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Auto Tech
Overview
Autonomous and connected technologies shape the future of the automotive industry
In recent years, the automotive industry has come under the pressure of evolving consumer demands, global climate change concerns, and the imperative to reimagine the future through innovation. In response, tech developers have launched next-generation technologies and tools, with a focus on road safety, fuel efficiency, driver convenience, and security. Collectively referred to as “Auto Tech,” these technologies comprise Light Detection and Ranging (LiDAR) and other sensors, safety and driving assist tools, autonomous and connected passenger vehicles, data capture and analytics platforms, infotainment, and Internet of Things (IoT)-enabled vehicle security.
Notably, these auto technologies are synergistic and interdependent. Most have already been commercialized, except the autonomous passenger vehicles segment, which is still in the pre-commercial stages.
Industry Updates
Market Sizing
The US Auto Tech market could reach USD 23.0 billion–29.0 billion by 2028
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Use cases
Auto tech solutions are widely adopted across various industries, particularly the consumer discretionary and industrials sectors. This specifically includes the automobile manufacturers and auto components subsegments under consumer discretionary as well as the ground transportation subsegment for industrials.
Adoption rates are notably high for auto tech products integrated into connected vehicle solutions such as vehicle data capturing, analytics, connected car platforms (including GenAI-based voice assistant features), and infotainment. These products have proven to enhance customer satisfaction and consequently boost revenue from subscription-based services. Additionally, LiDAR solutions have gained widespread adoption, particularly among automakers, as they effectively enhance vehicle safety and driving assistance features, further improving overall functionality.
We have identified key Auto Tech use cases below:
Market Mapping
Startups dominate the auto tech space, particularly in segments like LiDAR and other sensors, autonomous passenger vehicles, and data capture and analytics. Despite being relatively capital-intensive, segments like LiDAR and other sensors and autonomous passenger vehicles have attracted significant startup activity, boosted by the self-driving vehicle industry and the declining cost of autonomous technology and sensors such as LiDAR.
Almost all the players in the connected vehicles, data capture and analytics, IoT-enabled vehicle security, and infotainment segments have commercialized their product offerings and today operate either in go-to-market or expansion stages. However, most of the autonomous vehicle tech developers as well as some safety and driving assist tools providers and LiDAR and other sensor developers are yet to commercialize their product offerings. Therefore, they are classified as ideation or minimum viable product-stage companies.
Most of the incumbents operating in the space are either automotive companies such as Toyota, Tesla, and General Motors or tech giants such as Google, Amazon, and Nvidia. Incumbents dominate the infotainment segment, likely given the level of R&D required to truly distinguish these offerings in response to pressing consumer demands. Incumbents also hold a notable presence in autonomous passenger vehicles, safety and driving assist tools, and connected car segments.
LiDAR and other sensors
Safety and driving assist tools
Autonomous passenger vehicles
Connected car platforms
Data capture and analytics
Infotainment
IoT-enabled vehicle security
The Disruptors
Most of the startups in the Auto Tech industry operate in the LiDAR and other sensors as well as the safety and driving assist tools segments. These include listed companies like Luminar Technologies, Innoviz Technologies, Aeva, and Cepton, as well as well-established startups like Applied Intuition and Nauto.
The autonomous passenger vehicles segment has been the most attractive for investors, as it requires higher funding for complex product development. As of November 2024, startups in this segment had raised USD 23.0 billion in collective funding, largely led by Waymo, a go-to-market-stage autonomous tech development unit established under Alphabet. Waymo is by far the most well-funded company in the industry and the autonomous passenger vehicle segment, with USD 11.1 billion in funding raised (as of November 2024).
LiDAR and other sensors represents another segment attractive to investors, having collectively drawn USD 7.9 billion in funding as of November 2024. Most of the LiDAR-related startups are publicly listed and have commercial-scale customers. Luminar Technologies and Innoviz Technologies are considered some of the most significant pure-play LiDAR startups in terms of funding and are listed on Nasdaq.
The industry also includes several companies that have been listed, all via special purpose acquisition companies (SPACs). The companies that went public via SPAC deals include LiDAR makers Luminar Technologies, Aeva, Innoviz Technologies, AEye, Cepton, Arbe, and LeddarTech, as well as autonomous vehicle startup Aurora Innovation.
Funding History
Competitive Analysis
Incumbents
Most incumbents in the auto tech space develop autonomous passenger vehicles and safety and driving assist tools. Well-established automakers such as Tesla, Toyota, and General Motors (GM) and tech giants like Alphabet, Nvidia, and Amazon alike operate in these segments.
Several incumbents operate across multiple segments in the auto tech industry, likely driven by the interrelated nature of the tech. Players like Bosch, Tesla, Toyota, Volkswagen, Nvidia, and GM operate in as many as three to six segments. Only a few incumbents such as Ouster, Amazon, and Intertrust appear to specialize in a specific technology and operate in a single segment.
Acquisitions represent a popular means for incumbents to enter the auto tech space or strengthen their offering by acquiring related tech startups that can complement in-house product development efforts. In fact, several well-known incumbents such as Amazon, Intel, and Samsung only entered the auto tech space after acquiring related startups—Amazon via the acquisition of Zoox, Intel via Mobileye, and Samsung via the addition of Harman International Industries. Meanwhile, companies such as Volkswagen, GM, Tesla, Toyota, and Ouster engage in in-house product development, coupled with inorganic growth to support tech development.
Notable Investors
