We use cookies to enhance your experience. By continuing to visit this site you agree to our use of cookies . More info . X close

Level 3 Autonomous Vehicles Market

Report Code AT 9435
Published in Jun, 2025, By MarketsandMarkets™
Download PDF

Choose License Type

Buy Report Now Inquire Before Buying

Level 3 Autonomous Vehicles Market - Technology Trends and Strategic Recommendations by Region (North America, Europe and Asia Pacific)

Overview

The level 3 autonomous vehicle market is projected to grow from 291 thousand units in 2025 to 8.7 million units by 2035 at a CAGR of 40.5%. Level 3 autonomy is a crucial step toward true autonomous vehicles as it requires balancing regulatory norms and advanced sensing technologies for reliable advanced features. Industry experts say the sensing, computing, and software technologies available today can achieve autonomous driving. However, regulatory approvals are a significant concern as they deal with liability ownership. This is where OEMs emphasize developing highly redundant autonomy technologies, thereby slowing the roadmap toward autonomous vehicles. Subsequently, continued efforts from OEMs and Tier I & tech companies are focused on improving sensing technologies and developing redundant E/E architectures, which can feasibly get regulatory approval for vehicle operation.

Level 3 Autonomous Vehicle Market

Attractive Opportunities in the Level 3 Autonomous Vehicle Market

ASIA PACIFIC

Market growth in Asia Pacific can be majorly attributed to aggressive efforts by the OEMs to develop level 3 autonomous vehicles through a mass market share capture strategy

Emerging revenue streams from subscription packages to boost the development efforts from the OEMs and Tier Is

Enhancement in level 3 specific hardware and sensor fusion along with next-gen E/E architecture to support the level 3 autonomous vehicle development

Improving sensing technologies and compute platforms along with evolving regulatory norms to support market growth

The Asia Pacific market is projected to reach 2.6 million units by 2035 at a CAGR of 50.4% during the forecast period.

Global Level 3 Autonomous Vehicle Market Dynamics

Driver: Need for improving sensing technologies aimed toward level 3 autonomy

Sensor technology has advanced rapidly in recent years, laying the groundwork for scalable level 3 autonomy. For level 3 autonomous vehicles, LiDAR systems have significantly improved cost efficiency and resolution. For instance, Valeo’s latest SCALA 3 unit delivers up to 12 million points per second. It can detect objects at ranges of up to 300 meters—enabling high-speed, “eyes-off” functionality in traffic jam scenarios at speeds up to 130 km/h.

Radar technologies, too, have improved from a cost and performance standpoint. Leading tier 1 suppliers, such as Valeo and Bosch, now offer imaging radars capable of supporting high-speed highway scenarios. Bosch recently introduced an in-house radar sensor integrated with a custom SoC to offer high compute density within a compact form factor. Meanwhile, camera systems and sensor fusion technologies are becoming more intelligent and robust. Bosch is investing in multi-purpose camera-inertial sensing units for enhanced localization accuracy. Similarly, companies like Mobileye are deploying 4D imaging radar that can digitally interpret elevation and distance, irrespective of adverse conditions such as fog and rain.

The convergence of advanced LiDAR, radar, camera, and inertial sensing into interconnected sensor stacks is the key to successfully deploying level 3 vehicles. These integrated platforms provide the redundancy and reliability required for safe and commercially viable level 3 driving.

Restraint: Lack of clarity in liability

A significant challenge for level 3 autonomous vehicles is liability. Level 3 autonomy shifts primary driving responsibility from the human driver to the vehicle’s system under certain conditions. This transfer complicates liability and insurance coverage. There are challenges for individual stakeholders as well. Some of the challenges are given below:

OEM Responsibility: When a level 3 system is active (e.g., Mercedes Drive Pilot, Honda Traffic Jam Pilot), the OEM must assume liability for accidents or mishaps caused by a system malfunction. While Mercedes-Benz and BMW have assumed the responsibility (if any incident happens), most OEMs find this a major hindrance to labeling their vehicle as level 3.

Insurance Concerns: Traditional auto insurance policies are based on human driver responsibility. However, with level 3 autonomous driving activated, the responsibility has shifted toward the vehicle, with technically no liability toward the driver. Some of the challenges faced by insurance providers are as follows:

  • If the vehicle fails to handle a scenario within its ODD safely, insurers must determine whether the OEM (and their software/hardware) or the driver (for delayed takeover) is liable.
  • Cost Implications: Insurers anticipate higher claim payouts if level 3 system errors occur, potentially raising premiums on level 3-equipped vehicles.
  • Policy Adaptations: Carriers need new coverage models, which can be challenging.

Opportunity: Strong potential from subscription packages

OEMs increasingly monetize ADAS/automated driving through software subscriptions and feature unlocks. Since Level 3 systems require powerful computing and up-to-date mapping/software, vendors see recurring fees as viable. Surveys also support this. For example, AlixPartners found that ~60% of consumers are open to subscribing to ADAS features. In practice, Mercedes-Benz became the first to offer a certified level 3 system (Drive Pilot) as a paid service. In the US (California/Nevada), it is provided via the Mercedes-Me store at about USD 2,500/year (2023) for qualified S-Class/EQS owners. BMW is offering its level 3 Personal Pilot in the 7-Series in Europe as a one-time upgrade (approx. Eur 6,000) rather than a subscription. Chinese OEMs have similarly begun software monetization. For example, NIO charges a subscription for its Navigate-on-Pilot (NOP+) highway assist (~¥380/month from 7/2023 for NIO ET7 and ES7). XPeng notably includes its Navigation-Guided Pilot (NGP) system at no extra fee (Wired notes “Xpeng’s system does not cost extra”). BYD now supplies its “DiPilot” (God’s Eye) ADAS suite as standard equipment on most models (even base models) with no additional cost. These strategies contrast Tesla’s North American approach (FSD at ~USD 15,000 or USD 199/month) but signal that OEMs see recurring revenue in advanced ADAS services.

Challenge: Issues with Infrastructure Readiness

For safe level 3 operation, vehicles often rely on onboard sensors and external infrastructure: well-maintained roads, consistent lane markings, high-definition (HD) maps, and robust cellular/V2X networks. Here are some of the challenges faced by level 3 autonomous vehicles

Road Quality & Signage:

  • Lane Markings: Faded or irregular lane lines can confuse camera-based lane-keep systems in identifying the actual situation on the road.
  • Traffic Signs/Signals: Inconsistent signage (size, reflectivity, placement) reduces detection accuracy in low-light or inclement weather.

Digital Infrastructure (HD Mapping & Localization)

  • HD Maps: Many level 3 systems (e.g., Mercedes Drive Pilot) require pre-scanned HD maps of highways. Mapping entire road networks is expensive and time-consuming.
  • Localization: Precise vehicle positioning (±10 cm) often relies on RTK-GPS or 5G-aided localization. Areas lacking high-accuracy GNSS or cellular coverage hinder real-time geo-alignment.

Connectivity & V2X

  • 5G/C-V2X: Low-latency, high-bandwidth cellular supports OTA updates, real-time traffic info, and fallback guidance. Regions with sparse 5G or no V2X networks force level 3 systems to operate in “standalone” mode, limiting ODD scope.
  • Edge Computing: Roadside units (RSUs) can aid in hazard warnings, but few regions have RSU deployments.

Traffic Environment

  • Mixed Traffic: Heavy two-wheeler or pedestrian traffic (common in India and Southeast Asia) complicates sensor detection.
  • Weather Conditions: Frequent fog, rain, or snow (e.g., in parts of Northern Europe and Japan’s winters) can impact the LiDAR and camera performance.

Global Level 3 Autonomous Vehicle Market Ecosystem Analysis

The market ecosystem participants include OEMs, tier 1 suppliers, autonomous vehicle developers, software and system providers, chip makers, and sensor providers. A few major level 3 autonomous vehicle providers include Robert Bosch GmbH (Germany), Continental AG (Germany), Denso Corporation (Japan), ZF Friedrichshafen AG (Germany), and Magna International Inc. (Canada).

Top Companies in Level 3 Autonomous Vehicle Market

Note: The above diagram only shows the representation of the Level 3 Autonomous Vehicle Market ecosystem; it is not limited to the companies represented above.
Source: Secondary Research and MarketsandMarkets Analysis

Asia Pacific is projected to demonstrate the highest growth in the level 3 autonomous vehicles market during the forecast period.

Asia Pacific is set to register the highest growth rate in the overall level 3 autonomous vehicles market during the forecast period. This growth is expected to kickstart in the next 2-3 years as Chinese OEMs, such as Zeekr, Xpeng, and others, plan to launch level 3 autonomous vehicles. It should be noted that Chinese OEMs are focused on gaining mass volume in domestic and international markets. The Chinese OEMs plan to achieve this by making ADAS features a standard (primarily without any subscription package) offering in their models. These OEMs (particularly BYD) plan to deploy ADAS across the lineup irrespective of vehicle segment (premium, mid-segment, or economy). BYD primarily leads this trend by launching its God’s Eye self-driving system. Thus, as the level 3 autonomous vehicle reaches the final development stage, rapid growth can be expected in the country for these vehicles. Western OEMs are increasingly partnering with Chinese OEMs to develop next-gen technologies faster. In 2024, Volkswagen partnered with Xpeng to develop E/E architecture faster. Such partnerships can pave the way for Western OEMs to gain share in the Chinese market.

Recent Developments of Level 3 Autonomous Vehicle Market

  • In April 2025, Mobileye (Israel) announced a collaboration with Valens Semiconductor (Israel) to enhance its autonomous driving offerings. This collaboration will leverage Valens’ VA7000 chipsets, which adhere to the MIPI A-PHY standard, to facilitate high-speed in-vehicle connectivity between sensors and Mobileye’s EyeQ6 computing units.
  • In April 2025, Valeo (France) partnered with Renault Group to deploy its latest Smart Safety 360 (VSS360) system on the new Renault Grand Koleos. The VSS360 platform is a ready-to-deploy L2/L2+ driver assistance system that integrates a front camera, radar sensors, advanced detection software, and enhanced parking and safety functionalities.
  • In March 2025, Mobileye (Israel) introduced a new solution called Surround ADAS, designed as a cost-effective, software-defined platform for hands-free and eyes-on highway driving. Built on Mobileye’s EyeQ6 High SoC, this system incorporates up to 11 sensors—including cameras and radars—and combines advanced features, such as AI, REM-based mapping, computer vision, and OTA updates. Core capabilities include hands-off driving at speeds up to 130 km/h, lane assistance, collision avoidance, driver monitoring, smart parking, and autonomous lane changing.
  • In March 2025, Zeekr (China) unveiled its first electric vehicle equipped with level 3-ready autonomous driving capabilities. The new Zeekr 007 sedan integrates advanced software developed in-house, supported by Mobileye’s EyeQ6 chip, lidar, and radar-based sensors. This launch marks a significant milestone for Zeekr, making it one of the early adopters of L3 features in China’s premium EV market. The system allows hands-free driving under specific conditions, and Zeekr plans to roll out full L3 functionality via over-the-air (OTA) updates once regulatory approvals are secured.

Key Market Players

List of Top Level 3 Autonomous Vehicle Market Companies

The Level 3 Autonomous Vehicle Market is dominated by a few major players that have a wide regional presence. The major players in the Level 3 Autonomous Vehicle Market are

  • Mercedes-Benz
  • BMW
  • Honda

Key Questions Addressed by the Report

What is the current size of the global level 3 autonomous vehicles market?

The global level 3 autonomous vehicles market is projected to grow to 8.7 million units by 2035 from 291 thousand units in 2025 at a CAGR of 40.5% during the forecast period.

Who are the key players in the global level 3 autonomous vehicles market?

The level 3 autonomous vehicles market is dominated by Mercedes-Benz (Germany), BMW (Germany), Honda (Japan), Volkswagen (Germany), Xpeng (China), Zeekr (China), and others.

Which region is projected to dominate the level 3 autonomous vehicles market during the forecast period?

Asia Pacific is projected to lead the level 3 autonomous vehicles market, driven by a combination of regulatory mandates and rapid technological advancements.

Which country will play a major role in level 3 autonomous vehicles in the coming years?

China is expected to play a crucial role in the growth of the level 3 autonomous vehicle market due to aggressive efforts by Chinese OEMs to achieve autonomous mobility.

What are the key trends impacting the growth of the level 3 autonomous vehicles market?

Stricter government mandates for vehicle safety and advancements in sensing systems, computing platforms, and vehicle architecture drive the integration of high autonomy levels across new models.

Personalize This Research

  • Triangulate with your Own Data
  • Get Data as per your Format and Definition
  • Gain a Deeper Dive on a Specific Application, Geography, Customer or Competitor
  • Any level of Personalization
Request A Free Customisation

Let Us Help You

  • What are the Known and Unknown Adjacencies Impacting the Level 3 Autonomous Vehicles Market
  • What will your New Revenue Sources be?
  • Who will be your Top Customer; what will make them switch?
  • Defend your Market Share or Win Competitors
  • Get a Scorecard for Target Partners
Customized Workshop Request

Table of Contents

Exclusive indicates content/data unique to MarketsandMarkets and not available with any competitors.

TITLE
PAGE NO
INTRODUCTION
9
  • 1.1 STUDY OBJECTIVES
  • 1.2 MARKET DEFINITION
    INCLUSIONS & EXCLUSIONS
  • 1.3 YEARS CONSIDERED
  • 1.4 UNIT CONSIDERED
  • 1.5 KEY STAKEHOLDERS
INTRODUCTION TO LEVEL 3 AUTONOMY
12
  • 2.1 INTRODUCTION OF ADAS LEVELS
  • 2.2 LEVEL 3 AUTONOMY
    BASIC DIFFERENTIATION: LEVEL 1 VS. LEVEL 2/2.5 VS. LEVEL 3
    TECHNICAL COMPARISON: LEVEL 1 VS. LEVEL 2/2.5 VS. LEVEL 3
    HARDWARE AND SOFTWARE DISTINCTIONS BETWEEN LEVEL 1, 2, AND 3 ADAS
    - Sensor suite evolution
    - Compute and architecture
    - Redundancy and safety
MARKET OVERVIEW
15
  • 3.1 MARKET DYNAMICS
    DRIVERS
    - Focus on improving sensing technologies
    - Positive consumer perception on ADAS systems
    - Popularity of subscription packages
    CHALLENGES
    - Lack of clarity on accident/mishap liability
    - Liability concerns for major stakeholders
    - Issues concerning infrastructure readiness
    - Infrastructure limitations in major countries
  • 3.2 ADAS NORMS AND REGULATIONS
    GOVERNMENT REGULATIONS ON SAFETY MANDATES
    - Regulatory norms mandating ADAS features
    REGULATORY SKEPTICISM IN SELECT MARKETS
    - Regulatory norms for ADAS in select countries
  • 3.3 TECHNOLOGY ANALYSIS
    LEVEL 3 AUTONOMY HARDWARE
    SENSOR FUSION TECHNOLOGY FOR LEVEL 3 AUTONOMY
    - Deep learning-based sensor fusion
    - Artificial intelligence for sensor fusion
    ROLE OF 5G CONNECTIVITY IN LEVEL 3 AUTONOMY
  • 3.4 ECOSYSTEM FOR OVERALL ADAS AND AUTONOMOUS VEHICLES
  • 3.5 MNM INSIGHTS INTO HIGH-PERFORMANCE CHIPS POWERING NEXT-GEN ADAS AND AUTONOMY
    COMPUTING UNITS FOR ADAS APPLICATIONS
  • 3.6 MNM INSIGHTS INTO ADVANCEMENTS TO LEVEL 4 AUTONOMY IN MOBILITY AND TRUCKING
  • 3.7 CONSUMER PERCEPTION ON ADAS, BY REGION
    CHINA
    US
    EUROPEAN UNION
    INDIA
    SOUTH KOREA
    JAPAN
    MIDDLE EAST
LEVEL 3 AUTONOMOUS VEHICLES MARKET ASSESSMENT
35
  • 4.1 CURRENT PENETRATION OF LEVEL 3 VEHICLES
    LEVEL 3 AUTONOMOUS VEHICLES MARKET, BY REGION
  • 4.2 REGULATIONS
    EXISTING REGULATIONS ON AUTONOMOUS DRIVING, BY REGION
    NCAP REGULATIONS, BY REGION
    REGULATORY FRAMEWORK, BY REGION
    - China
    - Japan
    - South Korea
    - India
    - US
    - European Union
COMPETITIVE LANDSCAPE
42
  • 5.1 OEM ANALYSIS
    SELECT PASSENGER CAR MODELS EQUIPPED WITH LEVEL 2 OR ABOVE ADAS SYSTEMS
    LEVEL 2 AND ABOVE ADAS SYSTEMS OFFERED BY TOP CHINESE OEMS
    SELECT PASSENGER CAR MODELS EQUIPPED WITH LEVEL 2 OR ABOVE ADAS SYSTEMS
    COMPARISON BETWEEN LEVEL 3 ADAS SUITES
    COMPARISON BETWEEN LEVEL 3 ADAS HARDWARE COMPONENTS
    PLANS OF OEMS FOR DEVELOPMENT OF LEVEL 3 ADAS
  • 5.2 MNM INSIGHTS INTO DEVELOPMENTS UNDERTAKEN BY TIER I COMPANIES IN LEVEL 3 ADAS SPACE
    CURRENT TIER I OFFERINGS FOR LEVEL 3 ADAS
    CURRENT CHIPSET OFFERINGS BY TOP TIER I COMPANIES
    ECOSYSTEM INTERCONNECTION FOR LEVEL 3 ADAS SYSTEMS
RECOMMENDATIONS
54
  • 6.1 RECOMMENDATIONS FOR OEMS
    PRIORITIZING SCALABLE AND MODULAR E/E ARCHITECTURES
    INVESTING IN DIFFERENTIATED SENSOR FUSION AND REDUNDANCY
    DEVELOPING STRATEGIC PARTNERSHIPS WITH TIER I/CHIPSET MANUFACTURERS
    FOCUSING ON SPECIFIC USE CASES AND REGIONAL ODDS
    OFFERING FLEXIBLE MONETIZATION MODELS
    ENSURING CO-DEVELOPMENT WITH REGULATORY AUTHORITIES
  • 6.2 RECOMMENDATIONS FOR TIER I COMPANIES
    FOCUSING ON DEVELOPING LEVEL 3-READY SENSOR SUITE
    INTEGRATING SENSOR FUSION WITH COMPUTING PLATFORM PACKAGE
    FOCUSING ON SOFTWARE-DEFINED VEHICLE (SDV) NEEDS OF OEMS
    FOCUSING ON REGION-SPECIFIC OFFERINGS
LIST OF TABLES
 
  • TABLE 1 INCLUSIONS & EXCLUSIONS
  • TABLE 2 BASIC DIFFERENTIATION: LEVEL 1 VS. LEVEL 2/2.5 VS. LEVEL 3
  • TABLE 3 TECHNICAL COMPARISON: LEVEL 1 VS. LEVEL 2/2.5 VS. LEVEL 3
  • TABLE 4 EXISTING LEVEL 3 ADAS OFFERINGS BY LEGACY TIER I COMPANIES
  • TABLE 5 LEVEL 3 ADAS: RECENT DEVELOPMENTS
  • TABLE 6 L2+/3 ADAS SYSTEMS: SUBSCRIPTION PACKAGES, PRICING, AND ADAS SUITES OFFERED BY OEMS
  • TABLE 7 LIABILITY CONCERNS FOR MAJOR STAKEHOLDERS
  • TABLE 8 INFRASTRUCTURE LIMITATIONS IN MAJOR COUNTRIES
  • TABLE 9 REGULATORY NORMS MANDATING ADAS FEATURES
  • TABLE 10 REGULATORY NORMS FOR ADAS IN SELECT COUNTRIES
  • TABLE 11 RECENT SENSOR INNOVATION BY TIER I COMPANIES AND THEIR USE CASES
  • TABLE 12 CONSUMER SENTIMENT ON LEVEL 3 ADAS SYSTEMS ACROSS MAJOR MARKETS
  • TABLE 13 LEVEL 3 AUTONOMOUS VEHICLES MARKET, BY REGION, 2022–2024 (‘000 UNITS)
  • TABLE 14 LEVEL 3 AUTONOMOUS VEHICLES MARKET, BY REGION, 2025–2035 (‘000 UNITS)
  • TABLE 15 EXISTING REGULATIONS ON ADAS AND AUTONOMOUS DRIVING, BY REGION
  • TABLE 16 NCAP REGULATIONS, BY REGION
  • TABLE 17 SELECT PASSENGER CAR MODELS EQUIPPED WITH LEVEL 2 OR ABOVE ADAS SYSTEMS, BY OEM, 2024–2025
  • TABLE 18 SELECT PASSENGER CAR MODELS EQUIPPED WITH LEVEL 2 OR ABOVE ADAS SYSTEMS, BY CHINESE OEM, 2024–2025
  • TABLE 19 COMPARISON BETWEEN LEVEL 3 ADAS SUITES, BY OEM
  • TABLE 20 LEVEL 3 ADAS HARDWARE OFFERED BY OEMS
  • TABLE 21 ROADMAP OF MAJOR OEMS FOR ADAS LEVEL 3
  • TABLE 22 TIER I PRODUCT OFFERINGS FOR LEVEL 3 ADAS
  • TABLE 23 CHIP OFFERINGS RELEVANT TO LEVEL 3 ADAS SYSTEMS BY MAJOR PLAYERS
LIST OF FIGURES
 
  • FIGURE 1 LEVEL 1 TO LEVEL 5 ADAS: ASSISTED VS. AUTOMATED
  • FIGURE 2 LEVEL 3 AUTONOMOUS VEHICLES MARKET: DRIVERS, RESTRAINTS, OPPORTUNITIES, AND CHALLENGES
  • FIGURE 3 CUSTOMER SATISFACTION LEVEL FOR SAFETY SYSTEMS, 2021 VS. 2022
  • FIGURE 4 CONSUMER UNDERSTANDING LEVEL OF SAFETY SYSTEMS, 2021 VS. 2022
  • FIGURE 5 RENESAS ELECTRONICS CORPORATION: SENSOR FUSION WITH DEEP LEARNING
  • FIGURE 6 RENESAS ELECTRONICS CORPORATION: AI-BASED SENSOR FUSION
  • FIGURE 7 ECOSYSTEM MAPPING FOR OVERALL ADAS AND AUTONOMOUS VEHICLES
  • FIGURE 8 COMPUTING UNITS FOR ADAS APPLICATIONS
  • FIGURE 9 ADVANCEMENT TOWARD LEVEL 4 AUTONOMY IN MOBILITY AND TRUCKING
  • FIGURE 10 PENETRATION OF LEVEL 3 AUTONOMOUS VEHICLES AGAINST TOTAL VEHICLE SALES, 2022–2035 (’000 UNITS)
  • FIGURE 11 SALES NUMBERS FOR LEVELS 2/2+ AND 3 AUTONOMOUS VEHICLES, 2022–2035 (’000 UNITS)
  • FIGURE 12 LEVEL 3 AND ABOVE ADAS SYSTEMS: ECOSYSTEM MAPPING
  • FIGURE 13 REDUNDANCY IN MERCEDES-BENZ’S ‘DRIVE PILOT’
Request for detailed methodology, assumptions & how numbers were triangulated.
Please share your problem/objectives in greater details so that our analyst can verify if they can solve your problem(s).

Previous Versions of this Report

"Our USP is "providing game-changing business opportunities reports with free customization" - so please feel free to provide us with your specific areas of interest / business challenges in much greater detail !!"

We appreciate your interest in this report. Once you fill out the form, you'll be immediately directed to an exclusive solution tailored to your needs. This high-value offering can help boost your revenue by 30% - a must-see opportunity for anyone looking to maximize growth.


By clicking the "Submit" button, you are agreeing to the Terms of Use and Privacy Policy.

Custom Market Research Services

We Will Customise The Research For You, In Case The Report Listed Above Does Not Meet With Your Requirements

Get 10% Free Customisation

Growth opportunities and latent adjacency in Level 3 Autonomous Vehicles Market

DMCA.com Protection Status