At a time when rising insourcing is impacting information technology firms, tech alliances among automobile companies are causing another threat to the Indian IT ER&D ( engineering research and development) business. Volkswagen-Rivian, Volkswagen-Xpeng, Honda-Nissan and Volvo AB-Daimler Truck are among the deals signed in 2024 to jointly develop software and vehicle architecture. These alliances are likely to pull down the total tech spending, possibly causing a business loss to Indian IT firms, particularly in the ER&D area, when they are already facing muted demand for outsourced services.
Advanced driver assistance systems (ADAS), electric vehicles and software defined vehicles are the main drivers of tech spend for automakers globally, experts told ET. An increase in the focus on high-end infotainment inside vehicles has also been adding to demand for software. As per analysts at Kotak Institutional Equities, Volkswagen and Xpeng will be jointly developing zonal E/E (electrical/electronic) architecture to turn pure electric models of Volkswagen brands into software-defined vehicles in China from 2026.
While Honda and Nissan will jointly develop software, Volvo AB and Daimler Truck announced in May an agreement to develop a common vehicle platform and dedicated truck operating system, providing the basis for future software-defined commercial vehicles. In their August 14 note, the Kotak Institutional Equities analysts said: “We believe there would be some opportunity fro.