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Source: Precedence Research

Software Defined Vehicles Market Accelerates with 20.42% CAGR | Infotainment & Telematics Dominate, Security Systems Rising Fast

According to Towards Automotive consultants, the global Software Defined Vehicles market is projected to reach approximately USD 218.74 billion by 2034, increasing from USD 34.11 billion in 2024, at a CAGR of 20.42% during the forecast period 2025 to 2034.

Ottawa, Aug. 20, 2025 (GLOBE NEWSWIRE) -- The global software defined vehicles market size stood at USD 41.08 billion in 2025 and is projected to reach USD 218.74 billion by 2034, according to a study published by Towards Automotive, a sister firm of Precedence Research.

The software defined vehicles market is experiencing a significant boom these days due to its high demand in the market. Such vehicles are not completely dependent on the hardware system but are also operative with the help of software functions.

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Key Highlights of the Defined Vehicles Market

  • By region, Asia Pacific is currently leading the software defined vehicles market, whereas North America is expected to grow in the foreseen period with the help of the region’s developed technology.
  • By vehicle type, passenger cars are dominating the software defined vehicles market currently, with the commercial segment observed to grow with the highest CAGR in the foreseen period.
  • By propulsion type, the electric vehicle segment is expected to grow in the foreseen period due to high demand for this type of vehicle.
  • By software type, the application segment dominated the software defined vehicles market, whereas the embedded software segment is observed to grow in the foreseen period.
  • By connectivity, the Vehicle-to-Vehicle (V2V) segment dominated the market, whereas the Vehicle-to-Infrastructure (V2I) segment is expected to grow in the foreseen period.
  • By application, the infotainment and telematics segment dominated the software defined vehicles market, whereas the safety and security systems are observed to be the fastest-growing region.

Market Overview

The software defined vehicles market has been growing significantly in recent periods due to high demand for such vehicles that can be easily controlled with the help of software systems and lower dependence on hardware systems. It makes it easy for the manufacturers to operate a vehicle and find out any issues to repair it in the least possible time. Such vehicles also have the advantage of advanced security with the least possible chances of theft or unauthorized access.

New Trends of the Defined Vehicles Market

Role of Artificial Intelligence in Software Defined Vehicles Market:

Artificial Intelligence (AI) plays a foundational role in the evolution of the Software Defined Vehicles (SDV) market by enabling vehicles to become intelligent, adaptive, and increasingly autonomous. Through real-time data processing and machine learning, AI empowers SDVs with capabilities such as advanced driver assistance, predictive maintenance, in-vehicle personalization, and route optimization. It supports the integration of autonomous driving technologies, ensures secure over-the-air (OTA) software updates, and enhances cybersecurity by identifying and responding to threats proactively.

Top 5 countries in the Software Defined Vehicles (SDV) market:

1. China

China leads the global Software Defined Vehicles market due to its massive domestic automotive demand, rapid EV adoption, and strong push for smart mobility. Local companies are aggressively developing in-car software platforms, autonomous capabilities, and AI-powered features, making the country a leader in SDV innovation and scalability.

2. United States

The U.S. is a front-runner in SDV development, driven by advanced technology firms and EV manufacturers that prioritize software-centric vehicle architecture. The country's strong innovation ecosystem and early adoption of over-the-air updates and autonomous systems give it a competitive edge in the global market.

3. Japan

Japan is investing heavily in software-defined mobility, aligning its automotive industry with national goals around automation and smart transportation. Japanese automakers are developing self-driving capabilities and vehicle operating systems that support safety, sustainability, and digital transformation.

4. Germany

Germany’s automotive strength lies in its engineering excellence and integration of software with premium vehicle features. While traditional automakers are transitioning towards software-defined platforms, the country is pushing forward with intelligent mobility initiatives and connected vehicle infrastructure.

5. India

India is an emerging SDV market, supported by its growing automotive sector, digital transformation policies, and rising consumer demand for connected car features. The country is also seeing increased interest from global manufacturers to develop cost-effective, software-integrated vehicles for both domestic and export markets.

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Market Dynamics

Driver

What are the growth drivers of the Software Defined Vehicles Market?

The growing adoption of EVs globally is one of the major factors for the growth of software defined vehicles market. High usage of ADAS system that heavily relies on software systems for real-time monitoring, real-time data processing, sensor fusion, and decision making is also helping the growth of the market. Use of different types of advanced technologies such as 5G, V2X, and OTA updates also helps to elevate the growth of software defined vehicles market.

Challenge

Cybersecurity Risks hamper the Growth of Software Defined Vehicles Market

Cybersecurity risk is one of the major obstructions in the growth of the defined vehicles market. Such vehicles rely heavily on software systems for the operation of their multiple features, hence they are also vulnerable to cybersecurity risks. Software for connectivity, OTA updates, remote control functions, and many other functions is essential in such vehicles; hence, maintaining software security is of utmost importance. Hackers can easily exploit mobile apps, connected infrastructure, or even with the help of compromised devices, which is another restraint for the market’s growth.

Opportunity

Developing Software Systems and Technology to help the Growth of the Market

Developing software systems that help allow the software defined vehicles to operate multiple functions is helping the growth of the market. OEMs play a huge role in this growth by shifting systems from hardware to software for multiple functions, and with the help of a cloud-based system, allowing consumers to get the vehicle fixed easily. Hence, developing technology plays a vital role in the growth of software defined vehicles market.

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Regional Analysis

Asia Pacific led the Software Defined Vehicles Market

Asia Pacific dominated the software defined vehicles market due to various reasons, helping the growth of the market. Urbanization, robust government support, a huge consumer base, and advanced mobility solutions are also some of the major factors helping the growth of the market. Breakdowns of such vehicles can be easily fixed by the companies, as their cloud-based systems and connectivity features help in correcting the software systems for easy operation of the vehicle. Investments in the industry and developing automotive manufacturing plants are also among the major reasons for the growth of the market.

North America is expected to grow in the forecast period.   

North America is expected to grow with the highest CAGR in the foreseen period, helping the growth of software defined vehicles market. Autonomous driving, advanced features, technology, and connectivity are also some of the major factors helping the growth of the market. On-board edge deployment board, helpful for processing the data within the vehicle, is also helping the growth of the market in the region. Zonal and centralized architectures for cost efficiency and effective results are also helping the growth of the market in North America in the foreseeable future.

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Segmental Analysis

By Vehicle Type

The passenger segment dominated the software defined vehicles market due to high demand for passenger cars with different types of technological features, such as improved connectivity and personalized driving experiences. Rising adoption of autonomous vehicles with connected technology is highly reliant on software systems, further fueling the growth of software defined vehicles market.

The commercial segment is expected to grow in the foreseen period to control the rising costs, flexibility, upgradability, efficiency, and maintainability. Use of software defined vehicles for the commercial sector helps companies with real-time monitoring and remote diagnostics, which are helpful for cost control and improved efficiency. Hence, the segment is observed to grow in the foreseen period.

By Application

The infotainment and telematics segment dominated the software defined vehicles market due to high demand for advanced technologies like connectivity features, ADAS systems, and integration of smartphones with vehicles. The connectivity features are helpful for remote diagnostics, predictive maintenance, and enhanced security of the vehicle. Hence, the segment led the market. Smartphone integration with vehicles makes the user experience smooth and hassle-free, allowing a wider range of access to various other applications as well.

The security system segment is expected to grow in the foreseen period due to rising cybercrime threats and vulnerability to hackers in case of weak security systems. The segment is also expected to be ruling in the foreseen period due to rising demand for secure software architecture, continuous updates, and compliance with vital regulations.

By Software Type

The application software segment led the software defined vehicles market as the segment comprises software solutions essential for the functioning of different requirements of a vehicle, such as powertrain control, infotainment, telematics, body control, and various other features. The segment also dominated the market due to the rise in adoption of ADAS and safety features, further aided by features such as emergency braking, lane-keeping assist, and cruise control. Hence, the segment led the software defined vehicles market.

The embedded software segment is expected to grow in the foreseen period due to its crucial role in the core operation of a vehicle’s software system. The segment is also responsible for the operation of different operations of the vehicle and ensuring its smooth working as well. Rising demand for autonomous driving and vehicles, EVs, along with other technological features, is also helping the growth of the market.

By Connectivity

The vehicle-to-vehicle segment led the software defined vehicles market due to efficiency, enhanced safety, and improved overall driving experience. Rising demand for connected vehicles and smartphone integration has also helped the segment to further fuel the growth of software defined vehicles market.

The Vehicle-to-Infrastructure (V2I) segment is expected to grow in the foreseen period due to its capability of enhanced communication data exchange between vehicles. It helps to enhance the safety standards, helping the growth of the market. The segment also highlights various other important features such as autonomous driving, smart parking, and improved traffic management, further aiding the market’s growth.

By Propulsion Type

The ICE segment dominated the software defined vehicles market due to the introduction of software and technological advancements in such vehicles, helping the growth of the market. Hence, features such as enhanced safety and user experience, involvement of ADAS, infotainment systems, OTS updates, and various other features helped the growth of the market.

The EV segment is expected to grow in the forecast period due to the high demand for EVs globally. Integration of advanced software systems, helping in enhancing the functionality of the vehicle along with different other features such as cost efficiency, fuel efficiency, and sustainability, is aiding the growth of software defined vehicles market. EVs are also known as the future of the automotive industry; hence, it is one of the biggest factors in the growth of the market in the foreseeable period.

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Recent Developments in Software Defined Vehicles Market

  • In June 2025, Tata Consultancy Services announced the setup of its two new automotive delivery centers in Germany. These setups are located in Munich and Villingen-Schwenningen, along with an engineering center in Romania. The main aim of the company is to move TCS towards next-gen mobility solutions.
  • In March 2025, Hyundai Motor Group launched its software brand named ‘Pleos’ along with outlining plans for its software-centric ‘cloud mobility’ ecosystem. The launch was done at the Pleos 25 developer conference.

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Software-Defined Vehicle Market Companies

  • Aptiv PLC
  • Continental
  • Mobileye
  • NVIDIA Corporation
  • Robert Bosch GmbH
  • Tesla Inc.
  • Waymo LLC

Software-Defined Vehicle Market Segmentation

By Vehicle Type

  • Passenger Vehicles
  • Commercial Vehicles

By Application

  • Infotainment & Telematics
  • Advanced Driver-Assistance Systems (ADAS)
  • Connected Services
  • Powertrain Control
  • Body Control & Comfort Systems
  • Safety & Security Systems

By Software Type

  • Operating System
  • Middleware
  • Application Software
  • Embedded Software

By Connectivity

  • Vehicle-to-Vehicle (V2V)
  • Vehicle-to-Infrastructure (V2I)
  • Vehicle-to-Cloud
  • Vehicle-to-Everything (V2X)

By Propulsion Type

  • Internal Combustion Engine (ICE)  
  • Electric Vehicles (EVs)

By Geography

North America

  • United States
  • Canada

Europe

  • United Kingdom
  • Germany
  • France
  • Italy

Asia Pacific

  • China
  • India
  • Japan
  • South Korea

Latin America

  • Brazil
  • Argentina

Middle East and Africa

  • UAE
  • Saudi Arabia
  • South Africa

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About Us

Towards Automotive is a leading research and consulting firm specializing in the global automotive industry. We deliver actionable insights across key segments such as electric vehicles (EVs), autonomous driving, connected cars, automotive software, aftermarket services, and more. Our expert team supports both global enterprises and start-ups with tailored research on market trends, technology, and consumer behavior. With a focus on accuracy and innovation, we empower clients to make informed decisions and stay competitive in a rapidly evolving landscape.

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