Competing to control the in-vehicle user experience

The in-vehicle user experience (UX) is changing. This is due, in part, to customer expectations. Why should we have inferior UXs in our cars to those we are accustomed to with the technology products we use every day, such as smartphones? With a smartphone we expect:

• A simple, clean user interface.
• Continuously updated and improving features.
• Features that talk to other features.
• The latest version of an operating system.
• Our smartphone to interact with our other devices.
• Our media content available, on demand, on any device.
• Glanceable, relevant, contextually aware notifications.
• Touchscreens and super-accurate AI voice assistants.

The challenge is to bring the smartphone’s UX to the in-vehicle infotainment (IVI) system. The way to do this is through software, and all next-generation vehicles will be software-defined, making it easier to change and improve cars continually, throughout their lifecycles.

Smartphone mirroring solutions brought smartphone content into the car effectively

Since 2015, the penetration of smartphone mirroring solutions in cars has grown significantly. The solutions were designed to mirror smartphone apps, such as navigation or content streaming, with a familiar grid-style home screen, onto a central vehicle display. Apple, Baidu and Google were the first to offer the solutions, and still dominate today, with Huawei also active in China. The opportunity for the technology companies arose because infotainment features either could not be updated, or were not being updated. Drivers were relying on their smartphone apps, on their devices, in the vehicle more and more, so mirroring those apps onto the underutilized larger display in the car proved a hit with drivers. In 2022, Canalys estimates that 85% of new cars sold, and over 170 million cars on the road worldwide, are capable of smartphone mirroring.

But now it is all changing. The companies mentioned all have different strategies to control the UX. Apple’s next-generation CarPlay, due in vehicles from late 2023, will still mirror smartphone content, but it will be possible to use every display, customize the look and feel and have deep integration with a vehicle’s hardware to control other features and car controls. Baidu, Google and Huawei will continue with mirroring, but are already collaborating with car makers and powering IVI systems and digital cockpits with their operating systems: DuerOS, Android Automotive OS (AAOS) and HarmanyOS respectively.

Every car maker has a new software strategy

The greater, transformational strategy shift is happening at the car makers. They need to differentiate their UXs, but many want to own the differentiation and not cede control or wait for updates from third parties.

While some car makers will use an OS like AAOS, they are not all necessarily taking the available apps and services, such as maps/navigation, voice assistant and app store, preferring to source from other suppliers. Others will go it alone, spend billions of dollars and build their own software platforms, apps and operating systems for features way beyond the IVI. This is a calculated risk, a strategy made even more challenging when you consider that several automotive OEMs are developing software platforms for vehicles due in the next three years, which also have new EV and ADAS platforms. Any platform shift is a big deal for a car maker, but moving to multiple new platforms at the same time across many brands and models in the car group will be a massive challenge. The risk of delays is high, especially given the ongoing supply constraints of key automotive components and the complexity of the new platforms. A delay in one platform in one model can have repercussions across all brands and all models across a car group for the rest of this decade. Smartphone mirroring solutions will still be there if a plan B for an IVI UX is required!

Automotive OEMs are years behind Tesla, but significant OTA updates are starting

The challenge is not just to get the software-defined cars launched. Once launched, owners expect regular over-the-air (OTA) updates with enhancements and new features. Tesla owners have been receiving OTA updates for a decade already, with a digital cockpit designed before smartphone mirroring solutions even existed. They can also add new features, post purchase. The most famous and lucrative of these is Autopilot. Every Tesla ships with the necessary hardware installed and Autopilot included – customers can buy the Enhanced Autopilot or Full Self-Driving Capability option at the time of purchase, or later.

But while competitors are far behind, they have finally started to enable OTA updates. Some Chinese OEMs, especially the EV start-ups, started life with a software-defined vehicle strategy. Xpeng is ahead and has released 30 major OTA updates to date, adding approximately 200 functions. Zeekr, a Geely brand, with partner Mobileye, delivered a highway assist package OTA recently. Another from the Geely family, Polestar, part of Volvo Cars, was the first to adopt AAOS with Google Automotive Services and has updated its Polestar software more than a dozen times, with recent updates moving it to the latest version of AAOS and adding CarPlay support. Ford recently updated approximately 50,000 US customers’ new vehicles to BlueCruise hands-free driving through Ford Power-Up software updates. Feature improvements also include new apps. Lynk & Co, a joint venture between Geely and Volvo, worked with Microsoft to create a Microsoft Teams app for its cars. But no car maker will ever compete with the application developer network of the smartphone mirroring solution providers.

New revenue stream opportunities

Major car groups GM and Stellantis are both aiming for revenue of US$20 billion in 2030 from software services. Millions of connected, revenue-generating cars will be on the road by then, but how will OEMs grow their vehicles’ lifetime revenue potential?

The digital services developed must create business value as well as customer value, and do so for years. Subscriptions will be much more common and wide-ranging. New car owners are familiar with connected services, such as GM’s OnStar, where navigation, remote diagnostics, roadside assistance and crisis assistance can be part of a subscription plan. These plans are often included for free for a set period and then chargeable on a monthly basis. Expect more available services or features, such as driver assistance, to be added to these monthly plans. As Tesla has implemented, premium versions of a feature, such as driver assistance, are also likely to be available from other OEMs, post-sale, for a one-off charge. BMW’s ConnectedDrive Store offers digital services and features via microtransactions for items, including heated seats, high beam assistant, driver assistance and CarPlay. All examples will enable buyers of used software-defined vehicles to add a feature or service in the future.

More information on the Canalys Digital Cockpit Analysis service can be found here. To hear more on this topic, listen to our recent webcast here.