Computer-Aided Engineering Market Size, Share & Trends Analysis Report By Type (Software, Services), By Deployment Mode (On-premise, Cloud-based), By End-Users (Automotive, Defense and Aerospace, Electronics, Medical Devices, Industrial Equipment, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global computer-aided engineering market size was valued at USD 7.5 billion in 2023 and is projected to reach USD 10.0 billion by 2032, registering a CAGR of 3.2% during the forecast period (2024-2032). The growing demand for enhanced product development and innovation in automotive, aerospace, electronics, and manufacturing drives the computer-aided engineering market share.

Computer-aided engineering (CAE) is a broad term that uses computer software and simulations to help engineers analyze and create goods and systems. CAE refers to a set of tools and procedures that enable engineers to model, research, and optimize many elements of engineering processes before actual prototypes are constructed. This technique saves time, cuts costs, and improves the overall efficiency of the design and development process.

Manufacturing processes are increasingly being outsourced to emerging economies such as China, India, and Russia. The computer-aided engineering (CAE) market is expected to grow at an unprecedented rate throughout the forecast period as integrated software solutions minimize the need for many prototypes and product recall concerns. As a result, the costs connected with prototype and product recall strategy are significantly lower. Furthermore, the growing use of CFD software for measuring temperature in battery modules and boosting battery life and performance is expected to fuel the growth of the Computer-Aided Engineering market.

Highlights

• Software accounts for the largest share of the market based on type.
• On-premise generates the highest revenue share based on deployment mode.
• Automotive is a significant contributor to the market by end-users.

Market Dynamics

Global computer-aided engineering market drivers:

Growing emphasis on sustainability

The increased emphasis on sustainability in the Computer-Aided Engineering (CAE) market is driven by a global commitment to environmental responsibility and the demand for eco-friendly product design and development. CAE is critical to advancing sustainability goals in a variety of businesses. CAE tools are utilized in the automotive industry to improve the lightweighting of vehicle components. Simulation enables engineers to analyze the structural integrity of lightweight materials such as sophisticated alloys and composites, resulting in increased fuel efficiency and lower emissions. S&P Global Mobility expects global new car sales to reach 88.3 million in 2024, representing a 2.8% increase yearly, supporting the Computer-Aided Engineering market trend over the forecast year.

Furthermore, automotive manufacturers face increased pressure to meet severe emissions rules. CAE-driven lightweighting solutions enable manufacturers to enhance fuel efficiency and minimize greenhouse gas emissions. According to data from the Environmental Protection Agency (EPA), the average fuel economy of vehicles in the United States has consistently improved over the last decade, thanks partly to vehicle design and lightweighting technology advances.

Additionally, CAE technologies are used to design and optimize renewable energy systems like wind turbines and solar panels. According to IRENA, worldwide renewable capacity additions might total 550 GW by 2024. IRENA's World Energy Transitions Outlook asks for an average annual renewable power addition of 1,000 GW until 2030 to keep the 1.5°C climate objective within reach. Architects and engineers utilize CAE tools to create sustainable buildings, including optimal heating, ventilation, air conditioning (HVAC) systems, efficient lighting, and renewable energy integration. CAE simulations aid in determining energy usage, thermal comfort, and environmental impact during the building's lifecycle.

Global computer-aided engineering market restraints:

High initial cost

The high upfront expenses of using Computer-Aided Engineering (CAE) tools can be a substantial obstacle for organizations and tiny and medium-sized firms (SMEs). For example, computer-aided engineering (CAE) services can cost between USD 67,725 and USD 86,767 per year or USD 32 to USD 41 per hour. Costs are determined by the project's complexity, scope, and qualifications. 

Furthermore, CAE software licenses can be costly, especially for complex simulation and analysis tools. For example, permits for sophisticated FEA (Finite Element Analysis) or CFD (Computational Fluid Dynamics) software can range from hundreds to tens of thousands of dollars per user each year. The cost of CAE software licenses varies according to the complexity of the software, the number of licenses acquired, and the length of the licensing agreement. Some advanced CAE software systems might cost hundreds of thousands of dollars for a full license. For example, an Abaqus quarterly lease starts at over USD 7,000, while an annual lease starts at around USD 19,000. Abaqus costs around USD 31,000, with yearly maintenance (updates and support) starting at USD 6,000.

Moreover, the necessity for high-performance computing infrastructure, frequently required to run complicated CAE simulations efficiently, incurs additional expenditures. Investing in and maintaining HPC systems can dramatically increase overall spending.

Global computer-aided engineering market opportunity:

Rise in electrification and autonomous vehicle

The electrification movement in the automotive industry has raised demand for CAE tools to improve the design and performance of electric vehicles. CAE simulates and analyzes battery system behavior, considering heat management, energy efficiency, and overall battery life. For example, engineers can utilize CAE models to forecast how alternative materials, cooling systems, and charging/discharging scenarios affect the performance and durability of electric vehicle batteries. Moreover, according to Canalys' research, global EV sales are predicted to reach 13.7 million units in 2024, up 29% from 2023. 

Similarly, CAE tools in autonomous vehicle development entail simulating complicated situations for sensor fusion, decision-making systems, and vehicle dynamics. This simulation-driven approach is critical for developing reliable and safe autonomous driving capabilities. According to McKinsey, 12 percent of new passenger cars will be equipped with L3+ autonomous technologies by 2030, with 37 percent including sophisticated AD technologies by 2035. CAE is critical for autonomous vehicles because it allows them to evaluate and validate the performance of sensors, control systems, and overall vehicle dynamics in simulated environments. This simulation-based technique speeds up the development and testing of autonomous vehicle systems.

Moreover, the increase in electrification and the development of self-driving vehicles necessitate a thorough understanding of how different components interact and operate under diverse scenarios. Engineers may model these scenarios using CAE techniques, allowing them to optimize designs for electric and self-driving vehicles. As electric vehicles become more popular, CAE simulations help create more efficient and durable battery technology, tackling critical issues like heat management and range optimization.

Regional Analysis

North America Dominates the Global Market

The global computer-aided engineering market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global computer-aided engineering market shareholder and is estimated to grow at a CAGR of 3.3% over the forecast period. North America is a substantial location for technological innovation and adoption. In North America, the expanding use of cloud-based CAM technologies to improve and automate production processes has increased computerized manufacturing. The presence of major enterprises in the region increases the demand for CAM, CAD, and CAE technology. The process sector relies heavily on IT and supporting technologies for data collection, real-time inspection, and production process management. North America is expanding with a propensity for automated manufacturing due to an existing production technology environment.

Furthermore, firms make significant R&D investments to reinvent the manufacturing process, which drives expansion. Given the massive government investments in the industrial sector and capacity expansion, the North American area will likely increase rapidly during the forecast period. Furthermore, the growing prevalence of biodiverse cultures and increased automation in the manufacturing sector are expanding the market in the United States. The rapid expansion of the Internet of Things (IoT) and rising defense sector costs are expected to broaden the scope of CAE soon. Several businesses rely on cloud-based CAE to perform complicated simulations efficiently, requiring robust processing. This increases the potential of CAE in the cloud.

Europe is anticipated to exhibit a CAGR of 3.8% over the forecast period. The presence of leading industry competitors in several European nations will further enhance the market. Similarly, the automotive industry is an essential business in Europe and is projected to drive demand for computer-aided engineering. According to a European Automobile Manufacturers' Association (ACEA) survey, Europe's automotive industry is a significant driver of innovation. CAE contributes to developing sophisticated vehicle technology and is essential to the region's automotive R&D initiatives. The growing number of virtual vehicle companies and connected car suppliers are spending heavily on trustworthy engineering technologies to optimize production costs.

The Asia-Pacific regional market is predicted to increase exponentially throughout the forecast period, with a considerable CAGR. This growth can be linked to increased government investments in the manufacturing sector and the expansion of renewable energy capacity. The increasing automation of industrial equipment is expected to boost industry demand.

Moreover, leading businesses are entering Japan to support automotive, medical device, and electronics companies that use CAE to decrease risks and costs. This gives them a competitive advantage.

Latin America holds a significant market share. Countries in Latin America, including Argentina, Brazil, Chile, and Colombia, are revising their industrial policies to increase market income. In addition, the countries are boosting foreign investment to support regional industrialization. For example, the 2030 Sustainable Development Goals have been highlighted to promote sustainable industrial development. This is projected to drive market expansion in South America.

Growing productivity in the Middle East and Africa's industries is predicted to increase opportunities for producers of computer-aided engineering software. Over the last few years, manufacturing industries have emerged as major economic indicators for MEA countries.

Segmental Analysis

The global computer-aided engineering market is segmented based on type, deployment mode, and end-user

The market is further segmented by type into Software and Services.

The software sector held the largest market share in 2023 and is expected to maintain its dominance in the following years. CAE software is the fundamental component of Computer-Aided Engineering, consisting of a diverse set of tools and applications used to simulate, evaluate, and optimize engineering processes. The segment's growth can be due to advantages such as data security, dependability, and continuous testing. The program optimizes engineering tasks and is mainly used to test the durability and performance of components and assemblies.

The industry is divided into four software types: finite element analysis (FEA), computational fluid dynamics (CFD), multibody dynamics, and optimization and simulation. The FEA segment held a market share of more than 55% in 2023 and is expected to continue to dominate the market in the coming years. FEA is a computational analysis methodology for determining a product's strength in loading. FEA models genuine components to solve problems involving heat transmission, structural analysis, electromagnetic potential, and mass transport.

The service segment is predicted to have the highest CAGR during the projection period. CAE services supplement software components by providing experience, support, and specialized assistance in implementing CAE technologies efficiently. These services may include training programs to teach engineering teams how to utilize CAE software, consulting services for specific technical difficulties, and custom simulation services suited to the needs of each project. The segment's rise can be due to increased awareness of virtually enabled methods utilized for product development among businesses and governments. Services like design and consultancy, installation, and maintenance are becoming increasingly popular among companies.

Based on deployment mode, the market is fragmented into On-premise and cloud-based.

The on-premise segment dominates the global market, accounting for over 65% of the share. The software industry moves quickly, and timely product development and market introduction are critical to a company's success. Companies acquire new software technology through mergers and acquisitions. Based on deployment models, the sector is divided into on-premise and cloud. Cloud computing provides simple access to data, large storage capacity, and security. Furthermore, cloud-based CAE, delivered as Software-as-a-Service (SaaS), offers application-specific solutions for CAE users. As a result, the cloud-based deployment strategy is predicted to expand rapidly over the next few years.

Cloud-based deployment allows faster distribution, less maintenance, lower costs, and more scalability. Although on-premise software adoption increased software deployment and upgrade expenses, it maintained a considerable market share in 2023. This significant share in the on-premise market can be due to its early adoption. Furthermore, numerous firms regard software deployment at the client's site as more convenient when data confidentiality concerns remain. For similar reasons, the on-premise category will likely maintain the majority share during the forecast period.

The market can be further bifurcated by end-users into Automotive, Defense and Aerospace, Electronics, Medical Devices, and Industrial Equipment.

The automotive industry held the most significant market share, more than 29%, worldwide. The automotive industry is an important Computer-Aided Engineering (CAE) tool end-user. CAE is widely used in the automotive sector for various applications, including structural analysis, accident simulations, aerodynamics, and thermal analysis. This improves the overall design and performance of the vehicles. Furthermore, CAE software is essential for Computer-Aided Engineering (CAE) sketching and design, allowing engineers to model and develop concepts before creating physical prototypes.

CAE is used extensively in the defense and aerospace industries to build and analyze complex systems. Its applications include structural integrity analysis, aerodynamic simulations, fluid dynamics, and thermal assessments. The use of CAE software in the defense and aerospace industries is predicted to increase significantly throughout the projection period. This expansion can be ascribed to the increased use of CAE software for critical tasks like structural analysis, computational fluid dynamics (CFD), and electromagnetic analysis. These talents are essential to the development of modern defense and aerospace systems. Organizations in these industries can improve product performance, reliability, and safety by incorporating CAE software, which ensures precise engineering calculations and simulation.

Impact of covid-19

COVID-19 has caused chaos in the world economy, humanitarian aid, and healthcare systems. The rapid spread of the virus has a substantial impact on the worldwide automobile industry, causing a drop in the demand for both new and used automobiles.

The pandemic has a tremendous impact on the electric vehicle industry as the vehicles are regarded as cutting-edge mobility and are prohibitively expensive to buy. Due to the vigorous spread of the virus worldwide, many commodities' demand and supply chains have come to a standstill due to the lack of transportation medium.

However, by the end of 2020, the COVID-19 situation had stabilized in several countries, leading to the end of demand-supply imbalance and a considerable increase in new automobile registrations. It was due to the necessity of avoiding public transportation for the commute.

Additionally, the transmission market has lost its market share due to low or near-zero automobile sales and new requirements. Although over 90% of autos in the United States have adopted automatic transmission, large-scale markets such as India have failed to adopt automatic gearbox.  Automatic transmissions have become increasingly popular among drivers worldwide, assisting the industry in dealing with the pandemic and delivering high statistics in the aftermath of COVID-19.

Recent Developments

• January 2024- Hexagon's R-evolution introduces Green Cubes, a digital revolution for rainforest conservation.
• January 2024- BMW Group will collaborate with Dassault Systèmes to incorporate the 3DEXPERIENCE Platform into its future engineering platform.
• November 2023- Synopsys announces Synopsys.ai Copilot, a breakthrough GenAI capability to accelerate chip design.
• January 2024- The new Ansys Fluent Web UI provides access to massive, multi-GPU CFD simulations.