Software-Defined Vehicles, Connected Cars, and AI in Cars 2024-2034: Markets, Trends, and Forecasts

"Software-Defined Vehicles, Connected Cars, and AI in Cars 2024-2034: Markets, Trends, and Forecasts" explores what a Software-Defined Vehicle is, and draws upon IDTechEx's expertise on autonomous vehicles, 5G, and smart mobility to offer the reader with an in-depth insight of how Connected Vehicle (CV) and Software-Defined Vehicle (SDV) technology, such as V2X (DSRC, ITS-G5, C-V2X), automotive AI/GenAI, and telematics are redefining the automotive landscape.

 

Software-Defined vehicles (SDVs) represent a new paradigm for automakers and consumers. Whereas older ICE vehicles were a conglomeration of 70+ Electronic Control units, kilometres of wiring, and many thousands of components, the new era of vehicles can be more centralized, connected, and convenient, bringing benefits to both the consumer and OEM.

 

The most basic form of SDV is a vehicle where the user experience is affected in some way by the software in a vehicle. However, vehicles can become more 'software-defined' as the number of software-based features on the vehicle increases. Generally, a software-defined vehicle requires a constant cellular connection (4G or 5G), a large, touch-enabled screen, and a powerful central compute system that is also connected to the vehicle's constituent components. Many SDVs also take advantage of third-party apps and in-vehicle payments to add more features and convenience to the user.

 

Categorizing and comparing software-defined vehicles can be difficult, as almost every vehicle that has been released in the last 5-10 years is arguably 'software-defined' in some way. By assigning a vehicle with a simple level, based on the inclusion of certain software features, an approximate comparison can quickly be made. IDTechEx have developed the following system for comparing software-defined vehicles:

 

The future connected vehicle uses not just a standard smartphone cellular connection, but also potentially takes advantage of dedicated 'V2X' safety communication channels at 5.9GHz. This connection uses Wi-Fi or cellular-based technology to communicate with other vehicles and traffic infrastructure. If regulation or safety standards mandate this technology, then V2X is set to quickly become the 'digital seatbelt' of the future, promising to reduce accidents, improve congestion, and reduce emissions globally.

 

The SDV market is emerging, with many potential players being cautious about how to monetize SDV features within the vehicle, and as such, many OEMs, such as SAIC, Renault, and Toyota, are offering long-term free trials for SDV features that range from 3 to 10-years in length. Other players, such as Ford, Tesla, and BMW, are actively monetizing SDV features, and as a result, are generating significant revenue potential. BMW, for example, are offering owners of their i5 model up to US$150 a month in purchasable software upgrades and features, such as connectivity, real-time traffic information, and heated steering wheels.

 

There is a wide discrepancy between the ability of various OEMs to provision SDV features. Many OEMs, such as Toyota, continue to provide minimal options for users to interact with the vehicle, only providing small screens, with limited onboard compute capability. Other OEMs are providing large screens (with functionality for both passengers and driver), with powerful compute, 5G support, and support for in-vehicle payments.

 

Connectivity is a big feature for SDVs, with many OEMs offering 4G or 5G functionality for approximately US$10 a month, generating US$120 a month per vehicle per year. Autonomy as a Service (AaaS) can also offer significant revenue potential, with OEMs such as Ford offering upgraded AaaS for US$900 a year in some regions.

 

Based on information from vehicle brochures, context from automotive conferences, past trends, and conversations with players in the automotive industry, IDTechEx is forecasting a 35% CAGR in automotive software-related revenue by 2034, with software-related revenue being worth more than US$700 billion (US, 2023 prices) by 2034. The higher the SDV level, the more features are offered, and the more likely consumers are to decide to purchase or subscribe to the features offered within the vehicle. Alternative revenue streams will also be available from in-vehicle payments, the sale of actuarial data, and in-vehicle app stores. This is discussed further in the Connected and Software-Defined Vehicle Market report.

 

The V2X market is expected to grow significantly in markets such as China, with markets such as the US and Europe adopting the features soon with cellular-based C-V2X set to become the primary method of vehicle to everything communication.

 

 

This report provides a comprehensive analysis of the market for connected and software-defined vehicles (SDVs), which are vehicles that can communicate with other devices and networks, and have software that significantly impacts the user experience. The report covers the following topics:

 

 

The report is based on extensive research and interviews with industry experts and provides valuable insights for anyone interested in the future of connected and software-defined vehicles.

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