Connected Car Sales

The trajectory of the connected car market continues to be defined by two factors: 1) new vehicle sales growth and 2) connected car penetration, moving in opposite directions. On the one hand, the new vehicle sales market continues to falter, the result of ongoing supply chain constraints and looming macroeconomic headwinds eroding the pent-up demand for new passenger cars. Market fortunes over the last 3 years have been mixed, with each market shock being followed by a partial recovery, which is then stalled by the next shock. More specifically, in 2020, the disruption of the brick-and-mortar supply chain resulted in a contraction in connected vehicle shipments, with a partial recovery in 2021 once restrictions were lifted. Over the course of 2021, supply chain constraints began to compromise the rebound in new vehicle shipments, making 2021 a year of modest connected car sales growth. By 2022, however, the impact of the supply chain crisis was more severe, resulting in an expectation of fewer connected car deliveries in 2022 compared to 2021. As a result, there is an “up and down” pattern to the connected car market over the past 3 years.

In contrast, the penetration rate of embedded connectivity continues to accelerate, with 2022 representing the first year in which the majority of vehicles shipping feature their own cellular modem (51.7%). The net effect of these contrasting factors results in modest growth of 4% in the number of connected cars shipping, with the market set to return to pre-COVID-19 connected car shipment volumes by 2023.

In the longer term, embedded connectivity will continue its evolution from a consumer-oriented channel to deliver differentiating infotainment services into an OEM-focused channel focused on enabling lifecycle management of software-defined vehicles. Most vendors in the supply chain, therefore, expect penetration to reach almost full adoption in mature markets (United States, European Union (EU)) in the next 3 years, and at a global level toward the end of the decade. MNOs are reporting an increase in 5G Requests for Quotation (RFQs) due to carmakers being more committed to lifecycle management and wanting to make sure the vehicle is compatible with existing network technologies during its lengthy lifecycle.

Market Share Trends

This iteration of MD-CCAR introduces new market share perspectives for OEM, Tier One, and SoC suppliers in the North American and European infotainment markets. The standout performer from an SoC perspective is Qualcomm, with market share expected to grow in the next 5 years from 13% to 20% in North America, and from 21% to 38% in Europe, a result that will make Qualcomm the largest vendor in this latter market. This rapid growth is being driven by design wins with high volume automakers, including Stellantis brands PSA and FCA, and Renault-Nissan, adding to existing customers, Volkswagen and Honda. This rapid expansion in market share is expected to come at the expense of numerous incumbents, including Texas Instruments (TI) and Renesas, while NXP is expected to maintain a much healthier share of the market, in no small part due to the inclusion of the i.MX8 on the Ford SYNC 4.

Shipment Forecasts

By the end of 2023, ABI Research forecasts more than 70 million connected car shipments, with OEM Embedded connectivity comprising 54.85% of all new sales. That trend will continue through 2028, when OEM Embedded connectivity will account for 71.64% of the more than 97 million connected cars delivered that year.