BMW bringing back ‘Knight Rider’ is the easy part of software shift
CES, the consumer electronics convention held in Las Vegas this month, felt a lot like the flashy auto shows of yesteryear, with a techy twist.
Instead of unleashing a herd of cattle onto the streets of Detroit to promote its new pickup, Stellantis’s Ram brand unveiled an electric truck concept after a keynote touting its software ambitions.
What really evoked nostalgia, though, was BMW’s over-the-top presentation to a packed theatre at The Palms. Chief executive officer Oliver Zipse emceed quite the production, featuring Arnold Schwarzenegger and two fellow stars of the 1980s: David Hasselhoff and his Knight Rider sidekick Kitt.
This was all an elaborate windup to a chameleon-like talking BMW concept, the i Vision Dee, whose exterior panels changed colour, in sync with throbbing techno music.
The purpose of all this was to explain that, in the future, the ultimate driving machine will be more than a car. It will be your AI-enabled companion, anticipating your needs, obeying commands and integrating seamlessly with the rest of your digital life.
While BMW’s showcase certainly stood out, it’s not the first time we’ve seen carmakers roll out colour-changing concepts capable of sensing their driver’s mood. Tesla’s veritable iPhones-on-wheels that field over-the-air software updates have accelerated the industry’s shift.
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I spent most of CES talking with auto executives about how they’re navigating the transformation — all the thinking, hiring, training and coding they’re doing to not only make the user experience more computer-like but to centralise and control the back-end work to facilitate this. This is just as profound a change as the decline of the combustion engine or the ever-more-distant promise of autonomous driving.
Stellantis announced the formation of Mobilisights, a standalone software unit along the lines of Volkswagen’s Cariad and Toyota’s Woven Planet. BMW says it’s setting up “software factories” for the tools and processes to write code at scale while maintaining quality.
Each of these companies are hoping to foster a new corporate culture, with rapid iterations of software and continuous improvements via over-the-air updates replacing the three- to five-year product cycles the industry is used to.
After years of incorporating innovations by their suppliers, automakers have concluded the only way the industry can pull off this software transformation is to play a more hands-on role, one executive told me.
Car companies have to completely shift the mindset of how they develop and source components, their culture, and the talent and skills they want to attract, this executive said, and take greater ownership of their relationship with the customer.
That connection to the customer is key — it’s the ground automakers are trying to defend from the likes of Apple and Google, who pioneered the culture and processes they’re now trying to emulate.
Christopher Grote, BMW’s senior vice-president of electronics, told me the luxury car maker has enabled Apple Carplay and Android Auto so drivers can seamlessly connect their phones to the car, and it’s recently switched to Google’s open-source Android Automotive operating system as a foundation for its infotainment platform. But BMW draws the line there — it won’t pay Google for software services and wants to create them in-house.
“There’s always been talk about, ‘Should you give up? Has the end game come? Will company XYZ completely overtake the digital car?’” Grote said. “Don’t rely on the end game coming; be in control of your own tech stack.”
Carmakers have tried to boost their valuations by promising investors billions in new software revenue to be had from this transformation. General Motors (GM) has said it expects between US$20 billion and US$25 billion a year in software revenue by 2030. Stellantis has also targeted about 20 billion euro (S$28.5 billion) in software revenue by the end of the decade.
While charging subscriptions for advanced driver-assistance features like GM’s Super Cruise and Ford’s BlueCruise seems promising, car companies have had some high-profile stumbles in this realm. Both BMW and Toyota were skewered when they floated subscription-based pricing models for things like heated seats or remote start.
Tesla owners also are starting to doubt the promise of the driver-assistance system it’s marketed as Full Self Driving, which Elon Musk charges US$15,000 for, or as much as US$199 a month.
Wowing consumers enough to make them pay for subscriptions for software features is something only Tesla has really done so far. Whether executives in Detroit, Munich or Toyota City can do the same is still a multibillion-dollar open question.
There’s still more disillusionment to traverse before carmakers successfully monetise software features, one executive told me. No one is making a lot of money from software today, and there are lots of unknowns around how this will all shake out. BLOOMBERG
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