Automotive Embedded System Market Size - By Type (Software, Hardware), By Vehicle Type (Two-wheeler, Passenger Car, Commercial Vehicles), By Component (Transceivers, Sensors, Memory Devices, Microcontrollers), Application & Global Forecast, 2023 – 2032

Automotive Embedded System Market Size

Automotive Embedded System Market size was valued at USD 29.1 billion in 2022 and is projected to register a CAGR of 8% between 2023 and 2032. Modern vehicles require sophisticated embedded systems to process data from sensors (such as cameras, LiDAR, and radar) and make real-time decisions for features like lane departure warnings, adaptive cruise control, automated parking, and eventually fully autonomous driving. These systems enhance safety, convenience, and overall driving experience.
 

For instance, the Mercedez-Benz EQS SUV, launched in September 2023, comes with a Level 2 ADAS system that includes features such as adaptive cruise control, lane centering assist, and blind spot monitoring. It is also available with a Level 3 ADAS system that allows the driver to take their hands off the wheel in certain conditions.

Consumer demand for enhanced infotainment, connectivity, and in-car entertainment experiences is propelling the growth of the automotive embedded system market. Vehicles are becoming more connected, offering features like touchscreens, voice recognition, smartphone integration, navigation, and internet connectivity. Embedded systems power these functionalities, providing seamless communication between the vehicle, its components, and external services.
 

As user expectations for technology-rich driving environments increase, automakers invest in advanced embedded systems to meet these demands. For instance, in November 2022, BMW announced that it would invest ?30 billion in electric vehicles and autonomous technology over the next five years. The company is developing a self-driving car called iNext expected to be launched in 2025.
 

However, integrating advanced embedded systems in vehicles can increase manufacturing costs due to the need for specialized hardware, software development, and testing. As vehicles become more technologically advanced, the complexity of embedded systems also rises, requiring more resources and expertise for design, implementation, and maintenance. High costs and complexity can deter some manufacturers from adopting or fully integrating advanced embedded systems, especially in lower-priced vehicle segments.
 

COVID-19 Impact

The COVID-19 pandemic significantly impacted the automotive embedded system market. Lockdowns and disruptions to supply chains temporarily stalled production, affecting the availability of components crucial to embedded systems. Automakers delayed product launches and adopted cost-cutting measures. However, the crisis highlighted the importance of connected features for remote diagnostics, OTA updates, and contactless interfaces. Instances include increased interest in touchless controls and voice assistants, underscoring the sector's adaptability in response to changing consumer preferences amid the pandemic's challenges.
 

Automotive Embedded System Market Trends

Integration of Over-the-Air (OTA) Updates and software management practices in modern automobiles is among the prominent trends that could strengthen the automotive embedded system industry outlook through 2032. As vehicles become more connected, automakers are looking to implement more sophisticated software management practices. In March 2023, Volvo Cars announced that it would adopt agile software development practices for its autonomous driving technology. The company is also using AI to test and validate its software.
 

OTA updates allow manufacturers to remotely update software, fix bugs, and introduce new features to vehicles after they've been sold. This trend reduces the need for physical recalls and enables continuous improvement and customization of vehicle functionality. Effective OTA systems require robust security measures to prevent unauthorized access, making cybersecurity an integral part of this trend, thus favoring market dynamics.
 

Automotive Embedded System Market Analysis

The embedded software segment held over 70% of the automotive embedded system market share in 2022. Features like advanced driver assistance systems (ADAS), automotive infotainment, connectivity, and autonomous driving rely on sophisticated software solutions. For instance, Tesla's Autopilot system utilizes embedded software to enable semi-autonomous driving capabilities. As consumer expectations for safety, convenience, and entertainment evolve, automakers must continually innovate, leading to a growing need for embedded software that powers these cutting-edge functionalities in modern vehicles.
 

The passenger car segment recorded around 48% of the automotive embedded system market share in 2022, due to their pivotal role in enhancing safety, efficiency, and driver experience. Advanced driver assistance systems (ADAS), such as lane departure warnings and automatic emergency braking, rely on embedded systems to process data and make split-second decisions. Notably, vehicles like the Mercedes-Benz S-Class feature comprehensive ADAS suites that utilize embedded systems for a safer and more comfortable driving environment. As passenger cars evolve into highly connected and autonomous entities, embedded systems are crucial for delivering the technology-driven features that consumers demand.
 

The Asia Pacific automotive embedded system market accounted for 35% of revenue share in 2022. Increasing consumer demand for advanced vehicles with features like infotainment, connectivity, and driver assistance systems is driving the adoption of embedded systems. The rise of electric vehicles in China, where companies like NIO incorporate sophisticated embedded systems for battery management and autonomous capabilities, will support regional expansion. Moreover, the region's expanding manufacturing capabilities, technological expertise, and government initiatives to promote electric and connected vehicles contribute to the flourishing embedded systems market in APAC.
 

Automotive Embedded System Market Share

Major companies operating in the automotive embedded system market are :

• Denso
• Valeo
• Mitsubishi Electric
• Infineon Technologies
• Continental AG
• Texas Instruments
• Magna International
•  Harman International
• Toshiba
• Hella KGaA Hueck & Cc
• Panasonic
• Verizon
• NXP Semiconductors
• Delphi Automotive
• ntel Robert Bosch

These companies are majorly focus on launching new automotive embedded system solutions for different applications.
 

Automotive Embedded System Industry News

• In February 2023, Intel announced a partnership with Magna International to develop next-generation automotive embedded systems. The partnership will focus on developing high-performance and secure embedded systems for autonomous driving, ADAS, and infotainment systems.
   

The automotive embedded system market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2018 to 2032, for the following segments:

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Market, By Type

• Software
• Hardware

Market, By Vehicle Type

• Passenger car
• Two-wheeler
• Commercial Vehicles

Market, By Component

• Transceivers
• Sensors
• Memory Devices
• Microcontrollers

Market, By Application

• Infotainment & Telematics
• Safety & Security
• Powertrain & Chassis Control
• Body Electronics
• Others

The above information has been provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia
  • Taiwan 
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • South Africa
  • UAE
  • Saudi Arabia