Software Is the Future of the Automotive Industry, but Many Suppliers Are Ill-prepared

Published on January 19, 2023

The big industry trends – electric vehicles and autonomous driving – would have been unthinkable without the recent advances in software. Electronics and software now account for 90 percent of all innovations with OEMs and tier 1 suppliers set to significantly increase their R&D investment in these areas. However, key questions still need to be answered: What effect will software have on monetization strategies and how should suppliers’ adjust their current approaches?

It should come as no surprise that automotive suppliers are paying serious attention to these topics and their potential impact. Spending by OEMs and tier 1 suppliers on software-related R&D is expected to rise at a staggering compound annual growth rate (CAGR) of 16.1 percent, from 37.9 billion euros in 2015 to 168.8 billion in 2025. Simon-Kucher & Partners surveyed automotive suppliers on their attitudes toward digitalization. 37…

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