Northbrook, IL 60062 -- (SBWire) -- 12/20/2022 --The automotive semiconductor market is expected to grow from USD 42.9 billion in 2022 to USD 70.0 billion by 2027, at a CAGR of 10.1% during the forecast period.

OEMs offer a wide range of vehicles, from small hatchbacks such as Leaf to high-end sedans such as Tesla Model 3. The wide range of product offerings has attracted many consumers, resulting in an increased market for passenger electric vehicles. EVs are also growing in demand for fleet service providers and other commercial applications, including leasing, rental, etc. These companies have announced plans to shift to EVs in the coming years. Lyft (US) announced plans to have around 2,000,000 EVs as part of their fleet by 2030. Similarly, in October 2021, Hertz (US) announced plans to buy 100,000 Tesla Model 3 for its consumer fleet, with around 50,000 for rentals to Uber.

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The automotive semiconductor ecosystem includes raw material suppliers, original equipment manufacturers (OEMs), component suppliers, and distributors. The growing installation of sophisticated automotive semiconductors in powertrain systems, chassis, exhaust systems, safety and control systems, vehicle body electronics, and telematics systems is driving the growth of the market. The rising number of partnerships, agreements, deals, and joint ventures between automobile giants and automotive electronics providers is expected to still remain the largest source of revenue for automotive semiconductor manufacturing companies. However, the surging consumer demand for enhanced, vehicle safety, security, comfort, and the rising adoption of autonomous and electric vehicles will fuel future growth of the market. To grab market opportunities, companies are focusing on organic and inorganic growth strategies to meet future needs and demands of the automotive semiconductor industry.

Countries around the world have set targets to reduce vehicle emissions by 2050. They have started promoting the development and sales of EVs and related charging infrastructure. Several governments are providing various incentives such as low or zero registration fees and exemptions from import taxes, purchase taxes, and road taxes to adopt EVs. Norway and Germany are investing significantly in promoting sales of EVs. Thus, due to the high incentives and subsidies in Europe, a high growth rate in the sale of electric vehicles is observed. This has led to the growth in demand for components and equipment associated with EV charging, such as charging cables, connectors, adapters, and portable chargers. As part of a partnership between the US energy and transportation departments, a new vision for a national fast-charging network is expected to be developed, with potential longer-term innovations that include up to 350 kW of direct current fast charging. Stringent CO2 emission norms have increased the demand for electric vehicles. Governments are investing significantly in providing incentives and subsidies to encourage the sales of EVs. These steps undertaken by governments around the world are expected to help increase demand for EVs during the coming decade.

China, Canada, and US have set up regulations for EVs, while all countries have set up fuel economy standards. They also provide incentives and subsidies for EV manufacturers and buyers. The US provides incentives of up to USD 7,500 for buying new EVs. Europe is expected to be the first region with plans to fully shift to EVs. Most countries in the region have announced plans to stop ICE vehicle sales in the coming decades. The UK aims at dominating the entire vehicle market with EV sales by 2030. Norway plans to undertake the same initiative and complete it by 2025. The Netherlands, Israel, Ireland, Iceland, and Denmark have made plans to adopt EVs by 2030. China and Japan also plan to stop ICE vehicle sales by 2035.

Autonomous driving is one of the primary factors triggering the demand for advanced automotive semiconductors with high computational power. The market for most automotive electronics is growing in line with the overall growth in the automotive market. The high adoption of ADAS systems is the major reason for the elevated demand for automotive semiconductors. For instance, sensors installed in autonomous vehicle systems include image sensors, LiDAR, temperature sensors, position sensors, speed sensors, etc. that are connected and coordinated through a microprocessor or IC to detect and identify objects and enable autonomous driving. According to MarketsandMarkets, the global autonomous / self-driving cars market size is projected to grow from 20.3 million units in 2021 to 62.4 million units by 2030 at a CAGR of 13.3%.

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Initially, ADAS performed simple functions such as emergency braking, lane-keep assistance, and blind-spot detection. It is now moving toward more advanced features such as highway autopilot and a limited set of autonomous features, including the detection of obstructions ahead and the determination of vehicles' position with other surrounding objects. LiDAR technology is now being utilized for Level 2 and Level 3 automation in automobiles. Various automobile manufacturers, such as Tesla (US), Ford (US), and Volkswagen Group (Germany), have made significant investments in research and development activities in LiDAR technology. Passenger cars with LiDAR based ADAS are likely to be mass-produced from 2022 onwards for the Chinese market.