Last month my car went into the shop for its third software related recall in six months. Once again the nice guys at the dealership were unable to install the necessary update themselves. Instead, our now-undriveable SUV sat in their lot, waiting its turn with the experts at BMW headquarters. We waited in line for four days.
That postponement was both painful and pointless. Automakers learned a long time ago that they had to have the necessary parts and labor before calling a vehicle for a physical recall. Surely a company that claims to already have 9 million fully upgradeable cars on the road can set up an equivalent process for software.
Managing such updates will become increasingly important with the proliferation of electric vehicles and increasingly sophisticated digital information and safety systems in gasoline-powered cars. Software fixes accounted for 15 percent of recalls in the U.S. last year, up from 6 percent five years ago, according to the National Highway Traffic Safety Administration.
BMW’s three software recalls in the U.S. last year put it ahead of many rivals, NHTSA records show. Ford had the highest total with 19, followed closely by Chrysler. Tesla had the largest share with 50 percent of the 16 recalls requiring software repairs. This is not surprising given that electric vehicles rely far more on software and have fewer parts than internal combustion engines.
But the recall data only scratches the surface of a larger software problem. Automakers, like mobile phone service providers, routinely use updates to improve existing functions and sell new services to existing customers. Tesla was a pioneer in offering regular “over the air” upgrades and paid subscriptions to its “Autopilot” self-driving system.
Most manufacturers send out regular updates covering everything from interior lighting modes and improved battery usage to vital security changes. “It used to be that you could build a car, wrap it in foil and sell it,” says Kevin Mixer, senior analyst at Gartner. “Now the car is a living platform. . . Companies learn on the fly.”
This has proven more difficult for legacy automakers than for their upstart rivals. When Gartner ranked automakers by their digital performance last year, the top seven were Chinese and American electric vehicle makers, including Rivian, Tesla and Nio, with traditional manufacturers posting a poor average score of 33 out of 100.
Software issues have delayed recent launches at Volvo and General Motors, among others. Volkswagen executives became so frustrated with their in-house software development that they signed a $5 billion deal with Rivian last summer.
Traditional automakers struggle with updates for the same reason big banks spent billions modernizing back office technology: sprawling legacy systems. While Tesla started with a clean slate, incumbent automakers must wrangle legacy electrical systems and production lines, cross firewalls and integrate software code written by suppliers.
This means that some updates come effortlessly from the ether. Others turn a car into a brick. Or, as with my latest woes, trick the connected BMW app into mistakenly thinking that my car is sitting 1,300 miles east of its real-world location with half the battery life it actually has.
The rewards for getting this right are substantial. As more cars offer great screens and infotainment systems, and battery technology for electric vehicles improves, automakers will have to find new ways to differentiate themselves from their rivals.
Luxury goods manufacturers have already shown that making customers feel like they’re getting something special is key to convincing them to pay extra. Done properly, software updates can strengthen the bond between the automaker and the customer, maintaining the regular contact that oil changes and maintenance checks used to make possible.
“User experience and vehicle styling are once again becoming front and center of what can differentiate cars,” says Juergen Reers, global head of automotive at consultancy Accenture. “Customer care at its best.”
Software updates are also revenue opportunities in their own right. Accenture estimates that digital services could generate as much as $3.5 trillion a year for automakers by the 2040s, or 40 percent of all revenue, up from 3 percent today. Options range from upgrades to heated seats, self-parking to allowing drivers to purchase food, fuel or premium entertainment directly from the car.
But that lucrative future will have to wait until auto groups master the art of seamless software updates. As my BMW’s visit to automotive purgatory shows, they’ve eluded them so far.
Follow Brooke Masters with myFT
