Automotive Software Market worth $32.3 billion by 2030
The global automotive software market size was valued at USD 19.0 billion in 2023 and is expected to reach USD 32.3 billion by 2030, at a CAGR of 7.8%, during the forecast period 2023-2030. The amount of software in vehicles has increased exponentially with the growing demand for automotive safety and convenience. This is evident from software used across various new-gen automotive applications, including ADAS/AD, advanced navigation systems, intelligent infotainment systems, and connectivity. New and legacy OEMs are developing their future vehicle lineup using a software-first approach. They have also announced plans to develop specialized software to create new revenue streams based on add-on features for a more customized driving experience.
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Opportunity: Developments in automated driving and software-defined vehicles
Automakers have started providing automated driving and vehicle safety systems in their vehicles in recent years. This is mainly led by regulations for vehicle safety systems and increasing demand for safer vehicles. This trend has led to over 60% of newly sold vehicles in the US having Level 2 ADAS systems and over 80% coming with at least basic ADAS features in 2023. A similar trend is seen across China, South Korea, Japan, and most European countries. These systems’ function based on inputs from various vehicle sensors, combining their inputs for vehicle and pedestrian safety. During the process, a vast amount of data is generated for implementing such decisions with algorithms in the vehicle's computer system. Hence, automotive software is the key to implementing advanced driver assistance systems in vehicles.
Driver: Advancements in infotainment systems
Increasing competition among automotive OEMs for best-in-class infotainment systems in their latest vehicles is a major driving factor for the evolution of market. Apart from music and basic navigation, the OEMs have also been working with leading mapping & localization providers (such as TomTom Harman), navigation providers (Android Auto and Apple Carplay), and infotainment system providers to provide best-in-class in-vehicle experience. Modern automobiles have infotainment systems with complex interfaces, smart navigation, larger touchscreen displays, voice assist, smartphone integration, and driver assist systems.
Further, advancements in infotainment systems with a shift to digital cockpits and intelligent AI integration are expected to drive the next generation of infotainment systems. This would be accompanied by shifting consumer demand for smart vehicles and increased comfort systems by integrating value-added services. OEMs are already developing such software for their future vehicle range. As per automotive software industry experts, the software will be the primary differentiator among vehicles in the future, while the hardware will start being similar across product ranges with the shift to a modular manufacturing approach.