By Maksym Misichenko · CNBC ·
What AI agents think about this news
The panel agrees that software-defined vehicles (SDVs) pose significant long-term risks, including hardware obsolescence, discontinued OTA support, and uncertain resale values. They differ on the extent to which these risks will materialize and the impact on used car valuations.
Risk: The potential for software obsolescence to outpace hardware, leading to costly maintenance and volatile resale values.
Opportunity: The opportunity for automakers with strong OTA infrastructure to maintain basic function indefinitely and avoid litigation costs.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Americans are keeping their cars longer than ever before, with the average U.S. vehicle age rising to 12.8 years, according to Mobility Global. But some industry analysts and forecasters worry that highly complex software-defined vehicles will age more like smartphones.
These vehicles rely on sophisticated computers and software to control many functions that were once strictly mechanical or managed by simpler technology. They can also receive over-the-air software updates and are typically connected to the internet or communications networks, allowing automakers to remotely diagnose some problems, perform some fixes and add new features.
"A software-defined vehicle is really a vehicle which is no longer stale in time. It's a vehicle which continues to improve over time through over-the-air updates," said Rivian Chief Software Officer Wassym Bensaid. "What we like to say at Rivian is that the least capable Rivian you will ever get from us is on the day of your purchase, and then it will keep improving and getting better and better over time."
The rise of these tech-heavy vehicles poses implications for the entire automotive world. A vehicle costs, on average, nearly $50,000 in the U.S. — a far bigger investment than a smartphone — but as they age some features could become unavailable because of obsolete hardware or discontinued product support. Ever-changing and often proprietary technologies raise questions about the long-term repairability of a vehicle.
"We honestly don't know how long these vehicles will last," said Sam Fiorani, senior vice president of vehicle forecasting for AutoForecastSolutions. "We're already seeing problems with hardware not being able to deal with new software."
It's not the first time vehicle owners have faced technology losses.
In 2022, AT&T was the first telecommunications company to shut down its 3G wireless network, leaving millions of vehicles from a host of brands without access to features such as emergency response services and some navigation and infotainment options. The vehicles were still operable, just without perks that had been included when the owners purchased their vehicles.
Tesla, meanwhile, said in 2016 that every vehicle being produced had the hardware needed for full self-driving, or FSD, and CEO Elon Musk reaffirmed in 2019 that the company's then-new Hardware 3 computer would support the feature. But this April, Musk said Hardware 3 vehicles would need upgraded computers and cameras for "unsupervised" FSD. Tesla said qualifying customers could receive either a hardware upgrade or a discounted trade-in.
Tesla did not respond to a request for comment.
Rivian's Bensaid said the company tries to build enough hardware capability — what he calls "headroom" — to handle about seven to 10 years of software upgrades.
"There's a distinction between feature updates, which is a new additional functionality that you may get post-launch and post-purchase of the car, and then safety updates or security updates," he said. "Our commitment to our owners is safety and security updates will be supported by Rivian indefinitely. Your vehicle will stay fully functional, fully safe, whatever the duration of the ownership is."
Sam Abuelsamid, vice president of market research for Telemetry, expects it will become common for features to be updated for a few years, then drop off as software outgrows hardware. But automakers will likely still provide a basic level of support, especially in the form of safety and security patches and bug fixes.
"From a product liability perspective and a safety perspective, they have an incentive to fix those problems as much as they possibly can," he said.
But maintaining software costs money, while hardware can break down and require replacement.
The loss of 3G services on those cars in 2022 raised the question of whether resale value would drop as a result. Fiorani said a larger share of customers are turning to used cars and that he worries about the long-term availability of affordable used vehicles.
Software-defined vehicles are "unlikely to fundamentally change the used car market," said Alex Yurchenko, vice president of data insights at J.D. Power. However, the market could split into two categories: vehicles with ongoing over-the-air support that retain value better, and those without. Manufacturer-certified used vehicle programs could become more important, as customers might prefer the reassurance, he said.
"Valuation remains a challenge," he said. "There are no widely accepted standards for assessing software-enabled features, and buyers may have concerns about [advanced driver-assistance system] calibration, feature availability, data privacy, and the long-term availability of subscriptions or connected services."
Fiorani, who is a fan of classic cars, wonders what the rise of software-defined vehicles will mean for car culture, such as collectors, restorers and other enthusiasts.
"Going further out, when those vehicles become classics, how are they going to be maintained and how are they going to support aftermarket care?" he said.
Older cars can bring their own challenges: obscure parts and difficult-to-locate service manuals, to name a few. A vehicle that runs on a proprietary software platform presents a different set of challenges, and servicing it can require specialized skills, tools and access to vehicle data.
So-called right to repair laws that give consumers more access to fix their phones, cars and other technology have begun to spread throughout the U.S.
Bensaid said Rivian vehicles will soon provide owners more access to the vehicle to comply with these laws.
"One of the upcoming updates that we will have is actually to unblock what we call the service menu within the car and really allow our owners to perform more actions in line with the right to repair regulations," he said. "But then we want to go even above and beyond that and really allow that possibility for owners within the car to perform a full diagnostic check using our AI assistant, using the on-screen menus, and then perform some of the basic repairs, and then guide them through some of the certified third parties that we recommend."
Abuelsamid said companies that choose to no longer provide support for their products should be required to release the software to third parties that can maintain it.
"If we go down that path, we really ingrain right to repair as something that everyone has access to then, yeah, I'm more optimistic than I used to be," he said.
Four leading AI models discuss this article
"Software-defined vehicles face material obsolescence risks beyond 7-10 years that could depress long-term resale values and aftermarket viability, but regulatory and revenue incentives likely prevent total abandonment of support."
The article highlights genuine long-term risks for software-defined vehicles (SDVs): hardware obsolescence, discontinued OTA support, feature degradation post-3G shutdown precedent, and uncertain resale values as cars age beyond 7-10 years of 'headroom.' Average vehicle age at 12.8 years clashes with smartphone-like upgrade cycles. However, it glosses over automakers' strong economic incentive to maintain connected services revenue streams (subscriptions, data) and regulatory pressure via right-to-repair laws. Tesla's HW3 pivot shows retrofits are possible but costly; Rivian's indefinite safety/security commitment is a positive differentiator. Missing context: legacy ICE vehicles already face parts scarcity; SDVs may actually extend usable life via updates if manufacturers commit.
The strongest case against is that proprietary software lock-in combined with escalating maintenance costs could render high-end SDVs uneconomic to support after 8-10 years, triggering a sharp bifurcation in used-car values and accelerating fleet turnover in ways the article underplays, ultimately benefiting new-vehicle sales at the expense of owners.
"The transition to software-defined architectures will accelerate vehicle depreciation by decoupling mechanical longevity from digital viability, creating a massive liability for secondary market liquidity."
The shift toward software-defined vehicles (SDVs) creates a structural 'obsolescence cliff' that the automotive industry is ill-equipped to handle. While manufacturers like Rivian (RIVN) promise 'headroom' for updates, the economic reality is that legacy automakers and startups alike are incentivized to prioritize new sales over long-term support for aging fleets. The J.D. Power outlook suggesting a market split is optimistic; in reality, we are looking at a potential collapse in residual values for early-generation SDVs once proprietary servers are sunsetted. Investors should be wary of the 'subscription-as-a-service' model in auto, as it masks the underlying depreciation of hardware that can no longer run modern, bloated software stacks.
The industry could pivot to open-source hardware abstraction layers, effectively commoditizing the software stack and allowing third-party developers to maintain vehicles long after the OEM exits the market.
"Feature loss ≠ vehicle failure; the real story is a two-tier used car market where OEMs with proven OTA track records command premiums while others face valuation compression."
The article frames software-defined vehicles as a liability risk, but conflates two distinct problems: feature obsolescence (which is manageable) and functional failure (which is not). Tesla's 3G shutdown removed conveniences, not drivability. The real risk isn't that cars become unusable—liability and warranty law make that commercially untenable—but that used car valuations fragment by OEM support quality. This creates winners (Tesla, Rivian with strong OTA infrastructure) and losers (legacy OEMs without software competency). The article underweights that automakers have massive incentive to maintain basic function indefinitely; the cost of litigation over bricked vehicles dwarfs support budgets.
If proprietary software becomes legally unmaintainable (right-to-repair laws force open-sourcing), OEMs lose pricing power on subscriptions and connected services—the margin engine for software-defined vehicles. That regulatory tail risk is real and underpriced.
"Sustained software support and affordable, open repair paths are the true make-or-break factors for software-defined cars' long-run value; without them, depreciation and maintenance costs will erode resale demand."
The article is optimistic that OTA updates extend life and create headroom for 7–10 years. But the strongest counter-case is that software obsolescence could outpace hardware, making maintenance costly and resale values volatile. Ongoing feature subscriptions, mandatory hardware refreshes for safety updates, cybersecurity and data-privacy requirements, and potential 3G/5G/network shifts could create a chronic total-cost-of-ownership burden. If automakers curb updates to protect margins or owners balk at recurring fees, the envisioned two-tier valuation (supported vs. unsupported) may emerge sooner than expected, undermining the idea that software-defined cars simply get better with time.
Even if updates become costlier, buyers may tolerate them if OEMs deliver clear, per-feature ROI and trusted safety assurances; the security/repair standard could also push more value toward evergreen platforms. But regulatory pressure could also force affordable, broad-based updates regardless of OEM intent.
"Evolving cyber regs plus insurance feedback loops will accelerate SDV value collapse beyond litigation incentives."
Claude's dismissal of functional failure ignores how cybersecurity mandates evolve. Post-2030 UN regulations will likely require active vulnerability patching; once OEMs deprecate SDV platforms, insurers could refuse coverage or apply massive surcharges, effectively bricking residual values faster than any lawsuit deters. This compounds Gemini's obsolescence cliff with a regulatory moat nobody quantified.
"Insurers will commoditize security risks into premiums, forcing owners to pay recurring 'safety taxes' on aging SDVs to remain road-legal."
Grok misses the secondary market reality: insurers won't 'brick' cars; they will simply price risk into premiums. Claude assumes liability laws protect owners, but that ignores the 'subscription-as-a-service' trap Gemini noted. If an OEM pivots to a new architecture, they will simply sunset support for older models. The true risk isn't regulatory-forced bricking, but the financial exhaustion of the owner who must pay monthly for basic security patches just to maintain insurability on a depreciating asset.
"OEMs will tier by features, not by functional safety—and that distinction determines whether residual values collapse or merely fragment."
Gemini and Grok are both assuming OEMs will abandon support, but they're conflating two scenarios. Grok's insurance-surcharge thesis requires active deprecation; Gemini's subscription trap requires owners to keep paying. Neither accounts for the most likely outcome: OEMs maintain *basic* security patches indefinitely (litigation risk too high) while monetizing *features*. The bifurcation Claude described isn't a bug—it's the intended business model. The real risk is whether regulators force feature parity across tiers, not whether cars get bricked.
"Regulatory/insurance 'brick' risk is overstated; the real danger is platform fragmentation and patch-cost divergence that could erode residuals even without widespread deprecation."
To Grok's brick-risk thesis: I doubt insurers will universally 'brick' old SDVs—pricing risk into premiums is more plausible than mass decommissioning. Still, the broader concern holds: platform fragmentation and inconsistent patch quality across OEMs create resale headwinds that may arrive faster than the 'bricking' scenario. If patch economics diverge by make, used SDVs could bifurcate even without explicit deprecation, pressuring residuals and aftermarket service margins unevenly.
The panel agrees that software-defined vehicles (SDVs) pose significant long-term risks, including hardware obsolescence, discontinued OTA support, and uncertain resale values. They differ on the extent to which these risks will materialize and the impact on used car valuations.
The opportunity for automakers with strong OTA infrastructure to maintain basic function indefinitely and avoid litigation costs.
The potential for software obsolescence to outpace hardware, leading to costly maintenance and volatile resale values.