The car of the future is not one that will remain unchanged over time. It is one that will adapt, improve, and offer more functionality as time progresses. It will integrate with the other gadgets in your life, offer increasingly automated driving and become ever more customized to your unique preferences. There have been several large paradigm shifts in the history of the automobile, and this one could be a permanent game-changer.
That is, if car companies can actually pull it off.
The new dividing line between the innovative and antiquated is software. Software is what makes a Rivian or Tesla feel so modern, and a Toyota or Mazda less so. It’s what allows cars to have over-the-air updates delivering notable improvements in your own garage. It allows seamless smartphone integration and even repair diagnostics without the need to enter a service shop.
Ten years ago, buyers wanted cars with the best fuel economy, safety features, and reliability. Today, they… well, they still want that stuff. But 10 years from now, software could become the deciding factor in most car purchases. They will ask questions like: How does this product interact with my devices? How will this product improve over time? Does this car offer autonomous features that learn and adapt? And most importantly, when will its technology become obsolete?
But not every automaker will be able to succeed in the world of software. So far, most of their attempts to become software companies have been marked with speed bumps at best or disastrous delays and C-suite turnover at worst.
“You need to be able to write from layer one of the silicon all the way up to the application layer of the car in order to control it properly," now-former Volvo CEO Jim Rowan told the UK's Autocar in a recent interview. "There are three companies in the world that have managed to do that: Tesla, Rivian and Volvo. There’s a lot of good car companies but none of them have figured it out. It’s a big deal—and freaking hard to get this done. But we’ve stuck at it.”
Rowan is correct. Long-term, failure in software may translate into the failure of the automaker itself. Building a good car is no longer enough. The car has turned into a consumer electronic device. But what does this mean for the automotive industry as a whole? And who will be the winners and losers?
Enter The Software-Defined Vehicle
Software-defined vehicle (noun) – A vehicle in which core functions like driver assistance, infotainment, and performance are primarily controlled by software rather than fixed hardware. These features can be updated, modified, or enhanced remotely via over-the-air software updates, allowing for continuous improvements and new capabilities over time.
Every modern car has some element of software, and has since the advent of electronic fuel injection in the 1980s. However, the degree to which the software affects the functionality and usability of the vehicle varies significantly. For instance, a 2007 Toyota Camry has electronic stability control (ESC), a feature where a computer reads sensor inputs to modulate braking.
But the Camry is just as much of a software-defined vehicle as a Casio F91W is a smartwatch. A true software-defined vehicle offers far more than isolated software-driven features. The entire vehicle is designed as a platform with software managing key functions.
Still, for much of automotive history, software played a minor role. It was limited to controlling isolated systems like stability control or basic infotainment systems. In other words, automakers implemented software, but it did not take center stage.
According to Rivian’s Director of Electrical Architecture, Kyle Lobo, an SDV encompasses two primary aspects.
“One is wanting to make sure that all of the controllers in the vehicle are updatable,” Lobo told InsideEVs. “And then the other part is vertical integration. So that's like making sure you have full control of the feature, the system development, the hardware and software implementations of that. That allows you to change things, and modify things more quickly.”
Tesla pioneered that approach, in part because it had to. Early on, Tesla engineers realized they lacked the off-the-shelf parts, software and features to make the EV they wanted, so they made them in-house. That spread to everything Tesla does, from its smartphone app to its charging network.
Since then, China’s automakers have taken that idea and run with it, and startups like Rivian are doing the same. Meanwhile, traditional automakers—who have typically used countless different third-party vendors for parts and software—are trying to get more vertically integrated too, with mixed results.
Rethinking The Automobile Itself
The original Model 3 never shipped with auto high-beams, wipers, voice control, nor functional heated rear seats. All of these features soon arrived via over-the-air updates. This approach streamlined production, reduced upfront costs, and enhanced the user experience long after purchase.
While automotive startups like Tesla, Rivian, and Lucid Motors have faced financial and production constraints, their lack of legacy baggage has been among their greatest asset. Without organizational inertia, entrenched supplier relationships, or sunk-cost-driven decision-making, they were empowered to rethink everything. They were given a clean sheet of paper and a diverse team of Silicon Valley designers, engineers, and software gurus to make magic happen.
A result of this systemwide mindset has been the introduction of the zonal architecture. Typical cars have dozens of onboard electronic control units (ECUs) used for various tasks like infotainment management, keyless entry, powertrain controlling, and more.
These get their jobs done, but they require lots of wiring and lack centralized cohesion. It’s like having a separate WiFi router in each room of a school for each individual device. Instead, why not just have one router in each room that accommodates everyone’s devices?
“So we'll see a shift from application-specific domains to more of a zonal architecture where each different area of the vehicle will have a zonal controller that will communicate to a central computer that will run the software-defined functions,” said Robert Day, the Director of Automotive Partnerships at ARM. For startups building highly-connected vehicles, streamlining the approach of ECU placement and design was somewhat of a no-brainer.
Reducing Complexities And Improving Efficiency
As Rivian increasingly becomes another leader in the software space,, it has embraced the concept of zonal architecture. “We looked at a clean sheet approach, which would be, let's place ECUs geographically, and then just have it connect to the thing that's most local,” Lobo said. “We have an East, we have a West, and we have a South {zone controller}. The West Zone controller, for example, connects everything on the driver's side of the car, so the accelerator pedals and the front suspension system.”
In total, Rivian uses just seven ECUs for the 2025 R1S SUV and R1T pickup. This number is down from 17 in the original R1S and R1T. Some modern luxury vehicles competing with Rivian’s offerings can contain as many as 150 ECUs. Even chopping out 10 ECUs made notable improvements inon weight and wiring requirements. “We've reduced the harness lengths by 1.6 miles in the car with the same feature set,” Lobo said. Rivian said that this, paired with the fewer ECUs, shaved 44 pounds off the weight of the vehicle. That means the cars cost less to make and operate more efficiently overall.
These improvements piqued the interest of Volkswagen Group, a company notorious for its issues with software. In 2020, Volkswagen launched a new software division called CARIAD. But it has since struggled, leading to the delays of several key vehicles including the Porsche Macan EV and Audi Q6 e-tron. This was even part of what cost Volkswagen’s previous CEO, Herbert Diess, his position at the company. The stakes could not be higher.
In November 2024, the two announced a joint venture called Rivian and VW Group Technology. Within this JV, Rivian will supply its software platform for future Volkswagen vehicles, like the upcoming ID.1. “We will be providing architectures to the Volkswagen Group vehicles,” Lobo told InsideEVs. “We’re really excited as it's like a really fun moment for us to spread the technology to other companies and have them benefit from it as well.”
Along with the ID.1 and other Volkswagen vehicles, Rivian plans on utilizing its zonal architecture as the basis for its own upcoming products too. “So now you're increasing the gamut of choices that you have, especially with the next generation of R2 and R3 coming in,” said Vivek Surya, Rivian’s Director of Software Product Management. “That increases the scope of customers that you can start bringing into the ecosystem, and also brings the industry to a new standard where there's an expectation from customers across the board on what a vehicle should be capable of.”
The Broader Implications of SDVs
For automakers, utilizing a software-defined platform allows for much more control of the user experience. There are now multiple areas in which the automaker can collect data to understand user behavior. At times, this access to data can be detrimental to the user. Consider Tesla.
In 2020, Tesla launched its own insurance program that adjusts rates based on driver behavior. Drivers are given a Safety Score, which can be affected by speeding, hard braking, aggressive cornering, tailgating, night driving, and more. Unless you want to pay through the nose, no longer are weekday nights reserved for carving canyons. The optimistic way to view this is that safe driving is rewarded through lower insurance rates. The pessimistic viewpoint would be an overreach of big tech.
But control can create an incredible experience for the user. This was part of Steve Jobs’ philosophy at Apple. Why are those products so elegant to use? In part, because Apple controls almost everything, from the software to the hardware. You can’t easily service Apple products on your own and they’re generally more expensive than competitors. But they offer fluid user interfaces and seamless connectivity in a package of hardware and software encased into an attractive aluminum shell.
You can see the downsides to that approach with cars as well. As our vehicles become more software-centric, more like the so-called “smartphones on wheels,” they may well get harder to service by an independent mechanic—or in your own garage. Long-term software support is also now an open question; look at the Fisker owners who had to fight for that after the company went bankrupt.
Think of an online video game, or even an older smartphone, that’s no longer supported by its manufacturer. What happens if that sort of thing happens to your vehicle? You don’t need a game or a phone to get you to work, or your kids to school on time. Eventually, we may need ways to guarantee that owners will be taken care of long-term when they opt for these cars.
What’s Next
The automobile is evolving into a tech appliance.
But unlike previous automotive developments, this revolution isn’t being led by legacy automakers. It’s being driven by the fresh-faced underdogs. “There are few companies able to do that {software}, and we have a privileged spot where we are able to make those updates and make that meaningful for customers,” Surya told InsideEVs. Granted, software alone won’t keep them afloat in the risky world of new car ventures, but it does give them an edge.
Simultaneously, legacy automakers are facing an existential crisis. Volkswagen’s partnership with Rivian was a massive signal to other automakers: adapt or be left behind. Building cars efficiently is now just one aspect of being an automaker. Now, software encompasses the other half of the package. Building a good car has never been harder.
We are seeing more automakers catch on, however. While it’s drawn endless criticism for lacking Apple CarPlay, General Motors’ Android Automotive-based systems show a lot of potential, including for over-the-air updates. And brands like the Geely Group-owned Volvo and Polestar are undertaking huge high-tech pushes of their own. Toyota has indicated it’s aiming for a big push on software in the coming years as well. Rivian and Tesla won’t have this world to themselves forever.
For now, they’re taking advantage of that first-mover approach. “As a startup, we got to think a little differently from a traditional OEM, where we are not burdened with the choices that were already made,” Surya said. “So that gives us a lot more freedom to express ourselves in terms of features, as well as bring in a lot more improvements just in the customer feedback.”
Now, the question will be whether they all can get the customers on board with this transformation.
Andrew Lambrecht is a contributor at InsideEVs and an industrial engineering student at Clemson University. In addition to InsideEVs, Andrew writes at Forbes Wheels and Business Insider, covering the transportation sector. Check out his podcast, The Current Review.
