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.
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.”
Risk aversion may slow adoption
SOTA solutions typically address telematics or infotainment solutions. Maps, navigation, Apple CarPlay, and other driver-facing applications generally fall into this category. Firmware (FOTA) involves mission-critical systems that allow the car to function.
The updates typically are downloaded while the car is parked.
“The only one publicly doing FOTA right now is Tesla,” Beardslee says. “Potentially this could be used for safety issues, or even value-added improvements like improving gas mileage.”
The design cycle of vehicles will likely delay wider adoption of SOTA in the short term. “There are processors that need to be designed or changed,” Beardslee says. “We’ll see more of this in the 2018/2019 start of production.”
Some OEMs are also very hesitant or risk averse when it comes to FOTA capabilities, particularly those that affect the safety of the car. “They are more interested in consumer-facing entertainment and navigation applications,” Beardslee says.
An increase in FOTA and SOTA updates could be viewed as a threat to car dealerships, who stand to lose revenue and additional customer contacts.
“The car dealers have everything to lose,” says Beardslee. “When the automotive industry becomes fully OTA, car dealers lose not only the revenue enhancement that they acquire in making updates and repairs, but they lose the associated foot traffic.
“There’s definitely going to be pushback from the dealer network,” she continues. “For every recall that comes in, they get money from the OEM.”
However, the ROI for OEMs is potentially huge. “They set aside a large amount of cash reserves in case of recalls,” Beardslee says. “They could use that money more effectively if they aren’t putting it aside to wait for recalls.
Another potential challenge: customers opting out of updates. Recall completion rates are sometimes low (averaging 80 percent, according to the National Highway Traffic Safety Administration), even for major safety fixes. Customers may be just as averse to SOTA/FOTA updates.
Tesla notifies drivers of the updates, although most of them happen overnight while the car is stationary. “The discussion that I’ve heard in the industry, from a risk mitigation standpoint when it comes to safety critical functions, is that OEMs are increasingly interested in doing the download regardless of an opt-in,” Beardslee says. “That way they know that if there is a problem that can cause an accident, they can push it down as a matter of safety.”
Dealers, of course, will still get plenty of business from hardware-related recalls. There may also be some potential for dealers to get involved in software sales for the vehicle. “Some dealers have seen uptake in traffic and sales attributable to GM adding Apple CarPlay in the vehicles, for example,” Beardslee says. “By finding products that consumers desire and having a broad portfolio to offer those products, you can drive more customers coming in on the front end.”
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