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The report found that automotive organisations are increasingly seeking partnerships, with nearly two in five collaborating with big tech and hyperscalers for software, cloud, and data capabilities. The automotive industry is increasingly centring software in its business strategy and operations, according to a new report by the Capgemini Research Institute. The report, titled The software-driven mobility era: Beyond vehicles, found that 92 per cent of automotive organisations expect every automotive company to transition into a software company to support Software Defined Vehicles (SDVs) and software-driven mobility (SDM) services. More than eight in 10 respondents said software-defined products and services, not just the physical vehicle, will become their core value proposition.
Despite strong ambitions, less than half of automotive organisations have scaled their SDM initiatives in 2025. The report found that 34 per cent have partially scaled at least one SDM use case, while only 14 per cent have achieved full-scale deployment. The survey also highlighted that only one in 10 original equipment manufacturers (OEMs) has made progress in decoupling hardware and software, with just over a quarter actively piloting new approaches.
Laurence Noël, Global Head of Automotive at Capgemini, said, “For decades, automotive leadership was driven by hardware but today consumers demand connected, digitally enhanced experiences. This calls for adoption of a software first approach across the value chain to enable holistic mobility solutions. Forward–looking automotive organisations are already treating software as their core product and leveraging key partnerships to expand their ecosystem. While the ambition is high, it requires a complete organisational overhaul. Those that align their talent, platforms, and partnerships, while fostering trust and delivering an elevated customer experience, will stay ahead of the curve.”
Partnerships and AI Integration
The report found that automotive organisations are increasingly seeking partnerships, with nearly two in five collaborating with big tech and hyperscalers for software, cloud, and data capabilities. While few have established joint ventures, a third plan to do so within three years. Up to 84 per cent are exploring new supplier markets, and nearly 70 per cent are increasing in-house development of key components. Organisations are also adjusting supply chains to explore new sourcing markets, including India, Southeast Asia, and Eastern Europe.
Software-defined products and mobility services are expected to become significant revenue contributors for OEMs. Their share of total revenue is projected to double, contributing to over 50 per cent by 2035.
AI is also becoming integral to automotive software. According to the report, 85 per cent of organisations said AI is embedded in software features and functions, including in-vehicle experiences, safety, and cybersecurity. Over three-quarters (77 per cent) said AI integration into software development, in-vehicle functions, and mobility services is a critical competitive advantage. Most organisations consider AI integration for Advanced Driver Assistance Systems (ADAS) and autonomous driving as significant in their software-driven strategy.
Organisational changes needed
The survey highlighted that 86 per cent of organisations believe SDM strategy requires changes to the organisational model, processes, and skill sets. Challenges include software engineering, compliance, safety, cybersecurity, leadership, and talent acquisition.
The report is based on a June 2025 survey of 600 executives from 200 established automotive organisations, including OEMs, suppliers, mobility service providers, and digital natives across North America, Europe, and APAC.
- Published On Sep 9, 2025 at 12:25 PM IST
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