A Bumpy Road: Estimating Software Costs in the Automotive Industry
As the automotive industry speeds towards a future dominated by electric and autonomous vehicles, the role of software has become crucial—and problematic. Recent issues at General Motors (GM) and other car manufacturers highlight the growing pains and financial hurdles of integrating complex software into vehicles. Examining these challenges reveals the importance of producing reliable software cost estimates upfront to ensure success.
GM's Costly Lessons
General Motors' recent troubles with the Chevrolet Blazer EV provide a stark example of how software issues can wreak havoc. Last December, GM had to halt sales of the Blazer EV due to software defects, such as infotainment screen crashes and problems with charging. As Forbes reported, this pause resulted in substantial financial losses. GM's projected sales for the Blazer EV were around 45,000 units annually. With an average price of $54,000 per vehicle, the four-month sales suspension likely cost GM $810 million in lost revenue.But the financial hit doesn't stop there. GM's response to these issues involved a significant overhaul of its software development and validation processes. Bringing in top talent from Silicon Valley is expensive, and high turnover rates only add to the costs. Frequent management changes can lead to product failures and more expenses, creating a cycle of disruption and financial strain.Similarly, the expertise required for accurate cost engineering can be equally costly and, if mishandled, detrimental, especially within the software arena where software cost estimation is a relatively new and unexplored discipline in the automotive industry. Inadequate cost estimation can lead to budget overruns and project delays, compounding automakers' financial and operational challenges.
The “Four Horsemen” of Automotive Software Challenges
The automotive industry grapples with four key challenges that make software development risky. Forbes reported that these include cybersecurity threats, unreliable over-the-air (OTA) updates, centralized software systems, and offshore development resources.
Cybersecurity Threats:
The rise in automotive cybersecurity incidents is alarming. A report by Upstream Security noted a 250% increase in high-scale incidents in 2023. As vehicles become more connected, they are increasingly vulnerable to cyberattacks. Automakers must invest heavily in cybersecurity, which adds significantly to software costs.
Unreliable OTA Updates:
OTA updates, intended to keep vehicle software current, have not always lived up to their promise. Many automakers struggle to ensure these updates are reliable. Failures often result in customers visiting dealerships for manual updates, causing dissatisfaction and additional costs.
Centralized Software Systems:
Transitioning to a centralized software architecture, where a single onboard computer runs all vehicle functions, is a strategic move for many automakers. However, this approach is both complex and costly. It requires balancing traditional automotive engineering expertise with innovative software development from the tech industry.
Offshore Development Resources:
Many automakers have moved software development to lower-cost regions. While this saves money initially, it can lead to a loss of critical experience and higher turnover rates, making it difficult to maintain consistent software quality.Estimating software costs is intertwined with these challenges. Effective cost engineering accounts for the extensive cybersecurity measures needed, the potential unreliability of OTA updates, the complexities of centralized systems and multiple suppliers, as well as the costs and risks associated with offshoring. Producing unreliable estimates exacerbates the financial and operational difficulties automakers already face.
Real-World Consequences: The Chevrolet Blazer EV
The Chevrolet Blazer EV's journey illustrates the practical challenges of software integration. According to Autoweek, GM halted sales of the Blazer EV due to software-related quality issues. Customers reported multiple electronic failures, including problems with infotainment and charging. These issues forced GM to pause deliveries and work on fixes, highlighting the real-world difficulties in ensuring reliable software performance.These problems are not isolated incidents but are symptomatic of the broader industry challenges. The Blazer EV example underscores how these interconnected challenges make reliable software cost estimation critical, reinforcing the need for meticulous cost engineering to anticipate and mitigate such risks.Driving Into the FutureAs automakers integrate advanced software into their vehicles, estimating software costs is becoming a significant challenge that can be addressed when employing a credible software estimating model. GM's struggles highlight the financial and operational hurdles involved.Specifically, the Chevrolet Blazer EV's issues illustrate the need for credible cost estimation to avoid costly delays and reputational damage. Understanding and addressing these issues is crucial for the industry's successful transition to a software-driven future. Proven cost engineering processes and models can provide a target cost for the system and give a clear picture of where money should be applied.Investing in advanced technology, like Unison TruePlanning•, and developing robust cost estimation methods are essential. With subject matter experts and investment, the industry can steer around these obstacles and move toward a future where software development drives consumer satisfaction and profitability.
Unison Cost Engineering provides the tools and expertise needed in this evolving field.
