What to Expect in the Era of Software-defined EVs?

The article explains how surging global EV adoption, propelled by net‑zero policies and intensifying competition, is ushering in an era of software‑defined vehicles where value shifts from hardware to intelligent, connected systems. Consequently, AI‑driven health monitoring, V2X connectivity, smart grids, next‑generation batteries and ADAS emerge as core differentiators, and automakers must build strong software partner ecosystems to overcome talent shortages, accelerate innovation and unlock higher performance, safety, efficiency and sustainability.

Written by

Tran Diep Trinh

Published on

February 05, 2024

What to Expect in the Era of Software–defined EVs?

The automotive industry is entering a new era shaped by software‑defined electric vehicles (EVs). By embracing this transformation, automakers can unlock new levels of performance, safety, efficiency, and connectivity, paving the way for a brighter and more sustainable future.

In recent years, the EV market has seen a sharp increase in demand, driven in large part by bespoke software solutions designed specifically for the sector. As this software‑driven evolution accelerates, an important question emerges: what can we expect from the new era of software‑defined EVs?

Overview of Global Electric Vehicle Market Growth

The demand for electric vehicles (EVs) is rising rapidly worldwide, across hybrid, plug-in hybrid and battery electric models. According to Canalys, global EV sales reached 6.2 million units in the first half of 2023, representing 49% year-on-year growth and an increase of 12.4% compared with the same period in 2022 [1].

Mainland China remains by far the largest EV market, accounting for 55% of global EV sales in H1 2023, equivalent to about 3.4 million units. Europe is the second-largest market, with a 24% share and 1.5 million units shipped. The United States holds a 13% share of global EV sales, but is emerging as one of the fastest-growing EV markets, with EV sales increasing 97% year-on-year, up from 62% growth in H1 2022 [1].

Beyond these established markets, South Korea and India have also become significant forces in the EV sector. In India, EV sales reached 1.38 million units between January and November 2023, growing 50% year-on-year [2]. In South Korea, EV sales are expected to reach 170,000 units and a market value of USD 9.2 billion by the end of 2023 [3].

Main drivers behind the surge in electric vehicles

Electric vehicles (EVs) have existed for over a century, yet their popularity has surged only in recent years. The primary catalyst is the wave of global government initiatives promoting EV adoption. As part of the Net Zero Emissions by 2050 Scenario – a roadmap for the global energy sector to achieve net zero CO2 emissions by 2050 – governments worldwide are tightening regulations on petrol and diesel cars to cut emissions and accelerate the shift to cleaner mobility.

Government policies and net-zero commitments

In response to climate change and worsening air pollution, many countries are introducing stricter emissions standards, setting EV adoption targets, and phasing out internal combustion engine vehicles. These measures typically combine regulatory pressure with financial and fiscal incentives, creating a strong push for both consumers and manufacturers to embrace electric vehicles.

India, which is home to 14 of the world’s 20 most polluted cities [4], illustrates how pollution concerns can drive ambitious EV policies. Tailpipe emissions are a major contributor to poor air quality, prompting the government to set a target of 30% EV adoption by 2030 [5]. To support this goal, India has launched a range of national and state-level policies and incentives, including tax benefits, subsidies, and investments in charging infrastructure.

A key initiative is the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, introduced in 2015 to encourage the use of EVs across the country. The program has an estimated funding of USD 1.4 billion, designed to stimulate demand through financial subsidies for buyers [6].

South Korea has also rolled out extensive incentives to boost EV uptake, combining tax breaks, direct financial support, and increased investment in research and development. In April 2022, the South Korean government announced a USD 318 million acquisition to strengthen the nation’s EV charging and hydrogen refueling networks. This initiative aims to enable 4.5 million eco-friendly vehicles, including 3.62 million electric vehicles, to operate nationwide by 2030 [7].

Industry transformation and the rise of EV software

The global automotive industry is undergoing a profound transformation as it pivots toward electric vehicles. Manufacturers face mounting pressure to satisfy evolving customer expectations while competing in an increasingly crowded market. To remain competitive, companies are investing heavily in EV software research and development, preparing for a new era defined by digitalization and technological innovation.

The EV software segment, in particular, is expanding at remarkable speed. The global market for EV charging management software is expected to grow at a compound annual growth rate of 30.3% from 2023 to 2030, reaching USD 7.50 billion by 2030 [8]. According to McKinsey, the market for electronic control units (ECUs) and domain control units (DCUs) is estimated to reach USD 144 million by 2030, while software development – including integration, verification, and validation – could generate up to USD 83 billion in revenue by 2030 [9]. This rapid growth is fueling a new wave of bespoke EV software development poised to reshape the industry.

With such strong policy support and intense technological momentum, the road to innovation in EV software appears virtually limitless. The key question now is: what breakthroughs and advancements can we expect next on this journey?

Charging Forward with EV Software Development

The electric vehicle (EV) industry is rapidly advancing toward a new horizon of technological breakthroughs. Bespoke software technologies are at the heart of this shift, driving progress and delivering transformative impact across the EV ecosystem.

AI-powered vehicle health checks

AI is becoming an essential component in modern EV architecture. It is particularly useful for monitoring and managing a battery's state of charge (SOC) and state of health (SOH). By collecting sensor data and analyzing anomalies, AI-driven systems can accurately assess the health of both the vehicle and its battery.

This information is invaluable for owners and fleet operators, enabling proactive actions to prevent costly repairs. In addition, AI systems underpin features such as keyless entry, predictive maintenance, remote diagnostics, fleet management, and user-adaptive algorithms, helping to deliver an optimized, reliable, and safe EV driving experience.

Improved connectivity features

The shift toward software-defined electric vehicles underscores the need for seamless connectivity to ensure a smooth driving experience. Vehicle-to-everything (V2X) technology plays a crucial role by enabling data exchange between software controllers and both internal and external vehicle components.

This continuous data flow supports capabilities such as remote diagnostics, location-based services, real-time battery charge monitoring, and over-the-air software updates, keeping EVs continuously optimized and up to date.

Smart grids

Limited availability of charging stations remains a key challenge for many EV owners. Smart grids help address this issue by providing the visibility and control needed to mitigate load impacts and protect distribution network components from overloading caused by EV charging.

By ensuring that electricity generation capacity is used efficiently, smart grids enhance the efficiency of EV charging and load balancing, resulting in a more seamless charging experience for users. Innovations such as bi-directional charging and vehicle-to-grid (V2G) technology also enable EVs to function as energy repositories, supporting deeper energy optimization.

Advancements in battery technology

Range anxiety continues to deter some consumers from purchasing electric vehicles, as limited mileage remains a concern. This demand for high-performance EVs with longer range is accelerating innovation in battery technology.

Solid-state batteries, expected to debut on the market around 2030, use a solid electrolyte and fewer raw materials and are poised to address many of the shortcomings of current lithium-ion batteries. With higher energy density, they promise longer range, faster charging, lighter weight, and a reduced risk of thermal runaway.

Advanced Driver Assistance Systems (ADAS)

ADAS, short for Advanced Driver Assistance Systems, refers to a set of technology-based features built on sensors and controllers. These systems are designed to enhance driving comfort and safety by monitoring the external environment for other vehicles, obstacles, and pedestrians.

The information gathered by ADAS components enables real-time assistance, including emergency braking, intelligent cruise control, and parking assistance, helping drivers navigate more safely and confidently.

Toward a New Era

The automotive industry stands at the threshold of a new era shaped by software-defined EVs. By fully embracing this transformation, automakers can unlock unprecedented levels of performance, safety, efficiency, and connectivity, ultimately moving toward a brighter and more sustainable world for all.

To realize this vision, having the right companion is essential, especially in the face of the ongoing shortage of skilled software engineers specializing in automotive technology. By building a strong partner network, organizations can tap into the experience, expertise, and proven track record required to innovate at lower cost, with higher optimization, and across shorter product development life cycles. Through this approach, EV leaders can truly usher in the software-defined era of electric vehicles and blaze a trail for a transformative future.

Frequently Asked Questions

How will software-defined EVs change vehicle performance and safety?

Software-defined EVs shift value from hardware to software, allowing automakers to tune performance, safety, efficiency, and connectivity continuously via data and over-the-air updates. This enables faster innovation cycles, personalized features, and safer, more efficient vehicles that keep improving over their lifetime.

Which EV software trends matter most for future vehicle health?

AI-driven vehicle health checks are becoming central to EV architecture. They monitor battery state of charge and health, detect anomalies from sensor data, and enable predictive maintenance and remote diagnostics. This reduces downtime and costs while improving safety and reliability for owners and fleets.

Why do OEMs need tech partners for software-defined EV programs?

Delivering software-defined EVs requires deep software, AI, and cloud expertise that many OEMs lack in-house. Strategic technology partners help close talent gaps, speed development, reduce cost, and bring proven platforms and tools, enabling faster, lower-risk execution of SDV roadmaps.

How fast is global EV demand growing across key regions?

Global EV demand is surging, with 6.2 million units sold in H1 2023, up 49% year on year. China leads with 55% of sales, Europe follows at 24%, and the US holds 13% but is growing quickly. India and South Korea are emerging as significant, fast-growing EV markets.

What policies are driving EV adoption toward Net Zero 2050?

Governments are using Net Zero 2050 targets to accelerate EV uptake via bans on ICE vehicles, tax breaks, subsidies, and charging investments. Programs like India’s FAME and South Korea’s large funding for charging and eco-vehicles are making EVs more attractive and viable at scale.