An Excerpt of McKinsey report “Automotive software and electronics 2030”
It is expected that Automotive Software (SW) and Electrical and Electronic components (E/E) market will grow by 7% CAGR(Compound Annual Growth Rate) that is from USD 238 billion to USD 469 billion during 2020 and 2030. The main drivers behind this growth are mainly ACES i.e. Automatic, Connected, Electric and Shared.
Core components within software and E/E market are:
- SW development, integration, verification, and validation
- Electronic control units (ECUs)/domain control units (DCUs)
- Sensors
- Power electronics
- Other components (harnesses, controls, switches, displays).
Entire automotive industry is now dreaming of cars in which all SW and E/E components are central and not distributed. Power Electronics will brow by a stunning growth of 15% CAGR, thanks to Electric Vehicle. High demand of ADAS/ACES cars there will be sharp rise in the SW and Sensors segment, approximately 8-9% CAGR for both.
The way complete electronic and electric system works in a car depends much on the architecture of the entire E/E system. As of now we are in third generation. The architecture is ever evolving. In first generation there were independent ECUs and there was no communication between ECUs. Each of the ECU used to look after different task. In second generation there were many ECUs rather there is a network of ECUs. There was collaboration between ECUs working on same domain. Domain are like body, powertrain, comfort, infotainment etc. Communication between ECUs looking after different domain was much limited. Now-a-days we use third generation architecture in which there is strong collaboration between different ECUs facilitated by Central Gateway. This has enhanced the ability of E/E system to undertake complex functions.
In 2020 the Automotive SW and E/E market was USD 238 billion it is expected to reach USD 362 billion by 2025 and USD 469 billion by 2030. The main contributor in this growth is ECUs/DCUs. Rest of the contributors are SW(functions, OS, middleware), integration, verification and validation service, sensors, power electronics, harness, switches, controls and displays.
The global automotive software market can be split into five domains those are:
- OS and Middleware
- Body and energy
- Powertrain and Chassis
- Infotainment, connectivity, security and connected services
- ADAS/AD
Among this entire domain the market share of ADAS/AD was highest in 2020 (USD15 billion out of USD 34 billion) and is expected to grow and remain highest among all by 2025 (USD 32 billion out of USD 63 billion) and 2030 (USD 43 billion out of USD 84 billion).
If we split the SW market into SW development, integration and validation we will find that the share of SW market related to “functional development” was highest is 2020 that is USD 21 billion out of USD 34 billion in 2020 and its trend will continue in 2025 as well as 2030. In 2025 the market share of SW (functional development) will be USD 37 billion out of USD 62 billion. And in 2030, it will be USD 50 billion out of USD 84 billion.
Electronic Control Unit is responsible for controlling the electrical subsystems. Whereas Domain Control Units are more complex than the ECUs. They can undertake more complex work. Following are the factors that shape and define the market share of ECUs/DCUs.
- AD
- Chassis
- Infotainment
- ADAS
- Body
- Powertrain
It is observed that the ECUs/DCUs related to Powertrain will control the market share in principal.
Demand for sensors will grow in-line with demand for ADAS/AD cars.
Powertrain sensors are used for sensing different parameters of engine, transmission, alternator; The number of sensors used in electric vehicle is more than the number of sensors used in mechanical cars. Sensors related to chassis monitor functions of braking, steering and suspension. Body sensors are used for sensing door and roof closure, seat occupancy, the amount of sunlight and rainfall. ADAS/AD sensors include LiDAR, and RADAR and cameras in principal.
The market share can be studied by classifying sensors like:
- Body
- Chassis
- Powertrain
- ADAS/AD
The market share of sensors was USD 30 billion. The share of sensors used in ADAS/AD was USD 13 billion out of USD 30 billion, it was highest. It is predicted that it will continue to remain highest in 2025 as well as 2030. In 2025 it will be USD 25 billion out of USD 44 billion and in 2030 it will be USD 43 billion out of USD 63.
Looking at this unprecedented growth in the demand for different SW and E/E related components it is expected that the electronics engineers having sound skills in development of software related to automobiles and interfacing of sensors and actuators are going to see golden opportunities in this decade.
List of abbreviations:
ACES: Autonomous driving, connected vehicles, electrification of the powertrain, shared mobility
AD: Autonomous driving
ADAS: Advanced driver assistance systems
BMS: Battery management system
CAGR: Compound annual growth rate
DCU: Domain control unit
E/E: Electrical and electronic
ECU: Electronic control unit
EV: Electric vehicle
LiDAR: Light detection and ranging
SW: Software
Credits: Ondrej Burkacky, Johannes Deichmann, Jan Paul Stein ( Authors of original report)
Main report rephrased by
Vasant B D (M.E., MBA)
Assistant Professor
Department of Electronics and Telecommunication
Marathwada Mitramadal’s College of Engineering
Pune, Maharashtra, India.