STUTTGART (Reuters) – The need for advanced safety features in automated and autonomous cars will see vehicle software revenues more than quadruple to $1.2 trillion a year by 2030, the head of auto parts supplier Continental said on Tuesday.
FILE PHOTO: Elmar Degenhart, CEO of German tyre company Continental poses for the media before the annual news conference in Hanover, Germany March 7, 2019. REUTERS/Fabian Bimmer/File Photo
Ensuring an autonomous car can avoid an accident will require it to process signals from radar, camera and laser sensors, leading to a massive increase in demand for sophisticated software, Elmar Degenhart, chief executive of Continental, one of the world’s biggest auto parts’ suppliers, said.
“Software competence is mission critical for successful car companies but the industry lacks scale in this competence,” Degenhart told the Auto Motor und Sport industry congress in Stuttgart, Germany on Tuesday.
Vehicle software currently generates annual revenues of $280 billion a year, he said.
The revenue growth potential and scarcity of software development skills at traditional car manufacturers makes technology companies outside the auto industry well placed to gain a foothold in the industry.
“Car companies are good at validation and homologation and lack software development skills, while software companies have the opposite problem,” Degenhart said.
“The IT industry has always valued speed of development more than perfecting the product, while the auto industry has tended to veer toward perfecting a product over rushing it out.”
Their approaches would become more aligned as the two industries cooperate more, he said.
“The software and the auto industry will have to work more closely together to develop autonomous vehicles and this will lead to a change in approach on both sides.”
Separately Continental said it is sticking to plans to prepare for a potential listing its powertrain division on the stock market this year.
Reporting by Edward Taylor; Editing by Susan Fenton