Software may not be sexy, but its ability to add features that improve the experience behind the wheel could be the deciding factor in buying a new car. Stellantis, the automaker created by merging Fiat Chrysler Automobiles and PSA Group, wants to generate almost $23 billion annually by 2030 through software-led products, customization, services, and subscriptions. The automaker expects tenfold growth in this area by the end of the decade with the growing number of services and people who are willing to pay for them, Stellantis CEO Carlos Tavares said during a “Software Day” presentation, followed by a meeting with media in Detroit.
Consumers want more from their cars, and will pay for services that make their lives better or easier. Automakers see customization and software-based services as a way to please buyers while reducing internal costs and generating more revenue.
In short, software controls the whole user experience in a connected vehicle, from navigation and infotainment to safety and performance. Tavares said there will be services and subscriptions unique to each of the automaker’s 14 brands, a means to increase brand loyalty and passion. Over-the-air updates will become the norm to fix, update, improve, and refresh vehicles as well as add services or boost performance in a quick and efficient manner.
Using Software to Transform Stellantis
Software is key to the transformation plans of Stellantis, which wants to be a leading mobility tech company, Tavares says. He is not alone. General Motors, Ford, Mercedes-Benz, Volkswagen, and others have similar goals and plans. And Tesla set the standard by framing itself as a tech startup from the start that continues to be valued as a tech and mobility company as opposed to a conventional automaker and manufacturer.
Stellantis has 12 million connected vehicles on the road around the world today which have received 6 million updates so far. The plan is to grow to 34 million connected vehicles by 2030.
“This company is on the move and we are full speed,” Tavares says of the long-term software strategy which he expects to translate to increased market share.
The auto industry as a whole is shifting to smart, connected, electric vehicles and companies are eying updates and services as a strong revenue stream going forward, both in passenger vehicles and light commercial vehicles subscribing to fleet management and logistics services.
Historically, dealers often make little money on the sale of a new vehicle, relying on revenue from service over the life of the vehicle. Going forward, many fixes will be over-the-air software updates. Revenue will rely on new subscriptions for apps, updated maps for the navigation system, insurance with premiums based on usage, or paying to boost power from the motor or enable hands-free highway driving.
All those connected vehicles will generate massive amounts of data which can also be a revenue source.
Autonomy + AI
Beginning in 2024, Stellantis will have three new AI platforms that will support new vehicles.
The first, STLA Brain, will connect vehicles to the cloud, offering greater processing capability for OTA updates. STLA Brain will launch in 2024 on the STLA Large vehicle platform that was engineered in Auburn Hills, Michigan. STLA Brain will roll out to the automaker’s three other vehicle platforms by 2026.
Another innovation is STLA SmartCockpit. Stellantis is working with iPhone maker Foxconn on cockpits for ultra-connected vehicles.
Additional revenue streams, in conjunction with a 10 percent cost reduction annually, are necessary as the industry shifts to electric vehicles which are 50 percent costlier to produce, Tavares says. Stellantis is investing $36 billion through 2025 on electrification with ambitious targets for 70 percent of sales in Europe and 40 percent in the U.S. to be electric vehicles by 2030. The additional cost cannot be borne by consumers; the middle class must be able to continue to afford new vehicles, he says. Software-enabled features should also increase residual value of vehicles and allow owners to hang onto their vehicles longer with updates keeping them competitive.
For autonomous vehicle capability, Stellantis is partnering with BMW for Level 3 capability and testing of STLA AutoDrive is underway on public roads in Europe.
Stellantis is working with Waymo on Level 4 fully autonomous tech, equipping and testing Chrysler Pacifica minivans. Waymo is also working on autonomous light commercial vehicles, starting with the Ram ProMaster in 2022.with first vehicles to Waymo in 2022 for development. 25 min 15 sec.
To accomplish its ambitions, the number of software engineers at Stellantis will be increased from 1,000 today to about 4,500 by 2024.
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