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The Software Revolution Is Here

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It’s a great time to be a software engineer in the auto industry. Demand for such talent is expected to continue to grow for the foreseeable future. The reason? Software is fast becoming a branding differentiator as carmaker’s add new electronic features. And for cars with electrified powertrains, autonomous driving systems and V2X connectivity, digital brain power is even more critical.

Hybrids and fully electric vehicles tend to have significantly higher semiconductor content than models powered by stand-alone piston engines, with software controls for battery systems, traction motor inverters, DC/DC converters and AC/DC chargers. IHS Markit expects semiconductor revenue for electrified propulsion systems will jump 23% to $2.7 billion in 2020—a year in which overall sales have been decimated by the coronavirus.

As the industry rebounds and electrified models take a larger share of the market, IHS predicts automotive semiconductor revenues will soar 18% in 2021 to $44.9 billion. This will be followed by estimated annual increases of about 7% to reach $67.6 billion by 2026. It isn’t just the propulsion system. EVs also tend to have more electronic features—including high-end infotainment units, user interfaces and advanced driver-assist systems—than their ICE counterparts, IHS says, noting that it’s much easier to add content to a high-voltage battery architecture.

Carmakers also are developing new electronics architectures with centralized control systems in which a handful of domain controllers replace more than 100 individual ECUs. This will open the door for even more electronics content. Mercedes-Benz is teaming with semiconductor giant Nvidia on its system, which is due to launch in 2024 and eventually will be used across all future Mercedes cars and trucks. The so-called “software-defined” technology promises to be the “most sophisticated and advanced computing platform” ever deployed for vehicle applications.

It needs to be. High-end cars already have more than 100 million lines of software code, which is expected to grow exponentially over the next decade. Future automated vehicles are expected to require three to five times current volumes. Switching to a few powerful domain controllers will help reduce complexity and allow different systems to share data faster and more efficiently—and allow customers to make continuous upgrades throughout a vehicle’s life.

The software revolution also is changing how suppliers and carmakers work together, adds Geoff Krieger, executive director in charge of electronics systems and software for steering specialist Nexteer Automotive. As OEMs push more of the development process down the chain, he says, suppliers need to become much more agile and develop new purchasing models for flexible engineering services rather than simply designing toward pre-defined specifications.

Staffing Up

The algorithms used to make sense of incoming data and determine the proper response from control units don’t write themselves—at least not yet. Software engineers do.

This puts their services at a premium, with traditional OEMs and Tier 1 suppliers increasingly vying with new mobility companies and other startups for tech talent. The competition is fierce. General Motors plans to hire 3,000 engineers by early 2021 to help it meet aggressive product development and new vehicle launch targets. The bulk of the new hires are expected to be software engineers and IT specialists.

“As we evolve and grow our software expertise and services, it’s important that we continue to recruit and add diverse talent,” explains GM President Mark Reuss. "This will clearly show that we’re committed to further developing the software we need to lead in EVs, enhance the customer experience and become a software expertise-driven workforce."

Volkswagen Group is on the same page. With plans to launch 75 EVs across its various brands over the decade, the company aims to boost the proportion of software development it does in-house to more than 60% by 2025 from less than 10% in 2019. VW’s new Car.Software team is expected to become a $7.7 billion business with 10,000 employees by 2025.

Meanwhile, supplier giant Bosch has formed a new Cross-Domain Computing division that will bring together 17,000 employees from its powertrain, chassis control, multimedia and automotive electronics units. Anticipating that the market for “software-intensive electronic systems” will grow 15% per year by 2030, company executives reason that Bosch needs a wide-range of electronics and software expertise to help “shape the future of mobility.”

VW CEO Herbert Diess views it as an existential challenge. The next 5-10 years, he says, will mark “the most important race and decisive point for our industry,” with electrification and software leading the way.


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