Why OEMs Should Accelerate Investment in OTA Infrastructure

Published On: April 27th, 20226 min read

Today’s largest original equipment manufacturers (OEMs) in the automotive industry push over-the-air (OTA) software updates to 2 to 5 million vehicles annually. In the coming years, those numbers are expected to grow exponentially, and OEMs would be wise to invest now in building out their OTA infrastructure.

With more new software-defined vehicles being sold — and more being equipped with OTA technologies — OEMs will need dedicated teams and partners that both manage the OTA data and work in lockstep within the operations and development teams.

Software-Defined Vehicles: Are We There Yet?

The first software updates to vehicle consoles began in the early 2010s. Consumers would bring their vehicles into a dealership, and a technician would typically update the entertainment unit.

On today’s software-defined vehicles, however, the process looks much different, thanks to OTA technology.

OEMs no longer rely on dealerships to deliver software updates; instead, they can be directly pushed out over the air by the OEM via cloud technology and a mobile provider. The vehicle receiving the update can be anywhere: en route to the country where it will be sold, on the dealership’s lot, or in the owner’s garage.

Today’s software updates also do much more than making a few tweaks to the entertainment unit. They can positively impact the driving experience in hundreds of ways – oftentimes with no visit to the dealer required.

DMI’s Jack Agzarian, Practice Director, Connected Solutions, likens the value offered by OTA to home renovation, where you live on the main floor while renovating the basement and then perhaps moving on to the second and third floor. Similarly, OEMs have the ability to ship a vehicle while constantly improving the driving experience over the course of months and even years.

“All they need is a component with basic functionality — the ability to go to the cloud, get a new software update, and install it,” said Agzarian. “That’s a little like your first floor being ready. And then, every time OEMs make a software update, they can build in more and more functionality to the software-connected parts within the vehicle and have a massive ‘mansion’ at the end. That’s what OTA brings to the software-defined vehicle platform.”

In the past, in-car software needed to be fully developed and installed within the typical 52-week production cycle. OTA allows OEMs to improve the consumer experience long after the car has left the factory floor.

“OEMs can say, we will update the vehicle over the air while it’s being shipped to the dealership,” said Agzarian. “And even if we don’t catch it when it first arrives at the dealership, we’ll update it with the latest and greatest features before the customer pulls out of the lot.”

Calculating the Costs and Benefits of a Robust OTA Program

As the industry speeds towards a future with a high percentage of software-defined vehicle platforms, OEMs must calculate the costs and benefits of fully embracing OTA.

On the cost side, for example, OEMs must pay a mobile provider to deliver their increasingly frequent OTA updates. “Let’s say it costs a dollar per year per car,” Agzarian said. “The mobile provider, or whoever you sign a contract with, usually allows X amount of free data usage per vehicle. That quickly gets eaten up, so the cost to OEMs depends on how well you negotiate your contract with the mobile provider.”

Other costs include investment in OTA technical infrastructure and talent.

But — for all of the costs — there are also significant benefits to building a robust OTA program.

Take, for example, recalls that are part of the normal vehicle lifecycle. “What OTA does is, if I’m an OEM, I no longer need to send a mailer out,” said Agzarian. “I know my entire ownership. I can just push out a message to their vehicle. If it’s something that can be fixed with software, I just say, ‘Hey, there’s a bug. Click this button to fix it.’ The consumer hits ‘Yes’ and it gets fixed – and that leads to customer satisfaction, customer retention, and an improved vehicle.”

Agzarian likens this process — as well as the process of delivering other improvements via OTA — to Android or iPhone users getting a firmware update with new bells and whistles that make the customer feel like they have a new phone.

“You don’t even necessarily have to fix the problem. You could just add a new solution and say, ‘Here’s a new feature,’” he said.

A Superhighway of Possibilities

The value of OTA also extends well beyond bug fixes and software updates that bring enhancements to the consumer experience. OTA is not a one-way street, after all. It’s a multi-lane superhighway of possibility for both consumers and OEMs.

Software-defined vehicles can collect an almost unfathomable amount of real-world driver and passenger usage data — something that has never before been possible. This anonymized data can be fed back to OEMs so they can analyze the real-world usage habits and preferences of their owners and then innovate accordingly within their software development and manufacturing arms. The data can also be tapped to develop new revenue streams through monetization.

“If I’m an OEM, it’s important that I manage this pipeline of incoming and outgoing data,” stressed Agzarian. “I’m going to be inundated with data, so I need to have the proper analytics in place. I need the proper data structures and data repositories to handle this influx of data. And ultimately, I need people managing this data and helping me to monetize it. I need to have a team that knows OTA.”

This task of enabling and managing the outflow and inflow of data is where OEMs should focus in the coming years as software-defined vehicles eventually become the dominant segment within both internal combustion vehicles and electric vehicles.

“Ultimately, if you don’t have a proper DevOps and a proper structure within your engineering department, you end up utilizing OTA as this catch-all tool to fix everything in the field. In doing so, you miss out on so many of OTA’s additional benefits,” said Agzarian. “OTA is best used to drive customer satisfaction and bring new products to the customer after they purchase a vehicle. OTA ensures that a product with a good initial experience can get even better.”

This is why DMI excels when it works with OEM clients: “We handle every aspect within the engineering of connected vehicles. We do conceptual architecture. We do integration. We do validation. We know the entire ecosystem,” Agzarian said. “At DMI, we understand the limitations and capabilities of the future of OTA. We also know how to maximize our capabilities. We have the people who can help you get your OTA system up and running — and keep it running smoothly.”

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