The global automotive embedded system market size is anticipated to reach USD 5,352.6 million in 2024. It is projected to register a CAGR of 5.7% during the forthcoming period to reach a value of USD 9,317.9 million by 2034.
The principal benefit of using automotive embedded software is its ability to ensure that essential features like safety, navigation, and brakes work without a hitch in contemporary cars. The automotive industry is estimated to witness tremendous upheaval because of innovations in embedded software technologies. Thus, embedded automotive software is set to be a significant component in promoting innovation and influencing the direction of mobility in the future.
| Attributes | Description |
|---|---|
| Estimated Global Automotive Embedded System Market Size (2024E) | USD 5,352.6 million |
| Projected Global Automotive Embedded System Market Value (2034F) | USD 9,317.9 million |
| Value-based CAGR (2024 to 2034) | 5.7% |
In order to evaluate sensor data and make choices in real-time for functions like automatic parking, adaptive cruise control, lane departure alerts, and autonomous driving, modern automobiles mainly rely on sophisticated embedded systems. The infotainment, connectivity, and in-car entertainment that consumers are demanding are propelling the automotive embedded system industry forward. The embedded systems play a pivotal role in enabling these features and maintaining smooth communication among the car's parts and external providers.
As these complex embedded systems need specialized hardware, considerable software development, and rigorous testing, their integration is set to result in high production costs. These systems get increasingly complicated as well, necessitating greater resources and knowledge for development, implementation, and upkeep.
Automobile embedded systems are becoming immensely popular as manufacturers strive to keep up with the growing demand for connected, smart cars, despite their high cost and complexity. However, these difficulties could discourage certain manufacturers from incorporating or completely embracing cutting-edge embedded systems, which is anticipated to affect expansion of the industry.
With ongoing technological innovations, several automakers are integrating their in-house vehicles with over-the-air (OTA) updates. Volvo Car AB, for instance, declared in March 2023 that it is planning to embrace new software development techniques to enhance autonomous driving technology. The emergence of innovative OTA systems to reduce the risk of unauthorized access will likely create new opportunities.
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The table below showcases the projected CAGRs for the global automotive embedded system industry over semi-annual periods ranging between 2023 and 2024. The analysis offers businesses with a better understanding of the growth over the year by revealing critical shifts in performance and growth patterns. The first half (H1) of 2023 spans from January to June. The second half or H2 includes July to December.
Numbers highlighted in the table below present the growth rate for each half between 2023 and 2024. The industry is set to grow at a CAGR of 5.1% in the first half (H1) of 2023. The second half of the same year is anticipated to display an increase in the growth rate at a CAGR of 5.8%.
| Particular | Value CAGR |
|---|---|
| H1 | 5.1% (2023 to 2033) |
| H2 | 5.8% (2023 to 2033) |
| H1 | 5.4% (2024 to 2034) |
| H2 | 6% (2024 to 2034) |
Moving in the following period, from H1 2024 to H2 2034, the CAGR is anticipated to decline to 5.4% in the first half (H1) and then rise to 6% in the second half (H2).
Emergence of Connected and Autonomous Vehicles (CAVs) Pushing Sales
Connected and autonomous vehicles are anticipated to lead to developments in the automotive industry. Embedded systems are paramount in the industry for handling different aspects, including communication modules, sensors, and complex algorithms. Key brands, such as Tesla, BMW, and Toyota are foreseen to make use of AI and machine learning to enhance their decision-making processes and provide safe means of transportation.
Economically, it is believed that the rise of smart, connected vehicles will spur sales of embedded systems for automobiles, with leading players like Bosch, Continental, and Denso providing unique devices. Embedded systems are predicted to dominate in the forthcoming decade as the automotive industry is envisioned to witness high demand for improved vehicle performance and safety features.
Trend of Electrification and Energy Efficiency to Boost Demand
With embedded software playing an integral role in maximizing energy economy and vehicle performance, the shift to electric and hybrid powertrains has influenced demand. At the same time, the software is likely to help regulate activities like battery management and electrical systems, thereby creating novel opportunities.
Unique software-based optimization techniques are included by Tesla, Nissan, and General Motors in their electric and hybrid vehicles to improve efficiency and range. Automobile embedded system sales are estimated to increase, as automakers cater to consumers' desire for high-performance, energy-efficient cars.
Increasing need for embedded systems is estimated to be contrived by the automotive industry's focus on cutting-edge control systems for electric and hybrid cars. As the industry develops, its role in automobile technology will likely become paramount for achieving maximum energy efficiency and performance.
Adoption of Open-source Platforms to Foster Innovation and Growth
To stimulate innovation and address several challenges, reputed automakers are adopting open-source software solutions. Automotive software development is made possible by initiatives, such as Automotive Grade Linux and Adaptive AUTOSAR, which offer standardized platforms. This collaboration between automakers, suppliers, and technology providers speeds up innovation and lowers development costs.
Sales of automotive embedded systems are surging because of rising adoption of open-source platforms among firms like NXP Semiconductors, Bosch, and Continental. Cutting-edge embedded solutions are being developed on these platforms, allowing systems for next-generation cars to be made adaptable, scalable, and affordable. Open-source software is anticipated to play a bigger part in the automotive embedded system market as the industry develops, encouraging innovation and teamwork.
Principal Consultant
The global automotive embedded system industry was valued at USD 4,103.3 million in 2019. It grew at a CAGR of 5.4% during the historical period ranging from 2019 to 2023. It attained a value of USD 5,064 million in 2023.
Over the historical period, sales of these systems gradually increased. Niche applications and early uptake were the main drivers of this rise. The creation of innovative base codes and automation technology innovations were key factors that helped propel progress. Governments worldwide also encouraged the use of electric cars, thereby implementing various regulations and subsidies.
The industry is projected to reach USD 5,352.6 million by 2024 and is anticipated to grow at a CAGR of 5.7% during the assessment period. It is predicted to reach USD 9,317.9 million by 2034.
Increased investments in automation and production facilities and strict emission regulations enforced by governments globally are projected to boost sales. Besides, technical improvements and economies of scale are set to augment the technological value and competitiveness of the automotive market, resulting in exponential growth predicted for the industry.
Key characteristics that distinguish Tier 1 organizations from others are their stability and brand recognition. These organizations constitute a significant portion of the global industry. They employ state-of-the-art technologies in their production processes to boost output.
The companies possess an extensive product portfolio and have manufacturing facilities spread across several regions. Prominent companies in Tier 1 are Continental AG, Denso Corporation, Robert Bosch GmbH, Delphi Technologies, and Mitsubishi Electric Corporation.
Businesses operating in specific regions fall under Tier 2. These organizations are renowned at the global stage and have a substantial impact on the regional economy. They also have a broad knowledge of the industry and ensure regulatory compliance. Well-known companies in Tier 2 are Harman International, Infineon Technologies AG, NXP Semiconductor, and Texas Instruments Incorporated.
Tier 3 is primarily made up of medium-to-small-sized businesses with regional headquarters. These enterprises have a limited geographical reach, resulting in less competition among players. Compared to industry giants in Tier 1 and Tier 2, Tier 3 businesses are less structured and formalized. Key enterprises in Tier 3 include Garmin Ltd., Johnson Electric Holdings Limited., and others.
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The section offers businesses with an overview of the industry. It comprises a detailed examination of the emerging trends and opportunities on a country-by-country basis. This country-specific analysis of the dynamics is projected to assist organizations to understand the complex nature of the business.
India is estimated to dominate during the forecast period with a projected CAGR of 6% through 2034. France and Spain are likely to follow behind to become the prominent countries with anticipated CAGRs of 5.6% and 5.4%, respectively. Following these countries, Italy and Canada are estimated to record a similar CAGR of 5.2% through 2034.
| Countries | CAGR 2024 to 2034 |
|---|---|
| India | 6% |
| France | 5.6% |
| Spain | 5.4% |
| Italy | 5.2% |
| Canada | 5.2% |
| Germany | 4.8% |
Germany is predicted to develop at a CAGR of 4.8% through 2034. Growth is set to be driven by the increasing demand for embedded systems to enhance vehicle performance and safety, especially in suburban areas. Leading innovators in embedded technology, such as Robert Bosch GmbH, Continental AG, and Infineon Technologies AG provide cutting-edge entrenched solutions to address problems, including driver tiredness, inattentiveness, and drunk driving.
The demand for safety features and the incorporation of automated systems has led to rising sales of embedded systems in automobiles. To stay competitive, Germany-based manufacturers are estimated to invest in such technologies, which are estimated to surge driving pleasure, road safety, and the intelligence and efficiency of automobiles.
By 2034, the demand for embedded sensors in India is predicted to record a CAGR of 6% due to the rising adoption of automotive multimedia systems. These systems, which combine hardware and software, enhance the driving experience by providing audio and visual entertainment.
The automotive industry in India is anticipated to adopt novel technology for the augmentation of sales. Leading brands in the country, such as Tata Motors, Mahindra & Mahindra, and Maruti Suzuki are constantly integrating cutting-edge systems into their new models. Sales of embedded systems for automotive are projected to rise, reflecting the growing importance of MIDS in modern vehicles in India.
The adoption of autonomous vehicles (AVs) and electric vehicles (EVs) is predicted to cause a wave of upheaval in the United States. The country is anticipated to rise at a CAGR of 4.6% in the assessment period, which is essential to this development.
The vital role embedded systems play in EVs and AVs is what is driving this growth. Cutting-edge embedded systems are necessary for smooth vehicle connection, effective battery management, and power electronics in electric vehicles.
Knowing how essential these embedded systems are in autonomous vehicles (AVs), key automakers in the United States are utilizing them for unique perception and control mechanisms in electric vehicles. As demand for EVs and AVs increases, sales of such systems are anticipated to surge, highlighting their strategic importance in the future of automotive innovation.
The section offers businesses insightful data and analysis of the two leading segments of the target industry. Segmentation of these categories helps companies understand the dynamics of the business and invest in the beneficial zones.
Analysis of the growth assists organizations to gain a thorough understanding of the trends, opportunities, and challenges present in the market. This examination is anticipated to assist organizations navigate the multifaceted environment of the business world and make informed decisions.
The software segment is anticipated to lead with a value share of 60% in 2024. In terms of application, the body electronics category is predicted to dominate with a value share of 40% in the same year.
| Segment | Software (Type) |
|---|---|
| Value Share (2024) | 60% |
The demand for software is estimated to rise, accounting for a leading share of 60% in 2024. The adoption of software, which is employed in controlling and optimizing different functions in cars, including engine control units, infotainment systems, ADAS, and autonomous driving technologies, is likely to push the embedded system market. By providing real-time data processing, better decision-making, and smooth communication among vehicle components, the integration enlarges the capabilities of embedded systems.
Sales of embedded systems for automobiles are estimated to upsurge due to the rising demand for connected and smart vehicles. The desire for improved user experience, efficiency, and safety is anticipated to drive expansion. However, substantial research, development, and testing expenditures are necessary for the creation and integration of sophisticated software, which is anticipated to raise prices.
| Segment | Body Electronics (Application) |
|---|---|
| Value Share (2024) | 40% |
Body electronics is anticipated to attain a dominant share of 40% in 2024 in terms of application. The demand for automotive embedded systems is anticipated to grow due to the need for body electronics applications.
Power windows, seat controls, lighting systems, temperature control, and other features that improve the comfort and convenience of contemporary cars are all included in the broad category of body electronics. Sales of automotive embedded systems are predicted to increase, as buyers want more sophisticated features in their vehicles.
The market is augmenting due to the automotive industry's shift toward smart, connected vehicles. Unique body electronics enhance user experience and safety, but integration requires specialized hardware and software, increasing manufacturing costs and complexity.
Key players in the industry are anticipated to upgrade the product with novel improvements in software and hardware. Established brands, with the advantage of existing consumer bases and distribution networks, are heavily investing to bring innovations in automotive technology. Embedded system developers are progressively entering the automotive embedded system market as they have extensive expertise in the development and innovation in base code.
In the competitive environment, start-ups and developing businesses are concentrating on introducing novel technology and solutions to the market. These firms are likely to have an advantage over their competitors in terms of flexibility and agility. In an effort to pool their resources and skills for the benefit of all parties, established businesses are gradually forming strategic alliances with newcomers.
Emphasizing innovation in technology is estimated to boost research and development activities to discover novel embedded systems for automakers. With the integration of AI and machine language in embedded systems, the vehicles are assessed to provide comfort for owners.
Industry Updates
In terms of types, the industry is divided into software and hardware.
On the basis on component types, the industry is divided into Passenger Cars, Commercial Vehicles, Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV) and Plug-In Hybrid Electric Vehicle (PHEV).
The product has applications in Infotainment & Telematics, Body Electronics, Powertrain & Chassis Control (Automatic Transmission, Electric Power Steering, and Active Suspension) and Safety & Security (ADAS, Electronic Brake System (Antilock Brake System (ABS), Electronic Stability Control (ESC), Traction Control System (TCS), and Airbags).
The industry is spread across North America, Latin America, Western Europe, East Asia, South Asia and Pacific, and the Middle East and Africa.
The market is predicted to reach USD 5,352.6 million in 2024.
It is estimated to reach USD 9,317.9 million by 2034.
Embedded automotive software is a crucial component in modern vehicles, enabling the monitoring and control of microprocessors and other hardware.
Continental AG, Denso Corporation, Garmin Ltd., Harman International, Infineon Technologies AG, and Robert Bosch GmbH are a few players.
It will likely rise at a CAGR of 5.7% from 2024 to 2034.
India is anticipated to dominate with a CAGR of 6% during the forecast period.
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