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

Software-Defined Vehicle Market Size

Software-Defined Vehicle Market Trends & Drivers

• The growing demand for autonomous vehicles is a key trend in the market. For autonomous driving systems, artificial intelligence (AI) and other technologies are being integrated to make it easier to recognize objects near the car.
• Presently, hefty investments are being made in the self-driving technology. Various car manufacturers and auto component providers, such as AB Volvo, Tesla Inc., Robert Bosch GmbH, and Valeo Saare, are working on making their models autonomous. Furthermore, in urban areas, self-driving automobiles are becoming popular, especially among the young generations.
• Road safety is of prime importance for people, automakers, and governments across the globe. The rising stringency of the governments’ road safety regulations and the surging focus on the protection of passengers because of the increase in consumers’ awareness drive the market.
• Along with safety, people now want the safety software to update over the air (OTA), because of the increasing availability of internet connectivity and the rising automotive system complexity.
• The software can be updated with new features, without visiting a dealer; SDVs provide this flexibility. It enables manufacturers to rapidly deploy fixes, in the case of issues, and add new features.
• The stringent regulations implemented by governments in order to boost the adoption of such cars propel the market. For instance, by 2023, according to the National Highway Traffic Safety Administration (NHTSA), all the manufacturers in the U.S. are required to equip new automobiles with automatic emergency braking (AEB).

Software-Defined Vehicle Market Analysis

Among Offerings, Software Is Expected To Grow at Highest CAGR

Software is expected to grow at the highest CAGR of 9.5%, attributed to the various advantages it offers, such as a more-convenient driving experiences and increased protection. The surge in the need for software-defined cars is mostly due to the rising need for security and the growing sale of EVs.

Among software, the hypervisor and middleware category is growing because these programs aid in running several applications simultaneously on a single hardware device. Hypervisors are known to instantly create virtual machines, in order to easily allocate resources and meet the dynamic workload requirements, thus providing high performance. They offer energy and cost-efficiency because multiple kinds of automotive software meant for varying functionalities run on one piece of computer hardware.

In addition, the category is expected to grow significantly because this software is required for minimizing the consumption of fuel and reducing the emission of pollutants. Along with this, the rising need for digitalization and increasing the safety of both vehicles and passengers are propelling its necessity.

ADAS Is Key Application

The ADAS category is expected to show significant growth over the coming years, ascribed to the increasing awareness among individuals of the protection of passengers and drivers. Along with this, the prices of in-car electronic safety systems are decreasing, which is allowing more people to buy vehicles integrated with them. ADAS is designed for preventing collisions on the road and notifying driversof any danger. It controls the speed and helps the vehicle maintain a safe distance from those in the front and behind. The major functionalities of ADAS are automatic emergency braking, lane departure warning, pedestrian detection, blind spot detection, traffic sign recognition, adaptive light control, automatic parking, night vision, and crosswind stabilization.

Additionally, the powertrain and chassis category is expected to grow with a CAGR of 8.7%. This is because the software for these components enhances the engine performance via the management of valve timings, fuel injection, spark timings, and warning lights. This way, it helps in keeping the system in proper working condition and increases the fuel efficiency.

Based on Vehicle Autonomy, Level 3 Expected to Grow Fastest

Based on autonomy, level 3 is expected to grow fastest, as level 3 autonomous vehicles have the capability to detect the environment and make informed decisions for themselves. These decisions include maintaining the ideal speed as per the traffic and weather conditions. It is considered a conditionally automated level, where the driver is able to handle the automobile themselves in several situations. In January 2023, Mercedes-Benz announced the receipt of the approval of the U.S. government for level 3 driving features.

The level 1 category is also growing, as this software assists the driver with cruise control and steering. Without much intervention by the driver, a safe distance between vehicles is maintained. This level of automation also helps drivers with braking, steering, and acceleration during driving. L1 features include tire pressure monitoring, lane departure warning, adaptive front lights, and many more.

Electric Vehicle Category Is Growing at Significant Rate

The demand for EVs is growing because of their lower running cost and no requirement for fuel, which eliminates the emission of harmful gases into the environment. Additionally, all major automotive OEMs are increasing their focus on EVs to meet the growing demand. For instance, Tata Motors will launch several new electric vehicles, such as Harrier EV, Punch EV, and Nexon EV, in 2023.

The awareness is increasing among people regarding the harmful effects of diesel and gasoline combustion, which is driving the demand for environment-friendly transportation solutions. Moreover, EV sales are increasing with the installation of charging stations around the globe. It has been expected that by 2030, 30% of the vehicles plying in India would be electric.

APAC To Continue To Be Largest Buyer of SVDs over the Coming Years

Asia-Pacific has the leading position in the software-defined vehicle market, and it will hold the same position in the coming years, accounting for a value of USD 147.8 billion by 2030. The growth is ascribed to the rise in the focus on safety and reducing the number of accidents.

In APAC, China holds the leading position, and it will grow at a CAGR of 8.8% during the forecast period. This is attributed to the rapid technological development in its automotive industry and the adoption of smart manufacturing to boost production.

In terms of market share, APAC is followed by Europe and North America. The increasing disposable income and growing demand for safe and convenient driving experiences are boosting the sales of software-defined vehicles around the world.

Due to human error, a large number of road accidents happen, which is fueling the market advance. According to India’s Ministry of Road Transport and Highways, every year, approximately 150,000 people die in India in road accidents, which creates a high demand for software for the safety of passengers. Additionally, the number of road accidents increased by almost 12% in 2021 from 2020.

Market Breakdown

Based on Offering

• Software
  • Automotive operating system (OS)
  • Middleware & hypervisor
  • Application software
  • Cybersecurity
• Hardware
  • Electronics control units/domain control units (ECUs/DCUs)
  • Sensors/actuators
  • Power electronics 
  • Others
• Services
  • Integration services
  • Connected services

Based on Vehicle Type

• Internal Combustion Engine (ICE)
• Electric

Based on Application

• Powertrain & Chassis 
• Advanced Driver-Assistance System (ADAS)
• Body & Energy  
• Infotainment 
• Connectivity & Security 

Based on Vehicle Autonomy

• Level 0 
• Level 1 
• Level 2 
• Level 3 
• Level 4 
• Level 5 

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
• Asia-Pacific
  • Japan
  • China
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa
  • U.A.E.

Top Software-Defined Vehicle Companies

Software-Defined Vehicle Market News

• In May 2023, Valeo and Renault Group entered into a partnership for the development of next-generation vehicles. The partnership is meant to minimize the time of development and cost of architecture. They will also focus on safety, compatibility, and high performance.
• In March 2023, BYD partnered with NVIDIA for the expansion of BYD’s use of DRIVE Orin, in order to launch safe and intelligent vehicles.