OEMs Must Orchestrate the Connected Car Era or Risk Losing Value

According to SBD Automotive, the automotive industry is moving through a fundamental shift as vehicles become increasingly defined by software, connectivity and digital services rather than by hardware alone.

While carmakers still design, build and sell the vehicle, the value created around connected cars is increasingly being shaped by cloud platforms, software ecosystems, data analytics companies and third-party applications.

This change raises a critical question for original equipment manufacturers (OEMs): can they retain control of value in the connected car stack, or will they become providers of the physical platform while others capture the most profitable opportunities?

SBD Automotive frames the modern connected vehicle as a five-layer ecosystem. At the base are hardware and electrical/electronic architecture, including ECUs, sensors, connectivity modules and in-vehicle components. Above this sit operating systems, middleware and virtualisation technologies. Further up are vehicle applications such as infotainment, navigation, remote services and electric vehicle features. The upper layers include connectivity, shared services and cloud platforms, where data processing, analytics, artificial intelligence and developer ecosystems sit.

The challenge for OEMs is that data starts in the vehicle, but much of its commercial value is created higher up the stack. Raw telemetry from a car has limited value on its own. It becomes more valuable when aggregated across fleets, analysed at scale and converted into services that improve customer experience, support predictive maintenance, enable subscriptions or unlock new mobility products. Those capabilities are strongest in cloud and application layers, where technology companies and hyperscalers already have deep expertise.

At the same time, the customer interface is becoming more horizontal. Drivers increasingly expect their car’s digital experience to mirror the convenience of their smartphone, voice assistant or app ecosystem. This gives consumer technology companies greater influence inside the cockpit. OEMs are not losing control completely, but their role is changing from sole owner of the user experience to orchestrator of a wider digital environment.

SBD Automotive highlights that OEMs still have important strengths. They remain central to system integration, safety, homologation and lifecycle management. No external technology provider can easily coordinate the complex relationship between physical vehicle systems, battery management, regulatory requirements and cloud-connected services at automotive scale. OEMs also control vehicle access, data permissions and integration rules, giving them a gatekeeping role within the ecosystem.

However, their vulnerabilities are clear. In applications and customer experience, Big Tech can set user expectations faster than many carmakers can respond. In cloud and data monetisation, hyperscalers benefit from scale, infrastructure and cross-industry data network effects that most OEMs cannot match alone.

The strategic answer is not for carmakers to own every layer. Instead, SBD Automotive suggests that successful OEMs will focus on selective control and strong orchestration. They will protect the areas where they must lead, such as safety, integration, over-the-air updates, identity management and customer data governance, while partnering intelligently with cloud, semiconductor, telecoms and software players.

In the connected car era, relevance will be defined less by ownership and more by positioning. OEMs that manage the ecosystem effectively can retain influence, build recurring revenue and protect brand loyalty. Those that fail may find themselves trapped in lower-margin hardware roles while others capture the digital value surrounding the vehicle.