'Our Mt Fuji': Toyota has a mountain to climb on software

If you were to pick a company whose approach to automotive engineering ran directly counter to the software world’s ‘move fast and break things’ philosophy, then it would have to be Toyota. After all, this is a company whose strategic plans are measured in decades, not months. But Toyota also can’t ignore the march toward the software-defined car and the extra revenue that will undoubtedly come from having a global fleet of connected, updatable and data-generating vehicles. So what is the Toyota strategy? The answer – what else? – is that it will take the same methodical approach to software as does for vehicle development and manufacturing. Toyota says it will “achieve TPS in software”, referring to its famed Toyota Production System that mandates that production is stopped immediately a problem occurs, to prevent defective vehicles reaching the showrooms. Journalists were given an insight into the process at a November event by James Kuffner (pictured below), Toyota’s chief digital officer and the now head of the company’s software division, Woven Planet. But this was very different from recent software presentations from the likes of Stellantis, Mercedes-Benz, General Motors or Renault. No bumper revenue predictions were given, no chip company tie-ups were announced and no roll-out dates for the first Toyota software-defined cars were given. “Toyota tries to be humble. We want to under-promise and over-deliver,” Kuffner told Autocar Business when asked why. “We want to meet quality and safety standards and earn customer trust.” In terms of roll-out for the first car running Toyota's Arene vehicle operating system, Kuffner would only say it was global and would arrive “in the next few years”. Japanese newspaper Nikkei last year reported it would be 2025. As for revenue, Toyota would be one of the biggest beneficiaries of shifting to a properly monetisable operating system, reckons banking firm UBS. “Among legacy OEMs, we consider GM, Mercedes-Benz, Toyota and Hyundai as best placed for the software era”, UBS wrote in a recent report, indicating the company could earn between 10% and 20% of its revenue by 2030 from software-enabled services such as semi-automated driving, full robotaxis and connected services. First it has to roll out Arene, though. Kuffner has been working on the operating system since 2018, but despite that head start, he acknowledges the difficulty. As with other car companies working on their own software-defined vehicles, Toyota wants to centralise the car’s computing power so it controls all elements of hardware on board. That’s in contrast to now, where each element – windows, lights, infotainment etc – has its own brain, which then have to be painstakingly stitched together with software that only works with a single model. “Toyota actually has the hardest challenge. We have hundreds of hardware variants, not a dozen,” he said. Along with everyone else, Toyota wants to make its software “hardware independent”. That is, you design one piece of software you can distribute to every new model. “If we do it well, we develop it once and then we can amortise development costs over hundreds of vehicles and millions of customers,” Kuffner said. Kuffner draws on his experience working for Google, which he left in 2016 as head of the robotics division before moving to Toyota. Programming the Android operating system for phones, he says, is a whole lot easier because it has testing tools that allow you to debug using a virtualised version before sending it to a device. “That’s not available in cars because nobody has a standardised platform,” he said. Once Toyota has that standardised platform, it can also be chip agnostic, Kuffner says. While other car makers have inked deals with the likes of smartphone chip maker Qualcomm, Toyota reckons it can pick the right chip provider at a later date. “The whole point of software-defined is that we can put any chip in there,” he said. “In a smartphone if you run Android, you can use an Arm-based chip or an Intel-based chip. It doesn’t matter.” While the likes of Renault, Honda, Volvo and Ford are partnering with Google, Toyota is going it alone. It’s practically a mantra for the company and it was hardly likely to do any different. “Toyota has a basic stance that has been handed down internally over the years: we stick to our principles and internalise important elements by attempting to first achieve them on our own,” it wrote in its most recent company report. It points to its in-house design of ECUs in the 1990s, followed by the establishment of an electronics plant, a chip plant and a battery plant. This led to the development of the Prius, it reckoned. This brings us to another central Toyota tenet: ownership. “At the core of Toyota’s products created through this research and development always lies intellectual property,” the company report stated. Software isn’t a core strength, however, and Toyota is slightly hamstrung by the Keiretsu system that stipulates it turns to its own network of Japanese suppliers first, and for chips that means Denso. That’s not always the case: for example, it also uses Mobileye chips for ADAS. We don’t know what underpins the operating system that Woven Planet’s globally located 3000 software engineers are working on, but we’re promised it’s one that can be easily programmed by outside developers to create useful apps. It also heavily draws on information stored in the cloud – for example, for automated driving Toyota states that only 10% of the software needed will be on board. As to how Toyota will monetise its software, one clue was seen in recent announcement by Toyota’s Japanese Kinto leasing division that customers for the new Prius would get a discount on the lease if they promised to sign up to software updates. The idea is that the average age of the leased cars would increase, but would still feel fresh because they would always have the latest software. The Prius isn’t running Arene but the launch does mark the first time Toyota has released a car with updatable safety systems. This was more in line with Toyota’s vision of monetising software, as opposed to unlocking features on demand as Tesla, BMW or Mercedes might. "Tesla's customers are, to put it simply, high-income earners, and many of them are willing to pay for new and good things," Shinya Kotera, president of Kinto in Japan, told news agency Reuters. "Toyota's customers are not like that. They are not someone who would pay extra for a new technology. They are looking for something good, reliable and inexpensive." Toyota’s desire get the software right first time could be a limiting factor as competitors take the ‘minimal viable product’ route. “In the new approach to vehicle software, the priority is not on making software perfect at once - which no one will achieve - but to start with a solid base while at the same time having the capability to improve it very quickly,” Pedro Pacheco, automotive technology head at consultants Gartner, said. Given rival Volkswagen’s recent woes while trying to put software at the heart of the automotive experience, Toyota’s refusal to rush out software-defined cars could look prudent. On the other hand, Tesla already has 10 years under its belt manufacturing cars with high-performance computers and it remains the benchmark that others are racing to catch. However, Tesla was tiny when it started. Toyota is the world’s largest car company. The job is immense, Kuffner acknowledges: “It’s really Mt Fuji. That’s the size of the barrier we face.”