The car is becoming a software product

This week I for the first time had the chance to take a seat in a Tesla Model S. The short experience on the passenger seat confirmed my assumption that there are challenging times ahead for today’s leading car manufacturers. Especially for those from Germany that until now have enjoyed an unprecedented period of enthusiasm and loyalty by customers worldwide.

With my comment I am not referring to the car itself. Neither to its design, its electric engine or its interior. All this can be comparatively easily competed with if you are a leading car company. What had the biggest impact on me was the huge 17-inch touch display and the computer running it. To me this “device” felt like the heart of the whole product. The center piece which everything else is built around.

The huge screen delivers a user experience which comes close to what we are used to from today’s smartphones and tablets. Tesla’s current “Software v6.0” might not look and feel as polished as iOS, but almost. It offers everything one can expect from a personal smart device. It comes with built-in Navigation and all kinds of integrations with web services and mobile devices. It also includes a fully-fledged browser. A browser that really works, not one that does only exist so that Tesla can advertise a built-in browser.

It’s the touch screen that shows up in front of my mind when I think about the Tesla. I believe this kind of “smart experience” will be something that most car buyers will expect in the future. This is where at least some significant part of the competition will happen. The mechanical engineering is one thing. The software engineering and the user experience are another. And here, Tesla has a huge lead. Which, considering the lengthy production cycles in the car industry, in reality is even bigger than what it appears like.

Sure, car companies are currently presenting lots of high-tech at this year’s CES conference in Las Vegas. But take BMW for example: Even the new concept for the iDrive infotainment control system, which may use a touchscreen in the future, does already look outdated compared to Tesla’s massive touch display. And according to BMW, it only could appear in production cars in about “one to two years”.

I might completely overestimate the importance of the personal computing experience for future car buyers. But lets say I am right: In that case, basically all traditional car manufacturers face a huge challenge: They need to get good at something they lack experience, knowledge and potentially talent. They need huge amounts of software engineers, designers, UX experts, and they need to change their whole DNA, culture and mindset, in order to adjust. Internal conflicts between old and new thinking will be inevitable.

It’s a pretty overused term, but I think “software is eating the world” applies even in the car industry. I cannot predict whether the old players can handle this challenge or not, and I don’t want to be too pessimistic. With lots of cash at hand an excellent employer reputation, the top brands in the car industry probably won’t have too much difficulties recruiting the new talent needed (and they probably have done so for years). Still, it’s a profound shift. Possibly the biggest for this industry for many decades. If cars are becoming software products on wheels, car companies must reinvent themselves to succeed.