FRM 2025: Sector Report Automotive Industry KPMG in Germany

Its platform automates the cybersecurity management system (CSMS) and product cybersecurity evidence (PCSE) to ensure compliance with UNECE R 155 and ISO/SAE 21434. We evaluate our own startup data and complement these insights with external research, including industry reports, news articles, and market analyses. This process enables us to identify the most impactful and innovative trends in the automotive industry. Volvo Cars has announced plans to adopt large aluminium castings for its next-generation electric vehicles, aiming to simplify production and enhance sustainability.

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• These innovations represent the brand’s commitment to redefining driving dynamics in the EV era.
• The market reflects its role in meeting strict safety rules and consumer demand for smarter vehicles.
• AI, automation, and an ‘electric-first’ mindset are impacting every industry, and automotive is no exception.
• In October 2022, the delivery lead time for chips decreased by six days to 25.5 weeks, the most significant drop since 2016.
• More driverless journeys will occur as technology continues to be enhanced and refined.
• By leveraging these factors, Statevolt is positioning itself to meet the rising demand for EV batteries in an increasingly competitive market.
• Due to the pandemic, the automotive sector is undoubtedly facing one of the most challenging periods and a massive slowdown for the last couple of years.

Its early fusion approach integrates LiDAR and radar data, while neural networks infer road elements and topology to create accurate high-definition maps. Continuous change detection triggers automatic cloud updates to ensure up-to-date navigation information. South Korean startup BOS Semiconductors builds Eagle-N, an AI accelerator for in-vehicle infotainment (IVI) and ADAS.

• It also provides lane-change algorithms that ensure comfortable lateral movement and personalized passenger comfort profiles refined with each journey.
• 94 percent of global automakers are using ARM-based technology for automotive applications, alongside the top 15 automotive semiconductor suppliers in the world adopting ARM technologies in their silicon.
• In 2025, used passenger car registrations are forecast to hit 179 million globally and are predicted to grow by 1.4% year-on-year.
• Its RISC-V IP processors adopt 32/64-bit architectures supported by a nine-stage dual-issue pipeline.
• Therefore, websites need to be easily readable and accessible across mobile devices, with clear calls to action.
• With a CAGR of 25.5% from 2025 to 2037, the global sensor fusion market is expected to reach USD 7.91 billion by 2025.

Radar Reticence designs Radar Sensors

Additive manufacturing shortens prototyping cycles, and IoT-driven analytics improve predictive maintenance. Changing consumer preferences, cost efficiency, technological progress, and sustainability targets drive this innovation. A Deloitte UK study found that 52% of all consumers show no interest in car subscription models; interest is higher among younger people (age 18-34). These all-inclusive options reduce the financial burdens of ownership, especially for urban users.

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According to a study completed by INRIX Transportation, Honolulu, New Orleans, and Nashville are the three US cities that stand to gain the most from micromobility vehicles. Tesla reportedly rewrote the software it uses in its vehicles so they could run on a different type of chip. However, the demand for parts is also being diminished by the increasing quality of newly manufactured vehicle parts. In addition, the ecommerce automotive aftermarket market is worth an estimated $85.28 billion. The company already has 50 Level 4 autonomous trucks operating in the Southwestern United States. One of the most promising companies in the autonomous trucking ecosystem is TuSimple.

Aeluma specializes in Scalable Silicon Manufacturing

Sensor fusion that combines information from various sources improves safety and autonomy by enabling accurate decision-making. Indian startup ThinkSeed develops middleware solutions that enhance smartphone connectivity to vehicles for secure access and infotainment. Its product, THINKey, transforms smartphones into digital keys that allow users to lock, unlock, and start their vehicles. The integration of 5G networks is accelerating advancements in vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) communication, supporting autonomous driving functionalities. The startup offers tools for real-time calibration health checks for deployed fleets to reduce time-to-market and operational risks.

The emergence of CASE (Connected, Autonomous, Shared, and Electrified) technologies is changing the industry like never before. This will drive growth opportunities for automakers in the years to come and shape the automotive industry outlook in the future. However, although the Chinese EV market may take some time to adapt to the new subsidy-free scenario, the situation is optimistic.

Explore the Top 10 Automotive Trends & Innovations in 2025

• US-based startup NuNami designs automotive semiconductors that provide reliable connectivity and safety-critical interfaces.
• Additionally, the onboard speed recorder limits the speed to discourage dangerous driving behaviors.
• With more and more customers prioritizing environmental sustainability, the focus should be on promoting environmentally conscious manufacturing processes along with eco-friendly cars like electric vehicles.
• The startup offers tools for real-time calibration health checks for deployed fleets to reduce time-to-market and operational risks.
• 2025 will witness the automotive industry transitioning from Level 2 autonomy to Levels 2.5 and 3, representing a substantial evolution in automotive technology and enhancing vehicle automation and safety.
• The global Automotive Human Machine Interface market, valued at USD 70.41 billion in 2022, is expected to grow significantly, reflecting these advancements in automotive technology.

While fully autonomous vehicles (AVs) are not yet standard on the roads, significant advancements are being made in 2025 toward realizing the vision of driverless cars. Companies like Tesla, Waymo, and others are working tirelessly to refine the technology, which includes machine learning, computer vision, and lidar (light detection and ranging) systems. The upcoming automotive industry trends refer to evolving changes in patterns within the sector that influence vehicle design, production, marketing, and usage. Technological advancements, along with changing consumer preferences, regulatory changes, and global economic conditions, are driving these trends.

🇨🇳 Increasing Competitiveness and Influence of Chinese Automakers

The scale established by these six stages is essential for comprehending and characterizing self-driving technologies, which span from complete human driving to complete vehicle autonomy. Through V2X, vehicles can share information about road conditions, accidents, and traffic patterns, allowing for real-time decision-making. This communication system is crucial for the safe deployment of autonomous vehicles, as it will enable them to “talk” to other vehicles and infrastructure, reducing the risk of accidents. The integration of Industry 4.0 technologies is revolutionizing automotive manufacturing. IoT, AI, and digital twins are becoming essential tools for improving efficiency, reducing downtime, and optimizing production processes.

Batteries are the heart of any electric vehicle, and improvements in battery technology will continue to shape the future of EVs. Companies focus on increasing energy density to improve range and reduce charging times. The trends shaping automotive manufacturing in 2025 emphasize innovation, sustainability, and connectivity. As electric vehicles become mainstream, digitalization reshapes production, and mobility services redefine car ownership, the industry is set to transform how vehicles are manufactured and used.

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The automotive ecosystem will become more interconnected, paving the way for smart cities and mobility-as-a-service (MaaS). The transition to electric vehicles has moved beyond early adoption and is now something of a global imperative. The uptake in EVs is experiencing a surge, driven by rapid advances in battery technology, an expanding charging infrastructure and supportive government incentives.

b. Charging Infrastructure Expansion

The law emphasises a cleaner and more efficient use of fossil fuels, placing a higher emphasis on sustainability and developing renewable energy infrastructures. This comes as China continues to make their presence known in the global EV scene, with ramped-up production and dominance in the international EV market. In 2023, the global connected car market was valued at $80.87 billion and projecting remarkable growth. It is expected to expand from $95.14 billion in 2024 to $386.82 billion by 2032, reflecting a robust compound annual growth rate (CAGR) of 19.2% over the forecast period according to some figures.

Electric Vehicle (EV) Expansion: EV Sales Reached 17M Units in 2024

Auto brands that stay on top of these trends and continue to innovate will be able to build a resilient business, that will help nurture a more electrified, connected, and sustainable future. With EV makers in China engaging in a price war due to declining demand, Chinese brands with strong hybrid presently are gaining popularity. A few hybrid models are priced below their EV and ICE counterparts, attracting Chinese consumers to hybrids, especially plug-in hybrid (PHEV) and extended-range hybrid (EREV) models.

According to Globe News Wire, the entire market will grow at a CAGR of 5.5% from 2025 to 2033, logging USD 984 billion. Semiconductor chips are at the heart of almost every automotive trend, from connected technologies to autonomous driving and EVs. Advanced systems that power, control, and optimize automobiles are increasingly being built around tiny chips.

Meanwhile, Toyota is reported to be cautiously evaluating the technology, balancing its benefits against potential risks. Sustainability has evolved from a competitive advantage to an existential necessity for the automotive industry. Efforts to adopt circular economy practices are intensifying, with manufacturers exploring innovative ways to extend the lifecycle of materials and reduce waste.

The Global Startup Heat Map showcases the distribution of 3836 exemplary startups and scaleups analyzed using the StartUs Insights Discovery Platform. It highlights high startup activity in Western Europe and the USA, followed by India. Unless otherwise noted, this page’s content was written by either an employee or a paid contractor of Semrush Inc.

• Honda will be showing its Series 0 platform that will be used for its SAE Level 4 driverless car in 2026.
• Automakers are investing in cybersecurity technologies such as hardware security modules (HSMs), AI-based intrusion detection systems, and secure over-the-air (OTA) updates to address these challenges.
• Shared mobility also influences vehicle design toward durability, modularity, and connectivity.
• What lies ahead is not just a continuation of trends but the potential for transformation that pushes the boundaries of how we move, connect, and thrive.
• For instance, Audi and BMW vehicles exchanged sensor data, including camera feeds, during 5G-V2X Direct demonstrations in Berlin.
• For example, its StellarAi data intelligence platform offers templates to quickly identify engineering variables, trends, and vulnerabilities.
• Moreover, car connectivity transforms the driving experience by integrating with real-time systems and smart gadgets.

What impact will 5G connectivity have on the automotive industry and its trends?

Automakers are responding by integrating carbon-neutral initiatives across their value chains. This includes upstream supply chains and downstream life cycle phases like recycling. Moreover, Asia-Pacific is the fastest-growing region, with a projected CAGR of 14.8%. This is fueled by increased vehicle production and sales in China, Japan, and South Korea. The AV market is projected to reach USD 1.73 trillion by 2033, growing at a CAGR of 31.85% from 2025 to 2033.

Looking ahead, Tesla’s strategies are likely to influence industry standards and inspire localisation efforts across the sector. With its focus on next-generation cells and expanded production capacity, Tesla is paving the way for a more efficient and sustainable global EV red flags in used car ads and sellers landscape. The next wave of auto trends is shaped by enabling technologies that extend beyond electrification and connectivity. Quantum computing accelerates material discovery and crash simulation, and edge computing and 5G offer real-time responsiveness in vehicles. Its bidirectional charging technology allows EV batteries to supply electricity to buildings during outages or peak demand. The technology also draws energy during off-peak hours to lower costs and stabilize the grid.

Shared/micro-mobility presents a potential shift among consumers

While the market for cars valued below $80k is expected to remain flat through 2031, the luxury car market is predicted to grow at up to 14% CAGR. The chip shortage is one-factor holding cars back from getting to the dealership lots. But, there are other various supply chain issues and factory closures that have led to low inventory, too. After demand started coming back, there simply wasn’t an adequate supply of chips, and the auto industry has been feeling the effects ever since. The parts industry is benefiting from the ever-increasing average age of vehicles on the road.

• Also, its platform manages claims and mechanical breakdowns across vehicle models from manufacturers.
• Lithium-ion battery prices have fallen by 89% over the last decade, reaching a price of $137/kWh in 2020.
• From enhancing in-vehicle safety solutions to enabling semi-autonomous driving features, AI is redefining innovations in vehicle functionality and unprecedentedly shaping the driving experience.
• People are shifting to EVs because of their design and their being environmentally friendly.
• Further, the Asia-Pacific region is anticipated to witness rapid growth, with a projected CAGR of 18.3%, driven by rising vehicle sales and evolving safety regulations.
• However, regulatory hurdles and the complexity of navigating diverse driving environments remain significant barriers.

The industry itself, however, has remained relatively stable over the last decade.

From electrification to IoT connectivity, these shifts are changing the way cars are manufactured, sold, repaired, and driven. Shared micromobility vehicles are becoming a popular mode of transportation in cities where the pollution from cars and traffic congestion is particularly evident. Chip shortages have been causing myriad changes to trends that affect the automotive trends that are not all positive.

No Surprise: Q4 Auto Sales Fell, EVs Fell Further

• Manufacturing was not spared either, representing 29% of global ransomware targets, an alarming 56% rise over the previous year.
• As per the traditional method, we used to visit the dealer and purchase vehicles from him, and the dealer used to make transactions with OEMs.
• It manages functions such as steer-by-wire, brake-by-wire, engine control, and ADAS.
• The transformation of the automotive sector is far from complete, but the direction is clear – towards a more sustainable, connected and intelligent future of mobility.
• Self-driving vehicles are becoming increasingly common and will continue to do so in 2025.
• Canadian startup Xaba develops intelligent automation solutions, materials, and processes for sustainable manufacturing.
• This approach enhances flexibility across its global operations, ensuring a rapid response to shifting market demands.
• Connected cars enable real-time navigation updates, remote diagnostics, and seamless smartphone integration.

These advancements are driving the future of connected vehicles, which are increasingly becoming a standard feature in new cars. Modern vehicles are now equipped with a unique digital identity, making it easier to track and share data for applications like insurance, driver safety, predictive maintenance, and fleet management. Nigerian startup Revive Earth develops the Revive Kit, to convert petrol vehicles into efficient EVs.