Over 50% Of A Car’s Value Now Comes From Software: Tata Elxsi’ Sundar Ganapathi

For decades, the automotive industry competed on horsepower, fuel efficiency, and build quality. Today, that battleground has shifted decisively to software. Cars are no longer just machines, they are becoming ‘software on wheels’ that continuously evolve over time. Much like smartphones, modern vehicles can receive over-the-air updates, unlock new features, and even optimise performance based on how they’re used.

This shift is being driven by software-defined vehicles (SDVs), a concept that is rapidly gaining ground across the industry. From predictive diagnostics and connected services to feature upgrades after purchase, SDVs are fundamentally changing ownership experiences and opening up new revenue streams & business models for the Industry players. But beyond the buzzword, what does it truly mean for carmakers and customers?

In a conversation with Utkarsh Agarwal, Editorial Lead at BW Auto World, Sundar Ganapathi, Chief Technology Officer of Automotive Business at Tata Elxsi, explains how software is now at the heart of vehicle value, why automakers are investing heavily in owning it, and why the modern vehicle buyers are increasingly prioritising experience, features, and intelligence over traditional metrics.

Highlights From The Conversation

• Software now contributes over 50 per cent of a car’s total value
• Shift from 70+ ECUs to single-digit controllers in advanced architectures
• OTA updates, predictive diagnostics, and feature upgrades are redefining ownership
• OEMs are increasingly owning software instead of relying on tier-1 suppliers
• Consumers are willing to pay for more features
• AI seen as a co-engineering assistant, not a replacement for engineers
• India is catching up fast with global tech adoption in vehicles
• Battery Aadhaar and sustainability frameworks gaining momentum in India
• Safety focus shifting beyond crashes to driver monitoring and active prevention

Edited Excerpts

Q. Beyond the buzzword, what exactly is a software-defined vehicle (SDV), and how is it different from traditional vehicles?

It’s an interesting question, and there isn’t a single consistent definition across the industry because it means different things to different OEMs. At a high level, the concept has gained prominence because more than 50 per cent of a car’s value is now determined by its software content. The number of features enabled through software increasingly defines the vehicle’s value and price point.

Traditionally, vehicles followed a plug-and-play approach, where each feature was controlled by a separate electronic unit. This evolved into domain-based architectures and now towards zonal architectures.

In a true software-defined vehicle, you have significantly fewer ECUs and much more powerful centralised computing systems. For example, some modern architectures have reduced the number of controllers from around 70 to as few as seven. This consolidation and shift towards zonal architecture is what defines an SDV in its truest sense.

Q. What are the real-world benefits of SDVs for customers?

The biggest advantages fall into three areas. First is over-the-air (OTA) updates. Customers no longer need to visit service centres for software fixes or updates, they can be done remotely. Second is predictive diagnostics. Instead of fixed service schedules, vehicles can now be serviced based on actual usage and condition. This helps optimise maintenance, reduce servicing frequency, and lower ownership costs. And, third is the ability to add new features even after purchase. Much like smartphones, cars can receive additional functionalities over time, provided the hardware supports it. This ensures the vehicle remains up-to-date longer.

Q. How is the investment landscape shifting with SDVs? Are OEMs prioritising software?

Absolutely, the trend is very clear. OEMs now want to own software. Earlier, OEMs were largely system integrators, relying on tier-1 suppliers for electronics and software. But now, since software determines a significant portion of a vehicle’s value, OEMs are bringing software development in-house.

They continue to source hardware from suppliers, but application software, especially for areas like infotainment, ADAS, and body electronics, is increasingly owned by OEMs. This shift is driven by the need to control intellectual property and capture more value.

Q. How is Tata Elxsi investing in this space?

Instead of focusing on numbers, it’s better reflected through our platforms. We have our connected vehicle platform Tether, which already supports a few million vehicles on Indian roads. We’ve also developed an SDV platform called Avenir, which demonstrates how multiple features can be integrated into powerful computing systems.

These platforms are built through investments and partnerships with semiconductor companies and tool vendors. Our role is to build solutions, demonstrate value, and support OEMs in their transformation journey.

Q. With rising feature content, are vehicles becoming less affordable?

This shift is largely consumer-driven, not OEM-driven. Customers today expect the same level of connectivity and experience in their cars as they do in their homes or smartphones. They are willing to pay for these features.

At the same time, as volumes increase, the cost of electronics comes down. Features that were once limited to luxury cars are now available in mid and even entry-level segments.

Q. With increasing data generation, how are privacy and cybersecurity concerns being addressed?

Respecting data privacy laws and cybersecurity requirements is non-negotiable. The key lies in transparency and value exchange. If OEMs clearly communicate what data is being collected and how it benefits the customer, such as better battery life or optimised servicing, customers are more open to sharing data.

"Concerns usually arise around sensitive areas like location tracking. Building trust through clear communication and compliance with regulations is critical."

Q. Do we need more global safety regulations, especially with new technologies?

Safety frameworks already exist and are evolving. Standards like Bharat NCAP and Euro NCAP are expanding beyond crash safety to include areas like driver monitoring, accident prevention, and post-crash response. OEMs are also now actively highlighting safety ratings in their marketing, which wasn’t common earlier.

Rather than creating entirely new frameworks, strengthening existing ones and incorporating new safety parameters will be more effective.

Q. How is AI being used in automotive engineering today?

AI is best seen as a co-engineering assistant, not a replacement for humans. We use AI across the product lifecycle as in mechanical engineering for CAE optimisation, in electronics for circuit analysis and in software for requirements, design, and testing support.

However, generic AI models have limitations because automotive data is not widely available in the public domain. So, the focus is on customising and fine-tuning AI for specific automotive use cases. Applying AI selectively, where it adds value, delivers the best results.

Q. Can you share updates on Tata Elxsi’s rare-earth-free motor development?

We are currently working closely with an OEM on this and have completed the initial design phase. The project is now in the validation stage, and once completed, it will move towards production. We will be able to share more details once the partnership is formally announced.

Q. Last year, Tata Elxsi had showcased a Battery Aadhaar concept in India. What is the status?

Globally, this aligns with the battery passport concept introduced in Europe, which tracks the entire lifecycle of a battery. India is moving in a similar direction with Battery Aadhaar. While regulations are still evolving, our solutions are already designed to align with both European and upcoming Indian requirements. Once the framework is formalised, deployment should follow.

Q. What big opportunities do you see for engineering‑led sustainability in EV architecture, SDVs, materials and digital engineering?

The biggest gains come from combining lightweight EV architectures, battery-aware digital twins and software-defined energy management into one integrated stack. Our teams are building EV and hybrid platforms that use advanced materials, structural optimisation and virtual validation so OEMs can right-size batteries, improve safety and extend range with far fewer prototypes. This lines up exactly with the clear shift to AI- and software-led vehicles at CES 2026, making SDVs the main driver of low-carbon mobility.

Q. Lightweighting and material innovation are becoming critical for net zero. What is Tata Elxsi doing in this space and how much impact can it really have?

Lightweighting sits at the heart of our automotive work because even a 10–20 per cent reduction in structural mass delivers clear range gains and cuts emissions, where every extra kilo increases battery size and lifecycle impact. We help OEMs choose the right materials without compromising on safety, develop hybrid chassis concepts and optimise heavy subsystems like powertrains and body structures. Pairing these with digital twins for validation keeps costs and certification risks low while delivering real efficiency benefits.

Q. Any exclusive or significant sustainability initiatives in manufacturing, testing or development at Tata Elxsi?

We are embedding sustainability straight into our engineering workflows through simulation-led design, digital twins, virtual ECUs and recyclable material choices. This lets OEMs cut physical prototypes, reduce waste during development and optimise energy use in plants and testbeds. Our smart-factory simulations model energy consumption and scrap reuse before anything is built, while our MOBIUS+ platform manages sustainable battery lifecycles and recycling. It matches the industry move toward virtual engineering as core automotive ESG practice.

Q. What key mobility trends do you see emerging in India over the next 2–3 years?

India is no longer just a follower, we are much closer to global technology adoption now. Some key trends include:

• Software-defined architectures with ECU consolidation 
• Enhanced digital cockpits and user experiences 
• Growing demand for connected and feature-rich vehicles 

Customer preferences have shifted significantly. Today, buyers ask about display size, connectivity, and features like parking assist, rather than just mileage.

Author: Sundar Ganapathi, CTO of Automotive, Tata Elxsi.