Tech giants have begun to displace established automotive Tier 1 suppliers as in-vehicle software providers

Overview

Electric Vehicles in Use to Grow 30% in 2026

Plug-in Hybrid Electric Vehicles in Use to Increase 32% in 2026

In 2026, 116 million electric vehicles (EVs) – cars, buses, vans and heavy trucks – are forecast to be on the road, according to Gartner, Inc., a business and technology insights company.

Expert Take:

“Despite the U.S. government introducing tariffs on vehicle imports and many governments removing the subsidies and incentives for purchasing EVs, the number of EVs on the road is forecast to increase 30% in 2026,” said Jonathan Davenport, Sr Director Analyst at Gartner. “In 2026, China is projected to account for 61% of total EV installed base, and global ownership of plug-in hybrid EVs (PHEVs) is expected to rise 32% year-over-year as customers value the reassurance of a back-up petrol engine for use, should they need it.”

Advancements in Autonomous Technology and Demand for Safety Features

In recent years, numerous advancements have been made to improve situational awareness and establish an early warning mechanism for identifying dangers and planning. One of the significant technological trends is the integration of radars and cameras as backups for components in the event of a malfunction of the other components within the system. Radar sensors and multipurpose cameras work in perfect harmony regardless of weather conditions.

Furthermore, the LED flicker mitigation mode implemented in the hardware allows the capture of flickering light sources, such as pulsed LED lights from traffic signs, traffic lights, turns, and brake lights, without oversaturating the image. For instance, in October 2021, Lucid launched the Dream Drive, an advanced driver-assistance system for AVs. More than 30 features are available through this hardware, including collision avoidance, highway assist, traffic jam assist, and auto park via a user-friendly interface.  Source: https://www.nextmsc.com/report/autonomous-vehicle-market

The cost of EV repair cannot be underestimated

According to Gartner, rapid reductions in BEV production costs should not come at the expense of increasing repair costs, since this may result in customer backlash in the long term. New means to manufacture a BEV must only be used in conjunction with processes that assure minimal repair costs.

“With the perceived promise of easy gains, many start-ups gathered into the EV space – from automakers to EV charging – and some are still heavily dependent on external funding, leaving them particularly exposed to market challenges,” said Pacheco.“ In addition, EV-related incentives are being progressively phased out in different countries, which makes the market more challenging for incumbents.”

Gartner predicts that by 2027, 15% of EV companies founded since the last decade will be acquired or bankrupt.

Gartner analysts estimate that by 2025, tech giants will own a part of the operating system for 95% of new cars on the road.

Tech giants have begun to displace established automotive Tier 1 suppliers as in-vehicle software providers (e.g., Google Automotive Services and CarPlay), and are also using their ecosystems to claim a larger share of the vehicle operating system territory (e.g., Renault’s partnership with Google and VW’s partnership with Microsoft). Furthermore, several tech giants are directly involved in the development, manufacturing and sale of cars. Foxconn, Huawei, Alibaba, Xiaomi, Tencent and Sony are all examples of this trend.

“Succeeding alone won’t be possible for a traditional OEM or supplier,” said Pacheco. “Each of them must forge partnerships with at least some digital giants if they want to remain profitable and competitive in the industry.”

By - Aaradhay Sharma