5G in Automotive and Smart Transportation Market

Market Overview

The global 5G in automotive and smart transportation market size was valued at USD 1.83 billion in 2023. It is estimated to reach USD 14.33 billion by 2032, growing at a CAGR of 25.7% during the forecast period (2024–2032). Several key factors have contributed to 5G's recent growth in the automotive and smart transportation markets. These include the growing demand for real-time connectivity and communication in vehicles, the need for advanced safety features and autonomous driving capabilities, the rise of connected cars and smart infrastructure, and technological advancements such as vehicle-to-everything (V2X) communication.

Furthermore, the expansion of smart cities and intelligent transportation systems, the deployment of massive sensor networks, and the optimization of traffic flows have all contributed to the faster adoption of 5G technology in the automotive and smart transportation industries.

5G in automotive and smart transportation refers to the integration of fifth-generation wireless technology to enhance the connectivity, efficiency, and safety of transportation systems. 5G offers ultra-fast data speeds, low latency, and high reliability, which are essential for advanced applications such as autonomous vehicles, real-time traffic management, and vehicle-to-everything (V2X) communication.

In automotive, 5G enables seamless communication between vehicles, infrastructure, and cloud services, facilitating improved navigation, predictive maintenance, and enhanced in-car experiences. In smart transportation, 5G supports intelligent traffic systems, smart parking, and efficient public transport operations, contributing to reduced congestion and emissions. By enabling more connected and responsive transportation networks, 5G is set to revolutionize how people and goods move, paving the way for smarter, safer, and more sustainable urban mobility solutions.

Highlights

• Hardware components dominate the solution segment.
• Vehicle-to-everything (V2X) dominates the application segment.
• Automotive dominates the end-user segment.
• North America is the highest shareholder in the global market.

Market Dynamics

Global 5G in Automotive and Smart Transportation Market Drivers

Increasing Demand for Real-time Connectivity

The growing demand for real-time connectivity is a key driver of the global 5G in the automotive and smart transportation market. With advanced technologies like autonomous vehicles, vehicle-to-vehicle (V2V) communication, and smart traffic management systems, the need for high-speed, low-latency, and reliable connectivity has surged. Real-time connectivity, enabled by 5G technology, is crucial for automotive and transportation applications. Autonomous vehicles require real-time data exchange with their surroundings, ensuring safe and efficient driving.

5G's low latency and high bandwidth enable split-second decision-making. In vehicle-to-everything (V2X) communication, 5G supports real-time data sharing, enhancing safety and traffic management. For infotainment and telematics, 5G allows real-time access to high-definition multimedia, streaming services, and cloud applications, enriching the in-vehicle experience. According to the 5G Automotive Association, 5G use cases in the automotive sector could generate up to $2.4 trillion in global benefits by 2030. Smart city initiatives and intelligent transportation systems (ITS) also rely on 5 G's capabilities, further driving market demand.

Global 5G in Automotive and Smart Transportation Market Restraint

High Integration Costs

The high integration costs associated with implementing 5G technology in the automotive and smart transportation markets pose significant barriers to its widespread adoption. The GSM Association (GSMA) estimates that deploying global 5G networks will cost $1 trillion by 2025, including spectrum licenses, new 5G base stations, infrastructure upgrades, and 5G-enabled devices. Vehicle integration costs are substantial, with Counterpoint Research indicating that 5G connectivity can add $200-$500 per vehicle.

Additionally, infrastructure upgrades along transportation routes require a dense network of 5G base stations and small cells, costing $300 million to $1 billion per major city, according to Accenture. Furthermore, adding 5G capabilities to existing systems necessitates extensive software development and integration, with costs between $50 million and $200 million per large metropolitan area. Moreover, maintenance and operational costs are also significant, with Deloitte noting the total cost of ownership for 5G networks is 1.6 times that of 4G networks over a decade. These high costs deter many stakeholders, limiting 5G adoption in these sectors.

Global 5G in Automotive and Smart Transportation Market Opportunities

Expansion of IoT Solutions

The expansion of IoT solutions presents a significant opportunity for 5G in the Automotive and Smart Transportation markets. The integration of IoT devices with 5G connectivity is set to transform transportation systems, enabling novel applications and services. Gartner projects 25.1 billion IoT-connected devices worldwide by 2025, with the transportation sector playing a major role. 5 G's high-speed, low-latency connectivity facilitates seamless communication between vehicles, infrastructure, and other devices, enabling real-time traffic management, predictive maintenance, and remote diagnostics.

Additionally, Frost & Sullivan forecasts the global connected car market to reach $225 billion by 2025, driven by 5G and IoT integration. IoT sensors on 5G networks can monitor and manage infrastructure in real time, optimizing traffic flow and enhancing safety. Furthermore, IoT-based fleet management solutions offer real-time tracking and route optimization, boosting operational efficiency. As smart city development relies on IoT and 5G for intelligent transportation and smart parking, the expansion of IoT solutions via 5G connectivity promises substantial growth and innovation.

Regional Analysis

North America Dominates the Global Market

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America is the largest shareholder in the global 5G in automotive and smart transportation market, and it is poised for significant expansion during the forecast period. This dominance is driven by advanced infrastructure, robust government initiatives, and the presence of leading automotive and technology corporations. The Federal Communications Commission (FCC) has reported substantial investments in 5G network deployment in the United States, with major carriers such as Verizon, AT&T, and T-Mobile leading the charge. By 2022, over 51,000 high-band 5G cell sites had been deployed, covering more than 200 million people.

The United States Department of Transportation (DOT) has played a crucial role in promoting 5G adoption within the transportation sector. Programs like the Intelligent Transportation Systems (ITS) Joint Program Office and the allocation of the 5.9 GHz spectrum for Dedicated Short-Range Communications (DSRC) have accelerated the development of intelligent transportation systems and connected vehicles. These efforts are bolstered by the presence of major automobile manufacturers such as Ford, General Motors, and Tesla, as well as technology giants like Google, Apple, and Microsoft.

Furthermore, the U.S. automotive industry, represented by the Alliance for Automotive Innovation, invested $26 billion in R&D in 2021, with a substantial portion dedicated to connected and autonomous vehicle technologies. These investments highlight the region's commitment to advancing 5G-enabled automotive and smart transportation solutions. Consequently, North America's strategic initiatives and substantial investments are key factors underpinning its leadership and anticipated growth in the global 5G automotive and smart transportation market.

The Asia Pacific region is the fastest-growing market for 5G in automotive and smart transportation during the forecast period, propelled by rapid urbanization, significant investments in smart city initiatives, and the presence of major automotive manufacturing hubs. China, Japan, and South Korea are at the forefront of 5G deployment in the region. As per China's Ministry of Industry and Information Technology (MIIT), the country had constructed over 1.6 million 5G base stations by the end of 2022, forming the world's largest 5G network. China's "New Infrastructure" initiative, launched in 2020, underscores significant investments in 5G networks and intelligent transportation systems.

Additionally, major automotive manufacturers, including Toyota, Honda, Hyundai, and Nissan, are integrating 5G technologies into their vehicles and manufacturing processes. The Japan Automobile Manufacturers Association (JAMA) reported that Japanese automakers invested $20.7 billion in R&D in 2021, with a focus on connected and autonomous driving technologies. Furthermore, the region's rapid urbanization and smart city initiatives further enhance the environment for 5G in automotive and smart transportation solutions. Singapore, South Korea, and Japan are leading in implementing intelligent transportation systems, traffic management solutions, and connected infrastructure. The Singapore Land Transport Authority's Intelligent Transport Systems Master Plan advocates for 5G-enabled V2X communication and autonomous vehicle trials. Thus, such factors are anticipated to drive the Asia-Pacific 5G in automotive and smart transportation market growth.

Segmental Analysis

The global 5G in the automotive and smart transportation market is bifurcated into solutions, applications, and end-users.

Based on solutions, the market is segmented into hardware components, software solutions, and services.

Hardware components dominate the solution segment. The market is dominated by hardware components such as user equipment, radio access points, and base stations. This is due to the widespread deployment of 5G networks, which require significant investments in infrastructure like network equipment, small cells, and antennas. The demand for high-speed connectivity and efficient transportation solutions has significantly increased the need for hardware components in the 5G ecosystem, resulting in this segment's dominance. Hardware components are critical for deploying and operating 5G networks in automotive and smart transportation systems. User equipment serves as the backbone of device connectivity, while radio access points and base stations facilitate data transmission and reception, ensuring seamless communication across the 5G network. The growing emphasis on real-time connectivity, advanced technologies such as autonomous vehicles, and the integration of smart transportation solutions that rely on 5G technology's high-speed, low-latency communication are all driving up demand for these hardware components.

Based on application, the market is segmented into vehicle-to-everything(V2X), infotainment and telematics, and fleet management.

Vehicle-to-everything(V2X) dominates the application segment. V2X technology allows vehicles to communicate with each other and infrastructure, including traffic lights and signs, improving road safety and reducing congestion. This technology enables vehicles to share information like speed, location, and direction, resulting in more informed driving decisions. V2X technology is gaining popularity due to its ability to prevent accidents through communication between vehicles and infrastructure. The V2X segment's dominance can be attributed to an increased emphasis on road safety and the need for efficient transportation systems. Vehicle-to-vehicle (V2V) communication technology enhances automotive safety by connecting vehicles and infrastructure to prevent accidents. Autonomous and connected vehicles require high-speed, low-latency connectivity, which 5G networks can provide.

Based on end-users, the market is bifurcated into automotive, defense, transportation infrastructure, warehousing and logistics, public safety, and others.

Automotive dominates the end-user segment due to the rapidly evolving automotive industries, especially in countries like China and India. These countries support automotive industry development through government initiatives like "Made in India" and "Made in China 2025" plans. Furthermore, the increasing demand for autonomous and connected vehicles requires high-speed and low-latency connectivity to transmit large amounts of data, and 5G networks provide these capabilities. China, the world's largest automotive producer, offers a lucrative market for 5G technology providers in the automotive sector. In 2019, China produced approximately 26 million cars and trucks, accounting for 28% of the global total. Government initiatives and investments in intelligent transportation infrastructure are expected to drive 5G growth in China's automotive and smart transportation markets by 2033.

Impact of covid-19

The pandemic led to a temporary lockdown that hindered big enterprise and market verticals. The automobile industry, primarily consisting of outdoor jobs, was poorly exposed to the uncertainty that contributed to a dramatic decline in automotive sales.

Furthermore, the instability of the supply chain industry, mostly due to closed national and foreign borders and the decision not to use Chinese products, may impede the operation. However, the new norm of social distancing may have a slight impact on the market growth.

Recent Developments

• April 2024- Qualcomm Incorporated, a leading provider of wireless technologies and solutions announced the launch of its next-generation 5G automotive platform, the Snapdragon Ride Vision System. This platform integrates advanced 5G connectivity, high-performance computing, and cutting-edge computer vision capabilities to enable a range of automotive applications, including autonomous driving, advanced driver assistance systems (ADAS), and in-vehicle infotainment.