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.