Will Software be the Future Differentiator of Cars?

People used to shop for cars based on brand, style, mileage, and reliability. But these days, technology features are at the top of the list for many consumers when looking for a new vehicle. From sophisticated infotainment systems to advanced driver assistance systems (ADAS), software has become one of the primary driving forces when purchasing a car.

BI Intelligence projects that 82% of all cars shipped in 2021 will be connected vehicles, marking a compound annual growth rate of 35% from 2016. The rapid rise of technologically advanced vehicles creates enormous opportunities for car manufacturers and software developers in the race to bring the latest tech features to consumers, with BI Intelligence predicting that connected cars will generate an astounding $8.1 trillion in revenue between 2015 and 2020.

Thanks to the Internet of Things, connected car capabilities have skyrocketed. It’s now commonplace for vehicles to have fully-integrated navigation tools and other apps, such as those used for listening to music and finding the cheapest nearby gas station. And this is just the beginning. Today’s ADAS offer a range of automated capabilities that make driving both safer and more convenient, including adaptive cruise control, lane departure warnings, and traction control. From Tesla’s controversial Autopilot system to the more cautious offerings available from other manufacturers, the race toward fully-autonomous cars is definitely on.

An increasing number of consumers consider the latest technology to be an essential part of their decision-making process when shopping for a new vehicle. A recent study by Autotrader found that 70% of younger millennials cite technology and infotainment features as “must-haves” when purchasing a car. And although older consumers generally consider technology to be less important, a significant portion of this demographic also seeks new tech offerings in vehicles during the shopping process.

Many experts believe that fully-autonomous vehicles will be commercially available as soon as 2020, with advanced driver assistance systems paving the way to prepare consumers and regulators for this eventual reality on our roads. Global consulting firm McKinsey & Company predicts that as many as 15% of new cars sold in 2030 will be fully autonomous, while others expect that number to be even higher.

There’s no question that vehicle software has become an essential part of the decision-buying process for a large percentage of consumers, and it’s clear that this will only increase over time, as advancements in car technology rapidly evolve. However, as much as vehicle expectations have changed, some things remain the same — it still has to be the right color.

Written by Igor Ilunin, head of IoT at DataArt.