Jeep Maker Stellantis Bets on Software to Boost Revenue

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The auto maker plans to hire more engineers and triple the number of cars the software generates sales

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The auto maker, which owns several brands including Jeep, Chrysler and Peugeot, said it targeted annual revenue of €20 billion, or about $22.57 billion, by the end of the decade through software-led offerings and subscription-related sales. Has been doing. who make cars.

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“We believe that software is key,” said Mr. Tavares. “There’s no way we’re going to consider that this can be sub-contracted to someone else entirely,” he said.

Stelantis’ stock gained nearly 3.8 per cent in morning trading on Tuesday.

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The auto giant, formed through the merger of Fiat Chrysler Automobiles NV and France’s PSA Group earlier this year, said it also plans to leverage partnerships with BMW-maker Bayerische Motoren Werke AG and Alphabet Inc.‘s

Waymo LLC for autonomous driving offerings, and with Foxconn on creating the so-called Smart Cockpit – a revamp of a car’s dashboard designed for an ultra-connected vehicle – to reach revenue targets.

Stelantis is the latest car company to reveal targets and revenue projections related to its connected-car ambitions as the battle with Silicon Valley intensifies over the future of the automobile.

Other car companies, such as Ford Motor Company and General Motors Company.,

They are also moving rapidly to develop vehicles that have built-in connectivity and downloadable features that can be delivered directly to the car, making them much like other consumer electronics today.

Tesla Inc. has long led the industry on vehicle software and other technical features, integrating downloadable updates, similar to software upgrades on smartphones, as of early 2012.

The rest of the automotive industry has long tried to match Tesla’s capabilities, but only recently have they introduced such features to their vehicles. Analysts say it is also struggling to attract and retain the talent needed to develop in-house software expertise, often relying on tech partners to develop in-car apps and technologies.

Stelantis chief software officer Yves Bonefont said the partnership will still be critical to its technology strategy, but it wants to control more of the software value chain. He declined to provide margin estimates for the new business lines, saying only that they would be more like those distributed in the tech industry.

Stelantis said it will increase the number of software engineers it employs to about 4,500 by 2024, up from more than 1,000 today. It plans to triple its number of cars that can generate revenue from software to 34 million by 2030.

Over-the-air updates in many car models already allow users to download the latest version of the car’s navigation software, or choose from entertainment or driving apps. In the future, on-demand services may include the ability to purchase insurance based on vehicle usage, or the option to add horsepower to an electric motor prior to a road trip through rough terrain.

For example, specifically for Jeep owners, Stelantis plans to sell an off-grid trail navigation feature that will allow drivers to connect with each other in person or in convoy, even when there’s no network coverage. Yes, said Mr. Bonefont.

He added that the company wants to use artificial intelligence to develop a more customizable media interface that can predict what a driver needs in terms of navigation and comfort.

“This is something that will support Stelantis’ profitability, with the level of margins that we do with the traditional automotive business,” Mr Bonefont said on a call to reporters.

Many carmakers bet that growth and profits will come less from manufacturing and selling cars and more from features like connected car services and apps. Although software in gas-powered cars has been around for years, the shift to electric vehicles is putting computing at the heart of the car.

Almost a year after his tenure, software strategy marks another big step for Mr Tavares, who has pledged to unveil a long-term strategic plan for the group in the coming months.

In July, Stelantis announced plans to spend more than $35.5 billion by 2025 to release a range of new plug-in models, joining several other carmakers in telling it it was in the industry’s rapid EV race. How does it intend to compete. Stelantis said that by 2030, 70% of its vehicle sales in Europe and more than 40% of its sales in the US will be electric models — targets that analysts say are the industry’s most ambitious.

The company said the deal with Foxconn to develop the semiconductor will meet more than 80% of the carmaker’s needs. The first chips from the partnership will be installed in vehicles from 2024. Stellantis said the agreement will help streamline its supply chain.

The move comes after a serious chip shortage has forced factories to close in the global auto industry. Ford last month outlined a strategic agreement with US-based semiconductor maker GlobalFoundries Inc.

To develop chips. GM also said it is building relationships with some of the biggest names in semiconductors—including Qualcomm. Inc.

and NXP Semiconductors have agreements to co-develop and manufacture NV- and computer chips.

Nick Kostov at [email protected] and Nora Naughton at [email protected]

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