IDTechEx Forecasts Software-Defined Vehicles Market to Be Worth Over US$700bn by 2034

James Falkiner, Technology Analyst at IDTechEx

eighth January 2024/Cambridge, UK:Connected and Software-Defined autos (SDVs) characterize a brand new paradigm for automakers and customers. Whereas older ICE autos have been a conglomeration of 70+ Electronic Control models, kilometers of wiring, and plenty of 1000’s of parts, the brand new period of autos may be extra centralized, linked, and handy, bringing advantages to each the buyer and OEM.

The most simple type of SDV is a car the place the person expertise is affected not directly by the software program in a car. However, autos can turn into extra ‘software-defined’ because the variety of software-based options on the car will increase, unlocking new experiences corresponding to permitting drivers to replace or improve their car through over-the-air updates or permitting passengers to watch on-demand motion pictures on the go. Generally, a software-defined car requires a continuing mobile connection (4G or 5G), a big, touch-enabled display screen, and a strong central compute system that can also be linked to the car’s constituent parts. Many SDVs additionally reap the benefits of third-party apps and in-vehicle funds to add extra options and comfort to the person.

Categorizing and evaluating software-defined autos may be troublesome, as virtually each car launched within the final 5-10 years is arguably ‘software-defined’ not directly. By conducting an evaluation centered round software program performance, IDTechEx gained a complete understanding of the present standing of software-defined autos. To create a means of evaluating present and future autos, IDTechEx has condensed their understanding into an SDV Level Guide, which compares autos’ software program and software-critical {hardware}. This encompasses options corresponding to a car’s connectivity, compute, shows, and software program system, permitting autos to be assigned a easy degree for comparability functions. The 2023 Tesla Model 3 is an effective instance of an ‘Advanced’ Level 3 SDV thanks to its 4G connectivity mixed with its highly effective central compute, which permits it to give customers a easy software program expertise and loads of performance corresponding to infotainment and Advanced Driver Assist Systems (ADAS).

DTechEx’s SDV Level Guide. Source: IDTechEx – “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies”

The future linked car makes use of not simply a typical smartphone mobile connection but in addition probably takes benefit of devoted ‘V2X’ security communication channels. This connection makes use of Wi-Fi or cellular-based know-how (C-V2X) to talk with different autos and visitors infrastructure. If regulation or security requirements mandate this know-how, then V2X is ready to turn into the ‘digital seatbelt’ of the long run, promising to cut back accidents, enhance congestion, and cut back emissions globally. Notably, China is making important progress in direction of integrating V2X inside autos on Chinese roads by the probably inclusion of V2X testing of their 2024 New Car Assessment Program (CNCAP). The US and different areas are actively assessing completely different types of V2X know-how, with IDTechEx forecasting that cellular-based C-V2X is ready to turn into the first technique of Connected Vehicle communication by 2034. For different detailed Connected Vehicle forecasts, please refer to the brand new IDTechEx report, “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies”.

What is the present SDV market standing?

The SDV market is rising, with many potential gamers being cautious about how to monetize SDV options throughout the car. Other gamers, corresponding to Ford, Tesla, and BMW, are actively monetizing SDV options and, in consequence, are producing important income potential. BMW, for instance, are providing house owners of their i5 mannequin up to US$150 a month in purchasable software program upgrades and options, corresponding to connectivity, real-time visitors info, and heated steering wheels.

There is a large discrepancy between the power of varied OEMs to provision SDV options. Many OEMs proceed to equip their autos with restricted and sluggish onboard compute, final era 4G connectivity, and unoptimized software program, preferring to depend on connecting a smartphone to the car for infotainment and funds. By distinction, some OEMs, corresponding to Mercedes and Cadillac, are specializing in a software-centric expertise, facilitated by a number of screens (with performance for each passengers and driver), with highly effective compute, 5G connectivity, and assist for in-vehicle funds to full the in-vehicle expertise.

Connectivity is a crucial facet of SDVs, with many OEMs providing 4G or 5G performance for about US$10 a month, probably producing US$120 a month per car per 12 months. Autonomy as a Service (AaaS) can even supply important income potential, with OEMs corresponding to Ford providing upgraded AaaS for about US$900 a 12 months in some areas.

Global Software-Related Automotive Revenue segmented by SDV Level. Source: IDTechEx – “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies”

IDTechEx’s intensive major analysis on the subject incorporates discussions with key gamers within the automotive trade, insights gathered from automotive conferences, particulars extracted from car brochures, and evaluation of historic traits. Drawing from this analysis, IDTechEx forecasts a 35% CAGR in automotive software-related income by 2034, with software-related income value greater than US$700 billion yearly (US, 2023 costs) by 2034. To put this into on a regular basis phrases, IDTechEx forecasts that by 2034, the common new automotive purchaser shall be paying ~US$70 per 30 days on software program options. A full breakdown of the methodologies and knowledge behind this determine is obtainable in IDTechEx’s market analysis report on the subject, however typically talking, the upper the SDV degree, the extra options are supplied, and the extra probably customers are to resolve to buy or subscribe to the options supplied inside a car. Alternative income streams can even be out there from in-vehicle funds, the sale of actuarial knowledge, and fee from in-vehicle app shops.

IDTechEx’s model new report, “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies”, gives an in depth evaluation of Connected and Software-Defined Vehicles, key applied sciences, traits, evaluation throughout the worth chain, main participant evaluation, and granular market forecasts.

Below are the important thing points of this new report:

Software-Defined Vehicles:
An intensive dialogue on how software program is turning into a key differentiator for automakers and customers, enabling new options, companies, and enterprise fashions, with a have a look at key market gamers, trade traits, and granular market forecasts masking each software program gross sales and {hardware} gross sales.
V2X and Connected Vehicle Technology:
An introduction to automotive radio entry applied sciences (RATs) corresponding to DSRC, C-V2X, ITS-G5, 4G, and 5G and their regulation worldwide.
V2X Use Cases for Safety and Sustainability: How V2X communication can allow use circumstances that enhance security, effectivity, and sustainability.
V2X ITS Hardware: A comparability of the important thing gamers and merchandise within the V2X {hardware} market
Autonomous Vehicle Connectivity: How connectivity is important for supporting autonomous autos.

For additional understanding of the Connected and Software-Defined Vehicle market, gamers, applied sciences, alternatives, and challenges, please refer to the IDTechEx report “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies”.

To discover out extra about this new IDTechEx report, together with downloadable pattern pages, please go to www.IDTechEx.com/CSDV.

On-demand webinar

How Will Connected and Software-Defined Vehicles Impact the Automotive Market?

James Falkiner, Technology Analyst at IDTechEx and writer of this text, has not too long ago introduced a webinar on the subject – How Will Connected and Software-Defined Vehicles Impact the Automotive Market?. This webinar is obtainable on-demand for a restricted time.

This webinar consists of:

The definition and classification of SDVs, and the way they differ from conventional autos
The key options and advantages of SDVs, corresponding to over-the-air updates, in-vehicle funds, AI-powered digital assistants, and infotainment
An introduction to Connected Vehicle applied sciences and terminologies.
Key regional laws associated to V2X know-how for China, the US, Europe, Japan, South Korea, and India
The predominant gamers and partnerships within the V2X ecosystem
An perception into present and forecasted market dimension and penetration of Connected and Software-Defined Vehicles