The consulting firm Gartner released its annual carmaker Digital Index (Gartner Digital manufacturers Index), which assessed 22 automakers in nine dimensions, using 13919 different data points, and concluded that traditional carmakers need to bridge a huge gap if they are to catch up with the digital competitiveness of the new power of carmaking.
At the national level, the index shows that US carmakers are generally slightly ahead of Chinese carmakers in the race for software supremacy.
Europe ranks far third, followed by South Korea, while Japan is not as good as it used to be.
“Software should be the top priority for automakers today,” Gartner analyst Pedro Pacheco told European Automotive News.
There is no room for complacency in this very fast-growing and radical field.
” Chinese carmakers have done well, and while all carmakers know they need to find ways to generate revenue from software, the index shows that it is hard for traditional brands to really transform into software-first companies compared with Tesla, Rivian and Weilai.
According to the carmaker digital index in 2024, Tesla is still the leader, but his score is 4% lower than in 2023.
“Tesla began to show some shortcomings in the intelligent Internet connection function, because the vehicles still do not have 5G and satellite connections, and the scores of APP users are declining,” Pacheco said.
” Another reason for the decline in Tesla’s score is that his leadership team is constantly changing.
Last month, Sreela Venkataratnam, Tesla’s vice president of finance and business operations, resigned, becoming the fourth senior executive to leave the company in five months.
“it is not 100% clear how Tesla’s senior management works,” Pacheco said.
There are still many professionals in Tesla’s leadership team, but many changes have taken place recently, and it is too early to judge how Tesla will develop.
” However, Tesla has also been praised by the index because its wireless software update business can already generate revenue.
At the same time, other electric carmakers in China and the United States are catching up with Tesla.
Second-placed Xilai increased its score in the index by 2 per cent, while Xiaopeng and Rivian each rose 13 per cent.
For example, Rivian has improved the efficiency of vehicles by equipping new R1T pick-up trucks and R1s crossovers with new computer networks and regional electronic architectures.
According to the index, Rivian’s regional architecture is considered to be one of the most advanced in the market, so the company ranks first in this dimension with Weilai, Tesla and Xiaopeng.
In addition, other Chinese automakers such as Geely and BYD have also made considerable progress.
Overall, the average performance of Chinese carmakers is very good.
However, Jaguar Land Rover is at the bottom of the rankings, scoring almost the same as last year.
Pacheco believes the UK carmaker “needs to improve on all aspects”, including improving the technical knowledge of the leadership, giving priority to automotive software, increasing the pay of software engineers, adopting a more modern car architecture, and taking a big step forward in self-driving and electrification.
Toyota ranked third from the bottom, with scores down 7% from 2023.
One reason is that the head of Toyota’s software department no longer reports to the company’s CEO, sending a message that Toyota doesn’t pay enough attention to the software business.
It takes time for a traditional car company to transform, says Pacheco.
It takes a long time for any traditional carmaker to turn into a technology company, adding that the main weakness of most traditional brands is that their leadership, culture and talent clearly do not attach enough importance to software compared to their competitors.
Pacheco pointed out that the CEOs of several new car-building powers all started in the field of technology, so when major problems related to software arise, they will solve them immediately.
By contrast, chief executives who have only worked in the auto industry often don’t pay enough attention to technical issues.
In addition, the software business leaders of many traditional brands are often not members of the executive board or do not report to the CEO, so they are handled differently.
To reverse this trend, leaders of traditional automakers need to “give priority to software”, which means that leaders must give priority to technology and create a culture that emphasizes software.
and ensure that companies can attract and retain top technical talent.
For now, many traditional carmakers don’t pay top software engineers as much as or more than they get from technology companies, so they leave.
According to Pacheco, it is still “very difficult” to change a company’s culture.
“the new power of car building is born more like a software company, while traditional carmakers are not.
As a result, the corporate culture of traditional carmakers needs to make a major change, and this needs to start at the top.
” Pushing for change at the board level, for example, can be difficult because many executives come from the traditional auto industry.
Pacheco points out that the board also wants to please shareholders who value short-term profits, making it difficult for chief executives to push for major changes in the company’s software.
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