The global artificial intelligence (AI) market in the automotive industry, valued at $2.5 billion in 2023, is on the verge of significant expansion. Forecasts indicate a compound annual growth rate (CAGR) of 15.6%, which is expected to propel the market to $13 billion by the end of 2034. This rapid growth is driven by advancements in autonomous vehicle technology and the increasing adoption of electric vehicles (EVs), according to an industry report.
Autonomous vehicles are at the forefront of this trend, utilising AI to navigate routes, identify hazards, and make real-time decisions. This integration of AI enhances vehicle performance, safety, and user satisfaction. The rise in adoption of EVs also contributes to market growth, with AI playing a crucial role in processing large datasets, identifying patterns, and making informed decisions. This development aligns EVs towards a future marked by intelligence, efficiency, and sustainability, said a report from Transparency Market Research.
Research and Development Driving Market Expansion
The report said that the push for autonomous vehicles is a key driver of the AI market in the automotive sector. These vehicles, categorised by levels of autonomy, use a combination of sensors, cameras, and AI algorithms to operate. Current models, such as the Cadillac CT6 and Audi A8, fall under level 2 or level 3 autonomy, where multiple tasks are automated but still require human intervention. Companies like Waymo and Uber are pioneering fully autonomous vehicles, utilising advanced sensors and AI to predict traffic patterns and navigate safely.
The surge in research and development (R&D) activities by key players is also fueling market growth. Companies are investing in AI to develop sophisticated automotive cognitive systems that enhance driving, safety, and convenience. For example, predictive analytics used by shared mobility companies like DiDi Chuxing optimise transportation needs and vehicle deployment, creating new market opportunities.
Electric Vehicles: A Catalyst for AI Integration
Electric vehicles (EVs) are another significant contributor to the AI market in automotive. EVs rely on AI to monitor and control battery temperature, charge, and discharge cycles, ensuring longevity and efficiency. According to the International Energy Agency, the EV market is experiencing exponential growth, with sales exceeding 10 million in 2022 and a significant increase projected for the coming years.
The integration of AI in EVs enhances their performance and safety, aligning with global efforts to promote sustainable and efficient transportation. Governments worldwide are implementing regulations to encourage AI adoption in vehicles, emphasising the integration of technologies such as advanced driver assistance systems (ADAS), said the report.
Regional Outlook and Market Dynamics
North America currently holds the largest share of the AI market in automotive, driven by robust development in autonomous vehicle technology and stringent government regulations aimed at enhancing road safety. The presence of leading automobile manufacturers and technology companies in the region further fuels market dynamics.
Companies like Nvidia and Waymo are at the forefront, creating comprehensive hardware and software ecosystems for automakers. Nvidia's Drive Hyperion 8, introduced in 2022, exemplifies cutting-edge AI solutions designed for full self-driving systems, supported by a range of leading sensor suppliers.
Key Players and Strategic Developments
Major players in the automotive AI market include Waymo, Tesla, Inc., NVIDIA Corporation, Intel Corporation, Bosch Group, Mobileye, Aptiv PLC, Daimler AG, Ford Motor Company, General Motors Company, Toyota Motor Corporation, BMW Group, Audi AG, Continental AG, Uber Technologies, Inc., Volvo Cars, ZF Friedrichshafen AG, Valeo SA, Hyundai Motor Company, and Baidu, Inc.
These companies are heavily investing in R&D to integrate AI into their vehicles and develop automotive cognitive systems. For instance, in June 2020, Mercedes-Benz and Nvidia entered into a cooperation agreement to create a revolutionary in-vehicle computing system and AI computing infrastructure. This system is set to be rolled out across the next-generation Mercedes-Benz fleet starting in 2024, embedding upgradable automated driving functions.
In March 2020, Waymo announced the use of AI to generate camera images for simulation, enhancing its self-driving technology by using sensor data collected from real-world environments. This approach preserves rich information about the 3D geometry, semantics, and appearance of objects, contributing to the advancement of autonomous vehicle technology.
Future Prospects
The report said that the market is expected to witness significant growth across regions, including North America, Europe, Asia Pacific, South America, and the Middle East & Africa. Key countries driving market expansion include the U.S., Canada, Germany, the U.K., France, Italy, Japan, China, India, Brazil, and the GCC countries.
The future of the AI market in automotive looks promising, with continuous advancements in technology and increasing investments in R&D. The integration of AI in vehicles is set to radically change the automotive industry, driving towards a future characterised by intelligence, efficiency, and sustainability.
