Automotive Electronics Set to Continue to Grow

The current automotive electronics market is enjoying solid growth and will continue to do so for the foreseeable future. The rise in the number and variety of electric vehicles (EVs) and hybrid EVs (HEVs) coming to market, combined with consumer interest in safety, connectivity, and entertainment features, is only fueling that growth.

At the same time, the global pandemic and associated supply chain delays and drops in vehicle sales made things tough for automakers. According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), global automobile production dropped by more than 15% to 77.6 million units in 2020, compared to 91.7 million units in 2019. Further, U.S.-China trade woes have also had an impact as China is a global manufacturing hub for the export of power electronics for electric cars and motors. Still, projections for the tech-heavy electronic vehicles industry are very much on the rosy side over the next few years.

The demand for electronics-heavy vehicles is expected to explode. Consider the current statistics: EVs (a segment that includes everything from commercial vehicles to electric scooters) will represent $55.81 billion units in 2022, a figure that will grow at an annual rate of 29.4% over the next seven years to reach $570.47 billion by 2029, according to analysts.¹ By volume, this market is expected to reach 7.62 million units by 2029, from an estimated 1.54 million units in 2022, representing a CAGR of 25.7% during the forecast period. Supportive government policies and regulations, environmental concerns, and rising acceptance of electric mobility are all driving adoption, along with the future promise of autonomous vehicles.

Auto OEMs love electronics

Along with entertainment, automakers have a variety of goals that can be supported through the strategic use of electronics, including reduced costs, lower emissions, higher efficiency, and improved safety. To that end, there are various types of components spread across modern vehicles and their electrical and electronic distribution systems (EEDS). Component makers are offering customized electronic designs that are robust in the face of temperature extremes while offering sophisticated features.

Not surprisingly, microcontrollers are called out as accounting for the largest share of components, contributing more than one-fourth of the total market in 2019.² It will also register the highest annual growth over the next handful of years, researchers say. You’ll find electronic content scattered throughout the vehicle, including systems such as “carputers", engine management, ignition, radio, telematics, advanced driver assistance systems (ADAS), safety systems, electronic fuel injection, airbags, and entertainment systems.

Figure 1 : In a bid to increase safety and comfort for drivers and passengers, car makers will continue to increase the number of electronics. (Image source: Precedent Research)

Analysts have thrown out several statistics that communicate the growth of automotive electronics:

• Four out of five cars shipped last year had connected technology integrated into them
• The global automotive electronics market will double between 2019 and 2029³
• The global automotive market will grow at an annual rate of over 7% to reach $415.6 billion by 2027⁴
• The sensor segment in automotive electronic components will grow at a rate of 10% year over year through 2029

Figure 2 : Although sensors will capture the largest amount of growth, other electronics categories are likely to double in the next decade. (Image source: Fact.MR)

Even as the automotive market is pushed to grow through the adoption of electric vehicles and eventually autonomous cars, there remain some gating factors. Automotive systems are increasing in complexity, which will increase replacement and maintenance costs on these vehicles. Further, certain systems are potentially prohibitively expensive. For example, ADAS is expensive enough that analysts expect that costs may restrain adoption.⁵

In a world where market researchers rarely agree, there is an oasis of shared understanding: The automotive electronics market is on track to grow at a rate of more than seven percent for the foreseeable future. Consumer demand for safer, more efficient, and more feature-rich vehicles is driving that trend.

References:

1: https://www.businesswire.com/news/home/20220609005703/en/North-America-Electric-Vehicle-Market-Report-2022-2029-Increasing-Investments-in-RD-for-Smart-Charging-Systems

2: https://www.digitaljournal.com/pr/automotive-electronics-market-to-reach-382-16-bn-by-2026-at-7-3-cagr-allied-market-research#ixzz7VgRDtbjI

3: https://www.factmr.com/report/4656/automotive-electronics-market

4: https://www.marketresearchfuture.com/reports/automotive-electronics-market-4191