Connectivity Is an Essential Enabler for Automotive Tech
Steve Bell, Chief Analyst, Connectivity
AutoTech Detroit unveiled a profound truth: software-defined vehicles represent not just a technological evolution but a fundamental business model revolution that is reshaping the entire automotive landscape. The industry stands at a critical crossroads, struggling in a costly “ship and fix” phase evidenced by a staggering $3.5 billion in software-related recall expenses across 13.3 million U.S. vehicles in 2024, while simultaneously striving toward the aspirational “ship and earn” paradigm. This transformation demands breaking down entrenched silos, establishing standardized interfaces and implementing blockchain-secured consent mechanisms that protect consumer data while unlocking new revenue streams. Connectivity emerged as the beating heart of this revolution, with telecommunications leaders demonstrating how their hard-won virtualization expertise could accelerate automakers’ digital journey. The convergence of 5G networks featuring exposed APIs, edge computing capabilities, precision geolocation and satellite integration is enabling everything from lifesaving safety alerts to frictionless payment solutions. These innovations align perfectly with consumer desires revealed in recent POCO Labs research, which shows over 80% of consumers are interested in advanced V2X features like road hazard warnings and pedestrian detection in their next vehicle purchase.
Software Continues to Drive the Conversation
Maitê Alves Bezerra, Senior Principal Analyst, SDV
The software-defined vehicle (SDV) emerged as a central topic at AutoTech 2025, reflecting its transition from a future concept to a present reality, actively reshaping the automotive industry landscape. Leaders highlighted digital twins as an essential tool for vehicle design, testing, manufacturing and supply chain management to address uncertainties. Moreover, industry experts emphasized connectivity as a core SDV architectural element – not an add-on – enabling over-the-air (OTA) updates, digital twins, feedback loops and expanded processing capabilities through cloud computing, all fundamental SDV components. Open-source software gained significant attention, with a growing industry appetite, while Tier 1 suppliers demonstrated how their learnings from working with disruptor OEMs and in the Chinese market are more important than ever for incumbent OEMs.
The automotive industry undoubtedly requires a fundamental shift from hardware-centric manufacturing to software-centric product definition, focusing on standardization and value-creating innovation rather than unnecessary component customization. Consensus emerged that collaboration, partnerships and dismantling silos within organizations and between competitors are crucial for advancing SDV adoption and standardization, though progress remains slower than desired. While this transformation poses an enormous challenge, AutoTech demonstrated that valuable lessons can be drawn from telecommunications, data centers and other industries that have successfully navigated similar digital transformations.
User Interface and Advanced Feature Integration Stand Out in the Digital Cockpit
Elaine Chung, Senior Analyst, Smart Cockpit
At AutoTech 2025, one of the most compelling themes across cockpit discussions was the shift toward empathy-driven human-machine interface (HMI) orchestration, designing interfaces that align closely with user intent and offering intuitive features that enhance accessibility and satisfaction. Cockpit and vehicle systems are increasingly integrated to enable real-time personalization and situational awareness, with artificial intelligence (AI) extending interaction from the driver zone to the entire cabin space. A standout example was the Kardome and SoundHound AI demo, which showcased multi-zone spatial voice recognition, allowing each passenger to engage with the system effortlessly. It demonstrated how context-aware voice AI, combined with spatial audio and generative intelligence, enables more natural and seamless interactions throughout the cabin.
In parallel, there is increasing momentum behind the integration of the cockpit and advanced driver assistance systems (ADAS) to enhance driver comfort and trust. Discussions highlighted how sensor fusion and contextual understanding can be leveraged not only for safety alerts but also to proactively assist the driver based on environment and behavior cues. Vehicles equipped with intelligent sensing and behavioral analysis are capable of dynamically adapting based on real-time context, such as driver stress levels, traffic conditions or navigation intent, introducing a new layer of predictive, human-like intelligence into the in-cabin experience. This convergence reflects a clear shift from function-based design to a user experience rooted in empathy and adaptability, where AI-driven applications seamlessly integrate with human intuition, creating a safer, more personalized and responsive driving environment.
Chinese OEMs Continue to Disrupt Design Cycles
Jason Low, Principal Analyst, Advanced Automotive
At AutoTech 2025, attendees expressed strong interest in how Chinese OEMs and brands are developing disruptive automotive technologies and producing highly competitive electric vehicles at an impressive pace. Tier 1 suppliers with experience in the Chinese supply chain emphasized the speed at which these automakers can make decisions, facilitating the standardization of underlying systems. This standardization supports faster development of software-defined vehicle platforms, as well as complex ADAS and digital cockpit systems. This agility allows Chinese carmakers to concentrate on enhancing the end-user experience, often resulting in ADAS that are highly differentiated, tailored to specific scenarios and optimized for particular vehicle types. Establishing the right organizational structure and collaborating with ecosystem partners are crucial for creating cross-domain experiences that lead to effective ADAS features, ensuring enhanced safety and an improved driving experience.
The global automotive industry is striving to optimize the combination of sensors, computing platforms and software toolchains essential for efficiently processing extensive sensor data and generating actionable driving outputs. However, varying regulatory environments and traffic conditions across regions pose challenges, necessitating the development of localized ADAS systems. As collaboration between OEMs and suppliers evolves, legacy automakers must adopt a customer-centric mindset and innovate swiftly to enhance vehicle safety and the overall driving experience.
Electrification’s Goal is Unchanged, but its Path Has Expanded
Adam Ragozzino, Principal Analyst, Electrification
Despite the diverse focuses at AutoTech – spanning mobility, cockpit, interior user experience (UX), SDV, communication and connectivity – several unifying themes emerged. The ongoing shift toward electrification remained evident across the automotive sector, with participants showing an interest in understanding the electric vehicle (EV) landscape beyond simple sales forecasts. Attendees sought insights into policy shifts and implications, competitive strategies and methods for navigating market uncertainty, reflecting the industry’s evolving priorities and challenges.
Five key reference points dominated both stage discussions and show floor conversations. Cost control emerged as the primary concern, driven by consumer price sensitivity, Chinese EV competition and shifting trade policies, with companies responding through reduced design complexity, streamlined manufacturing and vertical integration. Flexibility is rapidly being recognized as an essential survival skill amid anticipated supply chain and labor disruptions. Organizations emphasized faster market entry through improved cross-functional communication to break the uncertainty cycle that leads to missed opportunities. Strategic partnerships gained prominence as a method to mitigate risks, reduce costs and access otherwise unavailable technologies in a fractured global market. Finally, a renewed consumer focus directed companies to prioritize essential features that address genuine needs rather than implement technology without purpose, ensuring relevance in today’s hyper-competitive environment.
Culture and Resilience Were Behind Every Conversation
Edward Wilford, Senior Research Director, Automotive
At AutoTech 2025, the most necessary element in so many of the discussed transformations was cultural. Speeding up design cycles requires an organizational chart that can embrace change. Transitioning to software as the leading element requires cross-functional teams that defy traditional structure. Working closely with connectivity providers from early in the design process will mean new ways of collaborating outside the comparatively rigid tiered supplier structure. The so-called upstart OEMs have proven how fast a manufacturer can move when not beholden to the structure and culture OEMs have traditionally embraced. What remains to be seen is if the legacy automakers have the capacity and the institutional will to adapt and adopt this technology-focused approach or if they will continue to try to create new ends from old means.
One benefit of a more agile approach is increased resilience, as noted in a keynote from James Hawkins of Lucid Motors. Resilience is poised to be a key requirement, particularly in this era of market uncertainty. Resilience has traditionally depended on redundancy, but in a faster future, it will be more appropriately dictated by flexibility – and that again requires a culture where flexibility is prized. OEMs and their suppliers have the opportunity now to embrace that flexibility and to acquire that resilience through an intentional shift in company culture. Whether they will do so successfully remains an unanswered question.
Appendix
Further reading
“A maturing automotive tech market finds direction but seeks drive – Five takeaways from CES 2025” (January 2025)
“Applications and approaches converge for a flexible future in automotive and beyond – Five takeaways from Embedded World 2025” (March 2025)
“Throwing wrenches by the handful: How a retaliatory tariff cycle is likely to affect global automotive markets” (April 2025)
Authors
Steve Bell, Chief Analyst, Connectivity
Maitê Alves Bezerra, Senior Principal Analyst, SDV
Elaine Chung, Senior Analyst, Smart Cockpit
Jason Low, Principal Analyst, Advanced Automotive
Adam Ragozzino, Principal Analyst, Electrification
Edward Wilford, Senior Research Director, Automotive
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