Jeep Maker Stellantis Bets on Software program to Enhance Income

The auto maker, which owns a spread of manufacturers, together with Jeep, Chrysler and Peugeot, mentioned it’s focusing on €20 billion, or about $22.57 billion, of annual income by the top of the last decade via promoting software-led choices and subscriptions associated to the automobiles it makes.

“We consider that software program is core,” Mr. Tavares mentioned. “There isn’t a approach we’re going to think about that this may be completely subcontracted to someone else,” he mentioned.

Stellantis’s inventory rose about 3.8% in morning buying and selling Tuesday.

The auto big, fashioned earlier this 12 months via the merger of Fiat Chrysler Vehicles NV and France’s PSA Group, mentioned it additionally plans to leverage partnerships with BMW-maker

Bayerische Motoren Werke AG

and

Alphabet Inc.’s

Waymo LLC for autonomous driving choices, and with Foxconn on making so-called sensible cockpits—a revamp of a automobile’s dashboard designed for an ultra-connected automobile—to succeed in the income goal.

Stellantis is the most recent automobile firm to disclose targets and income projections associated to its connected-car ambitions because the battle with Silicon Valley intensifies over the way forward for the auto.

Different automobile corporations, resembling

Ford Motor Co.

and

Common Motors Co.,

are additionally transferring rapidly to develop autos which have built-in connectivity and downloadable options that may be beamed right down to the automobile instantly, making them extra like different shopper electronics at present.

Tesla Inc.

has lengthy led the business on automobile software program and different tech options, integrating downloadable updates, just like software program upgrades on smartphones, as early as 2012.

The remainder of the automotive business has lengthy tried to match Tesla’s capabilities, however has solely just lately began to debut such options on their very own autos. It has additionally struggled to draw and retain the expertise wanted to develop the software program experience in home, typically counting on tech companions to develop in-car apps and applied sciences, analysts say.

Stellantis Chief Software program Officer

Yves Bonnefont

mentioned partnerships will nonetheless be core to its tech technique however it needs to regulate extra of the software program worth chain. He declined to offer margin projections for the brand new enterprise strains, solely saying that they’d be extra like these delivered within the tech business.

Stellantis mentioned it will improve the variety of software program engineers it employs to round 4,500 by 2024, up from 1,000 at present. It plans to triple the variety of its automobiles that may generate income from software program to 34 million by 2030.

Over-the-air updates in lots of automobile fashions already enable customers to obtain the most recent model of a automobile’s navigation software program, or select from leisure or driving apps. Sooner or later, on-demand companies may embrace the power to purchase insurance coverage based mostly on a automobile’s use, or the choice so as to add horsepower to an electrical motor forward of a street journey via tough terrain.

As an example, for Jeep house owners particularly, Stellantis plans to promote an off-grid path navigation characteristic that may enable drivers to attach with one another individually or in convoys, even when there isn’t a community protection, Mr. Bonnefont mentioned.

The corporate additionally needs to make use of synthetic intelligence to develop a extra customizable media interface, one that may predict what a driver may want when it comes to navigation and luxury, he added.

“That is one thing that may assist the profitability of Stellantis, with a stage of margins that’s north of what we do with the standard automotive enterprise,” Mr. Bonnefont mentioned on a name with reporters.

Many automobile makers guess that development and income will come much less from constructing and promoting automobiles and extra from options resembling related automobile companies and apps. Though software program has been operating in gas-powered automobiles for years, the shift to electrical autos is placing computing on the coronary heart of the automobile. 

Almost a 12 months into his tenure, the software program technique marks one other massive transfer for Mr. Tavares, who has pledged to unveil a long-term strategic plan for the group within the coming months.

In July, Stellantis introduced plans to spend greater than $35.5 billion via 2025 to launch an array of latest plug-in fashions, becoming a member of numerous different automobile makers in laying out the way it intends to compete within the business’s intensifying EV race. Stellantis mentioned that by 2030, 70% of its automobile gross sales in Europe and greater than 40% of its gross sales within the U.S. will probably be electrical fashions—targets that analysts say are among the many business’s most formidable.

The take care of Foxconn to develop semiconductors would cowl greater than 80% of the automobile maker’s wants, the corporate mentioned. The primary chips from the partnership will probably be put in in autos from 2024. Stellantis mentioned the settlement would assist simplify its provide chain.

The transfer comes after a crippling chip scarcity that has closed factories throughout the worldwide auto business. Ford final month outlined a strategic settlement with U.S.-based semiconductor producer

GlobalFoundries Inc.

to develop chips. GM additionally mentioned it was forging ties with a few of the greatest names in semiconductors—together with

Qualcomm Inc.

and NXP Semiconductors NV—and has agreements in place to co-develop and manufacture laptop chips.

Write to Nick Kostov at Nick.Kostov@wsj.com and Nora Naughton at Nora.Naughton@wsj.com