#402

Software-Defined Vehicle
ForecastCONTABLE OF CONTENTS
Introduction

Connected &Autonomous

As the presence of advanced hardware and software increases in today’s vehicles, the advent of the softwaredefined vehicle continues to draw closer. Not only is this notable in the uptake of innovative technologies bypremium and mass-market OEMs, but also through the newer brands, players, and start-ups announcing vehicles
built around such technologies, as well as software-centric features and services.

Birds Eye View
Executive SummaryThe Basics

The market for these new features is ultimately reliant on the correlation between the vehicle’s E/E architecture
and the platforms adopted from its ecosystem. As such, it is important that any OEM, brand, or start-up looking todevelop an SDV has strong strategies for each of these areas that can, together, evolve dynamically.

Analysis
Summary Tables

SBD Automotive’s Software-Defined Vehicle Forecast provides a grounded assessment of the growth enabling SDVtechnologies in different regions and segments. The ten-year forecast works to understand how major OEM groups
will deploy future E/E architecture elements, in addition to assessing how these elements are expected to evolve.
An adjacent Excel version offers detailed, data-driven, analysis sorted by brand and country.

Future Outlook
Next Steps

RELATED SBD REPORTS
403 – Software-Defined Vehicle: Organization &Strategies

In this report, SBD Automotive's experts map out
the strategies used to incorporate software-definedvehicles into new vehicle line-ups. Here, it
understands how key industry players are organizingthemselves as they prepare for SDV development,
while identifying the products, services, andbusiness models being pursued by stakeholders
today. It likewise highlights the challenges andconstraints of SDV development from anorganizational perspective.

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Key questions answered> What is the expected
evolution of SDV-specificenablers and technologies?
> How will OEM strategies
and choices impact thepace of SDV adoption and10-year volume impact?
> How will trends and SDVadoption vary by region?

> What are the implications forautomotive OEMs andsuppliers with the transition
to the SDVs?

This research supports

Product Planners

Do I have access?

C- S u ite> What role will legacy
systems play and how long
will these platforms besupported?

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Annual Report for 2023

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402

Software-Defined Vehicle Forecast

Contents Page
402 Software Defined Vehicle Forecast
Introduction ≫Birds Eye View

47

▪ BYD

▪ Toyota▪ Chang’an▪ Volkswagen▪ Cherry▪ Xpeng▪ Dongfeng

Executive Summary ≫The Basics ≫1724▪ FAW

Future Outlook ≫▪ Ford▪ Pace & Agility▪ Geely▪ New Experiences▪ GM▪ GWMAnalysis ≫32▪ HiPhi▪ Owning Own IP▪ Simplifying Complexity▪ Revenue Flexibility▪ Architecture Variance▪ Honda▪ Pace▪ Hyundai▪ Low Cost Vehicles▪ Leapmotor▪ Low Cost Vehicle 3.0▪ Mazda Motors▪ Diagnostic Approaches▪ Mercedes Benz

▪ State of the Art Over Time▪ Renault-Nissan-Mitsubishi▪ Diagnostic Approaches▪ SAIC▪ Decoupled Corners▪ Seres

Data Deep Dive▪ Stellantis

View and analyze deep datain your own waySummary Tables ≫4171▪ Forward Roadmap

Next Steps≫

79

Contact Us ≫83▪ Subaru Corp.

▪ BAIC▪ Tata Motors▪ BMW▪ Tesla Motors
Total number of pages - 83

Introduction

Introduction

Chapter Introduction
As the presence of advanced hardware and software increases in today’s vehicles, theadvent of the software-defined vehicle continues to draw closer. Not only is this notable in
the uptake of innovative technologies by premium and mass-market OEMs, but also
through the newer brands, players, and start-ups announcing vehicles built around suchtechnologies, as well as software-centric features and services.
The market for these new features is ultimately reliant on the correlation between thevehicle’s E/E architecture and the platforms adopted from its ecosystem. As such, it isimportant that any OEM, brand, or start-up looking to develop an SDV has strong
strategies for each of these areas that can, together, evolve dynamically.
SBD Automotive’s Software-Defined Vehicle Forecast provides a grounded assessment of
the growth enabling architectures in different regions and segments. The ten-year
forecast works to understand how major OEM groups will deploy future E/E architectureelements, in addition to assessing how these elements are expected to evolve. An
adjacent Excel version offers detailed, data-driven, analysis sorted by brand, platform andcountry.

What are the key findings of this report?
•OEMs with legacy will work hard to transition quickly to their new architectures.

•Even those with less legacy will struggle to deploy a single architecture across their full
spectrum at pace.

•Low cost solutions are tough but the drivers are large enough that from the late 2020s
Budget Vehicle 3.0 will emerge.

SectionBirds Eye View

ContentAn overview of the key findings from SBD’s various Software
Defined Vehicle, and adjacent reports

Executive
SummaryPresents key highlights and conclusions from the report.

The Basics

What do you need to know about Software Defined Vehicles?

AnalysisAnalysis of five key trends identified in the forecast, including theSBD’s view of potential solutions

Summary Tables

Overview of each OEM’s offerings in terms of architypes, and theirlead platforms today, in five years, and in ten years

Future OutlookFour OEM personas are considered against drivers and barriers
into the future to understand when SDV benefits will be realized inOEM organizations

Next StepsCan SBD help you with any unanswered questions?

66

Introduction

Forecast Methodology
Top-down
Bottom-up
Phase

Market Drivers
3

Step 1: A database of model-level architectures is created using data fromthe SBD’s EE Guide.
Step 2: The sales volume (Global data) of each model is overlaid

495

10 11
Industry Trends

Top-down
Phase

Step 3: Top-level market drivers and major triggers for change areconsidered, leveraging SBD’s Cockpit Forecast and ADAS L0-L3 Forecast
Step 4: A top-down forecast is created using Step 2 and Step 3 results asstarting-points

Industry
Step 5: Using Step 4 a top-level roadmap is created
Trends Phase

128

Step 6: OEM-by-OEM strategy is created using results from Step 1 and 5

6

OEM Strategy
Phase

7OEM Strategies

Step 7: OEM strategy is converted into estimations using Step 2 as a starting
point, and relying on platform data.
Step 8: Results from Step 7 are aggregated into industry-level forecast

2Cross-CheckPhase1System Availability

Step 9: The forecast from Step 8 (bottom-up) is then compared to the Step 4forecast (top-down)

Aggregation Step 10: Breakdown Step 8 forecast into sub-levels using Step 1 and Step 5
Phase
as starting points

Bottom-up

Global Data provide vehicle sales volumes, both historical and forecasted, that forms the basis of our volume forecasts,
with which we overlay our detailed feature and technology level forecasts and industry expertise77

Example slides
from the report

Executive Summary

Gradual shift toward Vehicle 3.0 with 2.0 remaining relevantGlobal platforms penetration percentage forecast (2023-2030)

Highlights• There are still many models with vehicle 1.0
architecture in the current market. However, thedominance of vehicle 1.0 will be gradually replacedwith vehicle 2.0 as the majority of volume models
will be fitted with Ethernet at least for the digital
cockpit domain

100%
90%

80%

• Vehicle 1.0 will shrink over the 10 years. This ismainly due to the expectation that Ethernet will be
more prevalent in the industry% of Platforms

70%

50%

• Vehicle 2.0 will expand gradually to take thedominant area in the mapping. After its peakadoption, it will be gradually taken over by vehicle
3.0 although it will be even after the 10 years time40%

• Vehicle 3.0 will be implemented with more models toshow closer form to the vehicle 2.0 penetration

60%• Leading OEMs will iteratively increase the penetrationof vehicle 3.0 within their portfolio, although even in
10 years there will be some models remaining withvehicle 2.0

30%
20%
10%
0%
2023

92024

Autonomy Overlay
Gateway
Ethernet Bus
Centralized Computing
Zonal Consolidation

2025

2026

2027

2028

2029

2030

• Mega volume OEM will need to accommodate verybroad portfolio, and as a result there will still be aspectrum from very small portion of vehicle 1.0 tothe vehicle 3.0 implemented on the leading /premium models

Dual CAN
Basic Ethernet
Budget Vehicle 3.0
Fuctional Domain Controllers on a Backbone
Decoupled corner9Analysis

Low Cost Vehicles

Tough business cases around low-cost vehicles
Volkswagen E3 1.X & MEB platform

Volume OEM with “motorhead” customers

STLA small architecture• VW launched its brand-new MEB platform forthe new all-electric models starting with the ID.
3. the launch of the ID. 3 suffered from thedelayed software development. Although ID.
series and other family electric models are
expanding, they are suffering from poorsoftware quality• Volume OEMs whose customer base is largely
composed by those who love cars, such as
Subaru or Mazda will have unique struggle indeploying and owning higher level of SDV• Stellantis announced the software / hardware
architecture transition to STLA architecture
which has much less hardware variety andcomplexity. The key motivation to introduce
the new architecture is to improve
development and operation efficiency as wellas to gain new revenue stream from softwaredefined features such as FaaS

• VW group, just like many other OEMs, ishoping to make significant portion of revenue
from software-related services. The connected
service subscription would be providing a goodrevenue source however it doesn’t look othersoftware-based subscription services aremaking profit as much as it was hoped.
• Cariad, a VW subsidiary solely focused on
software development, is reported to cost fourbillion euros per year to the Volkswagen group,
while the quality of software delivered to themarket don’t look necessarily good with many
critics on them found.
• It is reported that the profitability of VW
electric models are still not on par with the ICE
models – this is the case with many otherelectric models from traditional OEMs. The
major reason for the smaller profit is reportedly
the significant cost of battery• Major challenges are around cutting cost by
applying “minimalistic” interior which are seen
on some premium models, such as Tesla Model
3 or Volvo EX30 without instrumental cluster,
physical buttons, etc. The customers of thesevolume OEMs do not necessarily want premium
interior or rich feature set, however thosecustomers might avert minimalistic approaches
as they would want something which has
traditional look and feel
• Another challenge will be around owning
engineering base to leverage updatability ofvehicle 3.0. SBD believes that the key
motivation to the most of OEMs to progress
SDV levels will be to achieve updatability
across vehicle feature domains and agility toquickly update vehicle features depending onchanging consumer demands. However, thistype of small OEMs will struggle to increase inhouse engineering base to achieve competitive
agility due to smaller business scale compared
to mega-volume / premium OEMs.

• However, the lower-price models within
Stellantis brands may struggle to make a huge
profit from post-SOP revenue due to the small
appetite for such software defined features• Stellantis will probably see similar struggle tothose of VW group currently going through. At
the initial stage of STLA architecture roll-out,
the software quality may not be on par thelevel it was hoped, as well as the modest
growth in software-based revenue that is
hoped to reach ~21 billion euros in 2030

1010

Summary Tables

Honda Group
Current Architecture SpreadRegion

China

USA

Sales VolumeHigh•Dreams strategy targets zerocollisions, zero environmental
impact, and creation of innovativetechnologies•

Focused development of automateddriving and advanced driver assist
systems•

New areas of investment in nextgeneration energy, includinghydrogen utilization, batteries, andartificial intelligence•

Committed annual budget andstaffing to R&D•Investment and development inconnectivity and connected services
for personalized experiences•Target sales of electric vehicles of40% in developed countries by2030

USALow

Low

Summary Table

EuropeHighEurope

MediumSales Volume

MediumLow

Sales Volume

RegionRegionChina

USA

Future StrategyMedium

EuropeHigh

China2033 Architecture Spread

2028 Architecture Spread

Summary Table

Summary Table

Architype%

Architype%

Architype%

Veh 1.0 - Gateway

97.1

Veh 2.0 – Basic Ethernet

89.9

Veh 2.0 - Basic Ethernet

84.7

Veh 2.0 - Basic Ethernet

2.9

Veh 3.0 - Functional Domain Controllers ona Backbone

7.4

Veh 1.0 - Gateway

2.7

Veh 3.0 – Functional Domain Controllers on
12.9
a Backbone

Veh 2.0 – Ethernet Bus

2.3

1111

Summary Tables

Tesla Motors
Master Plan Part 3 lays out goals
for electric vehicle development,
energy production, and energystorage•

Research in energy infrastructure,both creation and storage•

Targeting global production of 20M
units by 2030•

Development of commercialsolutions•

Continued focus on centralcompute and scalability•

Continued development of L3/4
autonomous driving systems•

Commitment to continued overthe-air updates for life of vehicle•

Development of new platform andvehicles, with mechatronics
designed internally•

Goals of cost and complexity
reductions

China

USA

Sales Volume

HighLow

Summary Table

EuropeUSAHighEurope

MediumSales Volume

MediumLow

Sales Volume•

RegionRegionChina

USAHigh

EuropeFuture Strategy

MediumRegionChina2033 Architecture Spread

2028 Architecture Spread

Low

Current Architecture Spread

Summary Table

Summary Table

Architype%

Architype%

Architype%

Veh 3.0 - Centralized Computing

100

Veh 3.0 - Centralized Computing

100

Veh 3.0 - Decoupled corner64

Veh 3.0 - Centralized Computing

361212

Owning Own IPFuture Outlook

Hiring of software engineers and supplier collaboration
SDV Vehicle 4.0 Benefit 3

Owning Own IP

Increasing the desire for ownership of selected IPon vehicles

20242025

2026

2027

2028

Hiring of software engineers

Established Premium
Medium Volumes
High Margins
High Legacy

A new collaboration standard between OEM andsuppliers

Rapidly growing proportion ofSoftware focused staff (andincreasingly commoditized/
platform based mechanicalsystems
Collaborative model with supply
baseDisrupter
Through start-up or resetting for BEV have leapt
straight to Vehicle 3.0 but some struggle todeliver the full value

Increasing quality in gathering information about real world use of the product in real time

Hiring of software engineers

High Volume
High Volumes
Low Margins
High Legacy

A new collaboration standard between OEM andsuppliers

Prioritizing which areas of softwareadds most value and distinguishingbrand value

Rapidly growing proportion ofSoftware focused staff (andincreasingly commoditized/
platform based mechanicalsystems
Collaborative model with supply
baseChinese New Entrant
Increased interest in IP of software as European launches gain
pace, with currently outsourced work being brought internallyHigh Volumes
Medium Margins
High Legacy
OutcomeBarriers

Improved cost base with internallycreated softwareSolutions
13

What the Excel
Version Contains

Excel Database Includes

Excel Data Points:

80,000+#402/Software-Defined Vehicle Forecast

OEM Groups covered:

Excel Tabs:

28

4

Excel Database Includes

Excel Data Points:

80,000+#402/Software-Defined Vehicle Forecast

OEM Groups covered:

Excel Tabs:

28

4

Excel Database Includes

Excel Data Points:

80,000+#402/Software-Defined Vehicle Forecast

OEM Groups covered:

Excel Tabs:

28

4

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