Automotive Software Market Report 2025

The automotive software market size has grown rapidly in recent years. It will grow from $30.15 billion in 2024 to $34.92 billion in 2025 at a compound annual growth rate (CAGR) of 15.8%. The growth in the historic period can be attributed to consumer demand for connectivity, regulatory requirements for emissions and safety, evolution of in-car infotainment, demand for fuel efficiency, globalization of automotive supply chains, increased complexity of vehicle systems.

The automotive software market size is expected to see rapid growth in the next few years. It will grow to $63.4 billion in 2029 at a compound annual growth rate (CAGR) of 16.1%. The growth in the forecast period can be attributed to evolving business models in mobility services, demand for personalization and user experience, increased emphasis on data security and privacy, enhanced predictive maintenance, continued upgrades and retrofitting. Major trends in the forecast period include software-defined vehicles, increasing complexity of in-car infotainment systems, cybersecurity for connected vehicles, adoption of over-the-air (OTA) updates, focus on user experience (UX) design.

The increasing adoption of connected cars is anticipated to drive the growth of the automotive software market in the coming years. A connected car features two-way communication capabilities with external systems, allowing various devices inside and outside the vehicle to connect to the internet and share data. Automotive software for connected cars enables internet access through an in-car connectivity system, which offers advanced features such as internet connectivity, remote control of car systems, and enhanced security. For example, a report from Cisco, a US-based technology company, predicts that by 2025, around 2 billion connected vehicles will be on the roads worldwide, thanks to innovations in new vehicles and aftermarket equipment. As a result, the rising adoption of connected cars is fueling the growth of the automotive software market.

The automotive software market is set to experience significant growth due to the rising demand for electric vehicles (EVs). These vehicles, powered by electric motors and rechargeable through external sources, heavily rely on automotive software for managing and controlling various functions and components. Automotive software in EVs plays pivotal roles in autonomous driving, enhancing safety and performance, managing power electronics, battery systems, and enabling over-the-air upgrades. The International Energy Agency reported a substantial increase in EV sales, nearly doubling to 6.6 million in 2021 compared to 2020, consequently expanding the global EV fleet to 16.5 million vehicles. This escalating demand for electric vehicles is a driving force behind the automotive software market's growth.

The growing demand for electric vehicles (EVs) is expected to further accelerate the expansion of the automotive software market. An electric vehicle is powered by an electric motor, which can draw energy from a battery charged from an external source. Automotive software is critical in electric vehicles, as it controls and manages various vehicle functions and components. The software plays a role in EVs through autonomous driving, safety and performance optimization, power electronics, battery management, replacing mechanical systems, and enabling over-the-air updates. For instance, according to the Global Electric Vehicle (EV) Outlook 2023 published by the International Energy Agency (IEA), a France-based autonomous intergovernmental organization, the number of EVs is projected to rise from around 30 million in 2022 to approximately 240 million by 2030, with an average annual growth rate of roughly 30%. EV sales are expected to surpass 20 million vehicles in 2025 and 40 million by 2030, accounting for more than 20% and 30% of total vehicle sales, respectively. Therefore, the increasing demand for electric vehicles is propelling the growth of the automotive software market.

Product innovation has become a prominent trend in the automotive software market, with major companies focusing on developing new and innovative solutions to meet customer needs. For example, in September 2023, Valeo, a France-based automotive manufacturing company, unveiled anSWer, a software-as-a-product and software-as-a-service offering, at the International Automobile Exhibition (IAA) Mobility 2023. This scalable, modular solution provides high-quality applications, middleware, and services tailored to customer needs. Valeo’s anSWer includes software stacks that act as building blocks for advanced applications, offering middleware as a service. Additionally, integration, testing, validation, and maintenance services ensure functionality and security throughout the vehicle’s lifecycle.

Leading companies in the automotive software market are forming strategic partnerships and collaborations to harness each other's advanced software engineering expertise for the development of sophisticated automotive software platforms. Strategic partnerships involve leveraging one another's strengths and resources to achieve mutual success. For instance, in January 2023, EPAM Systems Inc., a US-based product engineering company, partnered with Renesas Electronics Corporation, a US-based provider of advanced semiconductor solutions, to introduce AosEdge, a vehicle-to-cloud (V2C) platform marking the next phase of connected cars' evolution. The AosEdge platform allows original equipment manufacturers (OEMs) to create software-defined vehicles by streamlining the operation of various software components within a unified environment, providing a more efficient means of in-vehicle software delivery. With Renesas’ embedded automotive software technology and EPAM’s expertise in digital platforms, the platform offers a complete software infrastructure for cars connected to the cloud, from installation to operation.

In July 2022, Brookfield Business Partners, a Canada-based company focused on owning and operating high-quality providers of essential products and services, acquired CDK Global for $8.3 billion. This acquisition will enable CDK to enhance the dealer and consumer experience in vehicle sales, purchases, and ownership. CDK Global is a US-based company offering software and technology solutions to the automotive, heavy truck, recreation, and heavy equipment industries.

Major companies operating in the automotive software market are NVIDIA Corporation, NXP Semiconductors N.V., BlackBerry Limited, Airbiquity Inc., Wind River Systems Inc., Green Hills Software LLC, Renesas Electronics Corporation, Microsoft Corporation, Elektrobit Automotive GmbH, Autonet Mobile Inc., MontaVista Software LLC, AImotive Kft., Adobe Inc., Atego Systems Inc., Robert Bosch GmbH, Alphabet Inc., Luxoft, Cox Automotive Inc., SAP SE, CDK Global Inc., Reynolds and Reynolds, Google LLC, KPIT Technologies Limited, Solera Holdings Inc., Dominion Enterprises, Epicor Software Corporation, Wipro Limited, Infosys Limited, Tata Consultancy Services Limited, Tech Mahindra Limited, HCL Technologies Limited, Capgemini SE, International Business Machines Corporation, Oracle Corporation, Accenture plc.

Automotive software represents a category of applications designed to enhance the performance and capabilities of vehicles, playing a transformative role in the future of the transportation industry.

Key components within automotive software solutions encompass autopilot software, navigation software, entertainment software, and car safety software. Autopilot software serves as a tool that specifically governs an aircraft's control within defined parameters, utilizing the vehicle's hydraulic, mechanical, and electronic systems. This software landscape extends across various vehicle types, including passenger cars, LCVs, and HCVs, incorporating multiple software layers such as operating systems, middleware, and application software. Diverse applications within this domain encompass ADAS and safety systems, body control and comfort systems, powertrain systems, infotainment systems, communication systems, vehicle management and telematics, connected services, autonomous driving, HMI applications, and a v2x system. This dynamic suite of automotive software solutions underscores its pivotal role in shaping the technological landscape of the automotive sector.

The automotive software market research report is one of a series of new reports that provides automotive software market statistics, including automotive software industry global market size, regional shares, competitors with automotive software market share, detailed automotive software market segments, market trends and opportunities, and any further data you may need to thrive in the automotive software industry. This automotive software market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

Asia-Pacific was the largest region in the automotive software market in 2024. The regions covered in the automotive software market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the automotive software market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The automotive software market includes revenues earned by entities through digital imaging software and inventory management software. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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