The importance of electronics and software in the automotive industry is rapidly increasing, with a third of the industry’s research and development investment in 2019 going towards these areas. According to a study by Berylls Strategy Advisors, this percentage is set to rise to 40% by 2040, with software development alone accounting for €39 billion. This will result in the cost of software per car reaching €410 by 2040, an increase of €105 from current new vehicles. The complexity of electronics and software is due to the introduction of alternative propulsion concepts, such as hybrid and electric vehicles, which require a significant number of software specialists to develop and maintain.
The development of electric vehicle platforms has led to the addition of new areas of complexity, such as battery storage and motor control, which require a significant amount of software development. The introduction of car-to-X communication, human-machine interface with artificial intelligence, and cloud data management are identified as new customer requirements by Berylls Strategy Advisors. The growth driver for software development in the automotive sector is autonomous driving, with an estimated annual increase of 15% in development costs for electronics and software over the next decade. This requires a complex interplay of sensors, actuators, computing power, and software to develop algorithms based on billions of kilometers driven to ensure the right decisions are made during autonomous driving.
The high complexity of electronics and software in the automotive industry has led to a significant demand for software specialists, with the need for over three-quarters of a million specialists in the coming years. Established automakers, as well as tech giants like Google and Microsoft, and new mobility service providers like Uber, Lyft, and Didi, are all trying to establish themselves in this area. The cost of software development per car is set to increase significantly, making it essential for automakers to invest in software development to remain competitive.
