Automotive OEM Restructuring for Data Monetization and Innovation - Part 1

Automotive OEM Restructuring for Data Monetization and Innovation - Part 1

Over the past decade, major automakers have radically reorganized their businesses to transition from hardware-centric manufacturers into software-driven mobility companies. Between 2015 and 2025, global OEMs (like Volkswagen, Mercedes-Benz, General Motors, Toyota, BMW, Hyundai) and Indian OEMs (Tata Motors, Mahindra, etc.) have launched dedicated software divisions, hired thousands of developers, and internalized critical software, data infrastructure, and AI competencies.

This strategic restructuring allows them to simultaneously pursue portfolios of low-to-medium-risk innovations (e.g. connected services, apps, feature upgrades) while orchestrating high-stakes, long-term platform bets (like unified vehicle operating systems or autonomous driving platforms developed in-house). A unifying theme is treating vehicle and user data as a monetizable product – enabling new revenue streams through digital services – rather than as a mere operational byproduct. This post provides a detailed timeline (2015–2025) of these transformations and case studies of key OEM initiatives (Volkswagen’s CARIAD, Mercedes-Benz’s MB.OS, GM’s Ultifi, Toyota’s Woven Planet, etc.). It compares how different OEMs evolved their internal software and data platforms and analyzes the impact on traditional suppliers, cloud partners, and simulation/AI tool vendors. All findings are supported by citations from investor reports, official press releases, earnings calls, and industry analyses.

Timeline (2015–2025): From Hardware to Software-Defined Vehicles

2015–2018: Laying the Groundwork for Software Competence

Early Recognitions of Change: Around their centennials, incumbent automakers recognized the threat of tech companies and the need to control the “brains” of future vehicles. In 2016, BMW’s R&D head Klaus Fröhlich warned that automakers must avoid becoming mere hardware assemblers for Silicon Valley. He outlined plans for a “completely overhauled company” where 50% of R&D staff would be software and computer engineers (up from ~20% in 2016), in order to keep the “most intelligent car” as a core competence. His concern: “preserve our business model without surrendering it to an internet player…otherwise we end up as the Foxconn for a company like Apple”. This sentiment was shared across the industry as tech firms (Google/Waymo, Apple) and startups began encroaching on autonomous driving and connected car services. Investing in Tech & Talent: Automakers started hiring software talent and investing in tech ventures. BMW in 2015–2017 hired hundreds of digital specialists (e.g. a 200-strong Chicago team from Nokia’s HERE maps) and, along with Audi and Mercedes, co-purchased HERE Maps in 2015 to have an in-house data platform for maps and vehicle data sharing. Mercedes-Benz and BMW also established CASE (Connected, Autonomous, Shared, Electric) as a strategic focus around 2016–2017, creating internal labs and venture funds (e.g. Daimler’s Lab1886, BMW iVentures) to incubate mobility startups – low/medium-risk bets outside the core. In India, Tata Motors and Mahindra began leveraging their IT arms (TCS, Tech Mahindra) for telematics and infotainment projects, anticipating the software-defined shift. First Connected Platforms: OEMs launched initial connected car platforms, often with external help. For example, Toyota in 2016 set up Toyota Connected (with Microsoft Azure) to build a cloud-based Mobility Services Platform, aiming to “collect data from connected vehicles and monetize it via services like car-sharing, usage-based insurance, and predictive maintenance”. This early collaboration with AWS was to ensure a secure, enterprise-wide data platform spanning all Toyota vehicles globally, foreshadowing data’s value. Similarly, GM expanded its OnStar telematics services and by 2018 started outlining a “Vehicle Intelligence Platform” electronics architecture to handle OTA updates and data at scale.

2019–2021: Formation of Dedicated Software Organizations

Volkswagen Group – “Car.Software” Organization: A pivotal moment came in 2019, when VW announced it would boost in-house software development from <10% to ~60% by 2025. To achieve this, VW created an independent unit called the Car.Software Organization (launched Jan 1, 2020) with an initial 3,000 software engineers consolidated from across Audi, Porsche, VW, etc. The plan was to scale this to over 10,000 digital experts by 2025 through hires, acquisitions, and partnerships. VW’s goal was a uniform software platform for all its brands – including a new vehicle OS (“vw.os”) and an automotive cloud – deployed in all new models by 2025. This was a high-stakes, long-term bet to unify dozens of vehicle ECUs under one software architecture (VW’s “E³ – end-to-end electronic architecture” program). It was prompted by software issues in early EVs(the ID.3’s launch in 2020 was delayed by software glitches) and by Tesla’s vertical integration advantage. By July 2020 the unit was rebranded “CARIAD” (Car.I.A.D = Car, Intelligent Automotive Device) and became VW’s internal software company. VW invested heavily: recruiting 1,000+ new software hires in the first year and partnering where sensible – e.g. with Microsoft (VW.AC) for cloud infrastructure and later with Bosch for automated driving software. Still, CARIAD would develop the critical pieces in-house: a unified OS, software-defined vehicle platform, and software features like ADAS algorithms, infotainment, EV charging software, etc. VW’s Board explicitly saw this internal software build-up as increasing its share of vehicle value-add and “controlling a much larger share of value creation in digitalization” going forward. (By 2023, CARIAD had faced delays and was restructured under new leadership to “accelerate E³ platform implementation” while serving as an internal software supplier to brands).

Mercedes-Benz – MB.OS Strategy: Daimler (Mercedes-Benz) also moved to centralize software development. In 2019–2020, under CEO Ola Källenius, Mercedes formulated its own proprietary Mercedes-Benz Operating System (MB.OS) to debut mid-decade. In 2020, they hired a Chief Software Officer and struck a notable partnership: Mercedes-Benz and NVIDIA (2020) agreed to jointly develop next-generation in-car computing for automated driving and AI, which would form part of MB.OS. By 2021, Mercedes announced it would hire 3,000 new software engineers and even created a new €200 million R&D center in Sindelfingen dedicated to software development. This in-house software push was to replace the old “patchwork of suppliers” with a more vertically integrated approach. As Mercedes’ Chief Software Officer Magnus Östberg said, “We take responsibility for software architecture and integration – that is our main goal… the parts most important for us, we do in-house”. By 2022, Mercedes had ~9,400 software staff globally and was on track for 10,000+ , developing MB.OS’s base layers internally for full control over the customer interface and data. The company targeted a 2024 launch (with its new EVA2 and MMA vehicle platforms) for MB.OS and demonstrated how it would enable constant OTA upgrades and new revenue from services. In short, Mercedes treated MB.OS as a strategic platform bet, while continuing incremental digital improvements (like the MBUX infotainment system introduced in 2018 and updated in 2020 with over-the-air update capability – a medium-risk innovation that kept customers engaged until MB.OS arrival).

General Motors – Ultifi and Ultimum Architecture: GM’s transformation ramped up in this period as well. In 2016 GM had acquired Cruise Automation (a moonshot bet on autonomous driving), but it also started revamping its core vehicle software. In 2019, GM rolled out a new electrical architecture (Global B or Vehicle Intelligence Platform) to support high-speed data processing and OTA updates. Building on that, in September 2021 GM announced “Ultifi”, an end-to-end vehicle software platform to launch in 2023. Ultifi (Linux-based and developed largely in-house) sits as an “umbrella” software layer over existing OSes, abstracting hardware so GM can update features, enable apps, and offer subscriptions throughout a car’s life. Executives described Ultifi as “a big next step in our software strategy…today cars are enabled by software; with Ultifi they’ll be defined by it.”. GM’s approach combined internal development with selective external tools: for example, Ultifi coexists with Android Automotive OS (for infotainment) in GM vehicles, but GM positions Ultifi as covering the whole vehicle, not just infotainment. This allows GM to open the car to third-party developers (via Ultifi’s Linux platform) on GM’s own terms. By centralizing control, GM can unlock use cases like safety features tied to sensor data (e.g. automatically engaging child locks if interior cameras detect kids) and sell upgrades like enhanced Super Cruise ADAS via OTA. During 2019–2021, GM also reorganized to support these goals: it created a dedicated digital business team and announced the goal of $20–25 billion in annual software and services revenue by 2030. This drove decisions like phasing out Apple CarPlay/Android Auto in future EVs (announced 2023) so GM could use its built-in Google-based system and “capture more data on how consumers drive and charge EVs” and not “share the customer with tech intermediaries”. (GM’s new digital cockpit, co-developed with Google, will tightly integrate navigation, EV routing, and even ads or suggestions, enabling GM alone to monetize those user interactions)

Toyota – Woven Planet Bet vs. Pragmatism: Toyota, historically conservative in software, made a bold move in 2018–2020 by launching Toyota Research Institute – Advanced Development (TRI-AD), later rebranded Woven Planet Holdings (2021), under CEO James Kuffner (ex-Google). This was set up as a quasi-startup subsidiary to develop a “software-first” vehicle platform called Arene and even build the futuristic “Woven City” living lab. Toyota’s ambition was for Arene to be an open vehicle operating system (allowing OTA updates, third-party apps, even licensing to other OEMs) – essentially Toyota’s answer to Tesla’s full-stack software. Woven Planet aggressively expanded in 2020–21, acquiring Lyft’s self-driving division and HD mapping firms, and planning to roll out Arene by 2025. This was Toyota’s high-stakes long-term play to internalize software and data at a massive scale. However, by 2022–2023, Toyota grew impatient with Woven Planet’s slow, idealistic approach. Ambitions were dialed back: deadlines slipped to 2027 for Arene, and Toyota’s new CEO in 2023 moved to fold Woven Planet more tightly in-house, renaming it “Woven by Toyota” and refocusing it on nearer-term, Toyota-specific software solutions rather than open platforms. Essentially, after investing in the “startup culture” approach, Toyota opted for a more pragmatic path: smaller, iterative software improvements that could be deployed sooner in Toyota/Lexus models. Examples include developing “feature-on-demand” upgrades (even whimsical ones like a manual-transmission simulator for EVs) and incremental ADAS improvements. Toyota did not abandon the core idea of internal software capability – in fact, it reinforced oversight by adding more auto industry veterans to Woven’s management. Concurrently, Toyota leveraged corporate partnerships for data infrastructure: a 2020 Toyota-AWS collaboration built a global cloud platform to “manage and monetize data from millions of connected vehicles” for services like usage-based insurance and predictive maintenance. So Toyota’s timeline saw a pendulum swing: big bets on software (2018–2021) followed by a course-correct to integrate those efforts into the main organization (2022–2025), ensuring they deliver tangible products (e.g. Toyota’s new Arene-based software to debut in the late-2020s vehicles) rather than just moonshots.

Others: Many other OEMs took similar steps in 2019–2021. Ford created an internal “Team Edison” for EV and software development and later split its business into Ford Blue (traditional) and Ford Model e (EVs and digital) in 2022. Stellantis (formed 2021) announced hiring 4,500 software engineers and investing €30 billion by 2025 on software and electrification, targeting €20B in annual software-enabled revenue by 2030. Hyundai Motor Group in late 2022 hosted the “Unlock the Software Age” forum, unveiling a strategy to convert all vehicles to Software-Defined Vehicles by 2025, backed by an internal Connected Car OS (ccOS) and a new Global Software Center. Hyundai committed ₩18 trillion (~$12.6B) through 2030 and had earlier (2019) acquired a tech startup, 42Dot, to jump-start its autonomous and connected software platforms. In summary, by 2021 virtually every major automaker had announced a software platform roadmap and was racing to hire talent – even if each packaged it differently, the underlying theme was internalizing core software and data expertise.

2022–2025: Software-Defined Vehicles Arrive; Monetization at Center Stage

As the mid-2020s arrive, many OEMs are deploying the fruits of these restructuring efforts:

Volkswagen Group (CARIAD) – faced challenges (CARIAD’s software 1.2 platform was delayed into 2023, affecting Audi/Porsche EV launches), leading to leadership changes. New CEO Oliver Blume in late 2022 imposed a “ten-point plan” including realistic software timelines and closer brand integration. By 2023, VW realigned CARIAD to focus on software-defined vehicle (SDV) architectures and “intensified partnerships”. Practically, this means VW still aims for a unified OS (now slated for 2025–26 launch on the new SSP platform), but it is more open to outside help (e.g. co-developing software with Audi and using Qualcomm’s system-on-chip for its unified architecture). VW’s strategy highlights a balance: CARIAD as an internal supplier of common software, but using “the best solutions on the market” via partnerships to fill gaps. Despite setbacks, VW remains committed to internal software dominance – it even inked a $2B deal in 2023 for CARIAD to take a 60% stake in a JV with Horizon Robotics in China, to internalize AD software for the Chinese market.

Mercedes-Benz (MB.OS) – is on track to introduce MB.OS in its new generation vehicles(CLA in March 2025 was the first to have it). In February 2023, Mercedes detailed MB.OS: it’s 100% developed in-house at the architectural level to “retain full control over the customer relationship and ensure data privacy”, while integrating select partners for certain services. For instance, MB.OS uses NVIDIA’s AI and Orin chips for automated driving and partners with Luminar (LiDAR) and Google (for map data and cloud), but all within a Mercedes-defined framework. This “chip-to-cloud” platform will connect all vehicle domains (infotainment, ADAS, powertrain, etc.) and crucially, allow OTA upgrades and feature activations over the vehicle’s life. Mercedes has already begun leveraging this new capability: it launched an in-car app store in 2023 and started offering subscription features (e.g. a yearly fee for rear-wheel steering on certain models). The company explicitly sees post-sale software updates as a revenue source, stating “we do believe there are subscription revenue opportunities for us”, with a target set by CEO Källenius to achieve high-margin digital revenues by 2030. Organizationally, Mercedes in 2023 also folded its mobility services and Formula 1 IT spinoffs back under one roof, indicating a consolidation of digital expertise. Overall, Mercedes-Benz’s high-stakes MB.OS bet is poised to pay off in brand differentiation (a luxury-specific user experience) and direct monetization (e.g. charging for Drive Pilot Level 3 automation or premium navigation content via its proprietary system).

General Motors (Ultifi and Beyond) – launched its first Ultifi-capable vehicles in 2023 (starting with EVs like the Cadillac Lyriq and Chevy Equinox EV). GM’s approach to monetization became very clear: by eliminating Apple CarPlay in EVs, GM ensures that data on driving, charging, and infotainment stays within GM’s ecosystem for analysis and new services. GM offers built-in Google Maps, Assistant, Spotify, etc., free for a period, but is building the habit so it can later upsell services on its terms. GM executives have highlighted opportunities like usage-based insurance, super cruise subscriptions, and even e-commerce or apps in cars as future profit centers. To support this, GM in 2022 opened a new software “Digital Business Innovation center” and re-trained many engineers in software skills. By 2025, GM plans to have millions of Ultifi-enabled vehicles on the road, each a node in a data-generating network. Data is fed to GM’s centralized databases (likely on a mix of Google Cloud and other cloud services, given GM’s partnerships) where it’s analyzed to improve products and create new offerings. GM’s long-term bet, aside from Cruise’s autonomous tech, is that a sizable portion of its revenue will come from software and data – making the car a platform similar to a smartphone on wheels.

Toyota (Woven by Toyota) – underwent a management change in 2023 that reinforces software’s importance. New CEO Koji Sato created a “Software HQ” to coordinate across Woven and mainline engineering. Woven’s Arene platform is being refocused to gradually roll out software-defined features on Toyota’s next-gen EVs around 2026–27 rather than a big-bang launch. In the interim, Toyota is monetizing data via its Connected Services (telematics subscriptions) and has even started exploring vehicle-to-everything data platforms with partners. For example, Toyota’s big data from connected cars is used in Japan to provide traffic information services and in the U.S. to develop insurance products via its new insurance arm. Toyota has thus turned some data projects into low-risk, immediately monetizable initiatives (e.g. offering Safety Connect and Service Connect subscriptions, which are powered by Toyota’s AWS-built cloud that processes data in near real-time for services like emergency assistance). This two-tier approach – steady revenue from current connected services, and long-term investment in the full SDV software stack – mirrors the portfolio strategy of balancing risk.

BMW – by 2025, BMW will introduce its “Neue Klasse” EV platform, which is said to feature a highly centralized computing architecture and a new in-house OS (often referred to as BMW Operating System 8 / 9). BMW’s incremental approach means it has already deployed many software-defined features: OTA updates since 2019 on capable models, an in-house personal assistant (“Hey BMW”), and functions on demand (e.g. subscriptions for features like heated seats or advanced driver aids). While BMW faced some public backlash for the idea of microtransactions in cars, it underscored their mindset of data and software as ongoing revenue streams. Internally, BMW has a robust data platform called “High Performance D³” (Data-Driven Development) which since 2019 has aggregated driving data for training ADAS algorithms. This platform enables extensive simulation – BMW simulates 240 million virtual kilometers for autonomous driving development – largely using its internal HPC and algorithms, with tools from partners (like simulation software from dSPACE or Intel’s SVL, etc.). By keeping such capabilities in-house, BMW reduces reliance on external simulation vendors, using them as tools rather than outsourcing the core learning. On the supplier front, BMW in 2022 decided to partner with Qualcomm and Arriver for ADAS software, effectively taking software development partially in-house (by directly working with a Tier-2 software supplier rather than buying a turnkey system from a Tier-1). This gives BMW more control over integration and data, while still sharing development costs – a hybrid buy/build model.

Hyundai Motor Group – is rapidly executing its 2022 roadmap: By 2025, all Hyundai, Kia, Genesis models will support OTA updates and Feature-on-Demand (FoD) services. Hyundai established a Global Software Center (hiring thousands of developers in South Korea, India, etc.) and is internalizing a Connected Car Operating System (ccOS) to run on new integrated vehicle controllers. Notably, Hyundai claims its ccOS is internally developed and optimized for performance and security. This reduces dependency on third-party vehicle OS providers. Hyundai still uses partners where sensible – for instance, it uses NVIDIA’s Drive platform as the hardware/software backbone for infotainment and some autonomous functions in its cars (a deal since 2020 ensures every Hyundai/Kia has an Nvidia chipset). But with its own software center, Hyundai can build the software applications on top of that hardware and keep the IP for features (ADAS algorithms, connected services, UI/UX) largely in-house. They anticipate 20 million connected cars in their cloud by 2025 generating data that Hyundai can leverage for new “smart mobility” services. Already, Hyundai’s shown concepts like connecting car data with smart city logistics and robotics (areas it’s expanding into, e.g. through its acquisition of Boston Dynamics). In short, Hyundai’s restructuring aims to internalize core software and data while leveraging its conglomerate structure (e.g. working with Hyundai Mobis for hardware, but keeping software logic internal).

Tata Motors / Jaguar Land Rover – By 2025, Tata’s luxury arm JLR will roll out its “Panthera” EV platform developed in-house (rather than buying a third-party EV skateboard). This decision to “go it alone” on a core EV architecture reflects a broader trend of preferring in-house development for long-term differentiation, even for hardware. On software, JLR announced that starting 2025 all its vehicles will run on NVIDIA’s Drive platform for software-defined features– but crucially, this is a platform JLR’s own engineers will utilize to build custom applications (JLR calls it a “software-defined platform” delivering driver assistance, safety, and personalization features). JLR is hiring talent and partnering with Tata Technologies and Tata Consultancy Services to accelerate software-defined vehicle development. For example, Tata Technologies is helping digitize JLR’s development processes and Tata Communications provides connected car networks – keeping much of the work within the Tata ecosystem. Tata Motors (the Indian brand) is also benefiting from this know-how for its domestic vehicles (e.g. the connected infotainment in Tata Nexon EV is built with TCS). We see medium-risk initiatives like Tata Motors launching iRA connected apps and fleet telematics in India now (often built with group IT support), while big bets like a unified EV software architecture will come via JLR’s efforts a bit later.

Mahindra & Mahindra – Though smaller in scale, Mahindra has charted a software strategy alongside its EV plans. It formed an “Electronic, Vehicle, and Software” division in recent years and has partnered with global players for expertise. For instance, Mahindra engaged Vector Informatik (Germany) to design an SDV architecture that lets Mahindra more efficiently manage software integration across suppliers. This indicates Mahindra is creating internal reference architectures and standards – a form of internalization that guides external vendors. Mahindra also partnered with Sibros (a California-based connected vehicle platform) to implement OTA update and data collection capabilities in its upcoming Born Electric Vehicle (BEV) lineup. By using a modern startup’s platform but integrating it for their products, Mahindra can quickly gain an in-house controlled OTA system. They also leveraged Tech Mahindra (part of their group) to set up simulation and validation for ADAS. While Mahindra still relies on partnerships (it will use VW’s MEB EV components for some SUVs, for example), it is clearly aiming to own the software stack on those components, as evidenced by statements from its engineering head about a “centralized computing architecture” and plans for connected services revenue in the late 2020s (including possibly offering battery subscription models, etc.). Mahindra’s restructuring is less public, but it reflects the general industry pattern in a scaled-down way.In summary, by 2025 the industry has broadly achieved: (a) the rollout of vehicles that can be enhanced via software after production (the hallmark of software-defined vehicles), (b) internal organizations and talent pools dedicated to software, and (c) initial monetization of software and data (through subscriptions, app stores, usage-based services). Next, we compare how each OEM balances internal vs. external efforts in software, data, and simulation.

Between 2015 and 2025, global and Indian automakers undertook a sweeping transformation — reorganizing themselves from traditional hardware manufacturers into software-centric mobility and data companies. What began as cautious experiments in connectivity matured into high-stakes platform bets: full-stack vehicle operating systems, in-house ADAS algorithms, subscription-based feature monetization, and connected ecosystems built to harness and monetize vehicle data.

Across Volkswagen’s CARIAD, Mercedes-Benz’s MB.OS, GM’s Ultifi, Toyota’s Woven, Hyundai’s ccOS, and India’s Tata and Mahindra efforts, the strategic intent is clear: internalize core software and data capabilities, control the vehicle-user interface, and unlock new post-sale revenue streams. The results are now tangible — with production vehicles running on in-house software platforms, OTA update ecosystems, and live examples of software-based monetization.

• Further parts explore- Internal vs External Software & Data Efforts (comparitive matrix), Impact on external vendors & buy vs build dynamics, Org design & Innovation governance changes, New Monitisation Models *

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