TL;DR:
- Artificial intelligence in the automotive market is projected to grow at a robust CAGR of 55% between 2023 and 2033.
- Integration of AI solutions with automotive technology is driving the adoption of AI in the automotive sector.
- The restoration of the automotive industry post-pandemic, personalized vehicles with AI features, and the demand for autonomous operations are fueling the sales of AI-integrated automotive systems.
- AI technology plays a crucial role in the design and production of new vehicles, driving the sales of fully digitalized electric vehicles.
- Government support for sustainable technology and collaborations between automotive companies and AI vendors are further boosting the demand for AI in the automotive market.
- The United States leads the North American market, while China and Europe are also experiencing significant growth.
- The software holds a dominant position in the component category, and fully autonomous vehicles are witnessing substantial growth.
- Market developments include BMW’s digitization initiatives and Tesla’s advancements in AI and autopilot technology.
Main AI News:
Artificial Intelligence (AI) is revolutionizing the automotive market, playing a crucial role in everything from software to hardware and chipsets. According to a recent analysis from Future Market Insights, AI in the automotive sector is projected to experience a robust compound annual growth rate (CAGR) of 55% during the forecast period. In 2023, the market already holds a significant share of US$ 9.3 billion, and it is expected to surpass a staggering value of US$ 744.39 billion by 2033.
The research report highlights that the integration of AI solutions with automotive technology is driving the adoption of artificial intelligence in the automotive market. The rise of autonomous vehicles equipped with Advanced Driver Assistance Systems (ADAS) and auto-driving modes has paved the way for innovative AI-driven features such as guided park assist and lane locater. These advancements enhance the overall driving experience and promote safety.
Furthermore, the recovery of the automotive industry following the pandemic has spurred extensive research and development programs, resulting in increased sales of AI-integrated vehicles. Personalized vehicles with AI features have gained significant traction among consumers, as they offer convenience and improved user experiences. The demand for AI-integrated automotive systems is further fueled by the better customer experience provided by AI-enabled applications for autonomous operations. Automotive companies are strategically partnering with firms that specialize in AI integration, fostering market growth. Moreover, automotive engineers are designing new cars with driving assistance capabilities, which is expected to drive further market expansion.
The outlook for artificial intelligence in the automotive market predicts a future where AI technology will be a key component of vehicles operating on autopilot systems. Consequently, the integration of AI becomes crucial for the future of automotive manufacturing. Governments and regulatory authorities are embracing sustainable technologies, promoting the adoption of artificial intelligence and machine learning in the automotive sector. AI is not only a part of the final automotive product but also an integral component of its construction. AI-backed robots are facilitating vehicle manufacturing with unparalleled precision, while AI and machine learning enable autonomous navigation through traffic.
One notable example of advanced autonomous driving technology is Motional, a joint venture between Aptiv and Hyundai Motor Group. Motional employs three sensor types, namely LiDAR, Radar, and cameras, to provide comprehensive inputs to its AI system for analysis and decision-making. In addition to companies like Motional that equip vehicles with autonomous capabilities, there are also firms developing self-driving vehicles from scratch. The application of AI in driver assistance and autonomous delivery services represents the latest frontiers in AI utilization and is expected to drive market growth. These factors are anticipated to transform the artificial intelligence landscape in the automotive market.
Short-term growth in the market was initially impacted by the COVID-19 pandemic and subsequent research and development efforts. However, the demand for AI in automotive systems has been fueled by machine learning processes. During this growth phase, the market has established a solid foundation with new integration-based programs. Additionally, companies offering personalized automotive systems have contributed to the growing demand for AI in the automotive sector.
In the mid-term, there is a growing focus on exploring AI applications in various automotive machines through advanced projects and initiatives. Industries 4.0, with its components, is playing a pivotal role in enhancing the utilization of AI in automobiles. Machine learning, in particular, is crucial in understanding driving patterns, while AI analyzes this data and provides assistance to drivers.
Long-term growth prospects are bright for the market, driven by strong marketing campaigns and the increasing normalization of electric vehicles (EVs) and hybrid vehicles. Individuals with higher per capita income are investing in cutting-edge technologies, which will have a positive impact on the market. Over the period from 2023 to 2033, a remarkable CAGR of 55% is anticipated for artificial intelligence in the automotive market.
What factors drive and restrict the adoption of artificial intelligence in the automotive market? Firstly, AI’s role in modern vehicles is prominent across software, hardware, and chipsets. AI is a transformative technology of the future, and its integration with smart devices has become a necessity. Vehicles equipped with smart features like AC controls, lighting, park guide assist systems, and autonomous steering systems rely on software and programming support.
The integration of AI in the transmission system enhances machine learning capabilities and enables active memory usage. AI remembers past actions and utilizes this memory to make informed decisions during the drive. Features like automatic lane-shifting and overtaking contribute to the growing demand for autonomous cars, driving the market growth. Another driving factor is the rapidly evolving trends of the Advanced Driver Assist System (ADAS), which raise awareness about AI-powered vehicles and the importance of Connectivity-as-a-Service (CaaP) business models.
However, there are also key restrictions to the market’s success. The limited application of sensors and equipment that strengthen AI and machine learning systems poses a challenge. Additionally, software and hardware malfunctions can create skepticism among end users regarding AI’s application in vehicles.
The United States is experiencing significant growth in artificial intelligence in the automotive market, with a notable CAGR between 2023 and 2033. The country is expected to dominate the North American market, driven by the increasing sales of autonomous vehicles and electric vehicles with fully automatic programs. The emergence of new businesses focused on designing self-driving vehicles is another factor contributing to regional growth. Furthermore, initiatives promoting sustainable growth and environmental preservation support the adoption of electric vehicles. The presence of prominent EV manufacturer Tesla further fuels the demand for AI solutions in the automotive sector.
China, on the other hand, plays a pivotal role in the thriving market with the rapid adoption of AI and machine learning technologies in electric vehicles. The demand for AI software and hardware tools is fueled by Chinese automotive giants’ extensive research and development programs focusing on autonomous driving. AI is being applied during vehicle manufacturing as Original Equipment Manufacturer (OEM) implants, driving the sales and utilization of AI in the automotive industry.
In Europe, the market is undergoing a transformation due to the widespread adoption of electric vehicles and autonomous vehicles. Countries such as Germany, France, Spain, and Poland, known for their leading automotive manufacturing capabilities, are actively integrating AI systems into their vehicle transmissions. From traditional fossil fuel-based vehicles to electric vehicles, the objective is to digitize transportation while prioritizing driver comfort. Consequently, the demand for artificial intelligence in automobiles is soaring, supporting the global market. Germany, as a prominent vehicle manufacturing hub, is spearheading research facilities aimed at fully implementing AI and machine learning technologies.
In terms of market segments, software holds the leading position in the component category and is anticipated to reach a value of US$ 200 billion by 2033. The increasing application of autonomous vehicle services such as parking support, self-driving capabilities, AC controls, and advanced music systems heavily relies on software. Original Equipment Manufacturer (OEM) software and third-party software are the available options in this segment. While companies typically avoid experimenting with their pre-installed software, they do seek outside vendor support to customize the AI platform according to their specific requirements.
The application segment witnessing significant growth is fully autonomous vehicles, which is projected to reach a value of US$ 30 billion by 2033. This growth can be attributed to the rising popularity of vehicles equipped with driving assistance or autonomous control features. The extent of control granted to AI determines the degree of self-sustaining driving capabilities. Notably, technology companies and automakers are actively developing advanced AI systems tailored for driverless vehicles.
The global artificial intelligence in the automotive market is highly fragmented, with players continually advancing their systems through the integration of sensors and other components. AI vendors are expected to introduce software support that enables fully autonomous capabilities in vehicles.
Market developments include BMW AG’s plans to digitize the manufacturing space through innovative solutions and the integration of the digital mobility program. BMW’s upcoming projects are anticipated to involve AI-based transmission and programming. Tesla Inc has also made strides in artificial intelligence and autopilot technology, leveraging concepts such as neural networks, autonomy algorithms, code foundation, evaluation infrastructure, dojo systems, and chips to achieve its autonomous driving vision.
Conlcusion:
Artificial intelligence in the automotive market is poised for remarkable growth and is transforming the future of the industry. The integration of AI solutions with automotive technology, coupled with the demand for autonomous vehicles, personalized experiences, and sustainable practices, is driving the sales of AI-integrated automotive systems. This presents significant opportunities for both established automotive players and emerging AI vendors. Market leaders should focus on enhancing their software capabilities, developing fully autonomous vehicles, and fostering collaborations to capitalize on the growing demand and establish a strong presence in this dynamic market.
