GOTHENBURG, Sweden -- The market for automotive-focused software may be in its infancy now, but for the Swedish supplier Veoneer, it will be the driving force for future profits, the company's chief technical officer says.
"Is Veoneer turning into a software company and leaving hardware?" said Nishant Batra, who came to Veoneer as CTO last year from the telecommunications company Ericsson. "We would love to do that, but not any time soon, because for the next four years automakers are going to buy a lot of hardware."
Veoneer, which was spun off from airbag supplier Autoliv in 2018, makes radars, vision systems and software for advanced driver assistance systems and autonomous driving. It sustained a $122 million loss in the third quarter, but analysts and company executives are bullish on its future as more and more of the components and software it sells make their way into passenger cars.
Batra, who spoke at a recent Veoneer technical demonstration event at the AstaZero test track outside of Gothenburg, Sweden, said that the margins for software outstripped those for hardware such as radar and cameras -- but only if the software was coded in such a way that it could be used in a range of safety and assistance systems.
"An industry that was traditionally building engines and chassis is now spending more and more money on software," he said. "This is one of the biggest investments that we expect in the coming decade."
As an example, he cited Volkswagen Group's new Car.Software unit, which will bring together 5,000 digital experts to develop more of its software in-house.
At Veoneer, 70 percent of engineering workers are focused on software, he said.