Lowering Vehicle Development Costs and Self-Improving Performance... Innovation Driven by SDV

Hyundai Motor SDV Division CEO Song Chang-hyun
"A Paradigm Shift in Development Beyond User Environment"
Development Costs Can Be Reduced by 20%

"Just as the advent of the iPhone completely changed the way phones are developed, the concept of Software-Defined Vehicles (SDV) represents a major transformation that applies software development methods to vehicle development. It not only enables rapid improvements in vehicle convenience features, driving performance, safety, and application (app) services but also defines brand identity."

Song Chang-hyun, CEO of Forty2Dot, presenting at the HMG Developers Conference last November. He is leading the SDV Division at Hyundai Motor Group.
[Photo by Yonhap News]

Song Chang-hyun, CEO of FortyTwoDot and head of Hyundai Motor Group's SDV division, recently defined SDV as a hot topic in the mobility industry. While there are changes from the user's perspective, such as the increasing importance of software in overall vehicle control including basic driving, it also means that manufacturers have started to focus more on software to develop cars in a completely different way than before.

Software in automobiles used to be a secondary concept. After developing hardware such as the vehicle body, various software was installed accordingly. Various vehicle control functions were developed centered on electronic control units (ECU·MCU). It was common for controllers to operate by exchanging signals with each other.

"SW is a Game Changer in the Automotive Landscape"

However, going forward, we will enter an era of parallel growth of software and hardware. With the advancement of electrification and autonomous driving technologies, vehicle software logic has begun to become more complex. To control this efficiently, it is better to design hardware and software independently and develop each separately. This independent structure is more familiar among software developers.

Strengthening software can shorten the vehicle design, manufacturing, and mass production processes, as well as reduce development costs by more than 20%. Especially, even after selling a vehicle once, features and convenience options can be continuously improved through over-the-air updates (OTA) and connectivity technologies. Some automakers have already introduced paid subscription services that allow additional use of features such as increasing rear-wheel steering angles or heated seats.

As autonomous driving technology becomes widespread, the in-vehicle infotainment market is also expected to grow significantly. This is why SDV is attracting attention. In particular, American company Tesla installed a large touchscreen in its first 4-door sedan, the ‘Model S,’ and equipped it with in-vehicle lighting and temperature controls, video games, and various horn sounds. Walter Isaacson, in his biography of Elon Musk, described Tesla as "a game changer that altered the automotive industry's landscape." Adam Jonas, an investment analyst at Morgan Stanley, said, "Tesla could generate more revenue from software-related subscription sales than from vehicle sales within the next 10 years."

The SDV proposed by Hyundai Motor Group aims to decouple hardware and software from the vehicle development process, creating an independent structure.
[Photo by Hyundai Motor Group]

90% SDV Adoption Rate in 5 Years

Electric vehicle manufacturers such as China’s emerging companies Xiaopeng, Li Auto, and Nio, often called the ‘Tesla of the continent,’ have long focused on software and developed their own operating systems (OS). Traditional giants like Volkswagen and Mercedes-Benz are also developing their own OS. Some manufacturers, like China’s Geely, Stellantis, and Jaguar Land Rover, actively adopt external OS.

Major automakers, including Hyundai Motor, have announced transitions to SDV around this year and next. According to data analyzed by Deloitte, the SDV adoption rate is expected to rise from about 2.4% in 2021 to over 90% by 2029. Software is expected to become the mainstream in future automobile development.

Kim Tae-hwan, leader at Deloitte Korea, explained, "When making decisions related to product development and management, flexibility, scalability, and modularization must be considered. It is time to invest in developing software architecture and in education and talent acquisition." CEO Song said, "We need to change the existing hardware-centric vehicle structure to a software-centric architecture where hardware and software are separated."

This content was produced with the assistance of AI translation services.