Market Trends of Automotive Software Industry
Passenger Cars Hold the Highest Share in the Global Market
Over the long term, the rising demand for automobiles that provide enhanced driving experiences, comfort, and safety may boost the demand for fuel-efficient engines. The growing EV sales are also boosting the sales of passenger cars as various countries promote their adoption through strict regulations, subsidies, tax credits, and other incentives.
According to the International Energy Agency, new electric car registrations in Europe reached nearly 3.2 million in 2023, increasing by almost 20% compared to 2022, with battery electric cars accounting for 70% of the electric car stock in the same year.
Governments worldwide have been proactive in enacting policies to encourage the adoption of electric vehicles. China, India, France, and the United Kingdom announced plans to completely phase out petrol and diesel vehicles before 2040.
Similarly, vehicles registered in Europe until December 31, 2025, are exempted from the ownership tax for 10 years, and this exemption is valid until December 31, 2030. According to the European Commission, such policies are expected to boost the market growth of passenger electric cars.
Automotive software is significantly used in passenger cars to handle and analyze data supplied by sensors and communication devices. Automotive software is important to the seamless and effective operation of the cars.
Automotive software is also employed in developing and maintaining the different features and functionalities found in connected vehicles, such as navigation systems, infotainment systems, and advanced driver assistance systems (ADAS). These characteristics need advanced applications capable of processing huge amounts of information and responding in real time.
Considering the growth of passenger car sales, industry analysis reveals that companies are seeing growth opportunities in the vehicle segment and focusing on various technological advancements to develop new products. For instance:
- In March 2024, Valeo became the new launch partner of the SDVerse Vehicle Software Marketplace. Valeo joined founders GM, Magna, Wipro, and other launch partners to bring software developers and mobility players to introduce software solutions in the automobile industry.
The development of connected car technology is boosting the need for software that can handle and analyze data generated by connected cars. It is also opening up new opportunities for software developers to produce cutting-edge services and apps.
North America Captured a Major Market Share
North America is a significant market for automotive software. Countries such as the United States are home to several major automakers and technology companies that are developing advanced technologies for the automotive industry. One of the key drivers of the automotive software market in North America is the increasing demand for advanced driver assistance systems (ADAS) and autonomous vehicles.
The growth of EV sales in the country also contributes to the market’s growth. According to the International Energy Agency, new electric car registrations in the United States totaled 1.4 million in 2023, increasing by more than 40% compared to 2022.
The North American market is also driven by the growing adoption of electric vehicles, with major automakers such as General Motors, Ford, and Tesla investing heavily in developing EV platforms and related software. This trend has led to a growing demand for software to manage and optimize battery life and develop charging infrastructure.
Another key trend in the North American market is the growing demand for connected cars with internet connectivity and various software applications. This trend has led to software development for in-car infotainment systems, navigation systems, and other connected car services.
In addition to these industry trends, North America is home to several leading technology companies, such as Apple, Google, and Intel, which are developing technologies for the automotive industry. These companies are focused on developing software for autonomous driving, artificial intelligence, and other cutting-edge technologies that are expected to drive the future of the automotive industry. For example:
- In March 2024, General Motors partnered with auto supplier Magna and consultancy firm Wipro Limited to launch a virtual marketplace called SDVerse for buyers and sellers of automotive software.
Thus, such developments are expected to contribute to the market’s growth in the coming years.
