Automotive eSIM Market Shipments

Source Research:

The automotive eSIM market is expected to continue its dominance as it relates to integration, initially driven by initiatives by legacy applications, including eCall and UBI. The market will be further driven by longer-term trends, largely including Over-the-Air (OTA) and a subsequent shift for MFF standard SIM form factors toward eUICC variants. The automotive eSIM market will grow at a Compound Annual Growth Rate (CAGR) of 4.2% between 2023 and 2028. According to ABI Research's latest eSIM market forecasts, annual eSIM card shipments in the automotive industry will approach 84.1 million by 2028, a nearly sevenfold increase over 2023. Total shipments between that time period will eclipse the 463 million mark.

While not depicted in the chart above, the automotive eSIM market will also experience a CAGR of 4.3% in terms of eSIM Integrated Circuit (IC) shipments - from 70.3 million to 86.5 million.

With all that said, the automotive market has had its fair share of challenges, initially retracting in 2020, driven by manufacturing shutdowns and drop in demand, as a direct result of COVID-19. During 2020, new vehicle sales faced significant contraction, primarily due to the disruption that lockdown policies caused in the bricks and mortar retail sector. Many OEMs had to cut production and, consequently, component orders.

New vehicle sales continued to be hindered in 2022, driven this time by the semiconductor supply shortage affecting several industries, including the automotive sector. Amid the COVID-19 pandemic, semiconductor companies compensated for the lost automotive business revenue by repurposing their capacity to support other markets (e.g., electronics) that faced a boom in sales due to the increase in working from home.

Another aspect that impacted the automotive market, although driven by the chipset shortage, was an indirect one. The sourcing of older legacy chipsets proved a difficult task, as IC manufacturers and foundries prioritize higher-end and new next-generation chipsets. For this reason, automotive manufacturers had to look toward chip migration to demand newer IC types, which command a longer life expectancy. However, this is not a fast-paced process and, in the short term, the low supply of lower-end chipsets impeded car production, indirectly limiting growth in eSIM progression.

Although facing challenges, the connected car market - critical in pushing eSIM cards in the automotive space - grew in 2022, although sales did not match that of pre-COVID-19. Moreover, new macroeconomic challenges mean that a return to connected car volumes matching that of pre-COVID-19 will not likely be realized until 2024.

Despite the benefits of eSIM to vehicles and high acceptance among OEMs, the activation rate is still considerably low because only a few carriers in a small number of countries support eSIM services.