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Over-the-air software updates could reduce the cost of recalls

Monday, July 18, 2016 - 06:00
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As vehicles become as reliant on software as they are on mechanical systems, the idea of updating the systems in the car using over-the-air technology is gaining popularity.

Tesla has been a leader in the space, using software over-the-air (SOTA) fixes for everything from a charger plug recall to changing the suspension settings on its vehicles to give them more clearance at high speeds.

That could be good news for drivers who are hard pressed to bring their vehicles in for a rapidly rising number of recalls, but bad news for dealers who depend on recall business to keep customers coming back after the warranty is up.

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According to ABI Research, there will be 203 million OTA-enabled cars shipping by 2022. Both SOTA and firmware over-the-air (FOTA) will see a rapid increase, with nearly 180 million new cars supporting SOTA and 22 million with FOTA by 2022. Tesla will continue to lead the way in firmware updates, while other OEMs focus on SOTA.

“Three factors changed the course of the automotive industry and paved the way for the future of OTA: recall cost, Tesla’s success as the foundation of autonomous driving, and security risks based on software complexities,” says Susan Beardslee, senior analyst at ABI Research. “It is a welcome transformation, as OTA is the only way to accomplish secure management of all of a connected car’s software in a seamless, comprehensive and fully integrated manner.”

Managing recalls is a bigger challenge than ever for both OEMs and drivers. In the past two years, the recall rate increased to approximately 46 percent and four major OEMs set aside a combined $20 billion in 2015 in warranty reserves, according to Beardslee.

Not all recalls can be fixed via an OTA update, of course, but ABI’s analysis suggests that roughly one-third of recalls in 2015 could have been addressed over the air. Doing so could have saved manufacturers as much as $6 billion.

In some cases, OEMs have addressed software udpates by mailing USB drives to customers, but this method is inherently less secure and less reliable.

“Obviously, if there’s a problem with your airbag that can’t be fixed over the air,” Beardslee says. “But there still a tremendous opportunity. BMW last year sent a software patch to around 2.2 million vehicles this way. One of the advantages for OEMs and drivers is that you don’t have to take the time to go to the dealer, and you don’t have to wait for an incident to occur. You can make this change as soon as you know there’s a problem.”

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