Automotive Software Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Automotive Software Market Data

Automotive Software Market Analysis

The automotive software market generated revenue of USD 19.2 billion in 2023, which is expected to witness a CAGR of 8.0% during 2024–2030, to reach USD 32.7 billion by 2030. This growth is being driven by the mounting demand for connected cars, rising research and development (R&D) activities, and the introduction of innovative technologies for advanced user interfaces.

Connected cars are being adopted in large numbers due to the rapid urbanization worldwide. The demand for these cars is also being fueled by the soaring concerns for vehicle safety and security, rising demand for a better driving experience, and increasing adoption of the internet of things (IoT) technology in the automotive industry.

Thus, the integration of these new-age technologies is the key driver for the market. Automobile companies are integrating IoT to achieve pathbreaking results in the connectivity solutions deployed in connected cars. IoT also offers a wide range of infotainment services and advanced connectivity solutions for drivers.

Automakers across the world are incorporating innovative technologies to offer an advanced user interface. As automobiles are becoming more technologically advanced, it has become essential to design the technologies to be more human and personal.

For instance, the Model S by Tesla Inc. has few physical controls on or near the steering wheel. However, the majority of the secondary functions, including the rear-view mirror, media player, climate control, and cell phone, do not possess any dedicated physical control. These functions can be accessed through a 17-inch touchscreen display, which is placed on the dashboard of the vehicle. Such interfaces need software for technology integration.

Automotive Software Market Trends & Drivers

OTA Software Update Is Trending in the Market

• With the increasing dependency of vehicles on software, the practice of updating automobile systems by using the OTA technology is gaining momentum.
• Various vehicle manufacturers are deploying this technology in their offerings to update the software of vehicles at regular intervals, as it provides more clearance at higher speeds.
• At present, Tesla Inc. is one of the leading companies that offer this technology. It uses the OTA software to modify or fix systems, which could involve changing the suspension settings of automobiles or recalling charger plugs.

Rising R&D on Autonomous Technology Accelerating the Market Growth

• Autonomous vehicles are completely dependent on software, and the rising effort to integrate self-driving solutions creates a significant demand for software.
• The increasing incorporation of Level 1 and Level 2 autonomous technologies in vehicles is, therefore, acting as a catalyst for the automotive software market growth.
• Moreover, in 2019, some of the vehicle manufacturers introduced Level 3 autonomy in their vehicles. Further, many companies are involved in the R&D and testing of Level 4 and Level 5 autonomy in various cities of the world.
• Germany became the first nation in the world to legalize the use of level 4 and 5 autonomous vehicles. In addition, some European cities have Allowed pilot fleets to operate on private properties that provide ideal road traffic conditions.

Data Handling Challenges

• With increasing software intuition in automobiles, which particularly may include autonomous vehicles, connected cars, or electric vehicles, data generation and storage will also expand.
• For instance, equipped with hundreds of sensors on board, an autonomous car is capable of producing terabytes of data each day. Typically, not just one car’s database is looked at and studied, so the increasing number of autonomous cars will contribute to the generation of data in bulk every day.
• Also, connected cars can upload around 25 gigabytes of data to the cloud on a per-hour basis, and with the growing number of connected cars, the data being uploaded will also increase.
• In the coming years, automotive designs may also be revolutionized by virtual reality, thereby further contributing to the increase in the amount of data generated during the designing process.
• Moreover, OEMs are in the process of developing and deploying software crash simulations to amplify the safety testing of cars. As these systems become more comprehensive, they will also be responsible for generating larger amounts of data, which will, in turn, give rise to data management issues. Such factors are providing a hurdle for the evolution of the market.

In-Depth Segmentation Analysis

Software Insights

• The advanced driver-assistance systems and autonomous driving software category generates the largest revenue and is projected to have the highest CAGR of 8.6% during 2024–2030.
• This is due to the rising awareness about road and traffic safety, at both the individual and government levels. Technologies help in preventing the violation of traffic rules, which, in turn, helps in causing a decline in road accidents.
• Advanced technologies including ADAS, lane assist, and automatic braking enhance the driving experience and increase vehicular safety. These technologies also help in reducing the likelihood of road accidents by lowering the incidence of traffic rule violations.
• Additionally, several software companies are working on the R&D of such autonomous technologies.
• For instance, in July 2023, Volkswagen Group of America initiated its first autonomous driving test program in the U.S. These advancements, along with governmental initiatives, are poised to propel the market in the coming years.

During the study, we have analyzed various software types in the report:

• Advanced Driver-Assistance Systems (ADAS) and Autonomous Driving (AD) (Fastest and Largest Category)
• Infotainment, Connectivity, Security, and Connected Services
• Powertrain and Chassis
• Body and Energy
• Operating System (OS) and Middleware

Function Analysis

• The development category is projected to witness the highest CAGR, of 8.4%, during 2024–2030 in the market. Comprehensive software provides improved functionality in an array of products and offers better value to customers.
• In recent years, automakers have started deploying more software features in vehicles. Owing to this, the dependence of automobiles on software has risen, to manage an array of components, ranging from infotainment systems to advanced drivetrains.

Below are the major functions in which automotive software plays an important role:

• Development (Fastest and Largest Category)
• Validation and Verification
• Integration

Vehicle Type Analysis

• The passenger cars category accounted for the larger share of the vehicle type segment of the market in 2023. This is due to the surging demand for connected cars and the growing disposable income of customers.
• Apart from the larger consumer base for passenger cars, the mandates for vehicle safety are contributing to the growth of this category.
• Several automakers are proactively working on the installation of different autonomy levels in passenger cars, which has made advanced software a necessity here.
• On the other hand, the light commercial vehicles category is projected to have the highest CAGR of 8.7% during the forecast period. This is due to the wider use of such vehicles for commercial purposes like transportation and delivery services.
• The automotive software solutions are customized as per a specific requirement of fleet management, such as vehicle tracking, route optimization, and maintenance scheduling. These are essential for improving operational efficiency and cost reduction, especially in LCVs.
• Telematics systems are an integral part of LCVs, as they gather and transmit data concerning driver behavior, vehicle performance, and location tracking.
• Automotive software facilitates the smooth integration of telematics solutions, offering fleet operators real-time insights and analytics to optimize their operations.

Below are the vehicle types in which automotive software is utilized:

• Passenger Cars (Largest Category)
• Light Commercial Vehicles (Fastest-Growing Category)
• Heavy Commercial Vehicles

Asia-Pacific Holds 50% Share of the Global Market

• Geographically, APAC is the largest regional market, with around 50% revenue share in 2023. This is due to the presence of the largest automobile sector, flourishing economy, escalating purchasing power of customers, and a high demand for advanced features in vehicles, in the region.
• To meet this demand, automobile manufacturers are providing advanced applications, such as human–machine interfaces (HMI), auto-park assist, and keyless entry, which create a vast customer base in the market.
• Moreover, the leading position of APAC in the EV industry acts as a catalyst for the demand for automotive software.
• Among the APAC nations, China records the highest sales of EVs. In 2022, 22% of the electric passenger vehicles were sold, adding up to 4.2. million sales in China. With increasing production and sales of electric vehicles in the region, the market for automotive software is also growing.
• Furthermore, the region was followed by North America, which held the second-largest share of the automotive software market.
• This is majorly due to the existence of a significant number of vehicle manufacturers and technology giants, the increasing number of vehicle production, and the growing counts of connected cars in the region.
• Furthermore, developments in cellular vehicle-to-everything (C-V2X) technology, significantly changing in-vehicle electronics architecture, and the expansion of major software developers are the other factors fueling the growth of the market.
• Also, being a technologically advanced region, countries in North America are active in the development of autonomous technology.
• The region has a favorable regulatory framework for autonomous vehicles, which has enabled several companies to conduct tests and pilot projects on self-driving vehicles.

Further, regions and countries analyzed for this report include:  

• North America
  • U.S. (Larger and Faster-Growing Country Market)
  • Canada
• Europe
  • Germany (Largest Country Market)
  • UK (Fastest-Growing Country Market)
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia-Pacific (APAC) (Largest and Fastest Regional Market)
  • China (Largest Country Market)
  • Japan
  • India (Fastest-Growing Country Market)
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest and Fastest-Growing Country Market)
  • Mexico
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • South Africa
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

Market Nature - Fragmented

The global automotive software market is fragmented in nature, with the existence of market players such as NXP Semiconductors N.V., Robert Bosch GmbH, Airbiquity Inc., Continental AG, and Microsoft Corp. In recent years, players in the industry have taken several strategic measures, such as partnerships, in order to stay ahead of their competitors.

Automotive Software Companies News

• Blackberry Ltd. announced its partnership with Amazon Web Services Inc. (AWS) to demonstrate a connected vehicle software platform for in-vehicle applications. The software combines the security and safety of BlackBerry’s QNX real-time operating system with AWS’ IoT services available on the cloud and in the car. The platform permits automakers to securely access data from the sensors of the vehicle and create software applications and ML models for electric, connected, and autonomous vehicles.
• SoftBank Group and Cubic Telecom entered a strategic global partnership for pioneering the future of software-defined connected vehicles in December 2023. SoftBank Corporation will be investing over $514 million to take a 51% equity stake in the company providing more access to the Asian automakers.
• Robert Bosch collaborates with Microsoft for developing a software-defined vehicle platform. This will help in seamless integration between automotive and cloud computing for shaping the next generation of vehicle software.