Why cars of the future will resemble “smartphones on wheels”

But the change could put traditional vehicle brands at a disadvantage, they warn, prompting more drivers to test drive an electric car from an unnamed manufacturer.

These predictions come as some lesser-known brands in Australia, such as BYD and GWM, are gaining popularity, as well as several Chinese brands preparing to launch electric vehicles in Australia, such as Zeekr and Geely Auto.

Thoughtworks analyst Michael Fait says software will become a key part of future cars. (THOUGHTWORKS MATERIAL/ThoughtWorks)

The automotive market has already begun to change as consumers demand more infotainment options, advanced driving assistance features and better connectivity in cars, Michael Fait, head of software-defined vehicles at Thoughtworks, told AAP.

Their demands, he said, are putting particular pressure on traditional automakers such as Toyota, Mercedes and Volvo, which have long focused on mechanical superiority over software development.

“In the past, innovation in cars came from the equipment – ​​if you had a faster engine, you could go faster,” he said.

“Software is now becoming a major differentiator in the driving experience.”

Neural network-based software already powers advanced driving features such as lane keep assist and cruise control, and more cars are adding additional high-tech features such as passenger and rear-seat screens and advanced voice assistants, Mr Fait said.

He added that more drivers also expect vehicle software to be regularly updated via the internet, a concept foreign to traditional carmakers and giving emerging electric car brands an advantage.

“Right now we have companies, especially in China, that don’t have the organizational background that can’t handle the complexity of building an internal combustion engine, so they can focus on creating great software and making cars very cheaply,” he said.

“Without partnerships it will be difficult for European (producers) to compete.”

New electric car brands entering the Australian market could have a technological advantage over established carmakers. (Dan Himbrechts/AAP PHOTOS)

According to the Federal Chamber of Automotive Industries, 15 per cent of new cars sold in Australia in the first half of 2024 were imported from China, although brands such as BYD, MG and GWM enjoyed increasing popularity.

More Chinese EV makers are expected to introduce their vehicles to the Australian market next year, including XPeng, Geely Auto, Zeekr and GAC Motor.

Some emerging car brands have been acquiring software companies or partnering with technology brands to expand their vehicle offerings, said Hussein Dia, a professor at Swinburne University who focuses on the future of urban mobility.

For example, BYD has partnered with Nvidia to add AI technology to its vehicle software.

“The vehicle of the future will be like a smartphone on wheels,” said Professor Dia.

“You can imagine that as we get smart devices in the car, whether it’s advanced chips or computer systems, there’s nothing stopping you from adding generative AI to enhance the driving experience.”

However, Mr Fait said carmakers will need to be cautious about using AI in vehicles and ensure driver oversight, just as safety regulators are demanding that vehicles retain some elements of physical controls.

“We don’t want the car to operate on its own or without confirmation because the potential damage is just too great,” he said.