Future of Software-Defined Vehicles

The automotive industry is undergoing a transformation driven by the emergence of software-defined vehicles (SDVs). The nature of vehicles is changing, as they are increasingly defined not only by hardware but also by integrated software architectures that enable new capabilities and enhance existing ones.

Market projections suggest strong growth in this sector. SDVs also attract new market entrants, mainly tech firms and digitally native manufacturers, intensifying competition and challenging incumbent carmakers' organisational structures, skills, and business models. However, the SDV transition introduces significant uncertainties and potential risks. In particular, cybersecurity and data protection emerge as central challenges, as SDVs continuously collect, process, and transmit large volumes of sensitive data.

The report, prepared in cooperation with Adapt Institute and with support from The Korea Foundation grant,  examines SDVs through a strategic foresight lens. It explores four scenarios: 1. "Traditional automotive market"; 2. "Niche SDV market"; 3. "SDV evolution" and 4. "SVD revolution". The proposed scenarios are not meant to serve as predictions, but rather as tools to support strategic thinking and planning under uncertainty. The objective is to identify and test key assumptions and uncertainties, and to suggest recommendations.

The report concludes that SDVs offer substantial opportunities for innovation, safety, and new value creation, yet also pose systemic risks if security, privacy and broader societal trust are not adequately addressed. For policymakers, success depends on enabling ecosystems rather than relying solely on regulation. For industry actors, adaptability, (cyber)security-by-design, and balanced hardware-software strategies will be decisive. The way these challenges are addressed and managed will shape the future competitiveness and resilience of the automotive industry and the future satisfaction and security of its customers.