Believe it. In the next decade, the automotive industry will face a magnitude of change that has not been in a century. This change will e driven primarily by four mutually reinforcing trends, i.e., autonomous, connected, electric, and shared (ACES) vehicles. These will result in different user behaviors and mobility preferences, shifting value pools, innovative business models., and new entrants into automotive. All of these trends are enabled by the advancement of technology in electronics and software.
The global software-defined vehicles market size is expected to grow from USD 34.2 billion in 2022 to USD 81.6 billion by 2027, at a CAGR of 19%. The increasing adoption of semi-autonomous and autonomous vehicles due to the projected increase in the safety of passengers and pedestrians is the crucial factor boosting the market’s growth. The pivot from a hardware to a software orientation is a dramatic redirection that will pay off. For example, Tesla’s software-centric innovations extend battery range through over-the-air (OTA) updates.
Source: DOT, AcceleratingBiz
Regarding vehicle automation levels, the US department of transportation has adopted SAE International’s on-road motor vehicle automation framework to accelerate the development of regulatory policies, monitor autonomous vehicle development, and share best industry best practices with car manufacturers.
While passenger car and light commercial vehicle sales will increase slightly from 89 million vehicles in 2019 to 2030 (just higher than 1 percent CAGR), the automotive software and electronics market is projected to grow at nearly four times that rate during the same period. Making up the largest market share, electronic control unit (ECU) and domain control unit (DCU) sales are expected to reach USD 144 billion by 2030. The second-largest market share will be software development, with a revenue potential of USD 83 billion by 2030. Power electronics is the fastest-growing component market, with EV adoption fueling an expected CAGR of 23 percent through 2030. Finally, sensors are projected to grow at a compound annual rate of 7 percent, driven by AD/ADS sensors
Automotive software is projected to double in size from USD 31 billion in 2019 to roughly USD 80 billion in 2030, a CAGR of more than 9 percent. ADAS and AD software will account for much of this growth and makeup almost half the software market by 2030. Infotainment, connectivity, security, and connected services will also grow at pace with the overall software market, becoming the second-largest by 2030. This growth is driven by a high share of connected vehicles and demand for features such as in-car payments, location-based services, and music streaming.
The automotive software and E/E component market will proliferate, with significant segment-level variation driven by the disparate impact of the ACES trends. In addition, the trend toward a more centralized software and E/E architecture will drive the market’s expected expansion through 2030 (projected at a 7 percent compound annual growth rate).
In sum, AI in the automotive market, according to the Global Market Insights report, exceeded USD 6 billion in 2022 and is projected to expand at over 55% CAGR from 2023 to 2032. The rising adoption of autonomous vehicles worldwide will drive industry growth. Furthermore, Advance Driver Assist System (ADAS) level 2 technology is becoming increasingly popular. The rising need for ADAS systems that aid human drivers in making intelligent driving decisions is promoting the application of AI in the automobile industry.
Source: Global Market Insights Inc.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech