Auto Industry Zooms Towards Software-Driven Future: Report

The automotive sector is witnessing a major shift as software takes centre stage, according to a new Capgemini Research Institute report, ‘The software-driven mobility era: Beyond vehicles’. 

In June 2025, the Capgemini Research Institute surveyed 600 executives from 200 automotive firms across OEMs, suppliers, mobility providers, and digital natives in North America, Europe, and APAC. The study, limited to four respondents per firm, included over 15 expert interviews to complement the findings. 

Nearly all automotive organisations (92%) predict that every company will evolve into a software company to support Software Defined Vehicles (SDVs) and software-driven mobility (SDM) services. Over 80% believe that software-based products and services will define their core value proposition, moving beyond traditional hardware focus.

Scaling Challenges

Despite high ambitions, only 34% of automotive firms have partially scaled SDM initiatives in 2025, with just 14% achieving full deployment. 

Decoupling hardware and software is seen as vital for faster innovation and new revenue, yet only 10% of original equipment manufacturers (OEMs) have progressed, with 26% piloting new methods.

Capgemini’s Global Head of Automotive, Laurence Noël, noted that consumer demand for connected, digital experiences is pushing a software-first approach across the value chain. 

Forward-thinking firms are treating software as their primary product, relying on partnerships to expand ecosystems. However, this shift demands a complete organisational revamp, including talent and platform alignment, to stay competitive.

Collaborative Growth

The report highlights growing collaboration, with nearly 40% of firms partnering with big tech and hyperscalers for software, cloud, and data needs. 

A third plan joint ventures within three years, while 84% explore new supplier markets, including India, Southeast Asia, and Eastern Europe, for resilience. Around 70% are boosting in-house development to control key technologies.

AI is reshaping the industry, with 85% of respondents integrating it into software for enhanced in-vehicle experiences, safety, and cybersecurity. Over 77% view AI as a competitive edge, particularly for Advanced Driver Assistance Systems (ADAS) and autonomous driving, driving cost reductions and quality improvements.

A vast majority (86%) agree that SDM requires a complete organisational rethink, involving new skills and processes. Challenges include software engineering, compliance, safety, and talent acquisition, with 83% prioritising a unified software platform.

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