1、The software-driven revolution redefining the automotive industryThe software-driven revolution redefining the automotive industry2The software-driven revolution redefining the automotive industryTable ofcontent1.Foreword036.Development approach123.Introduction048.The path forward:EY-Ps Outlook142.E

2、xecutive Summary037.Shifting value chain134.Current challenges059.Conclusion165.Shifting technology landscape0710.Glossary193The software-driven revolution redefining the automotive industryThrough this paper,EY-Parthenons Future Mobility team aims to analyze the disruption caused by the increasing

3、importance of software in the automotive.We begin by looking at the existing challenges with the current approach to vehicle development and the limitations it places on software to grow.We also analyzed the key upcoming technology trends to combat the existing challenges and how they are giving ris

4、e to a new approach for developing SDVs.Lastly,we look at how the new development approach is redefining the existing automotive value chain and what this means for existing and emerging players in the future.Foreword Executive Summary 12Demand for advanced automotive technologies like ADAS,electrif

5、ication&connectivity are highlighting the importance of software in automotive and are characterized by independent development of software&hardware.Software-Defined Vehicles are reshaping the automotive industry by enabling increased flexibility,customization,and remote upgradeability.This is leadi

6、ng to new business models,such as subscription-based vehicle ownership,over-the-air software updates and enabling OEMS to offer new services to customers.However,despite all the inherit advantages,software defined vehicles are marred by challenges such as changes in vehicle E/E architecture,lack of

7、independent software development for distributed E/E architectures,lack of seamless connectivity options and cybersecurity concerns.OEMs have addressed these concerns by focusing on developing dedicated software platforms independent of hardware,consolidating the E/E architecture,and leveraging high

8、-speed 5G connectivity to enhance the V2X connectivity.Overall,software-defined vehicles are disrupting the automotive industry by changing the way cars are designed,manufactured,and used.Traditional OEM-Supplier dynamics are changing;Tier 2s and pure play software players are expanding their market

9、 position and are utilizing this opportunity to start engaging with the OEMs directly,by-passing traditional Tier1s.Through this paper,EY-P explores this changing automotive landscape and proposes a 3-pronged approach(Prioritizing software opportunities,building software capabilities,evaluating part

10、nerships/acquisitions)to enable a smoother transition to the software domain.4The software-driven revolution redefining the automotive industryIntroduction3Automotive consumers have increasingly come to expect a standard of convenience from their vehicles that they get from their smart phones,tablet

11、s,and appliances.Demand for advanced technology features,such as connectivity,driver assistance/autonomous-driving and safety,parallelly with market trends,such as vehicle electrification and increased efficiency norms,are placing an ever-increasing emphasis on the role that software plays in a vehi

12、cle.Traditional vehicle development approaches of developing hardware and software in unison can no longer keep up with A key enabler for SDVs is Over the Air(OTA)updates.Besides security patches and incremental software performance improvements,OTA updates carry the potential to massively cut down

13、costs and realize value from software for OEMs with the ability to roll out entirely upgraded features to customers without massive rollbacks or developing new vehicle programs.Players from markets like the US,EU and China are currently trendsetters and are leading the way in software development fo

14、r various safety,convenience and performance related aspects of a vehicle.The US,with an extensive talent pool of software developers from Silicon Valley,has radically changed the way software for automotive is developed.New age automotive companies/Start-ups in this region have pioneered our unders

15、tanding of SDVs today.They have adopted a“Software the exponentially rising complexity of software needed to meet evolving consumer and market demands.Enter Software-Defined Vehicles(SDVs).SDVs are characterized by the radically different approach of automotive development,where software is separate

16、d from the hardware it runs on.Like smart phones and computers of today,SDVs aim to utilize standardized software platforms,running on next generation consolidated and centralized computing hardware,with a focus on high-speed connectivity to the cloud,other vehicles and smart infrastructure.Figure 1

17、 High level architecture for a Software Defined VehicleApplication software:Front-end software components responsible for executing functional logic of that application.Development is completely abstracted away from hardware functions,aiding in scalability and ease of deployment across various vehic

18、le programs and typesSoftware platform:Unified software platform,responsible for centralization of functions across various vehicle domains.A software platform reduces development efforts,aids scalability,enables easier implementation of OTA updates and cloud connectivityCentralized High-Performance

19、 Compute(HPC)platform:Centralized processor that controls functions by connecting to sensors and controllers across the vehicle,with assistance from few zone controllers that take care of simpler computational tasks.Greatly reduces the number of ECUs required in a vehicle and allows for a standardiz

20、ed development environment,reducing development effortsSoftware-Defined Application software:Front-end software components responsible for executing functional logic of that application.Development is completely abstracted away from hardware functions,aiding in scalability and ease of deployment acr

21、oss various vehicle programs and typesSoftware platform:Unified software platform,responsible for centralization of functions across various vehicle domains.A software platform reduces development efforts,aids scalability,enables easier implementation of OTA updates and cloud connectivityCentralized

22、 High-Performance Compute(HPC)platform:Centralized processor that controls functions by connecting to sensors and controllers across the vehicle,with assistance from few zone controllers that take care of simpler computational tasks.Greatly reduces the number of ECUs required in a vehicle and allows

23、 for a standardized development environment,reducing development effortsHigh-Speed 5G connectivityVehicle Region Domain ControllerCloud connectivitySoftware-Defined VehicleFirst”approach where the vehicle and all the hardware in it is centered around a centralized software platform.The transition fr

24、om current vehicle architecture to a software driven one is not a straightforward approach.OEMs are racing to achieve a fully software driven vehicle.However,this entails a ground-up transformation of vehicle architecture,development methodologies,and business models.There are several pathways that

25、can be taken by leveraging different technologies and development approaches to cater to specific market needs.The transition is therefore disrupting the traditional automotive value chain,with entry of newer players,such as pure play software giants,redefined relations between traditional players a

26、nd repositioning of suppliers across the value chain.5The software-driven revolution redefining the automotive industryCurrent challenges4One of the major challenges facing the automotive industry today is keeping up with the upcoming trends of Connectivity,Autonomy,Shared and Electrification(CASE)f

27、or automobiles.Advancements in these areas require significant boosts in on-board processing,integration of components across the vehicle,and the need for broader connectivity.However,given how vehicles are developed today,moving toward a software-defined future presents significant challenges.Curre

28、ntly,most OEMs are observing relatively lower than expected returns on their investments toward developing the next generation of automotive software platforms.Certain factors,highlighted below,are responsible for this trend:This establishes the need for hundreds of ECUs in vehicles today,communicat

29、ing through a relatively low speed communication protocol.Having a distributed approach creates one of the biggest challenges for the development of the next generation of automotive software.Low compatibility with a centralized software platform:Due to their distributed nature,architectures like th

30、is have very low compatibility with centralized software platforms,like those found in modern consumer electronics,such as mobile phones and computers.High development effort:The development effort for a distributed architecture is inherently high,as each ECU might have its own development environme

31、nt and operating systems.Lack of scalability:With a distributed approach and the lack of a centralized software platform,it becomes difficult to scale the software products across multiple vehicle programs and variants.The current distributed Electrical and Electronic(E/E)vehicle architecture means

32、that for each specific feature,there might be several Electronic Control Units(ECUs).These ECUs contain a monolithic software stack as seen below(figure 2)and communicate with each other over the Communication Area Network(CAN)bus.Vehicle E/E architectureContains logic which dictates what the hardwa

33、re will do based on predefined condions Abstracts soware based applicaon layer from the hardware-oriented layers belowContains the operang system responsible for controlling the computaonal hardwareHardware components that work based on the logic defined in the applicaon layerContains logic which di

34、ctates what the hardware will do based on predefned conditions Abstracts software based application layer from the hardware-oriented layers belowContains the operating system responsible for controlling the computational hardwareHardware components that work based on the logic defned in the applicat

35、ion layerFigure 2 Monolithic Embedded Software Stack of a single ECU6The software-driven revolution redefining the automotive industryHardware-based developmentImplementing connectivityCybersecurity ConcernsWith distributed E/E architectures,the software included in the vehicle is largely tied to th

36、e hardware components it runs on.Currently,a lot of these hardware components are sourced from Tier 1s,forcing OEMs to source black-box embedded systems integrated with the hardware components.This shifts the responsibility of developing,integrating,and updating software components toward the suppli

37、ers,leaving OEMs with little or no autonomy in implementing a centrally defined software strategy.The consequence of such a supply chain and sourcing model is that the software is deeply linked to the hardware,posing several challenges,such as:Lack of OTA updates:Since the hardware and software are

38、closely linked,deploying OTA updates to the software through the serviceable life of the vehicle becomes a challenge,as it would mean updating the hardware as well.Lack of reusability:Reusing software components across multiple vehicle programs or variants becomes challenging as this would require s

39、imilar hardware to be deployed across multiple vehicle variants and programs Low integration:True integration among software components is very hard to achieve,thereby limiting processing power and latency,two key enablers for cross-functional features such as cloud connectivity and ADASDue to the d

40、istributed E/E architecture and the deeply linked hardware and software,achieving true connectivity becomes challenging.Since the embedded systems are not truly integrated,the effort and cost required for connecting multiple ECUs to cloud based applications significantly increases.As a result,most v

41、ehicles today cannot fully leverage the benefits of high speed 5G connectivity,as the existing E/E architectures are simply not compatible due to their distributed nature.A major implication of this is that moving non-critical processing tasks to the cloud does not make any economic sense,as the dev

42、elopment effort required far outweighs any productivity gains by implementing such a setup.This limits the capabilities of features,such as ADAS and Full Self Driving,preventing vehicles from achieving higher levels of autonomy.Cybersecurity plays a crucial role in considering consolidated software

43、platforms and increased vehicle connectivity.With a more distributed E/E architecture there are more potential points of entry for malicious actors to exploit.This can make it harder to keep the system updated with the latest security patches and to detect and respond to security breaches.Furthermor

44、e,a distributed architecture can also increase the complexity of the software running on the various ECUs,which can make it harder to test,validate and certify the system.Today,vehicles typically have somewhere around 100 million lines of code,whereas by 2030 it is believed that an average car will

45、contain roughly 300 million lines of code.Identifying vulnerabilities across multiple ECUs for a large codebase becomes highly tedious as the interactions between the various ECUs and the software they run can be complex.This can make it difficult to identify and patch vulnerabilities in a timely ma

46、nner.7The software-driven revolution redefining the automotive industryShifting technology landscape5To overcome these challenges,OEMs have significantly increased allocation of budgets towards R&D for automotive software.Realizing the importance of automotive software and the role it will play to r

47、emain competitive in a market where automotive software acts as a key differentiator,OEMs are redefining software strategies,setting up dedicated software organizations and swiftly building capabilities.Currently,the market conditions are highly fluid given the tectonic shift towards software focuse

48、d development,however there are some trends that have indisputably come across as key technology enablers for this transition to be successful.These are:The E/E architecture has evolved from distributed(with function specific ECUs)to domain-centralized(function specific ECUs bound to a domain specif

49、ic ECU)today and is likely to move to a vehicle-centralized(consolidation of ECUs)architecture.The vehicle-centralized E/E architecture is characterized by a centralized high processing computing unit(HPCU)managing domain specific and function specific ECUs connected via high-speed automotive ethern

50、et.This architecture is better suited to cater to cross-functional features such as advanced driver systems,vehicle connectivity,agile development methodologies and Over the Air(OTA)updates.These features require close integration of components,as they are required to function across all domains of

51、the vehicle.The growing needs of addressing higher vehicle complexity,scalability,higher vehicle security and connectivity will drive the expansion of ECUs.The evolving E/E architecture will pave out the way for development of standardized software platforms,compared to the previous approach wherein

52、 software was integrated into the hardware and sourced as black-box systems from multiple suppliers.“To manage complexity,OEMs are transitioning towards domain and vehicle centralized E/E architectures increasing reusability,scalability and reducing cost of development”Consolidation of E/E architect

53、ureSoftware platformsECUECUECUECUADAS/AD Domain ControllerCentral HPCUZonal GatewayZonal GatewayZonal GatewayPowertrain Domain ControllerECUECUECUECUECUECUECUECUECUECUECUDistributedDomain CentralizedVehicle CentralizedECUECUECUCentral BusECUECUECUECUECUECUFigure 3 Evolving Vehicle E/E ArchitectureUs

54、ing the traditional approach,achieving truly cross-functional capabilities,such as Full Self Driving(FSD),becomes a challenge.Each software feature is typically siloed and developed as an individual monolithic embedded system.Every individual software feature utilizes its own software stack,running

55、different operating systems(Figure 4).8The software-driven revolution redefining the automotive industryInfotainmentUser-InterfaceApplication LayerMiddlewareMicrocontroller Abstraction Layer(MCAL)Hardware Components0S-1(Android)SensorsActuatorsPower ComponentsPowertrainClimate ControlUser-InterfaceA

56、pplication LayerMiddlewareMicrocontroller Abstraction Layer(MCAL)0S-2(Autosar)SensorsActuatorsPower ComponentsUser-InterfaceApplication LayerMiddlewareMicrocontroller Abstraction Layer(MCAL)0S-3(QNX)SensorsActuatorsPower ComponentsFigure 4 Traditional Monolithic Embedded Software StacksFigure 5:Stan

57、dardized Software Platform ApproachHowever,SDVs can leverage software platforms characterized by a horizontal integration of lower software layers,across multiple domains and functions(Figure 5).With horizontally integrated abstraction layers between the various software layers,development of high-l

58、evel application is made independent of the hardware it is running on.Combined with the consolidated and centralized E/E architecture,a vehicle centralized software platform enables the emergence of a new software market.InfotainmentUser-InterfaceApplication LayerCommon MiddlewareCommon MCALHardware

59、 Components0S-1(Android)SensorsActuatorsPower ComponentsPowertrainClimate ControlUser-InterfaceStandard APIStandardized API to interact with the common middleware,consolidating development effort,while aiding scalability and reusabilityOSAL(OS Abstraction Layer)Different operating systems are access

60、ed through a common middlewareHAL(Hardware Abstraction Layer)Common drivers and MCAL to interact with standardized hardware componentsApplication Layer0S-2(Autosar)SensorsActuatorsPower ComponentsUser-InterfaceApplication Layer0S-3(QNX)SensorsActuatorsPower ComponentsCloud InfrastructureConnectivity

61、(Backend)9The software-driven revolution redefining the automotive industryLike app stores for popular mobile platforms,software platforms enable the automotive industry to observe reduced barriers to entry into the automotive software market for pure play software companies.Coupled with a compatibl

62、e centralized vehicle E/E architecture,some of the key advantages of a software platform are:Support for a microservice architecture:Breakdown of major functions(ADAS,In-Vehicle Infotainment,etc.)in to smaller and more independent software components called microservices.This would enable quicker re

63、lease cycles of new features.For example,updating a function like ADAS would no longer require the developer to re-deploy the entire ADAS application on a vehicle.Incremental update to smaller services that make up ADAS(object detection,decision making,etc.)can be made,rolled back or decommissioned.

64、Agile development:Since the SDLC(Software Development Lifecycle)is significantly shorter than the hardware lifecycle of a vehicle,agile development of software enables continuous development and improvement of software features leading to better customer experiences,security and has the potential to

65、 unlock new sources of revenue.Scalability and reusability:Developers would no longer need to concern themselves with ensuring compatibility with multiple hardware units their software needs to run on since higher-level software would be abstracted away from the hardware.This means the same applicat

66、ion can be deployed across vehicle variants and programs,allowing the services to be scalable and reusable.Several leading OEMs across the globe have already begun the transition to a software platform approach.However,it needs to be noted that a successful transition to a software platform approach

67、 must be underpinned by a compatible centralized vehicle E/E architecture.With the next generation of consolidated vehicle architectures and software platforms,OEMs can leverage cloud computing and V2X connectivity with greater ease.5G is one of the key enablers for bringing true connectivity capabi

68、lities in automobiles with advantages of low latency and increased reliability,allowing real time vehicle connection with surrounding smart infrastructure(V2I)and other vehicles(V2V),faster software updates,etc.Improvements in ADAS/AD:Automakers and system developers can leverage data and insights c

69、ollected from fleets of vehicle on road to train and enhance their ADAS and AD products and services by creating and running simulated environments on the cloud.Rapid deployment and OTA updates:Automakers and suppliers leverage automated data processing,training,and deployment pipelines to test,vali

70、date and deploy new or updated software products and services to vehicles on a recurring basis.MLOps:MLOps(Machine Learning Operations)refers to the practices and tools used to manage the production lifecycle of machine learning models.In the automotive context,this could include the development and

71、 training of machine learning models for tasks such as autonomous driving,predictive maintenance,and customer personalization.MLOps involves the collaboration of data scientists and IT professionals in order to efficiently build,deploy,monitor,and maintain these machine learning models in a producti

72、on environment(figure 6).Connectivity is the key enabler for MLOps to successfully manage and continuously improve features,such as ADAS and FSD,at scale.Data-driven organizations:Data collected from fleets of vehicle on road can be leveraged by multiple enterprise domains such as R&D,manufacturing,

73、after-sales,and maintenance to enhance product offerings,unlock new streams of revenue and enable data-driven innovation across the automotive value chain.Applications for this could include predictive maintenance,score-based insurance,large scale fleet optimization and management.V2X connectivityWi

74、th the lower latency and higher data bandwidth,5G in automotive would enable off boarding of non-safety-critical applications and processes from the vehicle to the cloud.Real-time connectivity to the cloud is one of the key defining features of an SDV.Some of the major benefits of integrating real-t

75、ime connectivity with the cloud include:10The software-driven revolution redefining the automotive industryData ProcessingData EngineeringTeamData IngestionData LabelingData StorageData Processing&AnalyticsCloud CI/CDModel DevelopmentAI/MLTeamModel TrainingModel ValidationModel RegistryModel Evaluat

76、ionTesting and ValidationTesting and Validation TeamSIL TestingHIL TestingLog Storage and AnalyticsMIL TestingECUHIL RIGDeploymentMLOps/DevOps TeamCode IntegrationPhased Roll-out/AB testingMonitoringOrchestrationFigure 6 Automated Cloud Based Pipelines for Rapid Deployment of Software Products and S

77、ervicesHowever,to successfully leverage all the benefits that cloud and vehicle connectivity offer,automakers must first successfully implement a compatible software platform and vehicle hardware.11The software-driven revolution redefining the automotive industryFigure 7 Emerging cyber threats in th

78、e era of SDVsCurrently,the regulations governing automotive cybersecurity are narrow in scope.Suppliers provide standard security solutions to OEMs with minor modifications based on the provided requirements.However,consolidation of the vehicle E/E architecture along with a centralized software plat

79、form can aid efforts to mitigate emerging cybersecurity risks across the various connectivity pathways (figure 7)Automotive cybersecurityBackend Applicaon ServersFrontend ServicesV2X ConnecvityVehicle FleetVehicle-level threatsTransmission threatsFront-end threatsBackend threatsSpoofing aacks:Vehicl

80、e-level threatsSpoofing attacks:Spoofing attacks to access critical vehicle functions like braking and accelerationPhysical access:Accessing the vehicle computer through the on board diagnostics port to install malware or spywareMan in the middle attack:Positioning transceivers between senders and r

81、eceivers to acquire sensitive data such as login credentials,or to impersonate one of the parties to mount an attackDenial of service:Disable service to vehicle that require critical data for functions such as ADAS or full self driving capabilitiesUnauthorized access:Access backend data and applicat

82、ions by maliciously acquiring identity credentials or exploiting vulnerabilitiesTransmission threatsFront-end threatsBackend threatsAdvances in vehicle architecture and software platforms aid automotive cybersecurity in the following ways:Reduced entry points for attack:Centralized architectures con

83、solidate the number of entry points for malicious attacks,making it easier to secure,monitor and manage the security of the entire system.This makes it easier to detect and respond to security breaches in a timely manner.Regular updates:Once detected,centralized software platforms make it easier and

84、 quicker to roll out security patches.With a consolidated architecture,it is also easier to implement security measures such as firewalls,intrusion detection systems,and encryption,as these measures can be centrally managed.Building redundancy and fail-safes:Implementing redundant systems and fail-s

85、afes to minimize the impact of any potential security breaches or failures becomes easier,as the effort to do so will be consolidated to a centralised system,rather than being spread across multiple ECUs12The software-driven revolution redefining the automotive industryDevelopment approach6With the

86、above trends enabling the transition to SDVs,automakers are realigning organizational strategies to meet the demands of an industry increasingly pivoting toward software.To do so,leading OEMs and suppliers around the globe are taking inspiration from leading software and technology companies.Traditi

87、onally,the development approach began with a requirement gathering phase,then sourcing hardware and software components from external suppliers,before moving on the testing,integration and validation.The sourcing of software was typically tied to the hardware of a specific vehicle domain(figure 8).F

88、or instance,the powertrain software was sourced together with the powertrain ECUs as an integrated unit.As software complexity rises,this methodology fundamentally lacks the ability to be scalable,agile or cost-effective owing to its sequential and time-consuming nature of development.Domain Specifi

89、c HW+SW engineering and sourcingNew Cross-Functional SW Sourcing ModelThe software-defined approach fundamentally differs from the traditional approach by focusing on software development independent from hardware.By completely decoupling the development of software from hardware,vehicle software de

90、velopment can be accelerated,scaled and continuously deployed across a vehicles serviceable life,all while incurring lower overall development costs.However,to fully embrace this approach,automakers are rapidly transitioning to a new sourcing model where software is sourced independently from the ha

91、rdware(figure 9).This model of sourcing is characterized by moving toward an organizational structure that reflects a cross-functional orientation of software teams,rather than domain specific ones.Internally,software budgets would be aligned toward development efforts for a unified platform rather

92、than individual vehicle domain programs.This change in development approach is giving rise to a trend wherein leading automakers are setting up dedicated software organizations and,as a result,their demands and interactions with suppliers and pure play software companies are disrupting the tradition

93、al value chain.ChassisChassisPowertrainPowertrainADASADASInfotainmentInfotainmentHWHWHWHWHWHWHWHWSWSWSWSWFigure 8 Conventional model for hardware and software sourcingFigure 9 Vertically Integrated Cross-Functional Software OrganizationCross-Functional SW Org,Independent from HW DevelopmentSW Engine

94、eringSW Sourcing13The software-driven revolution redefining the automotive industryShifting value chain7Traditionally,the relationship of OEM with suppliers has been straight forward and hierarchical with OEMs sourcing and interacting with Tier 1s directly,where Tier1s would acquire raw material/sub

95、components from Tier 2s and 3s.Tier 1s would play the role of integrators(figure 10).Some of the reasons this model is incompatible with a software driven approach are listed below:Lower autonomy:Sourcing integrated HW and SW systems from Tier 1s reduces the autonomy automakers have over the softwar

96、e deployed in their vehicles.This includes the data generated and collected,and the update cycles for releasing new features and overall differentiation achieved through software.Owning IP:As software continues to play an increasingly pivotal role and serve as a key differentiating factor for vehicl

97、e sales,OEMs would like to own and retain IP and autonomy over end-to-end development of their software products.Lack of integration:Sourcing solutions from multiple suppliers to implement a distributed vehicle E/E architecture leads to lower integration among components and increased development ef

98、forts for a software platformAs a result of this,Tier 2s and pure play software players have had the chance to expand their market position and have utilized this opportunity to start engaging with the OEMs directly,by-passing traditional Tier1s.OEMs get the benefits of reduced complexities,opportun

99、ity to develop the technology jointly and Tier 3:Raw material/Sub-system components(microcontrollers,PCBs,etc.)Tier 2:Module/Component suppliers(base SW,middleware,Assembled ECUs)Tier 1:System/Technology suppliers and integrators(integrated hardware with soware)OEMTier 3:Raw material/Sub-system comp

100、onents(microcontrollers,PCBs,etc.)Tier 2:Module/Component suppliers(base SW,middleware,Assembled ECUs)Tier 1:System/Technology suppliers and integrators(integrated hardware with software)Figure 10 Traditional OEM Supplier Relationship&HierarchyFigure 11 Redefined OEM Supplier Relationshipslater reta

101、in the IP while working with Tier 2s and new entrants in this space.However,Tier 1s still can still maintain relevance in this shifting landscape.To do so,they would need to reposition themselves in the value chain and leverage their system integration and development expertise by transitioning to T

102、ier 0.5s.Under the shifting value chain,Tier 0.5 suppliers closely collaborate with automakers form a very early stage of development.Where typical Tier 1s measure revenues by one-time sales of integrated units,tier 0.5 provides development support and collaboration by acting as innovation partners.

103、This includes collaboration from early-stage R&D efforts all the way through continuous development of software products.Additionally,automakers will also rely on Tier 2s,Tier 2+,and pure-play software companies for collaboration on different areas such as sourcing of centralized high compute SOCs,i

104、mplementing AI/ML frameworks as well as undergoing IT transformation to have standardized DevOps practices.This leads to a model underpinned by more collaboration across the value chain(figure 11).Tier 3:Raw material/Sub-system components(microcontrollers,PCBs,etc.)Tier 2:Module/Component suppliers(

105、base SW,middleware,Assembled ECUs)Tier 1:System/Technology suppliers and integrators(integrated hardware with soware)Software Defined VehicleTier 2:Module/Component suppliers(base SW,middleware,Assembled ECUs)Tier 1:System/Technology suppliers and integrators(integrated hardware with software)Tier 3

106、:Raw Material/Sub-System Components(SOCs,Board Specific SW)Tier 0.5 Suppliers:Innovation partners,collaborating,developing and implementing platform strategyOEMs:Creating scalable vehicle architectures,sourcing HW and SW independentlyIntegrated Solution Providers:Specialists that provide integrates

107、solutions such as integrated e-drives,power electronics and battery management softwarePure-Play SW Companies:Platform SW,Hyperscalers(AWC,GCP,etc),Data Aggregators,Infotainment and Cockpit SW providersTier 2:Integrated digital modules 14The software-driven revolution redefining the automotive indus

108、tryThe path forward:EY-Ps Outlook8Development of capabilities in automotive software will require sizeable investments and development efforts.EY-Ps New Age Mobility team has identified some key areas of focus for your business for it to be successful in this shifting technology landscape.These are:

109、OEMs are dedicating an ever-increasing amount of money to software R&D to remain competitive.The software R&D budgets are being dedicated toward the development of new features and a centralized platform strategy.However,generally,it will not be prudent for automakers to develop and control the enti

110、re stack in-house.To aid in the development efforts,they will continue to rely on suppliers,software players and solution providers in line with the redefined value-chain for SDVs.Software-product strategy:prioritizing the right opportunitiesSoftware differentiatorsNon-safety critical software produ

111、cts that require relatively low development efforts,have easy to acquire capabilities,but serve as key differentiators for automakers Example:Connected Mobile Applications,In-Vehicle Infotainment Software,Digital CockpitsHigh-techSoftware products that require mature capabili-ties in the field of au

112、tomotive embedded software and are highly sought-after by automakersExample:ADAS offerings,Cloud Connectivity,Full Self-DrivingCommoditized productsDevelopment effort/Capabilities requiredDifferentiating ValueNon-safety critical component level/low level software products that control basic hardware

113、 features of the vehicleExample:Actuator control software(wipers,windows,mirrors,Automatic lightsStandardized productsSafety critical software product that require mature capabilities due to testing and compliance requirements with safety and automotive standardsExample:ABS,Emission Control Software

114、,Power electronics control softwareFigure 12 Strategic Framework for Choosing the Best Software Product Strategy15The software-driven revolution redefining the automotive industryTherefore,to maximize returns on software development efforts it is important to establish a fundamentally solid product

115、strategy.The chosen product strategy will vary on factors such as existing capability maturity,the value of the product/services offered and so on.Therefore,choosing where to play(figure 12)becomes essential for establishing a software-product strategy.Building on the foundations of a product strate

116、gy,focus on capabilities required to execute the development of software.The core competencies and capabilities will vary depending on where in the value chain you decide to operate your business.For Tier 1s,system architecture and integrations capabilities would be a priority,whereas pure play soft

117、ware companies can leverage agility by focusing on DevOps skills.Given the dynamic market conditions,it is essential to ramp up capabilities quickly.To stay relevant in a software-driven industry,it will be essential for supplier,pure play software companies and solution providers to strategically p

118、artner through JVs,and Mergers&Acquisitions.This enables cost sharing of the large investments required to develop software capabilities and transition to a software organization.This is a phenomenon that has been observed across the industry with leading Tier-1 suppliers wholly acquiring or partner

119、ing with embedded software companies in this space.Building capabilitiesPartnerships/Acquisitions and academic tie-upsFor more advanced software offerings like ADAS and full-self driving,trends of OEMs and suppliers partnering with academic institution has been upcoming as well.To fully maximize the

120、se collaborative efforts,it is essential to set clear and strategic targets that align with the interests of both institutions.With a clear vision and established goals,such collaborations have the potential to yield high degrees of innovation by leveraging young talent and institutional funding.16T

121、he software-driven revolution redefining the automotive industryConclusion9The transition to SDVs is disrupting the automotive industry across the value chain.How the roles of different players will shape out in the future is still highly fluid,with new entrants,traditional suppliers and automakers

122、racing to grab a dominant position in this space.However,observing the current market trends(figure 13),one certainty that universally exists for all players is that software will play an ever-larger role in the automobiles of tomorrow and to stay competitive in the market going forward,automotive s

123、oftware would have to be a part of product offerings across the value chain.Figure 13 SDV Trends Observed by Automotive OEMsTrendsDistributed E/E architecture with minimum connectivity and ADAS functionalityPartial Consolidation of E/E architecture,L2 ADAS functionality,basic infotainment connectivi

124、ty Domain centralised E/E architecture,centralised ADAS/AV controllers,L3,L4 capabilities,with OTA functionality Centralised HPC platform,L4+ADAS capabilities,full vehicle connectivity with cybersecurity solutionsMass-Production OEMsPremium OEMsSoftware-defined startupsLeaderLeader123417The software

125、-driven revolution redefining the automotive industry Development of centralized software platforms leveraging high-speed connectivity and over the air updates to continuously improve and develop the in-vehicle software across the vehicles lifecycle Investments in R&D and carving out a dedicated sof

126、tware organization with focus on the SDLC Decoupling hardware and software to ensure faster software development times independent from hardware upgrades,scalability and tighter integration of software components Implementation of centralized cloud strategy to offload heavy processing tasks on the c

127、loud Development of cybersecurity solutions to ensure vehicle safety across the vehicle,cloud and during transmission of dataSoftware strategyCloud strategyOEMs across the globe are already racing toward achieving a centralized software platform and consolidated E/E architectures by inve4sting heavi

128、ly in the R&D for software.Some notable examples are:OEM2021 investments in software R&DKey achievements aligned to the software defined agendaAmerican multinational OEM$1$1.5 billion Introduced over-the-air updates for new electric vehicle program Developed in-house software product engineering tea

129、ms to enable full-stack development of software componentsGerman multinational OEM$3$3.5 billion Created a dedicated software organization Employing over 4,500 engineers and developers that were consolidated from various organizations to serve as an independent division,set up to service the softwar

130、e needs of all subsidiaries belonging to the OEMGlobal Japanese OEM$3.5$4 billion Developing and rolling out a dedicated centralized software platform for future vehicle programs Development effort for this software platform is consolidated and developed through a dedicated R&D subsidiary of the par

131、ent company Overhaul of E/E architecture to be more consolidated,scalable and modular for applications across vehicle programs and variants,in close collaboration with Tier-1 suppliersVehicle E/E architectureKey takeaway for OEMs:Key takeawaysDescription18The software-driven revolution redefining th

132、e automotive industry Transitioning from manufacturing and selling coupled hardware and software products to closely collaborating with OEMs and providing specialized software engineering management services For pure play software companies and traditional Tier-1s,specialization in a particular doma

133、in with automotive software can lead to OEMs sourcing non-differentiating products such as the middleware from specialized suppliers To rapidly develop and scale software capabilities,evaluate partnerships,tie-ups and acquisitionsRevised business modelsSpecializationAcquisition of capabilitiesTo con

134、clude,Software-Defined Vehicles(SDVs)are symbolic of the paradigm shift that the automotive industry is witnessing and is marked by various megatrends like the consolidation of E/E architecture,evolving software development approach,V2X connectivity,cloud computing etc.Software is the epicenter arou

135、nd which these megatrends are shaping up.EY-Ps future mobility team can help you navigate the complex strategic decisions required to help your business be successful in the era of Software-Defined Vehicles.Mirroring the end customer,consolidating capabilities for in-vehicle software and computing t

136、o offer cross-functional products and services in the domain of SDVs to OEMs through a single dedicated entity with a scalable global organizational platformConsolidated organizationKey takeaways for suppliers and pure play software companies:Key takeawaysDescription19The software-driven revolution

137、redefining the automotive industryGlossary10TermDefinitionOEM:Original Equipment ManufacturerCompanies that manufacture and sell vehicles or their associated components ADAS:Advanced Driver Assistance SystemsSet of safety features in vehicles that use software to assist the driver and prevent crashe

138、sSDV:Software-Defined VehiclesNext generation of vehicles characterized by key features enabled through a centralized software platform and consolidated electronics architectureFSD:Full Self DrivingCapability of a vehicle to safely navigate and operate without human input or supervisionOTA Updates:O

139、ver the Air UpdatesMethods to deploy software,configuration,or security updates through wireless communication protocolsC.A.S.E.:Connected,Autonomous,Shared,ElectricCollective term to describe the major upcoming trends of connected,autonomous,shared and electric vehicles within the automotive indust

140、ryECU:Electronics Control UnitControl system,usually responsible for executing a single function within a vehicleE/E Architecture:Electrical and Electronics Architecture Hardware topology dictating the network layout of electrical systems and electronic controls CAN Protocol:Communication Area Netwo

141、rk ProtocolStandard communication protocol used by microcontrollers to transmit and receive messages within a network without the presence of a centralized host computerHPC:High Performance Computing UnitCollective term for integrated high-performance computing,storage,and network resources for proc

142、essing complex workloadsSDLC:Software Development LifecycleTerm used to describe the end-to-end processes required to create software products from concept to production in the most efficient mannerHMI:Human Machine InterfaceCollection of functional elements that enable driver and passengers to inte

143、ract and control various aspects of the vehicle in the most seamless way as possibleV2X Connectivity:Vehicle to Everything ConnectivityUmbrella term used to describe the connectivity abilities of next generation of connected vehicles.V2X can include vehicle-to-vehicle(V2V),vehicle-to-infrastructure(

144、V2I),etcSOC:System on a ChipAn integrated circuit that integrates all components of a computer or electronic system into a single chipAPI:Application Programming InterfaceSet of protocols,routines,and tools for building software and applicationsHIL:Hardware in the loopMethod of testing in which a ha

145、rdware component is integrated with a simulated environment to test the components response to inputs and expected outputsMIL:Model in the loopMethod of testing in which a simulation model of a component or system is integrated with the real-time environment to test the models response to inputs and

146、 expected outputsSIL:Software in the loopMethod of testing in which a software component is integrated with a simulated environment to test the components response to inputs and expected outputs20The software-driven revolution redefining the automotive industryEY officesAhmedabad22nd Floor,B Wing,Pr

147、ivilonAmbli BRT Road,Behind Iskcon Temple,Off SG Highway Ahmedabad-380 059Tel:+91 79 6608 3800Bengaluru12th&13th floor“UB City”,Canberra BlockNo.24,Vittal Mallya RoadBengaluru-560 001Tel:+91 80 6727 5000 Ground Floor,A wingDivyasree Chambers#11,OShaughnessy RoadLangford Gardens Bengaluru-560 025Tel:

148、+91 80 6727 5000ChandigarhElante offices,Unit No.B-613&614 6th Floor,Plot No-178-178AIndustrial&Business Park,Phase-IChandigarh-160 002Tel:+91 172 6717800ChennaiTidel Park,6th&7th Floor A Block,No.4,Rajiv Gandhi Salai Taramani,Chennai-600 113Tel:+91 44 6654 8100Delhi NCRGolf View Corporate Tower BSe

149、ctor 42,Sector RoadGurugram-122 002Tel:+91 124 443 40003rd&6th Floor,Worldmark-1IGI Airport Hospitality DistrictAerocity,New Delhi-110 037Tel:+91 11 4731 8000 4th&5th Floor,Plot No 2B Tower 2,Sector 126 Gautam Budh Nagar,U.P.Noida-201 304 Tel:+91 120 671 7000 HyderabadTHE SKYVIEW 10 18th Floor,“SOUT

150、H LOBBY”Survey No 83/1,RaidurgamHyderabad-500 032Tel:+91 40 6736 2000Jamshedpur1st Floor,Shantiniketan Building Holding No.1,SB Shop Area Bistupur,Jamshedpur 831 001Tel:+91 657 663 1000Kochi9th Floor,ABAD NucleusNH-49,Maradu POKochi-682 304Tel:+91 484 433 4000 Kolkata22 Camac Street3rd Floor,Block C

151、Kolkata-700 016Tel:+91 33 6615 3400Mumbai14th Floor,The Ruby29 Senapati Bapat MargDadar(W),Mumbai-400 028Tel:+91 22 6192 00005th Floor,Block B-2Nirlon Knowledge ParkOff.Western Express HighwayGoregaon(E)Mumbai-400 063Tel:+91 22 6192 0000PuneC-401,4th floor Panchshil Tech Park,Yerwada(Near Don Bosco

152、School)Pune-411 006Tel:+91 20 4912 6000The software-driven revolution redefining the automotive EY IndiaEY_IndiaEYEY Careers Indiaey_indiacareersEY exists to build a better working world,helping to create long-term value for clients,people and society and build trust in the capital markets.Enabled b

153、y data and technology,diverse EY teams in over 150 countries provide trust through assurance and help clients grow,transform and operate.Working across assurance,consulting,law,strategy,tax and transactions,EY teams ask better questions to find new answers for the complex issues facing our world tod

154、ay.EY refers to the global organization,and may refer to one or more,of the member firms of Ernst and Young Global Limited,each of which is a separate legal entity.Ernst and Young Global Limited,a UK company limited by guarantee,does not provide services to clients.Information about how EY collects

155、and uses personal data and a description of the rights individuals have under data protection legislation are available via member firms do not practice law where prohibited by local laws.For more information about our organization,please visit .About EY-ParthenonEY-Parthenon teams work with clients

156、 to navigate complexity by helping them to reimagine their eco-systems,reshape their portfolios and reinvent themselves for a better future.With global connectivity and scale,EY-Parthenon teams focus on Strategy Realized helping CEOs design and deliver strategies to better manage challenges while ma

157、ximizing opportunities as they look to transform their businesses.From idea to implementation,EY-Parthenon teams help organizations to build a better working world by fostering long-term value.EY-Parthenon is a brand under which a number of EY member firms across the globe provide strategy consultin

158、g services.For more information,please visit and Young LLP is one of the Indian client serving member firms of EYGM Limited.For more information about our organization,please visit and Young LLP is a Limited Liability Partnership,registered under the Limited Liability Partnership Act,2008 in India,h

159、aving its registered office at 9th Floor,Golf View Corporate Tower B,Sector 42,Golf Course Road,Gurgaon Haryana 122002 2023 Ernst and Young LLP.Published in India.All Rights Reserved.EYIN2303-011 ED NoneThis publication contains information in summary form and is therefore intended for general guida

160、nce only.It is not intended to be a substitute for detailed research or the exercise of professional judgment.Neither EYGM Limited nor any other member of the global Ernst and Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a res

161、ult of any material in this publication.On any specific matter,reference should be made to the appropriate advisor.GAErnst and Young LLPConatct usEY|Building a better working worldSrihari(Sri)MulgundPraveen PothumahantyShashank Jain Harit BajajPartner,EY-Parthenon,New Age Mobility,India Director,EY-Parthenon,New Age Mobility,IndiaSenior Associate,EY ParthenonAssociate,EY Parthenon