Digi-Key’s chain solutions director – EMEA, Arkadiusz Rataj, explains why the automotive electronics market will grow at over seven per cent for the foreseeable future
Rising numbers of electric and hybrid vehicles coming to market, combined with consumer interest in safety, connectivity and entertainment features, is fuelling automotive electronics growth.
Simultaneously, the pandemic and associated supply chain delays and drop in vehicle sales made things tough for automakers. According to the Organisation Internationale des Constructeurs d’Automobiles (OICA), global automobile production dropped by over 15 per cent to 77.6 million units in 2020, compared to 91.7 million units in 2019. Further, US-China trade woes had an impact as China is a global manufacturing hub for power electronics for electric cars and motors. Still, projections for tech-heavy electronic vehicles are rosy over coming years.
Consider the current statistics: according to analysts, EVs (ranging from commercial vehicles to electric scooters) will represent $55.81 billion in 2022, growing 29.4 per cent annually for seven years, reaching $570.47 billion by 2029. By volume, the market is expected to reach 7.62 million units by 2029, from an estimated 1.54 million units in 2022, representing a CAGR of 25.7 per cent. Supportive government policies and regulations, environmental concerns and rising acceptance of electric mobility are all driving adoption, along with the future promise of autonomous vehicles.
Along with entertainment, the benefits of automotive electronics include reduced costs, lower emissions, higher efficiency and improved safety. Various component types are spread across modern vehicles and their electrical and electronic distribution systems (EEDS). Component makers are offering customised electronic designs that resist temperature extremes while offering sophisticated features.
Microcontrollers account for the largest component share, contributing over one-fourth the total market in 2019. Electronic content is scattered throughout the vehicle, including ‘carputers’, engine management, ignition, radio, telematics, advanced driver assistance systems, safety systems, electronic fuel injection, airbags and entertainment systems.
Illustrating the growth of automotive electronics: four out of five cars shipped last year had integrated connected technology; the global automotive electronics market will double between 2019 and 2029; the market will grow at an annual rate over 7 per cent to reach $415.6 billion by 2027; and the sensor segment will grow at 10 per cent year-over-year through 2029.
Even as the automotive market is pushed to grow through the adoption of electric vehicles and eventually autonomous cars, some gating factors remain. Automotive systems are increasing in complexity, which will increase replacement and maintenance costs. Further, certain systems are potentially prohibitively expensive. For example, ADAS is expensive enough that analysts expect that costs may restrain adoption.