How software-centric systems can accelerate electric vehicle adoption and automotive paradigms

While adoption of electric cars hasn’t met industry expectations, the growing emergence of software-defined vehicle systems could help them gain traction. On the other hand, software-centric vehicles will force the auto industry to rethink its traditional operating paradigms. Christopher Ahn, U.S. Connected Vehicle and Electrification Leader at Deloitte Consulting LLP, explains how this technology is quietly reshaping the industry.

Q: The transition to electric vehicles (EVs) has hit a speed bump. What benefits might persuade consumers to make the transition to EVs?
 

Christopher Ahn: One benefit is the lower overall cost of EV ownership. Although some consumers remain concerned about driving range and insufficient charging infrastructure, the cost of maintaining an EV is lower compared to internal-combustion engine (ICE) vehicles due to lower maintenance requirements (i.e., fewer moving parts and simpler designs) and lower refueling costs which is the top reason people cite for wanting an EV, according to the 2024 Deloitte Global Automotive Consumer Study.

State-of-the-art software and features tailored to consumer experiences can offer another benefit. While battery electric vehicles (BEVs) and software-defined vehicles (SDVs) are not mutually dependent, EVs often enhance the role of software in vehicle operations. For example, the software embedded in new vehicles goes beyond managing the infotainment system. It can also control more integral functions such as propulsion, suspension and steering. Imagine your car automatically increasing the suspension height because it knows you are approaching rough terrain or dynamically managing the tension in the steering wheel to stabilize turns in icy conditions. In the past, these vehicle aspects could only be upgraded by purchasing a new model or through aftermarket modifications. Now these performance updates are facilitated by software updates sent over the air, which allows consumers to personalize their vehicles to their individual mobility behaviors.

Q: Notwithstanding the challenges imposed by the current state of charging infrastructure, how can SDVs improve the overall charging experience for owners of EVs and attract consumers that are considering switching to electric propulsion?
 

Ahn: Deloitte Global’s consumer study results suggest the most important aspect of an EV charging experience for respondents is a fast charge time. With advanced software, vehicles can manage the charging process, optimizing it for speed and battery health, which can extend battery life. The software can be continually updated to automatically find the cheapest or quickest charging options by analyzing electricity rates and grid demand in real-time. This kind of intelligent charging management not only saves money, but can also create a more efficient fueling process.

SDVs also come with enhanced user interfaces that provide information drivers need all tailored to customer preferences. They can integrate with smart homes to schedule charging during off-peak hours and participate in vehicle-to-grid (V2G) systems, that can create both cost-savings and revenue-generating opportunities. Route-optimization features can help ensure journeys are planned around necessary charging stops, while customers manage the charging experience with mobile phones.

Q: What technology developments on the horizon are likely to make EV ownership in general – and charging in particular – a better experience for consumers?
 

Ahn: Advancements in semiconductor technology is expected to improve EVs. This should result in more efficient cars with better performance and faster charging times. Meanwhile, breakthroughs in battery technology, such as solid-state batteries, could offer longer driving ranges and quicker recharge times, which would address some of the main barriers to EV adoption. Also, upgrades in charging infrastructure, such as ultra-fast charging stations and smarter grid connections, are expected to make charging quicker and more cost-effective.

Emerging V2G technology is designed to allow EVs to interact with the power grid to provide stability and even allow owners to sell back excess energy, turning EVs into mobile power sources. Innovations like wireless and automated charging also are on the way, which should make charging hassle-free by removing the need to plug in manually. In addition, smarter software soon could tell consumers where the nearest available charging station is located.

Q: The auto industry is not the first to be disrupted by software. What lessons can be learned from other industries?
 

Ahn: The smartphone revolution didn’t just enhance traditional phone functionalities; it completely altered the landscape of communication through innovations like direct messaging and social media apps. This underscores the potential for transformational technology to not only improve existing products, but also fundamentally change the way they are used.

This shift reiterates that automakers and retailers may need to adapt their business models to incorporate both digital and traditional services. Examples include combining physical and digital service lanes as well as leveraging monetization strategies throughout a vehicle’s life cycle.

Moreover, automakers should work to master the deployment of over-the-air (OTA) software updates. It is important to continuously improve vehicle software, resolve issues and introduce new features, thus boosting the long-term value of vehicles.

Q: What should change to better meet the needs of software-defined EVs?
 

Ahn: Organizational change is a top-down process. A company’s board, executive leadership team and shareholders should adopt a software-centric strategic focus and prioritize the capital investments necessary to affect a comprehensive enterprise transformation that can create industry advantage. Many corporate operating functions should consider rethinking their roles and filter decisions through the lens of a software company.

For example, product development should evolve from parts-based to feature-based processes and systems of engineering. Supply chain functions should think about new ways of sourcing chips – a part that was once a Tier 2 supply component could now be the backbone of computing power in the vehicle. Finance controllers should reassess vehicle-program cost structures in a world of continuous software development, maintenance and updates to the vehicle post-sale. And human resource leaders should think about reskilling and upskilling their workforces to help meet the demands of a software-defined engineering landscape.

Q: How does an SDV change the balance of power between automakers and consumers?
 

Ahn: The biggest shift is that the opportunity to sell to consumers doesn’t end at the vehicle transaction. Instead, it can extend throughout the vehicle’s lifecycle, requiring ongoing support and updates. This shift asks auto manufacturers to adapt to a more continuous customer engagement model, focusing on software solutions and digital services. Consumers can now dictate what features they want, when they want them updated and how they’re integrated into their vehicles. This is a stark departure from the traditional model.

ABOUT THE PANELIST

Christopher Ahn
U.S. Connected Vehicle and Electrification Leader, Deloitte Consulting LLP
Christopher Ahn focuses on driving digital enablement from concept to operationalization for auto manufacturers, suppliers, and dealers. He brings extensive experience in emerging tech solutions for scaled adoption focused on streamlined customer experience. Contact Christopher at [email protected]. To learn more about Deloitte, visit: https://deloi.tt/3Sb22Oy.

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