IBM Study Predicts AI-Powered, Software-Defined Vehicles to Dominate by 2035

IBM's Automotive 2035 Study Unveils Industry Transformation

IBM's latest Automotive 2035 study, the fourth edition of its automotive industry longitudinal research, predicts a transformative decade ahead for the automotive sector. The study, based on 1,230 interviews with senior executives across nine countries, reveals that by 2035, vehicles are expected to be predominantly software-defined and AI-powered 1

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Key Findings and Predictions

The study highlights several significant trends expected to shape the automotive industry by 2035:

1. Software-Defined Vehicles (SDVs): 74% of executives believe that vehicles will be powered by software and AI 2

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2. Electrification: 80% of new cars are expected to have some level of electrified powertrain 1

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3. Brand Value Shift: 75% of respondents indicate that software-defined experiences will be central to brand value 2

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4. Revenue Model Change: The industry is projected to shift from one-time vehicle sales to recurring digital service revenues 2

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R&D Budget Allocation Shift

Currently, only 21% of research and development budgets are allocated to software and digital developments. However, this figure is expected to nearly triple to 58% by 2035, indicating a significant shift in focus towards digital capabilities 1

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Challenges in Transition

The transition to software-defined vehicles faces several challenges:

1. Lack of Software Development Tools: 77% of executives report a shortage of necessary software development tools and methodologies 1

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2. Cultural Shift: 74% of respondents cite difficulties due to a mechanical engineering-driven culture, making it challenging to switch to software-driven product development 1

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3. Technical Challenges: Separating software and hardware layers is seen as the top challenge in developing SDVs 1

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Industry Implications

Jeff Schlageter, Automotive Industry General Manager at IBM, emphasized the importance of this shift: "The shift to software-defined vehicles (SDVs) was cited by the majority of industry executives as the key to future brand developments. It is indicated that vehicle value may no longer be limited to initial features and functionality—it would be earned over the life of the vehicle by continuously providing superior customer experiences with new applications and subscription-based services for drivers." 1

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Leveraging AI and Cloud Technologies

To address these challenges and capitalize on the opportunities presented by SDVs, automakers are encouraged to harness the power of cloud computing and AI. These technologies can enable:

1. Exploration of new ideas and software configurations
2. Gathering valuable insights for innovative SDV features
3. Analysis of vast volumes of data to identify patterns and make predictions
4. Acceleration of SDV enhancements
5. Creation of personalized experiences for customers 1

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As the automotive industry stands on the brink of this significant transformation, the ability to adapt to software-defined and AI-powered technologies will likely determine the success of automotive companies in the coming decades.