Summary
International Business Machines Corp (IBM, Financial) has released its 'Automotive 2035' study, revealing significant shifts in the automotive industry towards electrification and software-defined vehicles. Published on December 12, 2024, the study indicates that by 2035, 80% of new cars will feature some form of electrification, and a majority of vehicles will be software-defined and AI-powered. The research, based on interviews with 1,230 senior executives from the automotive sector, underscores the industry's move from traditional car sales to a recurring revenue model focused on digital services.
Positive Aspects
- 80% of new cars are expected to have electrified powertrains by 2035.
- 74% of executives believe vehicles will be software-defined and AI-powered by 2035.
- Shift towards a recurring revenue model for digital services and products.
- R&D budgets for software and digital developments are expected to nearly triple by 2035.
Negative Aspects
- Current vehicle architecture is unsustainable for the software-defined vehicle era.
- 77% of executives face challenges due to a lack of software development tools and methodologies.
- 74% report difficulties in transitioning from a mechanical-driven to a software-driven product development culture.
Financial Analyst Perspective
From a financial standpoint, IBM's study highlights a transformative period for the automotive industry, which could lead to new revenue streams through digital services. The shift to software-defined vehicles (SDVs) suggests potential for increased profitability as automakers capitalize on subscription-based models. However, the transition requires significant investment in R&D and overcoming technical challenges, which could impact short-term financial performance. Investors should monitor how companies manage these transitions and their ability to innovate in the software domain.
Market Research Analyst Perspective
The 'Automotive 2035' study by IBM provides critical insights into the future of the automotive market. The anticipated shift towards electrification and software-defined vehicles indicates a major transformation in consumer expectations and industry standards. Market players need to adapt quickly to remain competitive, focusing on digital capabilities and personalized user experiences. The study suggests a growing demand for AI and cloud-based solutions, presenting opportunities for tech companies to collaborate with automakers in developing innovative vehicle features.
FAQ
Q: What percentage of new cars are expected to be electrified by 2035?
A: 80% of new cars are expected to have some form of electrification by 2035.
Q: What is the expected role of software in future vehicles?
A: 74% of executives believe vehicles will be software-defined and AI-powered by 2035.
Q: What challenges are automakers facing in transitioning to software-defined vehicles?
A: Automakers face challenges such as a lack of software development tools, methodologies, and a strong mechanical-driven culture that hinders the transition to software-driven product development.
Read the original press release here.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
