Market expectations and prospects for software-defined vehicles

Munich/Detroit, September 2021

Market expectations and prospects for software-defined vehicles

Munich/Detroit, September 2021
T

he automotive industry is on the verge of the mostsignificant transformation in its history, as the worldshifts to electric-powered and increasingly autonomous cars.

In meeting this challenge, a key issue will be software. Volkswagen’s chairman Herbert Diess has described software as the biggest test of the coming change, forecasting that it will eventually account for 60-70% of vehicle product differentiation. The reason lies in the nature of the product: the electric car of the future will always be connected, updatable and mostly self-driving, and be part of an everexpanding, integrated mobility services ecosystem. Berylls Strategy Advisors expects that by 2030 the proportion of vehicles worldwide that are connected, upgradable beyond just infotainment, and may even support autonomous driving, will sharply increase from less than 5% to 37%. Meanwhile, connectivity
will progressively expand beyond online services for “connected” cars to software updates for the entire vehicle system, including critical safety functions such as driver assistance. Greater connectivity will enable continuous innovation, even after the vehicle has been sold, as customers purchasing decisions continue to shift away from traditional selling points such as engine power and torque to software functionality and over-the-air (OTA) update capability.
 
Tesla is an example of how public perception of electric cars is now being significantly influenced by the innovative potential of software. Founded in 2003, the California-based company’s status as the leading pioneer of software-defined vehicles has propelled its meteoric rise to a market value of around $689bn in August 2021. Tesla is now the most valuable car manufacturer of all time, worth more than Toyota and Volkswagen combined, even though the latter companies respectively delivered 14.7 times and 12.7 times as many vehicles as Tesla in the first quarter of 2021.
Berylls Insight
Market expectations and prospects for software-defined vehicles
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Authors
Dr. Matthias Kempf

Partner

Malte Broxtermann

Principal

Sebastian Böswald

Associate Partner

Dr. Matthias Kempf

Dr. Matthias Kempf (1974) was one of the founding partners of Berylls Strategy Advisors in August 2011. He began his career with Mercer Management Consulting in Munich, Germany, in 2000. After earning his doctorate degree and further consulting work at Oliver Wyman (formerly Mercer Management Consulting), he joined the management of Hilti Germany in 2008. At Berylls, his area of expertise is new mobility services and traffic concepts. In addition, he is an expert in developing and implementing new digital business models, and in the digitalization of sales and after sales.

Industrial engineering and management studies at the University of Karlsruhe, Germany, doctorate degree at Ludwig Maximilian University, Munich, Germany.

Malte Broxtermann

Malte is an expert in the development and implementation of automotive digitization strategies.

He focuses on helping clients scale (generative) artificial intelligence to improve their bottom line across the entire automotive value chain. His primary customers are automotive manufacturers and their suppliers, especially those active in the Software-Defined-Vehicle space.

Before his time at Berylls by AlixPartners (formerly Berylls Strategy Advisors), he advised leading North American utility companies. Prior to that, he saved lives as emergency medical technician. Malte holds master’s degrees in economics from Maastricht University and Queen’s University in Canada.

Sebastian Böswald

Sebastian Böswald (1991) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) in April 2021. He is an Associate Partner and an expert in both transformation and operations. Over the last decade, he has focused his work on strategy and organizational design, as well as on two megatrends shaping the automotive industry: software-defined vehicles and CASE (connected, autonomous, shared, and electrified mobility). In these fields, he has advised our global OEM clients as well as Tier-1 suppliers and tech companies.

Prior to joining Berylls, he worked for PwC Strategy& and started his career at BMW as a project manager for product strategy and digital charging services.

He received a Bachelor of Science in Automotive Computer Science at the Technical University of Ingolstadt as well as a Master of Science in Management from the Technical University of Munich.