Driving the Future: 10 Key Trends and Predictions for the Automotive Industry
The automotive industry is undergoing a period of significant transformation, driven by advancements in technology and shifting consumer demands. Electrification, autonomous driving, artificial intelligence (AI), the Internet of Things (IoT), machine learning, and sustainability are at the forefront of this evolution creating what may be the most exciting time for automotive innovation since the invention of the motorcar. The industry is rapidly evolving towards electric, software-defined vehicles produced in highly automated, cloud-connected smart factories.
As technology advances, it is becoming more difficult to predict what the future will hold. Firms that deny these trends should do so with careful consideration.
Trend 1: Electrification of the Automotive Industry
Image courtesy of Rivian.
Vehicle electrification continues to surge as automakers respond to customer demand and government mandates which are incentivizing manufacturers to increase the production of fully electric vehicles (EVs). The demand for EVs slowed in 2023 due to higher interest rates and prices which spiked in part due to inventory shortages brought on by supply chain issues, such as shortages in computer chips.
In the first half of 2024, nearly 600,000 EVs were sold in the United States, up 7.3% compared to the first half of 2023, according to Kelley Blue Book. The gains were even higher internationally. Rho Motion reports that 7 million EVs were sold globally in the first half of 2024, an increase of 20% compared to the first half of 2023. These figures include 4.1 million EVs sold in China. EV sales are expected to continue to climb because of consumer demand and more than 50 countries and a few states in the US are mandating the phase-out of internal combustion engine (ICE) passenger cars by 2030–2050. In addition, 140 countries have also passed into law targets for net-zero emissions by 2050.
The International Energy Agency (IEA) estimates that EVs could reach 50% of all passenger car sales by 2030 to help achieve global net-zero emissions by 2050. BloombergNEF’s Electric Vehicle Outlook 2024 report projects that EVs will reach 45% of global passenger vehicle sales by 2030.
Drivers will be more likely to adopt EVs as battery efficiency and EV charging infrastructure continue to improve. EV battery prices are falling, with battery manufacturers CATL and BYD both on pace to decrease prices by as much as 50% by the end of 2024, making cost parity between EVs and ICE cars more possible, decreasing EV prices. As a result, EV ranges have continued to extend, reducing drivers’ EV range anxiety. Many original equipment manufacturers (OEMs) have EV models on the affordable end of their product lines with ranges of 200–250 miles or more, including Chevrolet, Hyundai, Jaguar, Kia, Nissan, Tesla, and others.
Trend 2: Increasing Role of Software in Vehicles
Modern vehicles are becoming software-defined, with performance, operation, and features managed by integrated systems. Cars are becoming software-defined vehicles (SDVs), essentially “computers on wheels,” where software dictates many aspects of a vehicle’s performance and features. These include driver-assistance, safety, and infotainment systems. An SDV can modify and improve functionality with over-the-air software updates, similar to a smartphone OS update. This requires automakers to decouple vehicle hardware and software functions while ensuring those functions collaborate and align. The major software systems handling the in-vehicle infotainment (IVI) and the advanced driver-assistance system (ADAS) are critical to SDVs. Different automakers develop these software systems and the hardware to run them differently.
Tesla, takes a vertical approach by developing much of the technology in-house, and others take a horizontal approach by partnering with different providers for key SDV elements like cloud platforms (Google Cloud, AWS, Azure); the end-user app system (Android, Amazon, ThunderSoft); the car OS (Android Auto, Apple CarPlay, Car Penguin); the user interface (often developed in-house); and the system-on-a-chip (SoC) computing hardware (Intel, Nvidia, Qualcomm).
Analysts predict that the overall market for SDV software and electronics will exceed $1 trillion by 2035. Automakers will need to open up to greater collaboration or “co-opetition” to establish partnerships that can monetize the areas in which each company excels. Mercedes-Benz, approved to launch production models with Level 3 ADAS in late 2023, and BMW are strong OEMs in ADAS technology. Automakers can also monetize from SDVs by offering a service or sales. As connected cars, they can become a part of the drivers’ smart home and a payments platform such as streaming content, smart home subscriptions, roadside assistance, and other services. In vehicle production, software is important in design and engineering. Interoperable data and data centralization on cloud-connected platform software helps to decrease barriers between departments that could be caused by incompatible files or data.
Trend 3: Rise of Autonomous Vehicles
Image courtesy of Waymo.
Self-driving cars and trucks have been in the development stage for the past decade, but they are now beginning to move from controlled testing into real-world autonomous driving scenarios. New technological developments include May Mobility making a large data set available to autonomous vehicle researchers that includes real-world data from multiple vehicles driving repeated trips and Toyota, for the first time, made two autonomous test vehicles drift around a track simultaneously without colliding after partnering with Stanford University.
Major automakers like Ford, GM, Tesla, Volkswagen, and Volvo are all testing the autonomous vehicle waters. In the United States, there were 1,400 self-driving cars being tested from more than 80 companies, including pilot programs from Alphabet, Inc., subsidiary Waymo taking place in San Francisco, Phoenix, and Los Angeles. Driverless cabs from Pony.ai and Baidu are also operating in China. Driverless taxis require Level 4 autonomy on the SAE’s Level 0-5 scale of driving automation.
A McKinsey survey estimates that Level 4 robo-taxis will be viable at scale by 2030 and that fully autonomous Level 5 trucking could be ready between 2028 and 2031. The same McKinsey survey revealed that 96% of mobility executives believe that industry partnerships are vital to spurn innovation, de-risk investments, and build the infrastructure needed to scale up autonomous vehicles. Some innovation is required around the evolving interplay among the main sensors of autonomous vehicles: cameras, radar, and LiDAR. These sensors generate massive amounts of data that must be processed by AI.
To convince customers and stakeholders of this new driverless-car mobility model, automotive manufacturers like Italian design company Italdesign are using VR and simulation software such as VRED to show people how riding in an autonomous vehicle will look and feel.
Trend 4: New Business Models and Services
Vehicle subscription models are becoming of interest to young people. According to Deloitte’s 2024 Global Automotive Consumer Study, economic uncertainty has made young people age 18–34 around the world more interested in vehicle subscription models, including 67% of respondents in India, 48% in China, and 28% in the United States. Interested customers also said they want a predictable cost structure, reliable vehicle availability, and convenience from a subscription plan.
Online vehicle sales and research are picking up among customers of all ages. Automotive research firm IMARC reports that online car sales in the United States hit $326 billion in 2023 and predict that they will reach $754.2 billion by 2032. In Cox Automotive’s 2022 Car Buyer Journey Study, 80% of respondents said they were open to buying a car entirely online, up from 76% in 2020.
Trend 5: Sustainability in the Automotive Industry
Image courtesy of Kia America.
The automotive industry is making moves toward sustainability with an emphasis on eco-friendly practices and materials. Manufacturers are choosing more sustainable materials in vehicle production with an increasing emphasis on improving fuel efficiency by designing lighter-weight parts, either by optimizing weight with generative design or using lighter-weight composites and other sustainable materials. Focusing on the longevity of parts and using durable coatings can also extend vehicle lifespan.
Automakers are also increasing the use of sustainable, recycled, and upcycled materials. The 2024 Kia EV9 uses sugarcane bioplastics and corn and castor oil biopolyurethane, recycled plastic from fishing nets for flooring, and recycled polyethylene from plastic bottles for seat stitching and the luggage board. Volkswagen has committed to making its car parts more recyclable, using more sustainable materials, and using recycled materials for textiles. Other materials trends include using plant-based leather, recycled steel, reclaimed wood, and antimicrobial materials that mitigate the need to use potentially polluting cleansers.
As EVs continue to grow, the industry and government are making efforts to improve charging-station access and EV battery recycling. EV charging infrastructure will get a boost of around a half-million public chargers—spaced no more than 50 miles apart on major highways—by 2030. Private companies such as Hertz, EVgo, GM, and BP are adding thousands of charging ports while Tesla has promised to make at least 7,500 of its charger destinations available to all EVs by the end of 2024. Governments in China, Europe, India, Japan, the United States, and others have set policies for aligning the mobility industry with sustainable development goals, including energy-efficiency standards, EV adoption incentives, and sustainable/recyclable materials mandates.
Trend 6: The Impact of AI and Machine Learning
Image courtesy of Ehab Kaoud.
The automotive industry is leveraging the power of AI, including machine learning and generative AI. Designers and engineers now have many AI assistance options. Fusion’s generative design outputs manufacture-ready designs, and software and applications are using automated modeling for quick design exploration. For automotive manufacturing, smart factories with embedded cloud-connected, data-collecting sensors throughout the facility use AI and machine learning, helping with predictive maintenance for reduced machine downtime and enabling smoother supply chain management. Smart factory AI also powers and optimizes many robotic processes. AI monitoring can alert factory staff to any unusual robotic process behavior as well as improve human safety by monitoring the factory environment and reducing human intervention in dangerous tasks.
The modern vehicle’s in-car computer system is built for AI, from AI-optimized computing hardware like the NVIDIA Drive series of SoCs, which enable automated driving functions. In-vehicle computers are increasingly likely to include AI voice assistants like ChatGPT.
Trend 7: Adoption of 3D Printing
Additive manufacturing, or 3D printing, continues to offer benefits to automotive manufacturers, such as faster prototyping; reducing the weight of certain parts; and producing quick molds, manufacturing aids, and custom aftermarket parts. Audi adopted 3D printing several years ago for faster prototyping. Ford’s Rapid Technology Center in Germany is using 3D printers to create same-day prototypes, and GM and Ford are employing 3D-printed assembly line tooling.
Moving forward, automakers will have greater opportunities to take advantage of 3D printing to make customized parts, promote sustainability through the use of recycled 3D-printing materials, and explore more cost-effective approaches to making parts with complex geometries. As EV production ramps up, 3D-printed parts with low weight and excellent thermal capabilities will be well-suited.
Trend 8: Integration of IoT in Vehicles
Connected cars represent a significant portion of new vehicles sold. Analysts predict that in 2024, 72% of passenger vehicles worldwide will be “connected cars,” meaning that they are part of the Internet of Things (IoT), with an internal computer that can send and receive data, as well as communicate with other software systems. The widespread use of 5G wireless technology and infrastructures increases connected cars’ ability to reliably update their internal systems and features from frequent over-the-air updates. It also makes connected cars better equipped to become an integral part of their owners’ smart homes. OEMs can also benefit by collecting real-world data from customers’ connected vehicles and using it to refine their vehicle digital twins.
Automakers will be able to explore different revenue streams. Deloitte’s 2024 Global Automotive Consumer Study indicates high customer interest in services such as updated information on car maintenance and traffic and road safety. However, the same study shows that the willingness to pay for connected vehicle services varies widely among countries.
Trend 9: Personalization and Customization
Personalization and customization offers opportunities to automakers, especially among car buyers. However, both software and connectivity within vehicles mean there is much more than vehicular personalization using additive manufacturing. Automakers can offer personalized display designs and integrated AI assistants. A car could also offer drivers personalized seat positions, climate-control conditions, and ambient lighting settings. If drivers enter personal details like schedules, an auto’s internal system could offer calendar reminders and sync the GPS with calendar appointment locations. Depending on the level of a vehicle’s ADAS, it could personalize certain handling characteristics to a person’s driving style or preferences, as well as monitor driving conditions for signs of driver fatigue or distraction and react accordingly. The growing interest in vehicle subscription plans also offers personal preferences.
Trend 10: Changing Safety Standards and Regulations
Advanced driver assistance systems (ADAS) and cybersecurity are increasingly important with new regulations. Software, connectivity, and driver assistance have become so ingrained in new vehicles that they may soon be legally required. The Biden administration has been planning to require that all new cars and trucks include ADAS that detects and avoids pedestrians, including object detection and automatic emergency braking. The UNECE W.29 regulations and the ISO/SAE 21434 standard provide the rules and engineering guidelines for connected vehicles to manage and mitigate cybersecurity risks, detect threats, and respond with secure software updates. These regulations are mandatory for all new vehicles produced in the European Union from July 2024; other jurisdictions have their own timelines for adoption. Also going into effect in 2024, the European Commission has mandated vehicle safety features.
The future of the automotive industry is here
With all of these converging trends, now may be the most exciting time for automotive innovation since the inception of the motorcar, and it’s up to designers and manufacturers to manifest automotive possibilities that work best for their customers, their businesses, and the planet.
