IBM Study Predicts Vehicles to Be Software-Defined and AI-Powered by 2035

According to IBM’s latest Automotive 2035 study, 74 percent of executives surveyed believe that by 2035 vehicles will be software defined and AI powered. The IBM Institute for Business Value published its fourth edition of the automotive industry longitudinal study, which outlines a transformative decade ahead for the automotive industry, driven by electrification and software-defined vehicles (SDVs).

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Key Trends Shaping the Automotive Industry

The study, based on 1,230 interviews with senior executives from OEMs, suppliers, and related industries across nine countries, highlights that over the next decade, 80 percent of new cars will have a powertrain that will be electrified to some extent.

The findings also reveal the following key trends by 2035:

Software-Defined Vehicles: 74 percent of executives believe vehicles will be powered by software and AI.

Brand Value Shift: 75 percent of respondents say a software-defined experience will be central to brand value.

Revenue Model Change: The industry is shifting from one-time vehicle sales to recurring digital service revenues.

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“The shift to software-defined vehicles (SDVs) was cited by the majority of industry executives as the key to future brand developments,” said Jeff Schlageter, Automotive Industry General Manager at IBM.

Industry Preparing for Digital Capabilities

The study highlights that the industry is preparing to offer deeper, more personalised user experiences that are enabled by digital capabilities. Currently, 21 percent of research and development budgets are currently allocated to software and digital developments, but respondents expect this to nearly triple to 58 percent by 2035.