Why you should care more for the software in your car than for the engine

Tesla car interior with a huge widescreen in the center.
Photo by Bram Van Oost on Unsplash

A lot has been said about future self-driving cars that will free millions of hours for drivers to do other things like work or entertain. Although we might be closer today to that point, monitored self-driving will be among us for some time thou.

It is difficult not to think about the evolution of smartphones when we find the similarities with the actual EV revolution. New electric vehicles are not only battery powered but they have a technological component that cannot be ignored.

Some legacy automakers still think that an EV should be the same car with a different drivetrain and they don’t realize that not only do they need powerful software to manage the car but that consumers demand new capabilities on their built-in touch screens.

Software as a competitive advantage

Software is a powerful tool for new EVs. Car manufacturers who master software will be able to get the most from their vehicles. It’s known that a big percentage of difference in range between competitors is not due to battery size but to battery management software. In a world that is battery constraint, which makes the battery one of the most expensive components, competitiveness comes in with software management.

In this field, Tesla has a clear lead and they can be proud to get the most juice from their batteries compared to other automakers. They seamlessly integrate their navigation software and AI to know when the battery needs to be heated or cooled, not only to get the best range but also to get it ready for high-speed charges without damaging it and preventing early battery degradation.

It is common for legacy auto markers to differentiate between the software that runs the car itself, its powertrain, brakes, stabilization, and other driving features from their infotainment systems. As much as they used to have two separate user manuals for the car and infotainment, in the last years they have even outsourced this last part to third parties in the form of Apple Carplay and Android Auto.

For their customers, it has been a convenient way to stick to what they already know and have in their smartphones and for the automakers, it has been a way to put their efforts into what matters to them. But, in my opinion, this is a terrible mistake that will be costly to auto markers in the future. If they don’t build in-house software departments they will have to outsource the most important part of the cars of the future and that will drain their margins compared to the ones who succeed in the software part.

Cars are going to be the perfect fusion between hardware and software and both should be important for manufacturers. When tech companies start competing with them, they will have to merge to support the costly software teams that will be needed, or as they are doing now, outsource and lose.

Full Self Driving

But if we need to talk about a piece of software that will be a game-changer, FSD will revolutionize the auto industry like no other. In the next months or years as a companion to avoid accidents, but, later on, it will fully automate driving to an extent that we could see cars driving themselves and we will be able to sleep while traveling shortening our perception of distances.

To some extent, it has already done so in highway driving. According to data published by Tesla for the 4th quarter of 2021, accidents are almost 10 times less likely to happen when their Autopilot feature is engaged compared to the average car. The published figures are that in the 4th quarter of 2021 Tesla “recorded one crash for every 4.31 million miles driven in which drivers were using Autopilot technology (Autosteer and active safety features)”. That compared to “NHTSA’s most recent data shows that in the United States there is an automobile crash every 484,000 miles.”

We might not see in the next few years level 5 autonomy for personally owned vehicles.. Companies like Tesla realized some time ago that such a valuable piece of software cannot be bundled with a car and maintain a reasonable price as the monetization of this feature goes way beyond using your car one hour a day.

Elon Musk has been talking about Robotaxis for several years now and the possibility for Tesla owners to use their cars as a source of additional revenue lending them to the network for a piece of the cake. Maybe this will be the only way to afford FSD software, as it just turned to a $12,000 additional feature and according to Elon its price will increase as we eventually get to the point where regulators approve its use.

Entertainment and productivity

I’m sure a new feature is about to come to Tesla cars. It hasn’t been announced but it is just a natural step towards the smart car. Eventually, Tesla will open their system to third-party developers to extend their ecosystem the same way Apple and Google did with iOS and Android in their mobile operating systems.

This will burst the number of applications available for Tesla cars and add features that will be useful and entertaining and others that we cannot even imagine. Today, Tesla’s ecosystem is in the spot where the iPhone was in 2007. A handful of Tesla-made apps that are mostly for the car’s control and navigation and some interaction with third party services such as music streaming, podcasts, video streaming, and some games.

But Tesla’s roadmap to installing state of the art chips in their new Model S and X and now rolling out in their Model 3 and Y starting in Shanghai and Fremont, and with no doubt coming to their newest cars in Berlin and Austin is not to run a few bunches of apps. Their strategy is to deploy a full system to run all kinds of apps and games with enough capacity for AAA games in game-console quality.

We can expect in the next months or a few years to see an open platform where software developers will add value to the Tesla ecosystem with high-quality apps and games that will make the experience of driving, commuting, or traveling a lot more comfortable.

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