There was a time when the value of an automobile was almost entirely locked in its physical form: the displacement of its engine, the stiffness of its chassis, the efficiency of its drivetrain. That calculus is changing rapidly, and not just because technology has advanced. Evolving customer expectations have been a decisive force in shifting the industry's centre of gravity from hardware to software. Once buyers experienced the convenience of a connected smartphone - always updated, always personalised, always learning - they began asking the same of their cars. That demand has fundamentally accelerated the automotive industry's transition into a software-driven era.
The numbers reflect this shift clearly. The Indian connected car market is projected to grow at 16.7% CAGR by 2030. What was once a premium luxury feature - in-car apps, ADAS, remote connected services - is now a mainstream expectation even in compact SUVs and premium hatchbacks.
The Competition Has Moved
Automotive rivalry was built for generations on horsepower, torque, and fuel efficiency. Those engineering fundamentals remain important, but they no longer define differentiation on their own. Today, a buyer evaluates the quality of the infotainment interface, the responsiveness of driver-assistance systems, and the depth of the connected services ecosystem with the same scrutiny as the engine spec sheet.
Automakers are responding by building proprietary operating systems, app ecosystems, and digital user interfaces, turning the vehicle into a platform capable of hosting navigation, commerce, entertainment, and mobility services throughout its life. Remote lock/unlock, real-time vehicle tracking, app-based climate control, and natural-language voice assistants are no longer segment-topping extras; they are becoming standard expectations. For manufacturers, this software-led approach creates a meaningful path away from price-driven competition, enabling customer stickiness through digital experiences and subscription-based feature ecosystems that evolve with the owner.
The Car That Improves After Purchase
Over-the-air (OTA) software updates stand as one of the most consequential shifts in how the automotive industry relates to its customers. For the first time, the vehicle at the point of sale is not the finished product; it is the starting point. Bug fixes, performance refinements, map updates, new safety features, and even enhanced powertrain calibrations can now be delivered without a workshop visit.
The share of vehicles globally and in India equipped with OTA capability is rising steadily. This creates new commercial possibilities too: "features on demand", tiered service packs, and software unlocks allow customers to expand a vehicle's capabilities as their needs change over time. The product, in effect, has a living lifecycle rather than a fixed one.
From Moving to Learning
Connected vehicles generate a continuous stream of data, such as vehicle health telemetry, driving behaviour, energy consumption, and location patterns, creating a feedback loop that was simply not available to automakers even a decade ago. With 4G/5G networks and embedded eSIMs now becoming standard in higher trims, cars can run AI-driven features such as adaptive navigation, driver monitoring, and predictive maintenance that genuinely improve with usage.
For EVs specifically, this data layer is particularly powerful, since it enables smarter energy management, battery health monitoring, and usage-based insights that directly improve ownership satisfaction. At the same time, the industry must address the responsibilities this brings: data privacy, user consent frameworks, and cybersecurity infrastructure are not optional considerations; they are key to the promise of a software-defined vehicle.
Indian Consumer Readiness and Implications for OEMs
Perhaps the most important signal for the industry is how quickly Indian consumers have embraced this transition. According to Ken Research, India's connected vehicle market is projected to scale from approximately USD 475 million in 2025 to USD 1.36 billion by 2031, growing at a 19.2% CAGR. A study published by Deloitte in Feb 2026 shows that more than half of Indian car buyers, particularly in metro markets, now rank in-car technology and connectivity among their primary purchase criteria, not as a bonus over mechanical attributes. Hundreds of thousands of connected vehicles are already active on Indian roads, with telematics and app-based engagement data clearly showcasing that these features are being used, not just bought.
Winning in this era will require automakers to think and operate increasingly like technology companies: building resilient, scalable platforms; iterating on features in rapid release cycles; and treating user experience design with the same rigour as structural engineering. Deep collaboration with cloud providers, semiconductor manufacturers, and telecom operators will be essential to delivering the reliable, low-latency connected experiences that customers now expect as a baseline.
The vehicle of the future will be defined not just by how well it drives, but by how intelligently it adapts, how consistently it improves, and how seamlessly it integrates into a customer's digital life. Software, in the truest sense, has become the new horsepower.
Anand Kulkarni is Chief Products Officer, HV Engineering, TMPV & TPEM. Views expressed are the author's personal.