Software-defined Vehicles: Experts Highlight Strategic Imperatives, Value Chain Transformation, and Growth Opportunities

Is your automotive company embracing softwarization to achieve competitive success?

The shift to software-defined vehicles (SDVs) is unlike anything the automotive value chain has seen before — what was once a mechanical engineering exercise is now a software innovation race. From centralized computing to over-the-air updates and platform-led monetization, SDVs are setting the stage for a future where automakers will transform from traditional OEMs into tech giants.

Frost & Sullivan’s recent Growth Webinar brought together leading industry voices to examine the disruptive technologies, monetization strategies, growth opportunities, and ecosystem dynamics defining the SDV landscape. The conversation unpacked how OEMs, Tier 1 suppliers, software players, and tech platforms can align for long-term success.

Leading Growth Experts Who Featured in the Webinar:

Here’s a glimpse of key strategies and perspectives offered during the discussion:

Additionally, To access the free on-demand recording of this Growth Webinar, click here.

Disruptive Technologies: The Shift from Hardware to Software-led Architectures

• The shift to centralized computing and service-oriented architecture is pushing OEMs towards full reset in development cycles, talent, and tooling.
• OEMs are now acting as system orchestrators, not just vehicle manufacturers — collaborating with cloud, chip, and middleware vendors to build flexible, updatable platforms.

Company to Action: NVIDIA is redefining in-vehicle computing through scalable, AI-enabled domain controllers integrated with end-to-end toolchains.

Innovative Business Models: Monetization Through Features-on-Demand (FoD)

• FoD is swiftly becoming a major contributor to annual recurring revenue across the global auto industry.
• To facilitate this transformation, business models are evolving from unit sales to lifetime value via microtransactions, subscriptions, and upgrades.
• Key to success: building modular software stacks and aligning legal/IP frameworks across regions.

Best Practice: BMW has been an early mover in FoD, testing consumer acceptance for subscription-based heated seats and Advanced Driver Assistance Systems (ADAS) feature upgrades.

Internal Challenges: Talent, Tools, and Cross-domain Integration

• SDVs require a fusion of automotive, software, cybersecurity, and cloud expertise.
• Companies are, therefore, modernizing development environments using agile methods, DevOps pipelines, and digital twin solutions.
• Bridging silos between electronic control unit (ECU) software, infotainment, cloud services, and ADAS is becoming critical for functional safety and user experience (UX) coherence.

Growth Opportunity: Investing in software upskilling programs and cross-domain engineering academies.

Are you leaders leveraging key strategic imperatives impacting the SDV space to overcome operational challenges?

Compression of Value Chains: Reorganization and Platformization         

• The traditional automotive supply chain is fragmenting and reassembling around software ecosystems and cross-industry partnerships.
• OEMs are either vertically integrating (e.g., Tesla) or forming SDV alliances to co-develop scalable software platforms.
• Middleware, virtualization, and edge computing players are becoming key enablers across mobility and cloud infrastructure.

Company to Action: Volkswagen Cariad is centralizing its SDV efforts through a dedicated software arm focused on shared platforms and reusable code assets.

Competitive Intensity: Over-the-Air (OTA) Capabilities as a Competitive Advantage

• OTA software updates reduce recall costs, accelerate innovation, and create new revenue loops.
• Automakers are leveraging OTA solutions to ensure secure, fail-safe, and regulation-compliant update mechanisms across global markets.

Best Practice: Tesla has set the gold standard with seamless OTA updates that have enhanced vehicle range, added new features, and even altered braking performance.

Are you prepared to compete in an ecosystem where real-time data and predictive insights drive every decision?

Your Next Steps

The SDV era rewards intuitive platforms, agile R&D models, and software-first product leadership. Frost & Sullivan helps ecosystem players evaluate:

• Their modularity and interoperability readiness
• Monetization pathways beyond vehicle delivery
• The strategic depth of their SDV partnerships

Future Growth Potential: With the vehicle platforms of the future expected to be SDV-native, the players who build the infrastructure, data layers, and modular monetization frameworks today will own the customer lifecycle of tomorrow.

Want the Full Perspective? Watch the full on-demand recording here and explore in-depth growth opportunities, transformations, and ecosystem dynamics shaping the SDV revolution.

You can also explore our comprehensive growth analysis on the topic: click here.