The global s/w defined vehicle market size is projected to grow from USD 213.5 billion in 2024 to USD 1,237.6 billion by 2030, at a CAGR of 34.0%.
SDVs are expected to be the next big disruption in Automotive Sector in the coming decade. By 2030, more than 70% passenger cars, as well as significant number of LCVs will be SDVs. Key automakers are also adapting to new generation E/E and chassis architectures for this ongoing technology shift. Hyundai, Mercedes Benz and BMW for instance, recently announced plans to launch SDVs from 2025-2026 in passenger cars. Rivian has also started providing SDVs in pickup trucks. Other OEMs plan to adopt this technology, to reduce losses due to vehicle recalls, develop alternative revenue streams through software monetization and personalized engagement, reduce manufacturing complexity and cost. This will be supported by growing OTA updates application, and adoption of new use cases such as real-time diagnostics, pay-as-you-go subscription services for feature on demand (FoD).
By SDV type, SDV segment is expected to have significant growth opportunities in global Software Defined Vehicle market.
During the forecast period, SDVs are expected to have larger growth prospects compared to semi-SDVs segment. Unlike traditional ICE vehicles, which mostly rely on predefined hardware configurations, SDVs are more flexible and adaptive in nature which allows their functionality and features to be upgraded and improved over time through continual software upgrades. OEMs such as Tesla, Rivian and NIO are leveraging the first mover’s advantage by developing unique products with best in class features for the industry. On the other hand, legacy OEMs are developing this technology for higher levels of connectivity, based on telematics and OTA updates that enable quick response to market demands and problem solving without requiring physical recalls. This ongoing shift will reduce production and recall costs by focusing on standardizing hardware and software differentiation.
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Passenger cars to drive the SDV shift with automakers planning to shift luxury and mid-segment cars to SDVs by 2030.
Automakers are rapidly shifting to SDVs, with passenger cars being the key segment leading this shift. Early on, new age automakers such Tesla (US), Li Auto (China), XPENG (China), ZEEKR (China) among others started providing this technology in luxury passenger cars. Further, BMW and Mercedes Benz also announced plans for this transition in some of their luxury models by 2026. Mid-segment passenger cars on the other hand are expected to enter the market from by 2028 as announced by volume market automakers. With the large volume sales of passenger cars, they will become new revenue centers for OEMs with shift to SDVs, providing additional revenue streams with OTA updated enabling feature on demand, and improved personalization.
“China to lead the Software Defined Vehicle market during the forecast period.”
China has encouraged automakers to develop automotive software and connectivity technologies along with EV technologies since 2015. Growing sales of premium vehicles, and demand for best in class in-car digital ecosystem has been pivoting Chinese Automakers to shift to SDVs. These vehicles come with features such as advanced in-vehicle workspaces with AR/VR for productivity, lifestyle synchronization with in-vehicle experiences linked to OTA updates, smart devices, and immersive entertainment ecosystems with multisensory features like haptic feedback and spatial audio. OEMs and technology providers in the country are utilizing open-source platforms to develop next-generation vehicle equipped with software stacks, which enhances SDV capabilities such as driving assistance, connectivity, and digitalization. NIO, Li Auto Inc., ZEEKR, XPENG Inc. among others currently provide SDVs in China. These companies are partnering with software mobility providers to enhance their SDV capabilities. For instance, in June 2024, XPENG INC. partnered with NVIDIA Corporation for the adoption of the NVIDIA DRIVE Thor platform for its next-generation EVs. This platform will power XPENG’s XNGP AI-assisted driving system, enhancing intelligent driving capabilities. This transition will be led by continuous R&D and advancement in the autonomous driving technology by local software mobility providers and sophisticated automotive ecosystems integrating cloud-native technologies.
The Software Defined Vehicle market is dominated by global players such as Tesla (US), NIO (China), Li Auto Inc. (China), ZEEKR (China), XPENG Inc. (China), and Rivian (US), among others. These new age automakers have adopted a software first approach from early development and have focused on developing vehicles using a zonal/centralized architecture. They have also partnered with technology providers including software stack providers, central compute providers and cloud ecosystem providers to provide SDV technologies, regular OTA updates and best in-class features such as smart digital cockpits, AI enabled vehicle control, and other on demand use cases.
Study Coverage
The report covers the Software Defined Vehicle market by SDV Type (Semi-SDV, SDV), E/E Architecture (Distributed, Domain Centralised, Zonal Control), vehicle type (passenger car, and light commercial vehicle), and region (Asia Pacific, Europe, and North America). It covers the competitive landscape and company profiles of the major players in the SDV ecosystem. The scope of the report covers detailed information regarding the major factors, such as drivers, restraints, challenges, and opportunities, influencing the growth of the market. A detailed analysis of the key industry players has been done to provide insights into their business overview, solutions, and services; key strategies; contracts, partnerships, agreements. New product & service launches, mergers and acquisitions, and recent developments associated with the market. Regulatory Landscape, Key Conferences and Events, Patent Analysis, Competitive analysis of upcoming startups in the SDV ecosystem is covered in this report.
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