Home >Opinion >Columns >Carmakers should go ‘full stack’ as software gobbles up vehicles

In a seminal 2011 blog, venture catalyst Marc Andreessen proclaimed that “software is eating the world". He talked about how products and entire industries, which were originally hardware-driven, are being disrupted and replaced or ‘eaten’ by software. So, iTunes ate music, Netflix swallowed Blockbuster whole, and Amazon gobbled up big box bookstores and is nibbling at all retail. So, it was no surprise to come across an excellent article by the Institute of Electrical and Electronics Engineers (IEEE) on ‘How Software is Eating the Car’.

We got rudely reminded of this fact recently when the pandemic-induced global semiconductor shortage impacted the availability of cars across the board. In fact, analysts predict that 4 million less cars will be made this year because of the lack of chips. Not steel, nor rubber, but chipsets, which would usually be the heart of a mobile phone or a personal computer (PC). In fact, technology and semiconductors will become the heart of most vehicles going forward. Ten years ago, the IEEE article explains, ultra-premium cars contained about 100 microprocessor-based electronic control units (or ECUs), running about 100 million lines of code. Today, even a basic Ford truck runs 150 million lines of code. Deloitte estimates that 40% of the cost of a new car is attributable to its electronics, and this will only rise, with an average car running on more than 3,000 chips. The success of a car, say experts, depends on its software much more than on its mechanical side, and 90% of future innovations will be in software, not hardware.

This is a big challenge for traditional original equipment manufacturers (OEMs) like Volkswagen, whose chief executive officer admitted that “hardly a line of software code comes from us." This has massive implications. On testing, for one. Making sure that this complex electronics and software works seamlessly together requires a very different skill set—that of a large software company doing millions of test sequences. Cyber security is another. Cars can become the favourite playing ground of hackers, with McKinsey estimating that external and internal vehicle communication can exceed 25 gigabytes of data an hour. Safety in cars meant passing crash tests and roll tests with flying colours; now it is about making your car hacker-proof. Repairs are another. The days of the roadside mechanic being able to tinker around to repair your car are past. Even a cracked windshield repair would cost 10 times of what it did, given the cost of replacing all the sensors, cameras and intelligence in it. Sometimes, it is cheaper for an insurer to declare a smashed vehicle a complete loss than pony up the money to repair it, which could herald the era of ‘use and throw’ cars. Then, there is the problem of software updates; you cannot expect to wheel your car in to a garage every time its software needs an update, much like you would not take your mobile phone to a shop every time it decides to update its operating system. All the world’s OEMs have been accustomed to building great looking and performing internal combustion engine-based hardware, with the software functioning like a ‘black box’, built externally and bolted into the vehicle. All except Tesla, that is.

Tesla’s Elon Musk built a software-designed car concept in which its heart was the software and the hardware was ‘bolted on’. A Tesla architecture has “a handful of powerful, extremely fast computer processors executing micro-services-driven code that communicate internally across a greater number of sensors across lighter wiring harnesses or even wirelessly", and an over-the-air based software update system, like that of a phone. Musk borrowed the ‘full stack approach’ from Apple. So he not only controls the hardware, the software is all in-house, the batteries are made in his giga-factories, and the super chargers and their networks are also built by Tesla, which manages repairs and now is getting into insuring its cars as well. This is why Tesla’s market value is more than the next five vehicle OEMs combined; it’s not just because it makes great cars or because Musk has a cult fan following.

I see the car becoming like any other device. Tesla has chosen the full stack Apple approach, and other OEMs will try it too. Many, however, will become like PC or phone companies, making the hardware, while a few companies like Tesla, Microsoft, Apple or Google will make the software, the operating systems that will run them. And pretty much like the PC or phone business, the software guys will eat up all the profits as their software eats up our cars.

Jaspreet Bindra is the author of ‘The Tech Whisperer’, and founder of Digital Matters

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