(Bloomberg) — Stellantis NV will lean on partnerships with Foxconn Technology Group, Waymo and BMW AG to generate about 20 billion euros ($23 billion) in extra revenue from software-driven features in its vehicles by the end of the decade.
The maker of Jeep, Chrysler and Fiat brands is extending existing tie-ups with Apple Inc.’s assembly partner Foxconn and Alphabet Inc.’s self-driving unit to build three new tech platforms by 2024, the manufacturer said Tuesday. The move will nearly triple the number of vehicles on the road to 34 million that can generate revenue from software.
“We don’t want to do everything ourselves,” Yves Bonnefont, Stellantis’s chief software officer said on a call with reporters. “We are better off with partners.”
The company is also planning to boost its own ranks of software engineers to 4,500, both through hiring and a dedicated academy to retrain staff. With Foxconn, the carmaker is setting up a venture to jointly design chips. Stellantis’s shares rose 1.3% Tuesday, taking gains this year to 40%.
Under Pressure
Stellantis is following rivals like Volkswagen AG in detailing plans for electrification, battery supplies and now software as the auto industry prepares for deep shifts in how vehicles are made and operate. Created in January following the merger of Fiat Chrysler and PSA Group, the sprawling automaker is also under pressure to make good on ambitious cost savings pledged as part of the deal.
Stellantis’s focus on revenue from software downloads and updates for services like navigation systems and maintenance shows how computer code is fast becoming the next battleground. By 2030, more than a fifth of automotive revenue will be software-derived, according to consultancy Capgemini SE.
Stellantis on Tuesday reiterated its plan to spend 30 billion euros by mid-decade on electrification and software, leaning on partnerships for the latter more than some of its peers.
Volkswagen set up a standalone software business called Cariad to pool the carmaker’s sprawling software efforts, though it has suffered a number of setbacks in getting off the ground. Ford poached a veteran of Tesla Inc. and Apple to spearhead digitization efforts, while Toyota Motor Corp.’s R&D unit is preparing an operating system with over-the-air software updates.
Read more: Daimler, Stellantis Tap Startup in Race for Solid-State Battery
“We really see software as a growth opportunity, something that can make a huge difference,” Bonnefont said, adding that updates that could be done every quarter would bolster profit margins.
The carmaker’s accord reached earlier this year with Foxconn will be extended for the development of four families of microchips to simplify its supply chain, according to a statement. This comes amid the industry suffering severe supply constraints that have idled production lines globally.
Stellantis and Waymo will start working on autonomous commercial vehicles for delivery services, the automaker said.
The BMW partnership dates back to a 2017 agreement with Fiat Chrysler to develop a self-driving vehicle platform. This will become one of the three platforms promoted Tuesday by Stellantis.
(Adds shares in fourth paragraph)
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