Software-Defined Vehicle Market size was over USD 53.8 billion in 2024 and is estimated to reach USD 602.4 billion by the end of 2037, expanding at a CAGR of 22.3% during the forecast timeline, i.e., 2025-2037. In 2025, the industry size of software-defined vehicle is evaluated at USD 65.8 billion. The growth is driven by the rapid evolution of the transportation industry. Companies are developing features such as connectivity, automation, and advanced mobility solutions, propelling robust demand in this sector. For instance, in May 2023, Renault partnered with Valeo to improvise its software-defined ecosystem. This partnership will supply SDVs with HPC to increase their capability to adopt new functionalities.
The developed electronic and electrical infrastructure further integrates innovations in the software-defined vehicle market. The unmatched connectivity and cloud computing technology can offer real-time navigation, remote evaluation, and predictive maintenance. Such enhanced features inspire companies to invest and collaborate to deliver more personalized user experiences. For instance, in May 2022, KPIT acquired SOMIT Solutions to add cloud-based capabilities to its vehicle diagnostics portfolio. This addition will create new opportunities to capture the large after-sales industry of automobiles through software intelligence. These further influence automakers to integrate advanced software capabilities in their latest vehicles.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
22.3% |
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Base Year Market Size (2024) |
USD 53.8 billion |
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Forecast Year Market Size (2037) |
USD 602.4 billion |
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Regional Scope |
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Vehicle Type (Passenger Cars, Commercial Vehicles)
In terms of vehicle types, passenger cars segment is estimated to dominate around 79.1% software-defined vehicle market share by the end of 2037. Adaptive cruise control and ADAS systems have made these models preferable to fit commercial transportation. The advanced cameras, sensors, and radars are capable of processing large data to deliver precise software outputs. Tech companies are increasingly prioritizing OTA updates and feature additions for improved performance. For instance, in June 2024, Renesas launched R-Car Open Access (RoX) for seamless integration of AI applications in SDVs. The market-ready platform enabled ASIL D-level sensing to elevate the in-cabin passenger experience.
Propulsion Type (ICE, Electric Vehicle)
Based on propulsion type, the software-defined vehicle market is expected to witness significant progress in the EV segment. The rising concern about sustainability is pushing automakers to manufacture eco-friendly solutions. Electric vehicles are setting the future of this concept, promoting zero-emission in transportation. Software can enhance the operational value of these cars to deliver optimal performance. The advanced control systems can increase energy efficiency through smart battery management and regenerative braking features. Leading tech companies are now investing to develop technologies to reduce footprint. For instance, in April 2024, intel acquired in-tech to accelerate its R&D for e-mobility engineering. It aims to utilize in-tech assets in automobile-specific software systems to upgrade EVs in the UK.
Our in-depth analysis of the global software-defined vehicle market includes the following segments:
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Vehicle Type |
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Propulsion Type |
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Level of Autonomy |
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Offering |
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Application |
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North America Market Analysis
North America in software-defined vehicle market is likely to hold over 29.8% revenue share by the end of 2037, due to its technology leadership. Its continued innovations have influenced the automotive industry to adopt such systems. Leading automakers including General Motors, Ford, and Stellantis are heavily investing in SDVs. This further inspires other regional startups to adopt advanced technologies in delivering enhanced vehicle performance. For instance, in June 2022, Apple launched a new software-driven car dashboard, CarPlay. The tool enables the monitoring of crucial vehicle components including speed and gas mileage. Automakers such as Ford, Nissan, and Honda shared their plan to implement this software in their upcoming models.
Being home to winning cloud companies such as Apple, Google, and Microsoft has inflated SDV demand in the U.S. software-defined vehicle market. The country is also opening doors to imported technologies to boost its software implementation. For instance, in February 2023, Hyundai and Kia announced to offer advanced software systems to 8.3 million cars in this country. The protection software will indulge in existing vehicle features to enhance traffic safety in response to the increasing thefts.
Canada is pushing towards remarkable growth in the software-defined vehicle market with its established automobile manufacturing industry. Domestic tech companies in this country are collaborating with global leaders to bring innovative software solutions to the auto industry. For instance, in March 2024, LeddarTech collaborates with Arm to develop new technology, LeddarVision for ADAS, AD, and parking. The AI-powered tool is capable of enhancing SDV navigation by accessing Arm’s next-generation hardware and software solutions.
APAC Market Statistics
Asia Pacific is expected to generate lucrative opportunities in the software-defined vehicle market during the forecast period. The developing auto industry of this region holds the potential to bring innovative solutions in this sector. Global leaders including Hyundai, Nissan, BMW, and BYD are heavily investing to accelerate development in this region by adopting SDV technologies. Tech leaders are introducing advanced software tools to offer elevated vehicle performance, safety, and infotainment systems. In September 2024, Hyundai Motors partnered with Kia and Samsung to develop improved connectivity for SDVs. The alliance will empower the vehicle-to-smartphone connection to create a user-specific ecosystem. This further inspires other domestic competitors to invest in smart auto technologies.
The rapidly evolving auto industry and supportive government are revealing the growth potential of India software-defined vehicle market. Many well-established companies in this country are contributing to the optimum implementation of tech ecosystems. They are taking the initiative to support the transition of the domestic automotive industry. For instance, in July 2024, Tata Elxsi opted for River Studio Developer to be the partner in leveraging their technology and design for SDVs. The collaboration will take off the speed of development and deployment of its DevSecOps platform.
With global leaders such as BYD, China is predicted to gain traction in the software-defined vehicle market. The country is also improvising software technologies to elevate its EV industry. Many business fleets including Didi Chuxing are incorporating such advancement in their MaaS offerings. This further creates the scope of investment to help generate greater revenue from this sector. In October 2023, Didi received funding worth USD 149 million from GAC Group and Guangzhou for R&D in autonomous driving. Such support is helping the country to convert urban mobility through autonomous technology and V2I communication.
Growth in the software-defined vehicle market is highly dependent on consumer acceptance of new technologies. Many tech companies are taking the responsibility to educate drivers about the benefits and effectiveness of these SDVs. For instance, in March 2024, Accenture launched a skill development platform, LearnVantage to help SDV drivers to gain essential operational knowledge. This is further supplying skilled professionals to encourage auto business fleets to adopt software-driven cars. The software monitoring and battery optimizing systems are being utilized for new EV models, contributing to sustainability. Companies are investing to promote software-driven EVs to consolidate their leading position. Such key players include:
Author Credits: Saima Khursheed
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