Table Of Contents
- Acceleration toward EV adoption and increasing demand for shared mobility services creating favorable growth conditions
- Decarbonization of supply chains and growing focus on cybersecurity impacting the industry positively
- Introduction of AI in vehicles and advancements in battery technology generating lucrative opportunities in the sector
- M&A deals amongst leading companies reshaping the competitive scenario in the sector
- Innovative product launches and new industry developments helping the domain flourish
- The essence
Lalit Janardhan Katare
Koyel Ghosh
Automotive and Transportation Domain in 2025: Understanding the Impact of Novel Strategies, Trends, and Innovations on the Sector
The growth witnessed by the automotive and transportation sector in the last few decades is mainly attributed to the various technological advancements in the domain. From power steering and navigation techniques to ADAS and infotainment systems, modern vehicles feature a wide range of functionalities that offer comfort and convenience to the driver. Additionally, the overall expansion of the logistics sector in various end-use industries has also played an important role in the growth of the landscape. Recently, the gradual shift toward e-mobility has opened new avenues for investments in the sector. This newsletter covers all such latest developments, innovations, and upcoming trends that are likely to impact the AT domain in 2025. Furthermore, the holistic strategies formulated by leading companies are also discussed in detail in this study. In addition, the major stakeholder actions and alliances established by key players are analyzed thoroughly.
Acceleration toward EV adoption and increasing demand for shared mobility services creating favorable growth conditions
The increasing awareness regarding environmental sustainability among people across the globe is one of the major reasons behind the transition toward electric cars. Moreover, to adhere to their commitments made under the Paris Climate Accord in 2015, governments across the world have passed legislation to limit the use of fossil-fuel-powered vehicles for public transportation. This has further accelerated the shift toward EVs, thereby boosting the revenue share of the electric vehicle industry. In addition, to facilitate a smooth transition toward e-mobility, automobile companies are increasingly investing in expanding the network of charging infrastructure by developing public charging booths, home charging solutions, and ultra-fast charging systems.
The growing vehicle traffic and congestion in industrial towns and metropolitan cities due to the rapid pace of urbanization and industrialization has increased the demand for shared mobility and subscription services. The shared mobility industry, which accounted for $435.20 billion in 2021, is predicted to amass a revenue of $1,266.80 billion by 2031, rising at a CAGR of 11.5% during 2022-2031. Many private companies such as Uber Technologies Inc., Blu-Smart Mobility Pvt. Ltd., Zoomcar India Private Limited, ANI Technologies Private Limited (Ola), etc., have launched digital platforms that offer various transportation options to customers looking for alternatives to car ownership. Furthermore, in 2025, government entities are expected to promote these services as part of their smart city projects to reduce the environmental pollution and traffic prevalent in these areas.
Decarbonization of supply chains and growing focus on cybersecurity impacting the industry positively
Along with this, automobile companies and logistics businesses are taking active measures to decarbonize their entire supply chains to align their operations with the evolving industry dynamics. For instance, automotive manufacturers are powering their industrial facilities with electricity that is generated through renewable energy projects such as solar parks, windmills, and hydropower plants. Moreover, these companies have also invested heavily in R&D activities to develop advanced eco-friendly materials such as recyclable plastics and bio-composites that have minimal impact on the global environment. The adoption of circular economy practices by logistics companies and their increasing preference for green-certified suppliers is expected to improve the revenue share of the domain in 2025.
In the last few years, the dependence on software-defined vehicles has increased exponentially. These automobiles primarily manage all their operations and functionalities through a software application, as compared to conventional vehicles that are operated via hardware modules. The ease of technological integration offered by these cars has made them a popular choice among people across the globe. However, the growing threats of cyberattacks have restricted the growth of the software defined vehicle industry. To deal with this issue, automobile companies are developing comprehensive cybersecurity architectures and intrusion detection systems for their car models to aid car owners in detecting unauthorized access to their vehicles easily.
Introduction of AI in vehicles and advancements in battery technology generating lucrative opportunities in the sector
One of the most exciting developments in the automotive and transportation sector in the last few years is the integration of AI in vehicles. The growing adoption of AI-powered tools such as adaptive cruise control and lane departure warning has significantly improved the overall safety of new-age vehicles. Additionally, the machine learning algorithms deployed in these systems help predict possible vehicle issues that may arise in the near future based on the driver’s usage patterns. Thus, AI-powered vehicles provide better predictive maintenance capabilities and ultimately offer a better driving experience than traditional models. Along with this, AI is expected to play an important role in the development, design, and testing of Level 4-5 autonomous vehicles. The R&D activities related to advanced driver-assistance systems and automotive mapping and simulation technologies are predicted to broaden the scope of the sector in 2025.
Alongside, innovations in EV batteries are anticipated to open new avenues for growth in the AT domain in the coming period. In the last few years, companies specializing in the development of energy storage solutions have started investing in advanced batteries such as zinc-manganese oxide batteries, gold nanowire gel electrolyte batteries, organosilicon electrolyte batteries, etc., which offer much higher performance and better energy efficiency compared to traditional lead-acid and lithium-ion systems. Additionally, in 2025, car manufacturers are predicted to focus more on the development of fuel cell vehicles (FCVs) and expanding hydrogen refueling networks across the globe.
M&A deals amongst leading companies reshaping the competitive scenario in the sector
The automotive and transportation domain has witnessed huge growth in the industry due to certain actions by major multinational businesses. To expand their consumer base across the globe, many companies are anticipated to establish strategic alliances with other businesses in the coming period. For instance, in January 2025, AIT Worldwide Logistics, a global freight forwarder, announced the acquisition of Krupp Trucking, a transportation solutions provider. As per many industry experts, this business move is projected to help AIT Worldwide Logistics enhance its logistical capabilities significantly in 2025, thereby helping the company increase its footprint globally.
On the other hand, Honda, a Japanese multinational automotive company, announced that it has entered into merger talks with Nissan, another major car manufacturer based in Japan. As per the press release, the discussions are anticipated to conclude by mid-2025 and the merger, if successful, will help create the third-largest automobile company in the world with an expected combined revenue of $191.4 billion. The business deal is predicted to aid both companies in jointly developing electric vehicles and other intelligent driving systems, thereby expanding their scope of operations substantially.
Innovative product launches and new industry developments helping the domain flourish
Recently, leading car manufacturers such as Honda have announced their plans to launch ingenious products to address the demands of their customer base comprehensively. As per the press release issued by the company, Honda aims to develop state-of-the-art solid-state batteries that are capable of providing 620 miles (1,000 kilometers) on a single charge. The main motive behind designing this technology is to facilitate a smooth transition to e-mobility and reduce the overdependence on charging infrastructure. This new battery technology is expected to strengthen the position of the company as a leader in the electric vehicles industry.
On the other hand, in January 2025, Clarios, an energy storage systems developer, announced that it had secured a major contract to develop advanced supercapacitors designed for regenerative braking solutions in 12V and 48V vehicle systems. These new products are estimated to help Clarios solidify its presence in the automotive and transportation domain in the coming period. Similarly, in January 2025, SunCar Technology Group Inc. released a press statement announcing a partnership agreement with Walmart China’s Sam’s Club Car Wash Project. Under this collaboration, SunCar Technology Group Inc. will provide premium car washing services to Sam’s Club Car members across 17 cities. The partnership is anticipated to boost the revenue share of both companies in 2025.
The essence
The automotive and transportation sector is projected to experience immense growth in 2025 owing to the various technological advancements in the domain. Furthermore, the shift toward sustainability and the increasing emphasis on cybersecurity is predicted to bring numerous opportunities to the landscape in the coming period. In addition, the M&A deals and partnerships between multinational companies are estimated to accelerate the sector’s growth and success in 2025.
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