With the rise of connected car technologies, what challenges are impacting the UK car industry?

The UK automotive software market is projected to nearly double from £1.05 billion in 2023 to over £2 billion by 2028, offering significant growth potential if the sector can overcome skill and innovation barriers.  This shift is being driven by software-defined vehicles (SDVs), artificial intelligence (AI), and new connected car technologies. These changes bring exciting growth opportunities, but also some major challenges for car makers, suppliers, and the whole industry. 

What’s changing? 

• More features in cars are controlled by software: In the past, most of a car’s value came from its engine and mechanical parts. Now, more and more features like safety systems, entertainment, and even how the car drives are controlled by software. Cars currently contain between 150 and 200 million lines of code, and this is projected to rise to 300-600 million by 2030, meaning car manufacturers need to focus less on nuts and bolts, and more on coding and digital technology. 
   
• Cars are becoming more complex: Modern cars can have up to 200 million lines of computer code, and this could triple by 2030. They can get wireless updates (like your smartphone), use AI for things like lane-keeping or parking, and connect to the internet for maps and music. Managing all this technology is complicated and requires new ways of working together between car makers, software companies, and tech suppliers. 

What are the main challenges? 

There’s a shortage of people in the UK with the right skills to write car software, work with AI and battery technology, or keep vehicles safe from hackers. Addressing these skill shortages is critical as it slows innovation and delays the transition to SDVs, while companies struggle to recruit and retain the necessary expertise.  Although the industry and government are working on training more people, it is still a big task.  

The complexity of SDVs will require closer collaboration between OEMs, Tier 1 suppliers, software developers, and cloud service providers, reshaping traditional supply chains. 

Some established car makers are used to building cars the old way and find it hard to change quickly. This can make it tough for them to keep up with newer, more tech-focused companies. 

With cars constantly updating their software, there are new questions about safety and following the rules. Regulators need to keep up, and car makers must make sure updates don’t cause problems or break the law.  Connected vehicles expose new attack surfaces, making cybersecurity a critical concern. Protecting vehicles and user data from cyber threats demands advanced security architectures and ongoing vigilance. 

As cars get more connected, they become targets for hackers. Protecting drivers’ data and making sure cars can’t be taken over remotely is an ongoing challenge. 

The upside 

If the UK can overcome these hurdles, there’s a huge opportunity for growth. The UK’s car software market could double in value by 2028, and the country is well-placed to be a leader in this new era of digital, connected vehicles—if it can adapt quickly and build up the right talent.