Stellantis develops its software strategy
Many automakers have announced ambitious plans to add software platforms and expertise to their future automotive product portfolios – and some are well on their way. Many are following in the wake of Tesla, the benchmark for high-performance software platforms.
In early December, Stellantis released its strategy for moving to a software-defined platform for all of its makes and models.
Stellantis released a lot of information about its overall strategy at its Software Day event.
Stellantis is the name of the company that merged Fiat-Chrysler Automobiles and PSA Group. The merger brings together 14 automotive brands. Chrysler, Dodge, Jeep and Ram represent its strongest American brands, with Citroën, Fiat, Opel and Peugeot in Europe. The table on the right summarizes the automaker’s software strategy.
Stellantis’ software strategy represents transformational change widely planned as a big milestone, with first results arriving in 2024. Other automakers are moving to software-centric platforms in incremental steps that take much longer to implement. implemented. While ambitious, the potential benefits are worth the risk, assuming minor execution issues. The development of the Stellantis software story is therefore worth watching.
A transformation strategy is needed to manage the software requirements of 14 distinct brands – perhaps the most diverse brands of any automotive OEM – in price ranges and vehicle segments ranging from consumer vehicles to commercial vehicles . This software complexity will generate significant cost savings and revenue opportunities once the software platform transformation is complete. Risk is a significant development cost over the next four to five years.
Stellantis estimates that 80% of software platforms can be shared between brands, with 20% requiring brand-specific software, mostly related to user interfaces.
A key goal of software is to decouple software from hardware platforms. Hardware-software decoupling has become standard procedure due to its many advantages. The final benefit is the ability to trade chips when supply chains are disrupted.
Stellantis clearly aims to hold a significant share of its software value chain for all of its brands. Almost all automotive OEMs are on this path, adding software expertise to their core competencies.
An important factor in creating value is the ability to perform over-the-air (OTA) software updates. Stellantis performed over 6 million OTA updates in 2021, most of them for Chrysler brands.
He also sees to using the software as a brand differentiator. It’s easy to say but harder to accomplish, especially since most automotive OEMs use similar tactics.
Platform goals include achieving long-term cost savings over current dedicated ECU architectures for all Stellantis brands and select models. This will undoubtedly happen due to the economics of software platforms, as development costs are covered by sales and profits on new sales are high.
Stellantis predicts that the addressable automotive software market will exceed €200 billion in 2030. The company has also released some software revenue targets along with its current software revenue. (The 2030 goals are summarized in the table.)
The current software turnover amounts to 400 million euros for 400,000 subscribers, or an average of 1,000 euros per subscriber. Stellantis has 12 million monetizable vehicles. Stellantis said its connected cars will only be viable software clients within the first five years of use. The current average revenue per monetizable vehicle is only €33.
It’s telling that Stellantis understands the dynamics of the automotive software revenue market and is realistic about how much of its connected car will drive software revenue.
For 2030, Stellantis predicts that monetizable vehicles will increase to 34 million. Estimates of subscribed customers by 2030 were not available. Incremental software revenue for 2030 is expected to reach around €20 billion. This equates to an average revenue per monetizable vehicle of €588, almost 17 times more than the current total.
Growth is expected to come from an increased service portfolio, expanded OTA and other factors.
Stellantis lists six business segments that provide software revenue:
- Software Services and Subscriptions, including traditional telematics services, of which several Stellantis brands are available. Many other connectivity services are emerging and will become sources of revenue.
- On-demand software features, selectively used when needed. Examples include audio, Wi-Fi, and streaming music. Stellantis also lists Amazon’s Fire TV. A growing list of revenue-sharing deals with major entertainment and tech companies is also expected.
- Data as a Service. Stellantis cites usage-based insurance as an example, which will be rolled out in 2022. Stellantis could use Otonomo to generate revenue from data services.
- Fleet services. Stellantis is the leader in European commercial fleets and a major player in the commercial fleet sector in North America.
- Vehicle prices and resale value. This is an indirect impact. Most customers quickly realize that updated features and functions such as OTA, ADAS, infotainment and connectivity increase resale value. It is therefore a generation factor
- Conquests, service retention and cross-selling. These are other indirect factors for increasing software revenue. Convenience and cost savings are a must. Stellantis claims a more than 10 point increase in service retention.
Stellantis is developing three technology platforms as part of its software strategy. STLA Brain, the core technology platform, is a new hardware and software architecture launched in 2024 on Stellantis’ four battery electric platforms.
The Stellantis architecture, pictured above, is a layered software and hardware framework that includes mobile and cloud-based device connections.
Software layers include applications on top and software platforms such as middleware, operating system and “Safety RT OS”.
Stellantis didn’t provide any definition of its function, but I guess the “RT” in Safety RT OS stands for “real time”. Is it a meta-OS like the emergence of Apex.AI?
Stellantis also stated that AI technology is part of its three technology platforms, but many more details are needed to understand this part of its software strategy. The company uses a service-oriented architecture in its STLA Brain platform. Microservices were also mentioned.
The second technology platform is the STLA SmartCockpit, offering infotainment capabilities ranging from entertainment and navigation to voice assistance, e-commerce and payment services. The company partners with Foxconn for the development of the platform.
Stellantis says SmartCockpit should transform a vehicle into a personalized living space. The technology platform will interact with the vehicle based on a combination of sensors such as touch, voice, gaze and gesture.
Finally, there is STLA Auto Drive, implemented in two phases: ADAS and autonomous vehicles. Stellantis already has ADAS L1 and some L2 capabilities. ADAS capabilities will be regularly updated via OTA updates.
In December, Stellantis and Foxconn signed a non-binding memorandum of understanding to create a partnership that will design a family of semiconductors to support Stellantis and third-party customers.
The four families of chips will cover 80% of Stellantis’ semiconductor needs, upgrading its current design and production technology. The new chips will also reduce complexity and simplify its supply chain while increasing hardware platform flexibility and speed of innovation.
The agreement extends the companies’ collaboration beyond the May 2021 launch of their joint venture Mobile Drive for the development of smart cockpits.
In addition to its partnership with Foxconn, Stellantis works with BMW and Waymo.
The company is working with BMW on ADAS functions, focusing on L2+ and L3 capabilities. Stellantis has been working with BMW since 2018 through Fiat Chrysler. L3 capabilities will be available in the near future.
L4 and L4+ features are under development with Waymo. The Chrysler brand of Stellantis has worked with Waymo for more than five years, and the Chrysler Pacifica hybrid minivan has been and remains among Waymo’s leading autonomous vehicles. Waymo used the Pacifica for robotaxi trials in Phoenix and for delivering cargo to several locations.
In 2022, Stellantis and Waymo will use Stellantis utility vehicles for AV development.
At the end of the line
Stellantis’ software strategy spans its 14 brands. The overall plan looks solid, although much more information is needed for a detailed assessment. Revenue targets are ambitious, including around €20 billion ($22.5 billion) in additional annual software-related revenue by 2030 from 34 million vehicles.
These figures translate to an average of €588 (US$661) in software value per vehicle by 2030.
This article originally appeared on EE Times.