The automotive industry has experienced record growth over the past decade, with the emergence of everything from autonomous tractors to self-driving car features. Manufacturers and original equipment manufacturers (OEMs) are laser focused on delivering smarter, more sustainable vehicles, which has led to greater investment in AI, electrification, and advanced connectivity solutions. In the automotive market, AI adoption alone is expected to grow at a compound annual growth rate (CAGR) of 28% from 2024 to 2033, according to Precedence Research.
Consumers are driving the movement toward more advanced and efficient solutions, as they seek out more sustainable products across home, workplace, retail, automotive, healthcare, and other spaces. In response, entire industries, including the automotive industry, are adapting to meet consumer’s wants and needs.
To meet consumer demands for sustainability, companies are turning to increasingly advanced technologies. Here are a few technologies that will continue to impact the automotive industry in 2025:
Electrification
Transportation is the largest single source of carbon emissions generated by the U.S., making up 27% of total emissions. Burning gasoline for transportation releases greenhouse gases into the atmosphere, where the gases trap heat and warm the planet. Electrification, the process of replacing fossil fuels with electricity, can reduce greenhouse gas emissions by generating electricity from renewable sources. Today’s electrified, low-emission vehicle options include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles.
The pace of electrification will continue to increase in the automotive industry as lawmakers and OEMs transition away from gas-powered vehicles. In March 2024, the EPA finalized stricter tailpipe emission limits through 2032, which require automakers to sell at least 50% plug-in and electric vehicles (EVs) by 2030. While these limits have declined from the EPA’s 2023 proposal of automakers selling 60% EVs by 2030, these actions will reduce emissions and the dependence on fossil-fuel-based sources, helping facilitate the transition to more sustainable energy systems.
Electrification extends far beyond the cars and trucks we drive every day. The market for heavy machinery used in construction and agriculture is expected to grow 9.7% from 2023 to 2024. Moving into 2025, we’ll continue to see companies across agriculture and construction leveraging renewable fuels, like corn and soybeans, to power heavy machinery, where the added weight and inconvenience of long charging times make batteries less than ideal.
AI and Autonomous Vehicles
It’s estimated that there will be 33 million fully autonomous vehicles on the road by 2040. However, today’s vehicles with advanced driving assistance systems (ADAS) are far from perfect. A study from the University of Florida revealed that due to sensor confusion, semi-autonomous vehicles were 5.25 times more likely to crash in low-light conditions. Wrecks involving vehicles with ADAS occur daily around the world, which shows that the technologies within these vehicles, including sensors, cameras, and GPS positioning, need more work before self-driving cars can replace human-operated vehicles.
In the near term, manufacturers will continue to invest R&D in chips and sensors that can continuously scan the vehicle’s surroundings and respond in real-time. These sensors are already being integrated into cameras and GPS systems to predict actions before they occur and train systems to respond to patterns.
Along with ADAS, AI is used in many of the cars and trucks consumers drive today to support both person-centric and car-centric capabilities. A good example of a person-centric capability is drowsiness technology, which detects and alerts drivers if they are falling asleep. AI can also detect emotional and cognitive responses, like elevated levels of stress, and prompt the vehicle to put on calming music. Car-centric AI capabilities focus on the vehicle itself, using AI for tasks such as intelligent traffic and routing. Looking ahead, AI-enabled chips will evolve to deliver smarter and safer operating decisions and more personalized in-vehicle experiences.
The demand for AI-enabled chips far exceeds supply. The ongoing chip shortage, which has impacted the auto industry since 2020, has caused production delays and reduced dealership inventory, slowing the growth of semi-autonomous and fully autonomous vehicles. This shortage is expected to continue into 2025 as domestic chip production plants continue to experience delays.
Connectivity
Connectivity technologies support critical functions across light-duty and heavy-duty vehicles. Satellites enable features like real-time GPS positioning that deliver precise locations, track speed and direction, and map routes. Satellite connectivity embedded in farm and forestry equipment helps workers stay connected in areas without cellular connectivity.
5G plays a critical role in helping facilitate communications between vehicles and the outside world, communicating which route to take amid heavy traffic and locating parking. For OEMs, ubiquitous 5G connectivity makes it easy to collect and store data on battery power and charge status and can speed deployment of software updates and security patches via the cloud.
In the coming year, 6G will roll out, bringing with it even faster speeds, wider network coverage, and enhanced reliability at a lower latency. The transition to 6G will make it possible to transmit more precise data to and from vehicles in less time and will enhance decision making, as well as safety and security.
Advanced connectivity, AI, and electrification will all help push the automotive industry forward. This will not only enhance safety, security, and consumer confidence in autonomous vehicles but also reduce greenhouse gas emissions.