The new year brings many predictions, innovations, challenges, and opportunities in every market sector. Here, in this article, we focus on the aspects and its after-effects in the global automotive market.
Vehicle connectivity, utilizing user data to improve customer experience, centralizing data to enhance operational efficiency, and the expansion of the automotive aftermarket will see enhanced growth this year.
We have listed the 15 automotive trends that will shape the automotive industry in 2024.
Here we focus on the integration of AI, IoT, Blockchain, and many more technological advancements that will reshape the way we perceive vehicles today.
1. Autonomous Vehicles:
Vehicles that eliminate the need for a driver to operate an automobile is an Autonomous Vehicle (AV).
The research on AVs goes back to the 1980s when the US DARPA held grand challenges to test the ability of vehicles while driving in urban conditions. By 2007, 6 teams were able to finish the DARPA challenge.
Current Market of AVs: The Market is Growing at a CAGR of 36.3% from 2022 to 2032 and the Worldwide Autonomous Cars Market is expected to reach USD 55.6 Billion by 2032.
According to a research report published by Spherical Insights & Consulting. Tesla, Uber Technologies, WAYMO, Volkswagen AG, Robert Bosch GmbH, Mercedes Benz AG, BYD Company Ltd., Ford Motor Company, and Volvo are the top players in the market.
Challenges: The challenges in autonomous vehicles can be divided into:
A. Post-Pandemic Production Recovery: The COVID-19 pandemic has led to serious challenges in restarting the production lines for many companies. North America and China reported 11.8% and over 15.1% increases in their outputs respectively.
B. Less Vehicle Sales: Vehicle sales have dropped after the pandemic and the Russia-Ukraine war which has led to many challenges for manufacturers.
2. The Connectivity of Vehicles:
The connectivity can be Vehicle-to-Vehicle (V2V) allowing vehicles to share data with other vehicles, Vehicle-to-Grid (V2G) which would help vehicles to share data with the nearest grid, and Vehicle-to-Public Infrastructure (V2I) which would enable them to connect to the nearest public infrastructure.
With the help of connected vehicles, it would be easier to manage and track vehicle data for many uses like insurance, vehicle maintenance, driver safety, and fleet management.
Current Market of Connected Vehicles: The global connected vehicle market size was valued at $23.6 Billion in 2021 and is expected to reach $56.3 Billion by 2026. This segment of the automotive market is expected to grow at a CAGR of 17.62% between 2021-2026.
Challenges in the Connected Car Segment: Like every new opportunity brings its own set of challenges, the connected car market is no different from them. The challenges are:
A. Connectivity Problems: For efficient use and wide implementation, we need cellular services that have no connectivity problems and ones that are consistent with the data transfer rate. They lose signals in certain areas leading to constraints when it comes to accessibility.
B. Data Management: A vehicle will generate an enormous amount of data which needs to be managed properly. Along with proper management, they also need to be utilized efficiently which would help in the betterment of many connected applications and also of the overall vehicle.
C. Security: Ensuring the security of such vehicles is essential. There should be measures to protect them from cybercriminals. A lack of security measures would mean that personal data would be a continuous risk of being hacked.
3. Electric Vehicles (EVs):
The challenges of depleting natural and fossil fuels have brought about the advent of the electrification of vehicles bringing innovation and disruption in the automotive industry. Today, major vehicle manufacturers are looking for solutions that do not depend on fossil fuels. Tesla, for example, is completely reliant on electric vehicles and has capped a huge market share in the US and European markets.
Current EV Market: The India electric vehicle market size was valued at USD 220.1 million in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 94.4% from 2021 to 2030.
The US EV market was valued at $49.1 Billion in 2022 and is expected to grow at a CAGR of 15.5% between 2023 and 2032.
Challenges of the EV Market: There are several challenges in the EV market today and despite many innovations, there are still many that continue to haunt the potential and existing buyers.
A. Purchase Cost: The purchase cost of electric vehicles is more than gasoline-powered cars. The raw materials that are required to manufacture an EV car are costly and so it often appears to be a challenge.
B. Serviceability Constraints: As most markets were (and still are) fossil fuel-driven markets, finding a technician for a gasoline-powered car is easier compared to electric vehicles.
4. Shared Mobility:
The various mobility options in shared mobility are Bikesharing, Carsharing, Microtransit, Ridesharing, and Scooter Sharing. This solution promises to reduce pollution and make a shift towards a community-led approach to the management of vehicles.
Current Market of Shared Mobility: The shared mobility market share is $91.07 Billion in 2023 and is projected to grow at a CAGR of 2.96% and reach $103 Billion by 2028.
Challenges of The Shared Mobility Market:
A. Infrastructure and Services – There are infrastructure challenges in many countries that bring hindrances in the adoption of shared mobility in terms of vehicle pick-up and drop-off services.
B. Policy and Regulations: To ensure that this solution is adopted at a wider scale, there needs to be rules and regulations in place to facilitate such adoptions.
5. Artificial Intelligence (AI):
In today’s tech-savvy world, people want their vehicles to be as smart as their phones or computers. While the impact of AI is considerable in almost every business sector, AI in the automotive industry is immensely powerful.
Current Market of Artificial Intelligence (AI) in the Automotive Industry:
Artificial intelligence (AI) in the automotive market is set to record a robust CAGR of 19.5 % during the forecast period. The market holds a share of US$ 9.3 billion in 2023 while it is anticipated to cross a value of US$ 744.39 billion by 2033.
Challenges: The current challenges of AI in the automotive industry are as follows:
A. Data Privacy and Security: Data privacy is a huge concern when implementing AI in the automotive sector. To tackle such challenges, manufacturers must set provisions in place to cater to these challenges.
B. Infrastructure and Resource Requirements: The implementation of AI requires a huge investment in infrastructure and would also require maintenance which would be at the same scale as the investment.
C. Skill Development: For a smooth implementation of any new and innovative solution, there is a huge requirement for the workforce to be skilled and able to handle complex situations. Such training is necessary when implementing such solutions.
6. Big Data and Analytics:
With the advent of connected vehicles, automotive OEMs have to respond to queries 24/7, have adept and quick decision-making, and also have enough data to work towards improving the overall customer experience. Implementing big data and analytics in the automotive domain enables automotive manufacturers to gain deeper insights into the realm of customer data and empowers OEMs to enhance the customer experience.
Current Market of Big Data and Analytics in the Automotive Sector:
Global Big Data Analytics in the Automotive market size is projected to reach USD 5622.9 million by 2027, from USD 2916.4 million in 2020, at a CAGR of 17.65 % during 2021-2027.
Challenges: Any innovation will bring disruptions, possibilities, and challenges. For an as extensive market as implementing big data and utilizing analytics to study consumer behavior, it is as challenging as it sounds. These challenges can be categorized into the following:
A. Data Storage and Management: Any implementation will require some output and would also need key takeaways from such implementations. With big data, we need to store and analyze the data more frequently than thought. Such an activity would require the development of infrastructure to complement the services automotive OEMs want to implement. It would mean capital investments and maintenance activities to be scheduled.
B. Privacy and Cybersecurity: In a world where data is available at a fast pace, we need measures to keep that data secure. This would require OEMs to implement security measures in place to keep this data away from hackers and protect it from potential security breaches.
C. Supply Chain Traceability and Compliance: Where consumer data is being used, there would also be compliances to follow. Implementing big data solutions in automotive helps build better supply chains. This would require implementing company-wide solutions and training employees for the same. This is a challenge when we consider large organizations with multiple factories and assembly lines.
7. Human-Machine Interfaces:
A Human-Machine Interface (HMI) is a user interface or dashboard that connects a person to a machine, system, or device. While the term can technically be applied to any screen that allows a user to interact with a device, HMI is most commonly used in the context of an industrial process.
Current Market of HMIs in the Automotive Sector:
The automotive HMI market is projected to grow from $23.9 Billion in 2023 to $40.2 Billion in 2028, growing at a CAGR of 13.56%.
Challenges: As HMI is a fairly new technology to be implemented in the automotive industry, especially in India, it brings several challenges. These challenges range from situational awareness to communication with the driver of the vehicle.
A. Real-time Traffic Updates: HMIs should also gather data from external sources (and the world) and offer real-time traffic updates to drivers and users. The system should consistently keep track of the current route and detect any congestion, blocked roads, or other hindrances and immediately report the same to users.
B. Deep Integration of Automotive Software: HMIs should be seamlessly integrated with the prevailing automotive software. If this does not happen, HMIs will be standalone modules without a purpose and other tech features will be modules without an interface.
C. Reactive Behaviour For Vehicle Malfunctioning: The human-machine interface should also offer instant updates on probable vehicle malfunctioning. This means the data generated from multiple vehicle components on their health should be monitored and processed by backend modules.
8. Blockchain:
Blockchain uses in the automotive industry include parts authentication, marketing interactions, financial applications, connected car and vehicle tracking, autonomous driving, car sharing, marketing, CO2 emission tracking, and many others. While the aforementioned applications of blockchain technology certainly make a strong case for changing many facets of the automotive industry, the community is just starting to explore the surface of blockchain applications in the automotive sector within the urban and smart city domains.
Current Market of Blockchain in the Automotive Industry:
The automotive blockchain market is set for a remarkable surge, projected to grow from $0.40 billion in 2020 to an impressive $11.6 billion by 2030, growing at a CAGR of 26.20%.
Challenges: BLockchain has seen tremendous growth from its conception in 2010 to 2023, but with its deployment in multiple industry segments, the challenges from each industry are different. Let us see what are the challenges in the automotive market:
A. Vehicle History Tracking: In case any fault is reported to a certain batch of vehicles, there are no effective means to track down and recall the vehicles once they leave the dealerships. This makes the recalling process time-consuming and complex. The lack of a proper tracking system also raises the probability of fraud in the used automobile and spare parts market.
B. Autonomous Car Development: Using blockchain technology would require data to be collected at various levels and stored. This means that the data could be at a potential risk of being hacked or misused. To prevent this misuse of data, businesses need to ensure data security and invest in the same.
C. Cost-Intensive Deployment: The post-pandemic market has left many companies with tight budgets. As the widespread adoption would require huge investments, the adoption is at a slow pace. This also means that the deployment of such solutions has to be company-wide to bring about the efficiency this new technology promises.
9. 3D Printing:
The 3D printing technology has given rise to spectacular achievements in the automotive industry, starting from the possibility of fast prototyping, through a more and more widespread production of final car parts, and ending with 3D manufacturing of nearly whole cars.
Current Market of 3D Printing in the Automotive Industry:
The current 3D printing market was estimated at $3.5 Billion in 2022 and is projected to grow at a CAGR of 26.64% between 2023 to 2029 and reach $13.85 Billion.
Challenges: 3D printing is a fairly new technology and has limited adoption in the market today. Although this seems like a solution to the existing automotive problems, let us look at the challenges this brings:
A. Training the workforce: With the advent of new technology solutions, new technology use is imminent. Such is the 3D printing market where the use of technologies like CAD is used and the workforce needs to be trained on it for a wider adoption.
B. Material Sourcing: The sourcing of materials is often a challenge for many automotive manufacturers. The availability might not be the same for everyone and some might need to shell a little extra money to procure the raw materials for the production.
10. Internet of Things (IoT):
The integration of technology with automotive parts is referred to as Automotive IoT. This could be the integration of sensors, hardware, and software to improve vehicle performance and tracking and also could be just adding sensors to existing vehicular framework.
Current Market of IoT in Automotive:
The automotive IoT market was estimated at 131.2 Billion in 2023 and shows a projected growth at a CAGR of 20.67% between 2023 to 2028 and will reach 322 Billion by 2028.
Challenges: Implementation of IoT seems very lucrative and also solves several automotive bottlenecks today. But the implementation will bring its own set of challenges:
A. Data Security: With data being collected at several levels, it is essential to implement data security measures such that this sensitive data is not shared, misused, or hacked by miscreants. Such measures would require huge investments in the security side of data.
B. Monitoring and Tracking (Presence): 'Presence' functionality is a way to monitor individual or groups of IoT devices in real-time, and has found adoption across the connected car space. Developers can build custom vehicle states, and monitor those in real-time as they go online/offline, change state, etc. Take fleet management for example. When delivery trucks are out on the route, their capacity status is reflected in real-time with a presence system.
11. Automotive E-Commerce:
Automotive e-commerce refers to the online purchase of vehicles. This could be a single or a bulk purchase. The post-pandemic market has seen a boom in online purchases of vehicles which has led to the development of automotive e-commerce.
Current Market of Automotive E-Commerce: The global automotive e-commerce market size was valued at $38.67 Billion in 2021 and is projected to grow from $45.44 Billion in 2022 to $193.98 Billion by 2031, growing at a CAGR of 17.5% between 2023 to 2030.
Challenges: With the advent of online purchasing of vehicles, several factors bring challenges and hurdles. This could mean building trust and also verifying the build quality of vehicles.
A. Trust: Building and maintaining the trust of customers can be a challenge for users when purchasing vehicles online. The traditional method of purchasing vehicles is considered best by users with a traditional mindset. But, with time, the newer generations are adopting new methods of purchase.
B. Inventory Management: With the advent of online purchases, auto parts companies need a better solution to manage the spare parts inventory as they have to deal with multiple SKUs and optimize the stock levels at regular intervals.
12. Growing Automotive Parts Market:
The automotive parts market consists of various parts that make a vehicle. This could also include the service segments when looking from a broader perspective. Auto parts and components include bodies, chassis, interiors, exteriors, seating, powertrains, electronics, mirrors, closures, roof systems & modules, etc. All the parts and components are installed in a car to supply the best driving experience
Current Automotive Parts Market: Growing at a CAGR of 14.60%, the automotive parts market will grow from $70.61 Billion in 2022 to $183.31 Billion in 2029.
Challenges: The automotive market will grow as automotive manufacturing grows further. This brings its own set of challenges:
A. Skilled Workforce Gap: The gap in the requirement for a skilled workforce is huge and needs to be filled.
13. Chip Shortage in The Automotive Sector:
The COVID-19 pandemic led to the rise in price for almost everything due to the markets closing. Then there was the Russia-Ukraine crisis which added to the problems for auto manufacturers.
14. Hydrogen as a Fuel:
Hydrogen promises to be a green solution to our depleting natural resources. We have seen many governments work towards hydrogen fuel adoption in their public transport.
Current Market of Hydrogen Fuels in Automotive: By growing at a CAGR of 23.96%, the hydrogen fuel market will rise from $46.11 Billion in 2023 to almost $675.19 Billion in 2033.
Challenges: Whenever there is a new technology or solution to cater to the existing problems, there comes a new set of challenges. Hydrogen fuel adoption is not different from that.
A. High Large-Scale Production Cost: The high production cost of hydrogen is a challenge for manufacturers to look for hydrogen as a mainstream solution.
B. Hydrogen Car Production: To adopt hydrogen as a fuel, automotive manufacturers will need to test and operate the vehicles on the roads. This means a greater R&D cost for testing these vehicles.
15. Centralized Zonal Architecture in Automotive:
A new approach to break down zones into smaller segments, this approach promises an operationally efficient management of vehicular data. Each zone has its own ECU, which is responsible for controlling a specific set of functions and subsystems.
Benefits of Centralised Zonal Architecture: With the advent of new-age technologies and solutions aimed to benefit the transition from traditional to newer vehicles, the benefits are paramount. Let us take stock of what benefits this brings:
A. Facilitation of Secure Over-The-Air (OTA) Updates: Large numbers of ECUs can cause update bottlenecks and complexity, leading to challenges around safety, reliability, regulatory compliance, and authenticity of individual images. The consolidation offered by zonal architecture is a significant step forward that will also facilitate rollbacks when updates fail.
B. Decoupling of Hardware and Software: Decoupling can be achieved through abstraction layers in software stacks so that one zonal controller implements the functionality of several, previously separate, ECUs. Abstraction layers can be constructed with less, and more commoditized, compute hardware.
C. Increasing Silicon Consolidation and Integration: By adopting the functionality of several ECUs, zonal controllers achieve silicon consolidation and integration. Meanwhile, smaller node sizes boost power efficiency. Emerging system-on-chip designs bring together several central processing unit (CPU), memory, and dedicated hardware (HW) accelerator subsystems, the latter enabling deterministic routing latencies and freedom from inference.
Conclusion
We have seen tremendous growth in the automotive sector in the past decade. With the advent of technologies like EVs, IoT, Blockchain, and many more, there is a huge promise in the deployment and adoption of these new technologies.
As the automotive sector continues to grow and advance, the related sectors will also see a boom in their growth. This means that the automotive aftermarket parts and services have a bright future ahead. Such a foreseeable bright future will ensure the operational efficiency and growth of various companies in the global market.
Intellinet Systems aims to be your partner in growth for the future and promises a hand-in-hand approach to ensure a fruitful relationship to achieve business success. Let us explore how we can collaborate, discuss opportunities, and work towards bringing a positive change in the industry!
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