Two tribes: software companies and carmakers

It is all very well aspiring to make your internal combustion engine car company the next Tesla, but these shifts in approach rub against an ingrained culture that fears radical change.

Love him or hate him, but Elon Musk’s strategy to turn the automotive industry on its head has proved so disruptive that many believe most existing carmakers will not survive the transition to electric vehicles and autonomous cars. Tesla is effectively a mobile platform on four wheels, where new functionality and updates are transmitted over the air. Such software updates offer Tesla customers improvements, which do not require them to buy a brand-new car or go into a garage to have a part fitted.

Industry experts believe that the idea of a car as – to use software industry terminology – a mobility solution – represents the next phase of car ownership.

Many cars on our roads are not necessarily “owned” outright. They are acquired through a lease, or some form of personal finance and the owner pays a monthly fee. Whatever financial jargon the finance company behind the car purchase uses, it is effectively a monthly subscription for a fixed term….and a usage limit, measured in annual mileage.

Then there is the pay per use car clubs, which are most definitely inspired by the as a service subscription model.

All carmakers are looking to address the changes in the way people want to own and drive cars. But BMW’s idea to ask its customers to pay £15 a month for a heated seat subscription seems a bit cheeky and, perhaps, misses the point. And former Volkswagen CEO, Herbert Diess’ recent and sudden departure from the carmaker, has been linked to poor software development. According to a report in the Financial Times, Daniela Carvallo, VW’s work council leader, last year criticised Diess for problems in the company’s software development programme. 

A new survey of 500 businesses conducted by Censurwide for Leapworks, found that 69% of UK and 85% of US CEOs think it’s acceptable to release software that hasn’t been properly tested, so long as it is patched later. One would hope that the CEOs of car companies are not among those CEOs who are happy to ship products with flawed software.

Over the air software updates provide a mechanism to deploy new (and hopefully useful) functionality, some of which may come at a premium. But the problem for carmakers is that they are not software companies. While they are undoubtedly pioneers of mechanical engineering, we are now witnessing the collision of two worlds, and it is software that will define the roadmap of the cars we use.