THE NAVIGATOR

Automakers and suppliers have been embedding electronic control systems and software into vehicles since the mid-1970s. But Tesla fundamentally changed the game in 2012 with the introduction of the Model S. That car was arguably the first software-defined vehicle (SDV) and it led to a fundamental shift in how the industry designed new vehicles and how financial markets thought about the industry. However, 14 years later, as the Model S is about to drive off into the sunset, the legacy auto industry is still struggling to build vehicles with modern software and find a way to make money from them.

As a reminder, prior to the Model S, software and the underlying electronics, sensors and actuators were always tightly coupled together. Aside from addressing recalls for regulatory compliance, the software was not designed to be updated once the vehicle was shipped from the factory. For the most part, a car had the same functionality after 200,000 miles of use as it did when the owner drove it off the dealer lot, and there was no expectation that manufacturers would ever push out new capabilities during the car's life.