Connected vehicle sales recovering despite chip shortage

May 13, 2021 // By Jean-Pierre Joosting
Connected vehicle sales recovering despite chip shortage
Report finds that after a sharp drop, connected vehicle shipments will rise by 20 percent in 2021 driven by rising consumer interest in infotainment.

The Connected Cars semiannual update report from ABI Research shows that new vehicle sales contracted by 15% in 2020, but consumer enthusiasm began to rebound at the end of 2020 and the first quarter of 2021, catching carmakers and suppliers by surprise. However, ABI Research contends that consumers have become more demanding about their in-vehicle infotainment expectations, driving strong interest in connected vehicles and boosting growth opportunities for the industry. Growth in connected vehicle sales is expected to be a 20% in 2021 with a 10.4% CAGR between 2020 and 2026.

"Announcements such as the partnership between Hyundai and NVIDIA to standardize AI-based infotainment experience throughout its fleet, Mercedes's MBUX Hyperscreen, BMW's iDrive 8, and Tesla Model S with ten teraflops of processing power for superior gaming experience demonstrate that the connected vehicle technologies that will shape the automotive industry in 2021 and beyond will be all around the infotainment systems. This will lead to opportunities for the whole ecosystem, but especially chipset providers, such as NVIDIA, Qualcomm, Xilinx, and NXP, offering powerful platforms to handle AI-based functionalities and headroom for OTA updates."

Shipments of vehicles with connected infotainment will grow by 23% in 2021, returning to pre-pandemic levels, led by increased penetration in emerging market regions. The recently announced partnership between Ford and Google shows a considerable migration to Android OS, which will see more than doubled penetration in production vehicles by 2023 and 2024. The closer proximity between carmakers and Google, unthinkable a few years ago, is a response to the poor reviews of embedded systems and still high dominance of smartphone projection.

"Nevertheless, because of the quicker than expected demand recovery, the automotive industry has a significant challenge to overcome in 2021," says Bezerra.

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