Maitê Bezerra of Wards Intelligence

0:00 Introduction to The Garage Podcast

Today in The Garage, we’re recording live from the COVESA all-member meeting in Berlin, Germany with Ward’s Intelligence. Let’s go! Welcome to The Garage. I’m John Heinlein, Chief Marketing Officer with Sonatus.

We’re recording live at the COVESA all-member meeting in Berlin, Germany. My guest today is Maitê Bezerra, senior principal analyst for software defined vehicle for Wards Intelligence, which is now part of Omdia. Maitê, welcome to The Garage. Thank you for having me.

0:39 Introducing Maitê Bezerra

Nice to see you. And, you know, we always start by getting to know our guests a little bit, so I wanna give you a chance to tell us about you and your background for a minute. So, John, I am an analyst looking at software defined vehicles. So my life, no my job, is actually trying to understand this transition in the automotive industry.

But before looking at software defined vehicles specifically, I looked at all the automotive tech. And before that, I was an academic. We’re thrilled to have you. Thank you for joining us again.

And usually, we ask our guests to tell us a fun fact about them, but I have a special fun fact to share on both of our behalfs. You have the privilege of being the first guest to be on The Garage podcast for the second time. Ah, that’s brilliant. You’re the first one.

And so we have a special surprise for you, which is, we have, present it’s the the Garage podcast mug that we’ll give to all of our guests, but you’re the first recipient as our second it’s our first ever second time guest. Oh my god. That is an honor. I love it.

Thank you for being here.

1:36 Overview of the Annual SDV Survey

But we’re we’re so plea pleased to to talk with you today. And you and I just came off stage here at the COVESA all-member meeting where we’re talking about the annual SDV survey that you carried out, and this year was sponsored by Sonatus. And, we wanted to share a kind of a preview of those conclusions today to our podcast listeners.

SDV is such a, as we said, broad topic. There’s so many parts to it, and I I think you and I both learned a lot with this survey. So can you introduce the survey? You’ve been doing it for several years.

And talk about what the goals and what we what we did. Sure. So the survey in itself, it’s something that Warts Intelligence has been doing for years. Because the idea is really to understand the transition that the automotive industry is going, but also how things are changing.

Right? Because we know this is an incremental change. So it’s really interesting to see the new trends and the new aspects that we address and that we find every year. So this survey is, usually a survey that we deployed in North America, some countries in Europe.

But now with the support of Sonatus, I’m really, really happy about this. We were able to expand it to seven countries. So now we have, US, Canada, UK, France, Germany, Japan, and China. And this is an industry survey.

So we deployed the survey to automakers, to to tier one suppliers, tier two suppliers, including software and chipset as well, consultants, and trade associations. But all related to automotive, and most of our respondents are working, in some parts of the vehicle. Yeah. Fully seventy five percent of the respondents were right in the automotive ecosystem, not counting those that are, you know, consultants or may have a broader role.

So really and it’s not a consumer survey either. Really, people right in the thick of SDV and and doing the innovation, so that’s fantastic. And we also we’re we’re so excited to have that many countries because it’s such a worldwide effect. And one of the things we learned, and I’m sure we’re gonna talk about and both of us have our iPads because there’s so many data points in the survey.

We found so many regional differences in the in the respondents. So I think we can talk about that a little bit as well. Let’s do it. Alright.

3:44 Artificial Intelligence in Vehicles

So let’s jump in. Earlier at the COVESA all-member meeting, we were on a panel talking about artificial intelligence. And so let’s start by talking about some of the conclusions from AI. AI is has become more and more commonplace in vehicles.

And yet, as we mentioned on the pan as the panel earlier, what we’re finding and my observation is still it’s only very early days of AI. And what we were curious to find in the survey was what and the question we asked was, what are the most promising use cases of AI in vehicles? And you might think that things like chatbots and, you know, navigation, things like that, entertainment system would be the top. Actually, those were the bottom of the list.

The top applications of AI in vehicles that are the most promising were things that are largely not done yet. The top one was smart diagnostics. So exciting to see that. Another one was dynamic vehicle performance calibration, things like ongoing optimization, range optimization, vehicle driving and comfort personalization.

And number five number four was routing and navigation, so that’s kind of normal. And number five was predictive maintenance. So fully four of the top five applications of AI are things that I would say are broadly not done at all yet in vehicles in any kind of widespread application. Was that surprising to you?

Definitely. And also, I think one of the things that is surprising is to say, we often think about the infotainment when we think about AI. Most of the the applications that we see over here about the demos are in the infotainment. But I think what we what this is demonstrating is that to to create value in the car, you need to focus on things that are car centric, that cannot be replicated with your phone, that will not be competing with your phone.

Right? So this would drive value to the customer when they are driving the car. Right. And, you know, there’s a big you know, a lot of complexity in terms of is it CarPlay?

Is it Android? Is it in integrated in your vehicle? But that’s all, as you say, infotainment. How can we do something that’s much more integrated in the car?

And the survey plays that out that there’s a desire to really create value in the car. And one thing that I I find interesting is that if you look at these, use cases, so smart diagnosis, for example, or dynamic vehicle performance calibration, these are not simple AI applications. You actually need, a next generation EE architecture, where you have your sensors connected to the domains, and you also need edge AI models that are capable of deriving insights about the user, about the vehicle, the environment, the cloud, and then take action. That’s right.

So, I thought it was really interesting because we’re talking about complex AI cases that need AI, the edge, that need flexibility in an SDV architecture. Yeah. We started with this AI. It’s such a hot topic.

We started with this question, but I think it’s so illustrative of some of the trends, the broader trends in the in the thing. You and I met at CES this year, and we showed off, some more AI applications for with something we called AI Technician Builder. And it really shows off this exact idea of how do you link AI, and insight and into vehicle data in a way that’s fundamentally more value creating. So I think this this plays out that I think we’re on the right track with that.

That’s brilliant.

6:52 Customer Loyalty and Revenue Generation

Let’s go into some more things. One of the other, questions we asked was, what’s the best way to build customer loyalty and potentially revenue with SDVs? What were some of the trends you saw from that?

I think this is interesting because if you look at what the industry think will lead to loyalty and revenues, it’s automated driving. And this is the top application in nearly all regions. And I say nearly because, it doesn’t appear in Germany, not even among the top three. And in China, it’s second.

And I think China was really interesting because what they think would, drive value and revenues is their AI assistant. And just to, clarify, the AI assistant they’re talking about is not the AI assistant that we are used to having in our phones or in our smart home devices. This is an AI tool that is capable of, again, communicating with the vehicle functions Controlling more of the car. Controlling the car.

It’s something that goes way beyond the infotainment. Yeah. It’s something that will have access to your ADAS and autonomous driving systems. The car functionalities of the vehicle will will enable you to adapt the vehicle ambient, for example.

So it’s, it’s a very robust application, actually. You need very robust AI application to achieve that, which reflects the state where China is. That’s right. And then you mentioned, ADAS was there.

And then as you got into other regions, then it became more complicated. Things in Germany, they they feel that the driving experience is important. Things like personalization, vehicle ride customization was important in Germany, also in the UK. Personalization actually applied in in most regions as well, making the vehicle your own, which is, again, not just the infotainment, but how can I make it that it feels differently, you know, whether it’s your driving settings or performance or climate or many things like that, really personalizing it?

And things like, you know, even downloadable themes, we were saying in the US, peep people seeing in North America seem to really care about personalizing their vehicle, whether it’s lighting or themes or maybe their favorite sports teams or whatever. Great. And I think, one important conclusion to drive here is we are not gonna reach a point in which a single application will be the most valuable everywhere. Every region has different preferences.

And I think the important point for the OEM is first to find out what these preferences are, but also have the flexibility in their vehicle platform and, of course, in their organizational processes should be able to address these different preferences. That’s a great conclusion. And, you know, Sonatus, as we’re saying and our big theme this year is that we feel SDVs are a platform for innovation. And it’s exactly that idea.

It’s not one thing. It’s not make the IVI smarter. It’s not just make ADAS smarter, but it’s a range of different things. And even as we’ve said before, we don’t always know, when a new application is gonna come out.

We need the infrastructure of the car to be flexible enough to adapt to something that comes tomorrow that is compelling, and we don’t obsolete our vehicles, and we don’t fundamentally create disadvantages. Precisely. That’s great.

10:03 Highest value applications of Vehicle Data

Another thing we asked about was vehicle data, and we asked customers what were the highest value applications for vehicle data.

The the top answer we saw across almost across most regions was, vehicle data monetization. And and that might make sense, and I think there’s there’s a continuous, journey in the industry to say, how do we provide, value creation, perhaps revenue services? You just finished a panel a minute ago looking into that as well. But what was also interesting was right below there, the answers differed a lot regionally.

And I think that that suggests that there’s no single way people are looking to monetize data, but rather they’re looking for a range of things which may vary regionally. What were some of the trends you saw? Well, as you say, they’re looking for monetization. So I I would like to link this to the main challenges because this was another question that we had in the survey.

So what are the main challenges you were finding through to scale SDVs? And, if you look at it, by far, it’s justifying return of investment. It’s justifying the cost. It’s optimizing costs, and finding business cases.

So, it’s not surprising, I think, that what all OEMs want to do is to monetize the vehicle data. Right? But as you say, and we heard this in the discussions, at COVESA now, is it still difficult to find out, how to make money? We we still haven’t found a way to actually make the vehicles extremely profitable.

The OEMs are still struggling to find what will be this application and the means for it. Again, it’s it’s something that having the architecture and having the flexibility and understanding the customers, they will find in the future. In terms of the regional preferences, I think one thing that is interesting is in China that they say that data driven product development and improvements is one of the most, high value vehicle data applications. Kind of a feedback loop of improvement.

Exactly, exactly. And it shows that the other regions are still a bit behind in terms of this. But China really understands that you need to understand the vehicle in your customers to evolve your product. That’s right.

Very exciting and very interesting. Another one that I thought was interesting is energy consumption and efficiency optimization. We mentioned a minute ago in terms of AI that this that one area of feedback about tuning the vehicle, I know a number of OEMs have said they’ve challenged their teams to provide ongoing optimizations over time so that especially battery electric vehicles particularly can improve over time as maybe the battery fades a little bit over lifetime so that they can maintain a common experience for their customers. So you’re seeing that in a number of regions was interested in ongoing energy optimization.

I like this. I I think it’s very, very important, for the cars. Because today, one of the problems we have, even with navigation. Right?

Because navigation is, as we saw, one of the areas that we’re going to see value, in in the vehicle. But if you don’t have access to real time vehicle data, if you don’t have access to, the state of the driver and the state of the passengers, how many drive how many passengers you have in the car, and you don’t have, you know, cloud data, to understand the the road conditions and what they’re going to face. Your estimation of range is not going to be accurate. And this, of course, would lead to a bad user experience.

So, of course, SDV has a lot to offer in this area. That’s great. I mean, another example is is battery algorithms. The, you know, battery management systems, you know, while we think of that as a solved technology, the reality is that chemistry and the technology is evolving so fast as we’re learning more things, and I fully expect those algorithms are going to change.

We want to make sure vehicles are upgradable for many reasons, not just the the car the person-facing things, but also the infrastructure inside. So then we talked a lot about, a lot of infrastructural things, and and there were so many questions in the survey. We can’t get to them all. But this was one that stood out to both of us, open source.

14:01 Open Source Operating Systems

What did you find? And also start by telling us how this year’s answer compared to last year. Well, I love this one, because I think open source is really going to bring, you know, a lot of optimizations, to to the industry. So last year, we asked, what the industry thought about using Linux, in safety domains, okay, to make it clear, safety domains.

And the answer was twelve percent of the respondents…

Last year? Last year. Twelve percent of the respondents were, would consider that. Now we are asking, in 2030, what do you think would be the leading OS in safety systems?

Leading OS in two thousand and thirty. Leading OS. Fourth position, Linux. And thirty eight percent of OEMs think Linux will be used for safety.

I mean, this is a drastic change. I think it has been, of course, motivated by the announcements of companies such as Elektrobit and Red Hat. They’re putting a lot of effort in bringing, Linux into, safety domains. But the industry is clearly ready.

It seems that they do have the appetite for open source now. Yeah. Linux, Linux is such an incredible story. I I I think I told you that.

I I worked with Linus Torvalds many years ago in my previous company. And so to see at that time when it got adopted into enterprise applications, which was revolutionary at that time. But who thought that you could trust Linux with enterprise applications? And I think it’s it’s growing, and it’s only continuing to mature even into safety applications.

Still a lot more to go, but but great progress, I think, is exciting to see. Yes. And, you know, just sorry, because I still think this is an amazing story. It’s brilliant.

Because, when the survey was deployed, we we still didn’t have, announcements saying Linux, it’s certified. So this shows an appetite before we even have full solutions out there. I mean, we do have a few solutions, but not necessarily just certified the Linux in itself. So it’s, I think this is amazing.

Very exciting. Yes. Very exciting. Another thing we we looked at, was the time horizon of deployment of various technologies, and there’s many, many slides here which we’ll share.

We’ll talk about that in a little bit of how people can get more access to that. But let’s let’s look at some of the trends we saw. And the first one is AI. We talked earlier about the enthusiasm about AI, albeit in the future, and the data played that out.

We saw that, AI based applications for ADAS and AV, which, of course, you know, there’s some amount of, autonomous driving and some amount of driver assistance in many cars today, certainly many new cars. You saw that, the expectation is that the predominant vehicles will be deployed by twenty six, 2026, 2027 will have AI deployed in ADAS, AV, and that’s probably not surprising. But what we found was in areas not ADAS and AV, the horizon was much later, more like 2028-2029 most regions felt like AI would be deployed in non ADAS things. And then we were talking about this earlier.

In in parts of the organization, not the vehicle, but in AI development inside the OEMs and inside the tier ones, more, pervasive deployment of AI was much further out even into 2030-2031 before they really expected AI processes. Tell me about your your observations on that. Well, I honestly I get a bit worried about these results. I mean, I think this is a clear reflection of the industry today, quite frankly, looking at how the industry is moving.

But, seeing, the AI in organizational processes, something that is going to be, deployed so late. And even when we asked in our question on how do you define an SDV, right, the enabling capabilities, or AI organizational processes was really at the bottom. And this worries me because when we we talk about the main obstacles to SDV adoption, what we hear now is that it’s the organizational processes, it’s the culture, it’s the silos. Enough talents to handle it.

18:05 Talent Retention Challenges in the Industry

Exactly. And not only enough talents. I think one of the things we even found this, to be a problem, especially in Germany, in our survey, is that they can bring talent, but they can’t retain the talent because they don’t have tool chains for these people to work. They don’t have the environment for these people to work.

So there’s no talent retention as well. We saw we saw in the past years a lot of talent coming from the big tech to the OEMs, and we also saw a lot of them leaving as well. That’s right. That’s right.

So I think it’s a it’s an opportunity, but it’s also a concern that, the automotive landscape has a ways to go. Yes. To really make AI pervasive across them. What are some other, trends you saw?

18:46 Business and Organizational Innovations

Well, then we have the the business and organizational innovation. And I think this is, one that is very interesting because, when we look at, the the capabilities that will be deployed earliest, we have feedback loop. But then we have a lot of OEMs saying not only OEMs, the whole industry is saying that this will be deployed by 2027. Whereas in China, most of the respondents says that it’s already deployed.

Right. So I think this this shows again why they are so advanced. Right? Right. And after that, we have new business models, something that is expected to be deployed around ’27.

My honest opinion, I think, the OEMs, when they think about business models, they still have somewhat narrow view. Thank you. Yes. It’s like, oh, we’re going to charge subscriptions.

Whereas I was just having a conversation with an OEM right now, and we need to start talking about total cost of ownership. Right. We don’t hear people talking about the costs of SDVs after they are on the roads. Right.

19:53 Cybersecurity in vehicles

Because they’re used to having the cost to manufacture the car and sell this to the customers, and it’s over. Right. But now you have cybersecurity. Right.

Now you need to maintain your car safe. You need to maintain your car secure, and you need to maintain your, user experience fresh. So that costs. And and, you know, we we’ve talked about how, a lot of people think that vehicles are smartphone on wheels, and and we I think you and I agree that that’s a terrible analogy.

But one of the things I observe about the smartphone market is the device itself is a small portion of the value of the experience. It’s the additional services that get added. It’s the upgradeability. It’s the app store, which has created a massive, value creation.

And I think the OEMs are still looking for that, and I think as an industry, we’re trying to provide the infrastructure that lets them do that. And and there’s great progress, and you’re hearing a lot of, great examples here at the panels in in this session, but there’s still ways to go. Yes. Definitely.

20:49 Integration with IoT and Smart Cities

But there is progress. Yeah. And this this is a a major point. I think after that, we see the integration with the IoT and ecosystem, the IoT ecosystem and smart cities.

And It’s very late. Very late. Yes. Yeah. I mean, smart cities is such a is such a great it’s like a windmill on the hill.

Everyone is saying that it’ll come. But in many, many geographies, it’s very challenging. Yeah. Even even in China where Asia Pacific where you might have thought it would be coming a lot sooner, and generally speaking, a lot of those kinds of technologies come sooner.

Even there, it was seen as further out. Yes. That that’s true. And also the the collaborative organization and structures, another thing that with the the survey results show that the OEMs will start deploying by ’28, 2028 onwards, that should start sooner.

21:44 Over-the-Air Updates as a Key Trend

Let’s talk about OTA. That was another huge trend we saw. All all different parts of OTA and software updates, which is so important. What are some of the things that stood out to you?

So this is really interesting. So if you compare it to last year, the the respondents said that OTA updates will be, would be implemented between 2025-2027. Now most of the respondents say it’s already implemented. Right?

So this is a major shift, which, yes, we we are seeing the OEMs advancing on this, pretty quickly. But I think even though that’s true, and we’ve talked with this many times, is the observation is that even though there is OTA in vehicles, it’s often only updating a portion of the vehicle. Yes. So the opportunity is still there to update more parts of the vehicle, than than is typically done today.

So I think they would almost be maybe next year, we’ll ask another question about which portion of your vehicle is upgradable. Definitely. Yes. But but then we have the OTA upgrades Yeah.

Which is a question that we asked as well. And sorry. I have to look at my tablet. It’s says twenty twenty seven.

Right? So we see the OEMs, looking to deploy the OTA updates. And then, of course, we should ask which part of which portion of the the vehicle. I think it’s more infotainment, but it’s still yeah.

We are seeing we are seeing advancements in there. And then one we also asked about, things like virtual development, and, and digital twins. And I was surprised to find that the horizon for that was a little later than I expected. And I think virtual development is a huge opportunity.

23:16 Potential of Virtual Development

A lot of organizations, Elektrobit is focusing on that, many others are focusing on that. It’s still very much in front of us. And but everyone realizes that can has the potential to speed design cycles and speed up the timeline, but still in front of us. Yes.

Well, it might be good news. Last year, they said 2030 This year, we expect [2029]. So maybe we’re gonna see the the timeline. I think that’s a really great point.

I think if we pull back and look at a macro level, all of the trends here suggest, an acceleration of SDV. It suggests a realization that SDV, which was perhaps buzzwordy a few years ago, there’s some real, concept, there’s some real value there, across the regions. So I think that’s the one huge positive takeaway. I completely agree.

24:02 Centralized Vehicle Data Management Challenges

And it’s it’s interesting because there was only one one technology that we saw the timeline increasing, and that was, interestingly enough, centralised vehicle data management. And that’s funny because I think it’s that there was a perception that was much simpler than it actually is. I think there is now the realisation that what they thought was centralised is actually very siloed. Right.

That the departments that really needs the the data don’t really have access to it, so it’s gonna take longer to. Yeah. We’re we’re here at COVESA. One of the key focuses of COVESA is, vehicle data.

They have a specification called VSS that we we participate in and others. That has the potential to help some of those problems, and help to standardize, but, it’s still still some ways to go. Yeah. Definitely.

24:48 Upcoming White paper Publication

Well, Maitê, we could talk for hours and hours about this. Let’s tell our our viewers, how can they hear more about this? What are some of the other things coming up where they can learn more about the survey? Well, the results of the survey are going to be in a white paper that will be published very soon, and you can access.

We are also going to discuss these results at AutoTech in Detroit, and we have The Garage, of course. That’s true. We’ll be recording there as well. So I look forward to seeing you in Detroit, and, look for this white paper soon.

I know you’ll have it on your site. You can come to the Sonatus site as well to find it. And there’s just so many interesting graphs. We’ve just given you just barely the surface of this.

We we learned a lot from it, and I’m sure our guests will find a lot as well.

25:30 Conclusion

Thank you so much for joining us again. Thank you, and thank you for my gift. You’re welcome.

You’re welcome. Thank you for joining us as well. If you like what you’re seeing in The Garage, please like and subscribe so you can see more episodes like this. And I wanna also give a special thanks again to COVESA for letting [us]

film at the COVESA all-member meeting here in Berlin. We look forward forward to seeing you on another episode of The Garage again very soon.