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In-house software development for software-defined vehicles: major changes ahead in automotive value chains?

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  • Andrea Szalavetz

Abstract

In response to the emergence of software-defined vehicles, incumbent OEMs announced software-focused strategies. Seeking to move software development in-house, they invested in building the requisite capabilities. This paper develops propositions about whether and how OEMs' software-focused strategies might reshape the division of labour and value in automotive value chains. We propose that the evolution of industry architecture is shaped not only by incumbents' shifting transactional choices regarding how they access the new technology inputs. There are several - occasionally counteracting - forces at play, generated by the efforts, interactions, and strategic pivots of heterogeneous actors. We argue that against predictions of disruptive change, the relative stability of industry architecture is also a conceivable scenario. Although incumbent OEMs' software-related strategic initiatives were only partially successful in terms of financial performance, their investments in the internalisation of various software-defined functions will prevent excessive value migration and the commoditisation of their core offerings.

Suggested Citation

  • Andrea Szalavetz, 2024. "In-house software development for software-defined vehicles: major changes ahead in automotive value chains?," International Journal of Automotive Technology and Management, Inderscience Enterprises Ltd, vol. 24(5), pages 22-39.
    • Handle: RePEc:ids:ijatma:v:24:y:2024:i:5:p:22-39
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