The automotive AI market is projected to be worth $7 billion by 2027 with a compound annual growth rate (CAGR) of 24.1% from 2022 through 2027 according to a report by MarketsandMarkets. Currently, the automotive AI market is worth $2.3 billion.
The growing adoption of advanced driver-assistance system technology by the OEMs and the rising demand for enhanced user experience is what’s fueling this growth. Another factor is the convenience features.
The key factors contributing to the growth of the market include the growing adoption of ADAS technology by OEMs, and the rising demand for enhanced user experience and convenience features are among the factors driving its growth.
The report noted that the human-machine interface for the auto industry is much easier for the driver to control and operate which enhances their experience. Previously, the electronics system in a vehicle only accounted for 1-2% of its cost. The increasing demand for enhanced user experience resulted in the share increasing to 8-12%.
With modern vehicles using driver assistance technology that relies mostly on AI, it’s no wonder the market is expected to increase to $7 billion by 2027 which isn’t really that far away.
The report also pointed out that autonomous vehicles are expected to be high-priced due to the introduction of new commercialized technological systems. The high price, however, may restrain the growth of the automotive AI market simply because most of the advanced technologies are in luxury and premium cars that have a limited customer base; dampening the market’s growth.
An example is Tesla’s Full Self-Driving software which is expected to increase to $15,000 on September 5, 2022. Tesla introduced a subscription plan for owners who would rather pay a small amount each month instead of a one-time payment of $15,000 (or whatever they may have to pay once it goes up from there.) Tesla will also allow other manufacturers to license FSD when the time comes.
In 2020, Elon Musk said that the value of FSD will be in excess of $100,000 as the software gets closer to full self-driving capability with regulatory approval.
Another thing the report noted was that the software segment will hold a larger share of the automotive AI market, which it already does now. Deep learning is projected to hold the largest share of the market this year. Deep learning is used in voice recognition, fraud detection, voice search, object detection, advanced driver assistance systems, crash avoidance, and more.
Note: Johnna is a Tesla shareholder and supports its mission.