Europe Connected Car Market Outlook to 2030

Europe Connected Car Market Overview

• The Europe Connected Car market, valued at USD 13 billion, is driven by a combination of rising consumer demand for enhanced in-vehicle experiences and government initiatives promoting vehicle connectivity for safety and efficiency. Technological advancements such as 5G networks and advanced telematics play a significant role in enhancing real-time vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication, making driving more connected and automated.
• Western Europe, particularly Germany, France, and the UK, dominates the market due to the presence of automotive giants like BMW, Volkswagen, and Daimler AG, coupled with significant investments in automotive research and innovation. Germany leads because of its strong automotive manufacturing base and the government's focus on smart mobility and intelligent transportation systems. These countries have advanced digital infrastructures, creating an ideal environment for the adoption of connected car technologies.
• The Sustainable and Smart Mobility Strategy, presented by the European Commission in December 2020, aims to transform the EU transport system towards a greener, smarter, and more resilient future. This strategy includes an Action Plan with 82 initiatives designed to achieve significant reductions in transport emissionstargeting a 90% reduction by 2050. These regulations encourage collaboration among stakeholders while promoting investment into innovative mobility solutions that align with sustainability goals.

Europe Connected Car Market Segmentation

By Connectivity Type: The Europe Connected Car market is segmented by connectivity type into embedded connectivity, tethered connectivity, and integrated connectivity. Embedded connectivity holds the largest market share, driven by regulatory mandates for emergency call systems and real-time data exchange capabilities. The European Union's eCall mandate, requiring all new cars to be equipped with a system that automatically calls emergency services in the event of a crash, has been a key driver for embedded solutions.

By Application: Under the application segment, infotainment systems have captured a dominant market share due to increasing consumer demand for personalized entertainment, navigation, and internet access while driving. Major automakers are focusing on creating user-friendly in-car systems that allow seamless integration of smartphones, providing apps and streaming services in real-time. This trend is further fueled by partnerships between automakers and technology companies such as Apple and Google.

Europe Connected Car Market Competitive Landscape

The Europe Connected Car market is dominated by several key players that leverage technological innovations and strategic partnerships to gain a competitive edge. European automakers lead the market, followed by global tech companies entering the space through collaborations with traditional automakers. The competitive landscape reveals a strong European presence, led by local champions BMW, Daimler, and Volkswagen, who have heavily invested in connected car technologies. These firms are increasingly collaborating with technology companies such as Intel, Nvidia, and Microsoft to integrate artificial intelligence (AI) and machine learning capabilities into vehicles, enabling advanced autonomous driving features.

Europe Connected Car Market Analysis

Growth Drivers

• Increase in Vehicle Connectivity: The rise in vehicle connectivity in Europe is driven by increasing consumer demand for connected services in vehicles. In 2022, around 30% of the global connected car fleet was located in Europe, reflecting a robust market presence. This trend is supported by the deployment of 5G networks, which are projected to cover 90% of the EU population by 2025. The digital economy, growing by 160 billion annually across the region, underscores the increasing reliance on connected technologies.
• Government Initiatives on Autonomous Driving: European governments are pushing for autonomous driving technologies, leading to growth in the connected car market. The European Union has set a target to reduce road fatalities by 50% by the year 2030, as part of its Road Safety Policy Framework for 2021-2030. This initiative aims to significantly lower the number of road deaths and serious injuries, with an overarching goal of achieving close to zero fatalities by 2050. These investments and regulatory advancements are projected to substantially increase demand for connected vehicle platforms.
• Integration of 5G for Enhanced Connectivity: The rollout of 5G networks across Europe has been a critical factor in improving vehicle connectivity. The European Commission has emphasized the importance of deploying 5G infrastructure to enable Connected and Automated Mobility (CAM), which is critical for applications like Vehicle-to-Everything (V2X) communication. This transition is expected to enhance road safety and reduce emissions, aligning with the broader goals of the EU's digital and green transitions.

Challenges

• Data Privacy and Cybersecurity Concerns: The growing integration of connected services in vehicles has raised significant concerns about data privacy and cybersecurity. There are data breach incidents in the automotive industry across Europe, highlighting the challenges in protecting user information. The cost of a single breach can reach USD 3.96 million prompting the need for improved cybersecurity protocols in connected vehicles.
• High Initial Infrastructure Costs: The deployment of connected vehicle infrastructure, such as 5G towers and smart traffic systems, involves significant upfront costs. These high costs deter smaller economies in Eastern Europe from investing in the necessary infrastructure, which could slow the adoption of connected vehicles in these regions. Western Europe, particularly Germany and France, accounts for the majority of connected vehicle infrastructure investments.

Europe Connected Car Future Market Outlook

Over the next five years, the Europe Connected Car market is expected to experience substantial growth, driven by continuous advancements in 5G technology, expanding electric vehicle (EV) infrastructure, and increasing demand for vehicle-to-everything (V2X) communication. Governments across Europe are also playing a crucial role in facilitating market growth through initiatives like smart city projects and autonomous vehicle testing regulations.

Market Opportunities

• Adoption of AI and Machine Learning in Connected Car Ecosystem: Artificial Intelligence (AI) and Machine Learning (ML) are transforming the connected car ecosystem. The European Commission has invested USD 1.82 billion into AI research as part of its Horizon Europe program, positioning AI as a key growth driver in the connected vehicle market. AI's role in autonomous driving is also expected to enhance vehicle-to-vehicle communication, leading to safer, more efficient road transport systems.
• Expansion of Vehicle-to-Everything (V2X) Technologies: The expansion of Vehicle-to-Everything (V2X) technologies is providing opportunities for market growth. As of late 2020, there were approximately 0.7 million vehicles equipped with V2X technology, and projections suggest this number could reach around 35.1 million by 2025. This technology enhances road safety and traffic efficiency. The rapid adoption of V2X technology is poised to revolutionize connected vehicle ecosystems, paving the way for smarter, safer, and more efficient transportation systems globally.