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Explore the top 10 automotive industry trends for 2024-2026, including the rise of electric vehicles, advancements in autonomous driving, increased connectivity in cars, the shift to online vehicle purchases, and more. These trends highlight the technological and market changes shaping the future of the auto industry, offering insights into how manufacturers and consumers will adapt to the evolving landscape.
Boston Brand Media brings you the important Auto industry trends - The auto industry is one of the largest and most influential markets on the planet. However, it has remained relatively stable over the last decade. That is now changing. Rapid technological and environmental innovations have forced incumbents to adapt to new challenges and have led to new startups emerging. If you want to learn more about ten of the most important auto industry trends for the next 18-36 months, read on.
One of the most significant trends in the automotive industry is the global shift to electric vehicles (EVs). Searches for “electric vehicles” have surged by 110% over the past five years. According to the International Energy Agency (IEA), global EV sales exceeded 3 million units in 2020, accounting for over 4% of global vehicle sales. By 2023, this figure had risen to an estimated 14 million, demonstrating rapid growth from less than 1% a decade ago to more than 4% today.
In recent years, China and Europe have led the way in EV sales growth. For example, sales of battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) in Europe increased by 137% in 2020 compared to the previous year, despite a 20% overall decline in the car market. Europe has now surpassed China as the largest market for new plug-in electric vehicles.
Bloomberg New Energy Finance predicts that EVs will account for 10% of all new car sales by 2025 and 58% by 2040. However, even with this rapid growth, EVs are expected to make up only 8% of cars on the road by 2030. A massive shift in the global vehicle fleet is anticipated to occur in the 2030s, with over 30% of cars expected to be electric by the end of that decade.
Regulatory requirements are driving much of this growth, with several countries aiming for net-zero emissions by 2050. Some have committed to phasing out new combustion engine vehicle sales over the next few decades. Achieving these goals may require EVs to comprise at least half of all new car sales by 2050.
Technological advancements are also accelerating EV adoption. Lithium-ion battery prices have dropped by 89% over the last decade, reaching $137 per kilowatt-hour in 2020, with some reports indicating prices below $100/kWh in China. Additionally, the number of public EV charging stations is growing, although many Americans can charge their vehicles at home. The increasing range of EVs, such as the Tesla Model S Long Range Plus, which can travel over 400 miles on a single charge, is helping alleviate range anxiety. Affordable EVs from manufacturers like Chevrolet, Hyundai, Kia, Nissan, and Jaguar offer ranges of 200 to 250 miles, making them more accessible to the average consumer.
Autonomous vehicles (AVs) are poised to disrupt the auto industry significantly. Searches for “autonomous driving” have increased by over 1,029% in the past decade. Currently, there are only 1,400 self-driving cars on US roads, but it’s estimated that there will be 33 million autonomous vehicles by 2040.
The Society of Automotive Engineers (SAE) defines levels of driving automation from 0 (no automation) to 5 (full automation). Over 30 million vehicles on the road already meet the Level 1 standard, and this number is expected to grow to 54.2 million by 2024. More than half of all vehicles are projected to fall within the Level 1-5 range by 2024.
The global autonomous vehicle market, valued at $207.38 billion, is expected to grow roughly tenfold in the next four to six years. Major automakers like Tesla, Alphabet, Ford, GM, and Volvo are leading the charge. Alphabet’s subsidiary Waymo operates in Phoenix, San Francisco, and LA, while Volkswagen and Ford own roughly 80% of Argo AI, an AV startup.
Elon Musk’s FSD subscription service, Autopilot, has seen over 1 billion miles driven with Tesla’s Autopilot enabled as of the end of 2023. Despite this growth, consumer and regulatory concerns remain significant barriers. The National Transportation Safety Board (NTSB) has called for stricter regulation of Tesla’s Autopilot program, and about two-thirds of people prefer to drive themselves rather than ride in an autonomous car. Much of the near-term focus is on trucking, where Level 3 or 4 autonomy could significantly reduce the 4,900 annual trucking-related deaths.
Autonomous trucks, such as those from TuSimple, are gaining traction. TuSimple, which has raised $648 million since its 2015 founding, partners with companies like Union Pacific and Goodyear and has 50 Level 4 autonomous trucks operating in the Southwestern US. The company aims to sell fully autonomous Level 4 trucks to fleet operators by 2024.
With the growth of 5G and the Internet of Things (IoT), vehicles are becoming increasingly connected. Searches for “connected car” have risen by 96% over the last decade. A connected car communicates with other software systems and collects data from its surroundings. Approximately 47.5 million connected cars were sold in 2020, with an estimated 20% increase in 2021.
The global connected car market, worth $103.24 billion, is expected to grow to $191.83 billion by 2028. Much of this growth will be driven by 5G technology adoption. Statista predicted that global 5G smartphone subscriptions would triple by the end of 2021, improving 5G infrastructure and supporting vehicle connectivity.
Tech giants like Google and Apple are entering this market. Google and Ford announced a connected car partnership, Team Upshift, equipping Ford and Lincoln vehicles with an Android operating system. This connectivity allows drivers to stay connected at all times, leveraging Google’s AI capabilities. Apple is considering a $3.6 billion investment in Kia, with plans to manufacture autonomous Apple electric cars by 2024, initially producing 100,000 units annually.
The internet is revolutionizing the car-buying process. Over 90% of car purchasers conduct online research before buying, and more sales are happening entirely online. Pre-pandemic, about 4.2% of car sales were online, a figure that likely rose in 2020 as dealerships turned to digital channels. In traditional dealership settings, customers spend over three hours on average in the showroom. In contrast, online transactions allow customers to complete purchases with a few clicks.
Carvana sold 244,111 cars in 2020, a 37% increase from 2019, and 412,296 cars in 2022. Searches for “Carvana” have increased by 6,900% over the last decade. Tesla closed all its stores in 2019 and now sells cars exclusively online. Even before COVID-19, 43% of shoppers wished to complete the entire car-buying process online.
The global automotive parts market has grown steadily for the past twenty years, reaching approximately $723 billion in sales in 2021. E-commerce has transformed this market, with 94% of consumers checking manufacturers’ websites for product information before purchasing. The e-commerce automotive aftermarket market is valued at an estimated $85.28 billion.
The demand for parts is driven by the increasing average age of vehicles on the road, though it is also tempered by the higher quality of newly manufactured vehicle parts. New truck and light SUV sales, which are prone to higher accessory and part sales, further fuel this growth.
Semiconductor chips are critical in modern vehicles, and the auto industry has faced a severe chip shortage. When car demand plummeted early in the pandemic, automakers stopped ordering chips, leading manufacturers to shift focus to other industries. As demand rebounded, the auto industry struggled with an inadequate supply of chips.
The shortage has led to plant shutdowns and production halts. For example, Ford temporarily closed eight plants in early 2022, and GM shut down its Fort Wayne, Indiana plant for two weeks in March 2022. The shortage is costly, with the industry losing over $210 billion in 2021. Relief isn’t expected until 2023 or 2024, although manufacturers like Infineon are increasing investments in production.
Some automakers have found workarounds, such as Tesla rewriting software to use different chips and BMW building cars without touchscreens. Despite these efforts, the chip shortage remains a significant challenge.
Auto sales in the United States have slumped due to low inventory and rising prices. Sales fell to the lowest first-quarter volume in the past decade in early 2022, with passenger car sales down 25% compared to the first half of 2021. Low inventory, driven by the chip shortage and other supply chain issues, has kept vehicle supply stagnant.
High prices have accompanied low inventory, with the average new vehicle price reaching $47,000 in May 2022. Some dealerships are charging substantial markups on their inventory, exacerbating the situation.
Cars have long been the favored transportation mode for Americans, but this is changing. Survey data from 2022 showed that 76% of Americans used a car to commute, down from over 80% in 2019. As environmental concerns and traffic congestion rise, micromobility options like bikes, scooters, and mopeds are gaining popularity.
The sale of e-bikes rose 240% in 2021, and the US market for electric scooters, worth $14 billion in 2021, is expected to grow to over $31 billion by 2028. Micromobility is viable for short-distance trips, accounting for 60% of all US trips. The market is projected to grow from $40 billion in 2020 to $195 billion by 2030.
Fuel cell electric vehicles (FCEVs) offer an alternative to internal combustion engines, generating electricity through a chemical reaction between hydrogen and oxygen. These vehicles emit only water, making them environmentally friendly. They also offer quick refueling times and ranges similar to gasoline engines.
While FCEVs are not yet as prevalent as battery-powered EVs, their sales are increasing. In 2021, 16,000 FCEVs were sold, a 90% increase from 2020. California and Hawaii are taking steps to promote FCEVs, including rebates and incentives for hydrogen infrastructure. The main barrier to FCEV adoption is the lack of hydrogen refueling stations, but efforts are underway to expand this infrastructure.
These trends highlight the dynamic changes in the auto industry, driven by technological advancements and evolving consumer preferences. The future promises more connected, efficient, and environmentally friendly transportation solutions.
For questions or comments write to writers@bostonbrandmedia.com
