Marelli sees a China-led massive acceleration for software-defined vehicles

Marelli technology chief Joachim Fetzer expects time pressure and electric innovation from Chinese automakers to accelerate the transition to software-defined vehicles. For example, today Chinese automakers ask Marelli to develop products in 12 to 18 months – down from three to four years previously. To differentiate itself from its competitors, Marelli uses so-called co-creation, namely working with customers to enhance the design that the technology makes possible. Fetzer discussed this and more with Automotive News Europe Managing Editor Douglas A. Bolduc and Correspondent Lois Hoyal.

Looking at the industry’s move to SDVs, what do you see as the key challenges ahead?  

The SDV is a technology that has been emerging and maturing over the last five years. The likes of Infineon have the products now to support SDVs. Five years ago, we were just talking about it. From a hardware point of view, it is very clear that SDVs will accelerate. The software technologies are there. And the prerequisites to make it happen are also there. It is going to accelerate across the globe massively. China is already leading this. It is already happening. It is already there.  

What will Marelli do to stand out from its rivals when it comes to SDVs?

We focus on what we call co-creation – working with our customers to identify and define the experience, focusing on the design enabled by the technology. This is not only limited to the software but also to other functionalities. We design lights, for example, and use them to enhance branding on a car. This is where we think that by co-creation we can differentiate as well as design innovation.  Chinese automakers are now asking us to develop products for a new car within 12 to 18 months rather than three to four years. This massively increases the innovation speed as well as customer expectations.  

What else is driving this increase in speed?

SDVs and their related technologies, such as digital twins, enable a faster speed. The SDV allows upgradability or at least updatability after SOP (start of production), so if things are not perfect with a SDV, you can still update it. This along with the massive focus in China on innovation, especially electronic innovation, is also increasing the time pressure. These two trends are coming together and positively amplifying each other and driving the necessity to innovate rapidly.  The innovation side within electronics is getting faster and innovation is therefore happening more frequently. Automakers have to think about what is the right innovation speed for each market.

Are you pursuing any SDV targets?

Our target is for all our software-based products to support SDVs. But we are not a software company and we don’t want to become one. We use software in SDVs to enhance the user experience. Our target is to grow with these trends but not to grow with software itself.

How much of your business is now focused on SDVs. And how will that change in, say, five years or 10 years?  

All of our electronics-related business, where we have systems using electronics and software is focused on SDVs. The SDV influences all that we do today with software, for example connecting to the cloud, offering microservices.

Do you have a breakdown between hardware versus software at the moment and an outlook on how this will change?

If you look at the big picture, software is getting more and more important so we will be building up software capabilities in engineering. But Marelli as a company does not offer software as a stand-alone product, at least not primarily. If customers ask us to get some functionalities as a stand-alone software product then we are ready to support them.  
But our business model offers hardware with software and the software is the enabler for the better user experience and therefore we don’t have this kind of breakdown. We want to serve the SDV with our products, enabled, enriched and made better with our user experience for software.

How is the move to SDVs changing the classic automaker-supplier relationship?

There is a lot of industry change happening. In the past, we had a clear hierarchical system. Now we will see a shift toward a network of suppliers, where the role of Tier 1 or Tier 2 etc. may change according to the project or according to the support each offers. The important thing is that we have an ecosystem of technology partners around the industry comprising of semiconductor companies, software companies and companies offering software components. They work with the Tier 1s. Network and technology partnerships are getting much more important than in the past.  

Is the slowdown in sales of full-electric cars negatively affecting Marelli? Is this going to be a long-term issue?

The market for EVs is not growing so fast. There is a slowdown. That is normal in a transition like the one we are seeing toward electrification. Certain customers are selling fewer EVs than planned, but we are not seeing any projects being cancelled, just demand being a little bit slower than expected. For the next five years, I expect demand to increase – at different speeds in different regions.  

What about demand for full hybrids and plug in hybrids. Are you seeing stronger than expected demand there?

Plug-in hybrids are rebounding and we also see an increase in full hybrids.