With aggressive revenue projections through 2030, the rewards appear to be worth the risk.
Many auto manufacturers have announced ambitious plans for adding software platforms and expertise to their future automotive product portfolios—and some are well on their way. Many are following in the wake of Tesla, the gold standard for successful software platforms.
In early December, Stellantis released its strategy for moving to a software-defined platform for all its brands and models. Stellantis released considerable information on its overall strategy during its Software Day event.
The table below summarizes the car maker’s software strategy. Stellantis is the name of the company that merged Fiat-Chrysler Automobiles and PSA Group. The merger combines 14 auto brands. Chrysler, Dodge, Jeep and Ram represent its strongest U.S. brands, along with Citroen, Fiat, Opel and Peugeot in Europe.
Stellantis’ software strategy represents a transformational change largely planned as one big step, with first results arriving in 2024. Other auto OEMs are moving to software-centric platforms in incremental steps that take much longer to implement. Though ambitious, the potential benefits will be worth the risk—assuming minor glitches in execution. Hence the progress of Stellantis software story merits watching.
A transformative strategy is needed to manage software requirements for 14 distinct brands, perhaps the largest number of diverse brands of any auto OEM—across price range and vehicle segments ranging from consumer to commercial vehicles. This software complexity provides major cost savings and revenue opportunities after the software platform transformation is completed. The risk is significant development cost over the next four to five years.
Stellantis estimates that 80 percent of software platforms can be shared among brands, with 20 percent requiring brand-specific software—mostly related to user interfaces.
A key software goal is decoupling software from hardware platforms. Hardware-software decoupling has become standard procedure due to its many advantages. The latest advantage is the potential to swap out chips when supply chains are disrupted.
Stellantis is clearly aiming to own a significant portion of its software value chain for all of its brands. Nearly all auto OEMs are on this path, adding software expertise to their core competencies.
An important factor in value creation is the ability to perform over-the-air (OTA) software updates. Stellantis has executed more than 6 million OTA updates so far in 2021. Most updates are aimed at Chrysler brands.
It is also seeking to use software as a brand differentiator: Easily said, but harder to do, especially since most auto OEMs use similar tactics.
Platform goals include achieving long-term cost savings compared to current dedicated ECU architectures for all its brands and some models. This will undoubtedly happen due to the economics of software platforms since development costs are covered by sales, and profits on new sales are high.
Stellantis forecasts that the addressable automotive software market will surpass €200 billion in 2030. The company also released some software revenue goals along with its current software revenue. (The 2030 goals are summarized in the table above.)
Current software revenue totals 400,000 euros from 400,000 subscribers or an average of €1,000 per subscriber. Stellantis has 12 million monetizable vehicles. Stellantis said its connected cars will only be viable software customers in the first five years of use. The current average revenue per monetizable vehicle is only €33.
It’s telling that Stellantis understands the market dynamics of automotive software revenue, and is being realistic about what portion of its connected car will create software revenue.
For 2030, Stellantis projects monetizable vehicles will grow to 34 million. Estimates for subscribing customers by 2030 were unavailable. Incremental software revenue for 2030 is projected to reach about €20 billion. That works out to an average revenue per monetizable vehicle of €588, or nearly 17 times higher than the current total.
Growth is expected to come from increased service portfolio, expanded OTA and other factors.
Stellantis lists six business segments providing software revenue (as shown in the table).
Stellantis is developing three technology platforms as part of its software strategy. STLA Brain, the core tech platform, is a new hardware and software architecture launching in 2024 across Stellantis’ four battery electric platforms.
The Stellantis architecture, shown below, is a layered software and hardware framework that includes cloud-based and mobile device connections.
Software layers include applications on top and software platforms such as middleware, operating system and “Safety RT OS.” Stellantis provided no definition of its function, but I assume Safety RT OS means real-time. Is this a meta-OS like the emerging Apex.ai?
Stellantis also said AI technology is part of its three tech platforms, but many more details are needed to understand this part of its software strategy. The company is using a service-oriented architecture in its STLA Brain platform. Microservices were also mentioned.
The second tech platform is the STLA SmartCockpit, providing infotainment capabilities ranging from entertainment and navigation to voice assistance, e-commerce and payment services. It is partnering with Foxconn on platform development.
Stellantis asserts SmartCockpit should transform a vehicle into a personalized living space. It will interact with the vehicle based on a combination of sensors such as touch, voice, glance and gesture.
Finally, there is STLA Auto Drive, implemented in two phases: ADAS and autonomous vehicles. Stellantis already has L1 and some L2 ADAS capabilities. ADAS capabilities will be regularly upgraded through OTA.
The Chrysler Pacifica has been used by Waymo for robotaxis trials in Phoenix, and for goods delivery in multiple locations.
Along with Foxconn, Stellantis is also working with BMW and Waymo. The ADAS functions are focused on L2+ and L3 and will be developed with BMW. Stellantis has worked with BMW since 2018 through Fiat Chrysler. L3 capabilities will be available in the near future.
Meanwhile, L4 and L4+ functionality is being developed with Waymo. Stellantis’ Chrysler brand has been working with Waymo for more than five years. The Chrysler Pacifica Hybrid minivan has been and remains among Waymo’s leading autonomous vehicles. In 2022 Stellantis and Waymo will use Stellantis commercial vehicles for AV development.
Stellantis and Foxconn signed a non-binding memorandum of understanding to create a partnership to design a family of semiconductors to support Stellantis and third-party customers.
The four chip families will cover 80 percent of Stellantis semiconductor needs, upgrading its current design and production technology. The new chips will also reduce complexity and simplify its supply chain while increasing hardware platform flexibility and innovation speed.
In May 2021, the partners announced the Mobile Drive joint venture for developing smart cockpits.
The Stellantis software strategy covers its 14 brands. The overall plan looks sound though much more information is needed for a detailed assessment. Revenue goals are aggressive, including about €20 billion ($22.5 billion) in incremental annual software-related revenue by 2030 from 34 million vehicles. Those figures translate to an average of €588 or $661 in software value per vehicle by 2030.
This article was originally published on EE Times.
Egil Juliussen has over 35 years’ experience in the high-tech and automotive industries. Most recently he was director of research at the automotive technology group of IHS Markit. His latest research was focused on autonomous vehicles and mobility-as-a-service. He was co-founder of Telematics Research Group, which was acquired by iSuppli (IHS acquired iSuppli in 2010); before that he co-founded Future Computing and Computer Industry Almanac. Previously, Dr. Juliussen was with Texas Instruments where he was a strategic and product planner for microprocessors and PCs. He is the author of over 700 papers, reports and conference presentations. He received B.S., M.S., and Ph.D. degrees in electrical engineering from Purdue University, and is a member of SAE and IEEE.