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In the early 2000s, the mobile phone industry underwent a shift, spearheaded by the introduction of the iPhone. This revolution wasn’t just about hardware, it was the combination of software and user experience that set Apple apart. Today, a similar revolution is happening in the automotive industry, particularly among electric vehicles (EVs). This transition, initially dominated by Tesla, is now pivoting towards a new paradigm where automakers are focusing on the digital user experience as much as the physical features of the vehicle.
The Rise of Electric Vehicles: A Hardware-Centric Approach
The beginning of the mobile phone revolution saw a focus on the hardware. With more players in the market, it was important for traditional mobile phone manufacturers to focus on features and technology to stand out. This saw the introduction of slimline models, QWERTY keyboards, and later touchscreens.
The beginning of the EV revolution was akin to the advent of the smartphone. Drivers were interested in battery life (akin to mobile phone battery capacity), charging infrastructure (similar to network coverage), and physical performance metrics. Tesla, much like Apple, was a front-runner, not only for its battery technology but also for its ability to balance this with a unique user experience.
Chinese manufacturers, paralleling companies such as Samsung and Huawei in the mobile phone arena, quickly followed suit. They emphasized not just the hardware but also affordability, rapidly expanding the EV market’s scope and accessibility. Our recent Automotive Software Survey showed that 31% of people would consider an EV from a Chinese manufacturer, with 21% of those stating the reason was that the price was attractive.
This shows that the EV market is becoming more competitive with Chinese manufacturers able to compete on price in a way that others aren’t always able to. This means legacy manufacturers are looking for ways to increase their competitive advantage.
Software: The New Player in Automotive Innovation
As EV hardware matures and becomes more standardized, the distinguishing factor shifts to the digital user experience. This is determined by the vehicle’s software and how it serves the overall experience of the vehicle — an echo of the mobile revolution where iOS and Android defined user preferences.
The software in an EV encompasses everything from the intuitiveness of the infotainment system and the sophistication of autonomous driving features to the personalization of the driving experience. A vehicle’s software functions can be the thing that separates a good vehicle from a great one and users are beginning to pick up on this as they shop for their next car.
User Experience: Driving Customer Loyalty
In the mobile industry, Apple’s success was due to its product and ecosystem. The seamless integration between hardware, software, and services (like the App Store, iCloud, etc.) created a loyal customer base. A study found that Apple has the most loyal customers — 92.6% of iPhone users plan to stick with Apple for their next phone, compared to 74.6% of Samsung users.
In the automotive world, a similar trend is emerging. Manufacturers are not just selling cars; they’re offering a holistic driving experience that extends beyond the vehicle. This will only increase loyalty as drivers get used to the user experience of their favored brand.
This all comes down to functionality such as over-the-air updates that refresh the vehicle’s capabilities, apps that control the car’s features remotely, and even subscription-based services that unlock additional features. The focus is shifting towards creating an ecosystem where the car is an extension of the driver’s digital life.
Some automakers are moving away from siloed third-party systems such as Android Auto and Apple CarPlay and are instead focusing on creating intuitive native infotainment systems. While consumers might want easy integration with familiar services, this shouldn’t come at the expense of the in-cabin experience.
Automotive strategist and influencer James Carter recently spoke about this on LinkedIn, praising Rivian and Tesla for their infotainment systems. He said: “Both [Rivian and Tesla] took the time to develop a ground up solution that is fully integrated with other features, such as Supercharger location details, ideal charge time and alternate route ideas. Everything you need is right there on the screen. What’s more, the maps are fast and the overall experience is seamless.”
According to our Automotive Software Survey, 40% of automotive professionals feel there’s going to be a shift in the industry to embrace Tesla-like continuous quality processes within five years. However, many manufacturers seem to be struggling to match what Tesla has been able to do. In 2022, 55% of automotive professionals thought the shift would come in five years. Now, more respondents than even think this will come within 10 or 15 years.
https://www.auroralabs.com/2023-survey-results/
Challenges and Opportunities
This shift isn’t without challenges. Traditional automakers must adapt to a software-first approach, which differs from their traditional mechanical expertise. This opens up opportunities for new players, much like the mobile revolution, where many traditional phone manufacturers couldn’t adapt to the smartphone era.
With software as a competitive differentiator, many automakers need to balance new hurdles with the traditional challenges of automotive manufacturing. Fisker, the US-based EV maker, filed for Chapter 11 bankruptcy at the end of June 2024. While the company intends to keep serving existing customers and building a network in Germany, there was a critical issue with its software 3.0 deployment. The update compromised several large data volumes, which frequently drained the vehicle’s small 12V battery.
For other automotive professionals, safety is, as ever, a big concern with 27% of respondents to our Automotive Software Survey stating that ensuring safety and reliability is one of the most challenging elements of automotive software development. Furthermore, data security and privacy are paramount, just as they are in the mobile industry. Consumers will demand transparency and control over their data, and regulations will likely follow.
The automotive industry is at the cusp of a revolution that will change how people buy cars. The companies that will dominate this new landscape are those that will understand the importance of software and user experience. They will be the ones to create not just vehicles, but holistic, connected, and personalized driving experiences. Just as Apple reshaped our perception and use of mobile phones, we await the visionary companies that will redefine our concept of the automobile in the era of electric vehicles.
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