Autonomous Driving Software Market

The automotive industry has been shifting towards L2 and above ADAS systems with a growing emphasis on driver safety and improved driving experience. As per MarketsandMarkets Analysis, more than 80% of all newly sold vehicles by 2035 will have L2 and above features, up from around 40-45% in 2023. Further, over 25% of those vehicles are expected to come with L3 and above Autonomous Vehicles, which in turn would drive the demand for autonomous driving software. The Autonomous Driving Software Market is expected to grow from USD 1.7 Billion in 2024 to USD 6.9 Billion by 2035, growing at a CAGR of 13.3%.

Technological developments are a major stimulant to market expansion. Continued research and development in artificial intelligence, machine learning, and sensor technologies improve the capabilities and dependability of autonomous driving software. This will be driven by technologies such as Sensor Fusion, combining inputs from multiple Automotive Sensors.  Furthermore, regulatory backing and government initiatives will help create a robust infrastructure framework, acting as a significant catalyst for this industry expansion. Governments worldwide are working on policies that will permit the testing and deployment of self-driving cars, thus leaving much scope for industry partnerships and innovation.

Currently, L2+ vehicles are the primary application area for Autonomous Driving Software. These vehicles come with advanced driving software from applications ranging from Perception & Planning to interior Sensing. Leading OEMs already have capability to shift to L3 autonomy but are currently in the process of regulatory approval and further technology improvement before this shift. OEMs such as Mercedes Benz, Hyundai, and BMW already provide L3 autonomy in some particular geographies. Others, including GM, Ford, NIO, Volkswagen, and Stellantis, plan to bring L3 autonomy in the next 2-3 years in select models. L3 vehicles shift would be seen at rapid rate and grow to 1.5-2% of annual car sales by 2030. Beyond that, market would see a gradual shift to L4 autonomy in passenger cars with increasing demand for highway self-driving and best in class driving support and driving experience key for normal city driving. L4 vehicles are expected to have ~1% market share by 2035 and grow rapidly beyond.

OEMs such as Tesla, Rivian, Mercedes Benz, XEPNG, General Motors, and Volkswagen AG, among others, are actively working toward in-house autonomous vehicle software development. For instance, Tesla developed its Car.OS, an operating system, and Tesla Autopilot is an autonomous driving platform. Similarly, Rivian has developed its operating system, Rivian OS, and an autonomous driving system known as Rivian Driver+. Likewise, Mercedes-Benz offers an operating system named MB.OS and an autonomous driving system called DRIVE PILOT. In addition, XPENG features an operating system called Xmart OS, an autonomous driving system called XPilot, and a navigation system referred to as XNGP (Navigation Guided Pilot).

Source: Secondary Research and MarketsandMarkets Analysis

Key business models as of now for monetizing autonomous vehicles include ride-hailing and ride-sharing services, where companies deploy autonomous fleets to reduce costs and improve efficiency. Subscription services provide flexible access to AVs, while autonomous delivery services offer efficient last-mile deliveries. The data generated by AVs can be monetized by selling insights to urban planners and businesses. Advertising opportunities inside and outside the vehicles, Mobility-as-a-Service (MaaS) platforms integrating various transportation modes, corporate and municipal partnerships, tourism and leisure services, specialized industry fleets, and in-vehicle commerce present lucrative opportunities for leveraging autonomous vehicle technology. OEMs, however, plan to bring near-autonomous vehicles to improve safety and driving experience for a much broader audience and tap new business opportunities in the coming years.

Relevant and Adjacent Market Reports

1. ADAS Market https://www.marketsandmarkets.com/Market-Reports/driver-assistance-systems-market-1201.html
2. Autonomous/Self Driving Car Market https://www.marketsandmarkets.com/Market-Reports/near-autonomous-passenger-car-market-1220.html
3. Sensor Fusion Market https://www.marketsandmarkets.com/Market Reports/automotive-sensor-fusion-market-260287840.html
4. Sensors Market for Automated Vehicles https://www.marketsandmarkets.com/PressReleases/sensor.asp

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