Software is set to become the dominant deciding factor in vehicle purchases in the coming years, both for autonomous driving features and in-car entertainment, automotive experts say.
But the change may put traditional vehicle brands at a disadvantage, they warn, prompting more motorists to test-drive an electric car from an unknown manufacturer.
The predictions follow the rise of some lesser-known brands in Australia such as BYD and GWM, and as several Chinese brands prepare to launch electric vehicles in Australia such as Zeekr and Geely Auto.
Thoughtworks analyst Michael Fait says software will become the most important part of future cars. (HANDOUT/ThoughtWorks)
The automotive market had already begun to transform as consumers demanded more infotainment options, advanced assistive driving features, and better connectivity in cars, Thoughtworks software-defined vehicles head Michael Fait told AAP.
Their demands, he said, placed particular pressure on legacy vehicle manufacturers such as Toyota, Mercedes and Volvo which had long focused on mechanical superiority rather than software development.
"It used to be that hardware brought innovation to a car - if you had a faster engine, you could drive faster," he said.
"Now software becomes the main differentiator for the experience you have with the car."
Software powered by neural networks was already supporting advanced driving features such as lane guidance and assistive cruise control, and more cars were adding hi-tech extras such as passenger and rear seat screens and advanced voice assistants, Mr Fait said.
More motorists also expected vehicle software to be updated regularly and over the internet, he said, which was a foreign concept to traditional car makers and had given emerging electric car brands an advantage.
"Right now we have companies, especially in China, which don't have the organisational legacy, which don't (face) the complexity of building a combustion engine, and they can really focus on building great software and producing cars very cheaply," he said.
"It will be hard, without partnerships, for European (manufacturers) to compete."
New electric car brands rolling out in Australia may have a tech edge over established automakers. (Dan Himbrechts/AAP PHOTOS)
Of the new cars sold in Australia during the first half of 2024, 15 per cent were imported from China, according to the Federal Chamber of Automotive Industries, though brands including BYD, MG and GWM were growing in popularity.
More Chinese electric vehicle manufacturers are expected to launch vehicles in Australia over the next year, including XPeng, Geely Auto, Zeekr and GAC Motor.
Some emerging car brands were acquiring software companies or partnering with technology brands to enhance their vehicle offerings, Swinburne University future urban mobility professor Hussein Dia said.
BYD, for example, joined with Nvidia to add artificial intelligence technology to its vehicle software.
"The vehicle of the future will be like a smartphone on wheels," Professor Dia said.
"You can imagine once you have smart devices in the car, whether that involves advanced chips or computer systems, there is nothing to stop generative AI add-ons coming in to advance the driving or riding experience."
But Mr Fait said automotive developers would need to apply artificial intelligence carefully in vehicles and ensure driver oversight, just as safety regulators insist vehicles retain some physical controls.
"We don't want a car just to act on its own or act without confirmation because the potential for harmful things is just too big," he said.
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