Software-defined vehicles: From OTA refresh to modular vehicle renewal

However, not all vehicle domains are equally suited to this approach. Infotainment appears to be the most practical and scalable starting point. It is less safety-critical, easier to validate, and highly visible to the customer. Upgrading a cockpit or head unit can materially improve perceived modernity, responsiveness, and access to new apps or AI-driven interfaces. This makes infotainment refresh a strong candidate for multi-cycle lease repositioning. 

The case for advanced driver-assistance systems (ADAS) is different. While some software improvements can be deployed OTA, meaningful capability upgrades often depend on new hardware, such as higher-resolution cameras, improved sensors, or more powerful compute. Even when technically feasible, such changes are often constrained by validation and approval requirements. In practice, ADAS refresh potential depends heavily on whether the original platform was designed with sufficient hardware headroom or modularity. 

This is why the concept of plug-and-play central compute is strategically important. If future SDV platforms adopt replaceable central computers, cartridge-based compute modules, or modular cockpit electronics, OEMs could extend the digital relevance of a vehicle without a complete redesign. The vehicle would no longer be a single aging product, but a long-life mechanical asset combined with a shorter-life digital layer that can be selectively renewed. 

However, engineering is not the only constraint. Homologation is likely to be the biggest hurdle. Software and hardware changes that affect safety-relevant systems raise much larger approval and compliance questions than infotainment updates. As a result, the economic and regulatory case for modular refresh is much stronger in non-safety-critical domains than in ADAS. 

SDVs do turn cars from depreciating assets into upgradable platforms—suitable for reuse across multiple lease cycles. Multi-cycle leasing sounds promising but it’s hard to make work. Residual value risk, battery degradation issues in EVs, and operational complexity all get in the way. It works best when vehicles are truly software-defined, data systems are mature and OEMs control the lifecycle end-to-end. That explains why a lot of OEMs have been marketing multi-leasing schemes in recent months but without concrete implementation or measurable impact of the business model.  

S&P Global Mobility sees another challenge in the form of added costs on the operational side. OEMs will have to spend more on used cars to make them fit for the market while cannibalizing new car sales in the process. It remains to be seen if they will be able to balance this refurbishment effort versus the opportunity cost. OEMs might need to find a mix of hardware and software to make the cars feel “refurbished” instead of used. Multi-cycle leasing works best when modularity is designed in from day one.

Centralized or zonal architectures, modular head units, upgradable connectivity, and abstracted software layers all improve the ability to refresh and repackage vehicles over time. That said, the business case will also vary by region. In markets where new vehicles are already highly affordable, upgrading older assets may be less attractive than replacement. In others, especially where residual value matters more, SDV-enabled refresh could become a major lever for leasing profitability. 

Ultimately, multi-cycle leasing may evolve from a software update story into a broader model of modular vehicle renewal. The OEMs best positioned to capture this opportunity will be those that design vehicles not only for OTA updates, but for selective digital reinvention across the full lifecycle. It’s fair to say that no OEM has fully solved the multi-cycle leasing challenge yet, as each is attacking a different piece of the problem.