What Does the Slowdown in the EV Transition Mean for the Software-Defined Vehicle?

After an extraordinary run from 2019, the Electric Vehicle (EV) market began to falter in 2023, and in 2024 is facing serious headwinds, particularly in Western Europe and North America. While the longer-term outlook for EVs continues to look positive, there are now clear signs that the bleak short-term prospective for EV sales is causing Original Equipment Manufacturers (OEMs) to rethink their new EV product development and rollout. Important examples include:

• General Motors (GM) has abandoned its target of 1 million EV production capacity in 2025, and has pushed back production of electric pickups at its Orion, Michigan plant by 6 months into 2026.
• Mercedes-Benz has halted development of its MB.EA large platform in favor of further development of its existing EVA2 platform.
• Volkswagen (VW) has cancelled plans to move ID.3 production to Wolfsburg, Germany has delayed the launch of the ID.7 in North America, and is reportedly considering closing the all-electric Audi factory in Brussels.
• Ford has pushed back its plans for a full-size electric Sport Utility Vehicle (SUV) from 2025 to 2027, and has withdrawn its target of being full electric in Europe by 2030.

The slowdown in EV sales clearly impacts suppliers of EV-specific components, with these suppliers already reporting that OEMs are working their way through inventory stockpiles resulting from ambitious orders placed when EV adoption was expected to grow more rapidly, harming component sales in multiple EV technologies. The resultant slowdown in EV product development and rollout will impact the entire automotive supply chain, including developers of SDV technologies, which have had at the heart of their plans the assumption that all of their customer base would rapidly pivot to EV platforms for their lineup within the next 2 to 3 vehicle generations.

As Internal Combustion Engine (ICE) platforms gain a multi-year reprieve, SDV technology developers must consider how to respond, maximizing their market potential in ICE models in the short term, while still positioning their products for the ultimate EV context according to a revised timeline.

Electrification is a major driver for the SDV megatrend, particularly with respect to the Electrical/Electronic (E/E) evolution that forms the foundation for a vehicle whose value proposition to the consumer can be shaped, and re-shaped entirely through software. The ideal E/E architecture for SDVs is one of generalized, centralized compute, powerful enough to concurrently run a mixture of safety-critical and non-safety-critical applications, with headroom and flexibility for more features to be delivered throughout a long lifecycle.

This is a far cry from the current reality, which is one of multiple applications specific to Electronic Control Units (ECUs)—the result of an iterative and hardware-oriented design approach that incorporates a new feature through the addition of yet another ECU. Breaking from this iterative approach represents a major upheaval, and OEMs had come to regard electrification as the best opportunity to wipe the slate clean, developing a new vehicle platform to underpin their net-zero and SDV ambitions. Furthermore, the consolidation of the E/E architecture into zonal controllers, eliminating, in Rivian’s experience, 1.6 miles of wiring and 20 Kilograms (kg) of weight, would play an important role in extending the range of these EVs.

At the same time, the thermal engineering of EVs, typically including powerful cooling systems for the battery, benefits the SDV E/E architecture, potentially enabling the use of even higher performance compute.

The long-term trend is clear—Battery Electric Vehicles (BEVs) are the best candidate to enable net-zero transportation in the passenger vehicle segment, and SDV technology suppliers should continue to plan for a pure EV future. What has changed is the market need in the medium 3 to 5 year time period. The decline of ICE platforms is set to be more carefully managed, and not only in the mass market vehicle segment. As a result, there is a need for SDV features, even premium SDV features to be rolled out in ICE platforms, without a full pivot to zonal architectures, which will remain the preserve of EV platforms. As a result, System-on-Chip (SoC) manufacturers should consider adding a further generation of domain controllers to their product plans, which provide the performance and headroom necessary to deliver differentiating and software-driven features over a number of years, but which can more easily coexist with ECUs in today’s ICE platform topologies.

Energy efficiency should continue to be focus area for SoCs, but suppliers should instead emphasize the advantages of integration with respect to heat dissipation, rather than EV range.