Automakers rush to take back their software codes

TOKYO — Toyota Motor Corp. is hardly alone in seeing its future in software.

Rivals from Silicon Valley to Wolfsburg and beyond are diving deep into the digital world as they reposition themselves for a new era when cars become more like smartphones.

The bet is that the technologies of tomorrow — high-speed connectivity, artificial intelligence and over-the-air updates — will deliver far more value and profits than stamped steel and rubber. Manufacturers and suppliers alike are boning up on the computer systems that run automobiles and allow their mechanical and electronic components to interact.

It's not easy: A typical new car has about 100 million lines of software code. A computer operating system such as Microsoft Windows, by contrast, has only 50 million. Some industry players expect the amount of code in fully self-driving vehicles to climb as high as 500 million lines.

For perspective, 1 million lines of code equals about 18,000 printed pages of data.

The shift has old-school metal benders dipping into unfamiliar territory that long was the domain of high-tech companies. But like Toyota, automakers increasingly see the importance of bringing those programming skills in house, so they won't play second fiddle to outside forces.

Tesla's expertise in innovative software has made it a darling of Wall Street investors.

Doubt the impact? The Model S became the first electric vehicle to crack the 400-mile-range milestone this year, thanks to a software update. Tesla can tweak everything from performance to handling and ride comfort through over-the-air updates, keeping cars fresh between redesigns.

Other high-tech automotive interlopers, such as Uber Technologies Inc. or Alphabet Inc.'s well-established Waymo unit, stake their entire business model on their software prowess.

The advent of advanced safety systems and automated driving is spurring the transformation. But so is surging demand for on-the-go connectivity needed for infotainment and e-commerce.

Traditional makes are moving fast, too.

Volkswagen says all of its new models will run on a new vw.os operating system by 2025. And last year, the German giant unified its fragmented information technology units into an $8 billion subsidiary called Car.Software.

That unit, based in Ingolstadt, Germany, is tasked with developing computer systems in-house, and VW said up to 5,000 IT experts were set to start work in Car.Software this year. VW is plowing about $8.25 billion into the subsidiary by 2025, and the full version of vw.os will debut in an Audi.

Daimler, meanwhile, is banking on a slew of software-based features to raise the reputation of the Mercedes-Benz S-Class family as a technological trailblazer. In the next-generation S-Class, due at the end of the year, up to 50 in-car systems will permit over-the-air updates. The car can also identify drivers through facial recognition software and automatically adjust seating and steering settings.

Suppliers also are getting into the game. Robert Bosch is combining its global automotive software and electronics activities into a new division called Cross-Domain Computing Solutions. It will launch at the start of the new year with 17,000 employees united to focus on automotive software.

"Software will play a crucial part in determining a vehicle's features and feel in the future," said Harald Kroeger, the Bosch board member heading the company's Mobility Solutions business sector. "It will help make cars ever more intelligent, and provide drivers with a tangible benefit."

Bosch is spending about $3.53 billion a year on vehicle software development.

Just last month, German supplier Hella said it will establish a global unit to coordinate its software activities and accelerate development of software-based business models. Its Global Software House will unite Hella's 2,000 software employees.

"The future of the automobile is largely decided by software developers," Hella CEO Rolf Breidenbach said. "By 2030, the market for software and electronics in vehicles will almost double."

But riding the new wave is not always easy for neophytes. Software problems marred the launches of two important Volkswagen models: the eighth-generation Golf and the first-generation ID3 electric car. And this year, Volkswagen Group replaced its software chief.

"We are now starting the biggest revolution in the automotive industry," said Audi CEO Markus Duesmann, who assumed oversight of VW Group's software business. "In a few years, a car's operating system and its connectivity with a highly secure data cloud will make all the difference. This is why the strong positioning of the Car.Software organization as a cross-brand unit for software development at the Volkswagen Group is a key step into the future."

Christiaan Hetzner, Peter Sigal and Alexa St. John contributed to this report.