Software Defined Vehicles: Reshaping the Automotive Ecosystem in the Nordics

Thomas Sheridan is a Senior Market Adviser at Enterprise Ireland Nordics.

From Products to Platforms

This year, I had the pleasure of visiting, for the first time, the VECS Automotive event in Gothenburg, where a consistent message emerged across OEMs, suppliers and technology partners: the automotive industry is undergoing a structural shift driven by software.

Vehicles, either commercial or private, are no longer being developed or considered solely as mechanical products. Instead, they are evolving into integrated platforms where functionality, performance and user experience are being continuously shaped through software improvements, including greatly enhancing battery charging efficiency. This transition is redefining how value is created, how vehicles are engineered, and how companies collaborate across the automotive ecosystem.

A Changing Value Chain

The traditional tiered supply chain model, a defining feature of the industry for many years, is becoming less rigid. Automotive manufacturers such as Volvo are moving closer to software providers, semiconductor companies and technology specialists, to build more integrated and strategic relationships with a wider variety of suppliers.

This reflects the growing importance of system-level integration, where software is central. As a result, the likes of Volvo and BMW are no longer simply integrators of supplier components but increasingly take ownership of core platforms and architectures.

For Irish companies, this shift creates opportunities to engage more directly with OEMs and contribute earlier to the development process, particularly in areas such as embedded software, electronics and advanced engineering services.

The Rise of the Software Platform & Shifting Sources of Value

A key theme across the conference was the move toward unified software platforms. Rather than managing fragmented systems and features, OEMs are consolidating functionality into scalable architectures that support continuous development. Companies such as Volvo are investing heavily in internal software capability, building dedicated teams and centres of excellence. 

While hardware remains critical, differentiation is increasingly driven by software, integration and user experience. Vehicles are now connected systems that generate and use data to improve performance and safety over time. This creates a continuous feedback loop, moving the industry away from one-off product delivery toward lifecycle-based value creation.

Rethinking Engineering and Development

The transition is also transforming how vehicles are developed. Model-based systems engineering, simulation and AI-supported tools are enabling faster iteration and reducing reliance on physical prototyping.

Artificial intelligence is increasingly used to support software development and system design. However, there remains a need for caution, particularly in safety-critical environments, as these systems are not fully deterministic, and there have been instances of AI -related safety features missing misinterpreted traffic hazards such as e-scooters. 

Organisational Transformation

A recurring insight from VECS 2026 is that the greatest challenge is not technological, but organisational. Legacy automotive companies, traditionally structured around mechanical engineering and long development cycles, are adapting to a more software-driven model. This requires new ways of working, with greater cross-functional collaboration, faster iteration cycles and more flexible structures. A key challenge is for teams not to become overwhelmed with the amount of data now produced, and to build mechanical processes which cope with constantly evolving software innovation.

Managing Complexity Through Integration

Modern vehicles are becoming increasingly complex, incorporating a wide range of technologies such as software systems, connectivity, electrification and advanced driver features. When different features are developed in isolation, it can slow development and create difficulties during integration. To address this, companies like Volvo and Scania are moving toward more structured approaches based on shared platforms. Instead of building each system separately, features are developed within a common framework that can be reused across multiple vehicles.

AI and the Future of Mobility

AI is playing an increasingly important role, not only within vehicles but across the development process. It is accelerating engineering workflows and enabling new capabilities in areas such as autonomy and route optimisation. At the same time, limitations remain, particularly in real-world decision-making. Examples discussed at VECS highlighted the importance of combining AI with structured systems to ensure reliability and safety.

Looking ahead, a key takeaway from VECS 2026 is that important Automotive players such as Traton Group and Volvo Cars are strongly focused on continuing to push the development of software-defined vehicles to enable new mobility models, including autonomous driving and shared mobility services. This progression, alongside continued advances in electrification, will reshape the automotive landscape over the coming years as software-defined vehicles become increasingly standard for commercial and personal transportation experiences.

The Nordic Context and Opportunities for Ireland

The Nordic region continues to lead in the transition toward software-defined vehicles, supported by advanced OEM ecosystems and a strong focus on innovation. For Irish companies, the Nordic OEM ecosystem offers opportunities to support in areas such as software, electronics, connectivity and data-driven solutions. There is a strong collaboration and openness mindset amongst the Nordic OEMs, such as Volvo AB, Volvo Cars and Scania, to build the next-generation vehicle solutions. 

Collaboration hubs such as MobilityXlab are programmes aimed at encouraging international companies to join partners in the Nordics to develop pioneering mobility solutions. Ireland’s strengths in these areas position it well to contribute to the development of next-generation vehicle platforms.

Conclusion

The shift toward software-defined vehicles represents a fundamental change for the automotive industry. It is not simply about adopting new technologies, but about rethinking how vehicles are developed, how organisations operate, and how value is created.

The direction is increasingly towards vehicles becoming platforms, development is becoming continuous, and the need for collaboration across the ecosystem is deepening. For companies that can adapt to this new model, the opportunities are significant.