The global automotive technology sector – comprising of autonomous driving, electrification, connectivity, in-cabin monitoring and software-defined tools – is forecast to be valued at $1.6 trillion (R30.4 trillion) by 2034.
This is according to the “Future Automotive Technologies 2024-2034: Applications, Megatrends, Forecasts” study conducted by research firm IDTechEx.
The report provides an overview of the global automotive technology sector and the trends shaping it, highlighting what is driving these technologies; where the opportunity is; and how much the market will be worth by 2034.
According to the report, autonomous driving technologies and vehicle electrification are megatrends that are reshaping the automotive industry.
In addition to these, connected and software-defined vehicles are gaining traction, with the potential to create new revenue streams, while safety applications from in-cabin monitoring will drive the market for a variety of sensors and related services.
Between the new services provided by these technologies and the components they require, IDTechEx predicts a market value of more than $1.6 trillion in 2034 – nearly a 10-fold increase compared to 2023.
IDTechEx finds that revenue generated through future automotive technology services will grow at a compound annual growth rate (CAGR) of 44.4% between 2023 and 2033.
Much of this potential market revenue will come from components required for electrification and automation, but the report predicts that services offered by autonomous and connected vehicles have the most room for growth.
While both autonomous mobility services and connected vehicle services are in their infancy, they are expected to grow into hundred-billion-dollar industries in 10 years' time, according to the report.
“While autonomous cars are still finding their footing, connected vehicles are already a reality in the automotive industry,” notes Dr James Jeffs, senior technology analyst at IDTechEx.
“Over the past few years, IDTechEx has seen OEMs [original equipment manufacturers] bring in new revenue models based on a feature-as-a-service plan. This allows customers to subscribe to some features of their vehicle, like a heated steering wheel, as they need it. IDTechEx predicts that these models and the features on offer will grow more all-encompassing and complex over the next decade.”
The report shows that the annual revenue generated through connected and software-defined vehicles will exceed $700 billion.
Autonomous vehicles are still in the early days, with commercial testing starting to scale in the US and China, but recent events show that the industry is growing still needs to gain more consumer trust, says IDTechEx.
“There are two significant opportunities to be aware of when it comes to autonomous driving – the growth of automotive perception sensors market and the creation of an autonomous mobility industry.
“The former already has a market size of more than $10 billion, mostly dominated by cameras and radars for advanced driver assistance system applications. Technologies under this umbrella include adaptive cruise control, automatic emergency braking and lane keep assist,” says the firm.
This hardware market will continue to see growth through further penetration of level two technologies, but it is the emergence of Society of Automotive Engineers level three technologies that will drive the predicted 10-year CAGR of 13.6%, according to the report.
Autonomous driving also promises an affordable and safe form of mobility provided by robo-taxis. These will carry even more sensors than consumer vehicles, with each robo-taxi possessing a suite worth into the tens of thousands of dollars presently.
Last month, self-driving vehicle firm, Waymo announced it had surpassed seven million driverless miles across San Francisco, Los Angeles and Phoenix.
The company claims to have shown that its vehicles are 6.7 times less likely to be involved in an injury-causing accident compared to human drivers.
“Despite this success, any incident should and will be scrutinised, and it will take time for regulations and public trust to build. But, over a 10-year horizon, there will be significant growth of autonomous mobility-as-a-service with services spreading to hundreds of cities worldwide and generating hundreds of trillions of dollars in revenue,” explains Dr Jeffs.