Automaker Stellantis on Tuesday rolled out its software strategy, including a 2030 target of 20 billion euros ($22.5 billion) in annual revenue from related products and subscriptions, as it targets rival Tesla.
CEO Carlos Tavares said the world’s fourth-largest automaker is expected to have 34 million connected vehicles on the road by then, up from 12 million today. The company currently generates 400 million euros per year from connected car services.
Stellaantis said the software push would provide on-demand services to create a customizable experience for drivers who can do everything from offering their favorite entertainment to closing their garage door if they forget.
For example, it will also enable the automaker to launch a usage-based auto insurance product in the US market.
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Stellantis’ 14 brands include Jeep, Ram, Dodge, Fiat, Chrysler, Maserati, Alfa Romeo and Mopar.
Leveraging its data collection capabilities, Stellantis will launch in 2022 a usage-based insurance program offered through its captive finance divisions in Europe and North America with a view to expanding globally.
In September, Stellantis announced that the F1 Holdings Corp. acquires, the parent company of First Investors Financial Services Group, an independent US auto financing company, in a cash transaction for approximately $285 million.
As part of the software push, Stellantis said it would deploy three new technology platforms powered by artificial intelligence (AI) by 2024.
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“This is something that will make Stellantis one of the leaders, if not the leader, in software and electronics,” said Chief Software Officer Yves Bonnefont, adding these platforms would match those of competitors.
One platform, called STLA Brain, will provide over-the-air (OTA) software updates, something Tesla already offers.
Software was part of a plan announced this year by Stellantis to invest more than €30 billion through 2025 to execute its electrification strategy.
Bonnefont said the group would move its vehicles from their current dedicated electronic architectures to an open software platform, using partnerships.
“We don’t want to do everything alone,” he says.
Stellaantis has strategic partnerships with companies including BMW, iPhone maker Foxconn and Alphabet Inc’s Waymo so that it can “continue to drive innovation, efficiency and shared know-how”.
Bonnefont said Stellantis should enter into a joint venture with Foxconn by the end of 2021 to provide in-car and connected-car technologies to the auto industry.
Stellantis also announced a preliminary agreement on Tuesday of a separate partnership with Foxconn to design purpose-built semiconductors to support the automaker and other customers.
The company said it will present its long-term strategy to investors on March 1.
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Investors and analysts see Stellantis catching up in advanced technology investments, not only for Tesla, but also traditional rivals such as Volkswagen and General Motors.
Tesla’s market cap of over $1 trillion partially reflects the importance of software capabilities in automaker valuations.
Software plays an increasingly important role in vehicles, from managing electric motors and batteries to supporting functions such as autonomous driving, entertainment and navigation.
Volkswagen expects about 1.2 trillion euros in software sales in the automotive industry by 2030, or about a quarter of the global mobility market, which is expected to more than double to 5 trillion euros.
Self-driving software systems and other services such as high-definition maps, traffic monitoring, internet-related functions and electric charging services generate future revenues for car manufacturers.
For example, Volkswagen is considering charging self-driving facilities from 7 euros per hour.
Research firm Counterpoint estimates that automotive connectivity revenues will exceed $500 billion by 2030.
GM is one of those looking to convince investors that it can outperform Tesla in technology and profitability.
In October, GM told investors it wanted to double its sales by 2030, including adding $80 billion from technology-driven new companies like the cruise autonomous vehicle unit.
Ford this year hired the former head of Apple’s auto project, Doug Field, to lead its advanced technology and embedded systems efforts, while France’s Renault has partnered with Google to help design its infotainment systems.
($1 = 0.8874 euros) (Reporting by Giulio Piovaccari and Gilles Guillaume; Additionl reporting by Christoph Steitz Editing by Edmund Blair and Mark Potter)
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