You’re Not Driving a Car, You’re Driving a Smartphone

Today’s automobiles are computers on wheels.

They’re filled with digital displays. Software-controlled technology helps reduce crashes and on some models lets motorists take their hands off the wheel.

On more and more vehicles, problems can be fixed remotely using over-the-air (OTA) software updates. And OTA can deliver new vehicle features as well as stream entertainment.

In Detroit, the recognition that cars are becoming more like rolling smartphones has automakers raiding Silicon Valley for talent.

Former Apple executive Peter Stern is the latest in a string of Valley expats heading to the Motor City. As head of Ford Motor Co.’s Integrated Services unit, Stern will play a lead role in the development of software and related vehicle features — or what have become known as “software-defined vehicles.”

“This is transformational because the cornerstone of our Ford+ plan is creating incredible customer services and experiences enabled by great hardware and software,” Ford CEO Jim Farley said in a statement announcing Stern’s hiring earlier this week.

Ford previously hired Doug Field, an Apple and Tesla veteran, to lead its EV development.

Tesla has shown the potential benefits of software-defined vehicles. It has used over-the-air updates to boost the performance and range of its EVs. And it has fixed a number of recent recalls simply by remotely updating onboard software. It can even send features not in a vehicle at the time of purchase — such as the ability to play fart sounds while driving.

That’s potentially good news for automakers, as well as consumers.

Stellantis CEO Carlos Tavares told The Messenger earlier this year he foresees his Euro-American automaker generating over $22 billion in annual revenues by decade’s end from software and services.

GM CEO Mary Barra has estimated that motorists would be willing to spend an average $135 a month for software-related services and subscriptions — as well as supporting hardware.

Much of that optimism depends on getting self-driving software to market.

A number of manufacturers already offer semi-autonomous technologies like General Motors’ Super Cruise and Ford’s BlueCruise. They permit hands-free operation on thousands of miles of roadways under ideal conditions — though drivers must keep eyes on the road and be ready to retake control quickly.

In June, Mercedes-Benz got approval to launch its "Drive Pilot" system in California. In industry parlance, it’s the world’s first “Level 3” autonomous technology.

In lay terms, "Drive Pilot" permits a motorist to not only take hands off the wheel but shift focus away from the road. You can text and even watch videos on the infotainment screen. For now, the system is primarily good in traffic jams because it automatically disables at 40 mph.

Tesla is already selling its "full self-driving" system, which promises to be a more advanced version of its original Autopilot technology. Demand for FSD has been strong — encouraging Tesla to raise its price to $15,000 last year — even though it’s not yet fully functional.

CEO Elon Musk has suggested the technology could become a major profit center for Tesla.

Not everyone is convinced software services and subscriptions will live up to the hype. BMW faced significant pushback when it signaled interest in charging a subscription fee to use its vehicles’ seat heaters. It dropped that idea in the U.S. but is trying the approach in some global markets.

“Three-quarters of the consumers we surveyed said they would not pay a subscription for services and features in their next vehicle,” said Michelle Krebs, senior automotive analyst with Cox Automotive. “They want it all included in the upfront price.”

But with Americans increasingly willing to pay monthly fees for streaming video and other luxuries, other experts disagree.

“Consumers are welcoming to the idea of subscriptions because it gives them exposure to features or technology that they may not have had in the past,” said Yanina Mills, senior technical research analyst at S&P Global Mobility. 

In a July survey, S&P found 82% of motorists who experienced a free trial or had an existing vehicle subscription service said they would definitely or probably consider continuing to pay.

“But not all subscription-based upgrades are created equal,” S&P said in a summary of its findings. Paid safety and security upgrades are the most popular. Paying a subscription for features today’s cars already have is a clear turnoff, the study found.