By Dmitry Lopatik
For years, the automotive industry has been fixated on one question: how do we build Software-Defined Vehicles? The industry has made significant progress in answering that question. The harder problem is what comes next i.e. delivering software at scale, across millions of vehicles, for as long as those vehicles are on the road.
McKinsey projects the automotive software, and electronics market will top $500 billion by 2035, which tells you software is about to become one of the industry’s biggest sources of value. But the real test isn’t the size of that number. It’s whether automakers can actually get that software to customers quickly, safely, and on an ongoing basis.
SDVs need a different kind of company
For more than a hundred years, automotive companies built their entire operating model around one milestone: Start of Production. Engineering, manufacturing, supply chain, and quality and everything pointed toward the same goal – getting a finished vehicle into the customer’s hands.
Software-Defined Vehicles break that model. The vehicle isn’t finished when it rolls off the line anymore. Features keep arriving, security patches keep shipping, performance keeps improving, long after the car is sold. The International Energy Agency points to exactly this — continuous software updates — as one of the defining traits of an SDV.
And that’s the real shift: if the product keeps evolving after production, the company behind it must keep evolving too. Delivering a vehicle once is a very different job from delivering software continuously, and most automotive organisations simply weren’t built for the second one.
The hard part isn’t writing the software but shipping it
Take something drivers now take for granted: an over-the-air update. From behind the wheel, it looks effortless. A notification pops up, you tap approve, and a few minutes later the car can do something it couldn’t before.
What that hides is everything happening behind the scenes: engineering, validation, cybersecurity, suppliers, manufacturing, cloud operations, homologation, compliance. All of it must line up before that update is allowed anywhere near the customer.
More often than not, writing the software isn’t the bottleneck but it’s getting the organisation ready to release it is. That’s not an engineering skills gap but the sheer number of dependencies between the teams responsible for getting software out the door. Once software sits at the centre of the vehicle, how well teams coordinate matters just as much as how well they code.
Why AI alone won’t fix this
AI is genuinely making automotive engineering more productive, and that’s not going to stop. But productivity and delivery aren’t the same thing. AI helps individual teams move faster on their piece of the work but doesn’t touch the dependencies that determine when the software is actually allowed to ship. If engineering wraps up a feature in three days but validation still takes three weeks, the release is still three weeks out. AI changes how the work gets done. It doesn’t change how that work moves through the rest of the organisation.
Looking past AI
Becoming an SDV company touches far more than engineering. It reshapes investment decisions, supplier relationships, quality management, aftersales, even how the business defines success. AI will absolutely shape where this industry goes. But the bigger challenge is building an organisation that can deliver software continuously, not just once. The companies that come out ahead won’t be the ones who adopted AI first, but they’ll be the ones who figured out how to keep improving every vehicle they’ve already built.
Which raises the obvious next question: what does an organisation built for continuous software delivery actually look like? That’s what we’ll dig into in the next article.
References
- McKinsey & Company, The automotive software and electronics market through 2035 — https://www.mckinsey.com/features/mckinsey-center-for-future-mobility/our-insights/mapping-the-automotive-software-and-electronics-landscape
- International Energy Agency, Vehicle software and software-defined vehicles — https://www.iea.org/reports/vehicle-software-and-software-defined-vehicles
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