Connected Vehicle Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Connected Vehicle Market Trends and Insights

Global 5G Roll-Outs Enabling High-Bandwidth V2X Services

Since 2024, the 3GPP Release 16 sidelink feature has enabled direct vehicle-to-vehicle messaging with extremely low latency. By the end of 2025, China, with a significant number of active 5G base stations, will lead the charge, with many stations facilitating C-V2X roadside functions ^{[1]“5G Base-Station Statistics 2025,” Ministry of Industry and Information Technology, miit.gov.cn} . In a bid to enhance pedestrian safety, South Korea allocated substantial funding in 2025 to upgrade numerous intersections with low-latency V2X technology. Meanwhile, in the U.S., the Federal Highway Administration underscored its commitment to digitizing freight corridors by adding several roadside units along a major interstate in 2025 ^{[2]“Accelerated Innovation Deployment Projects,” Federal Highway Administration, fhwa.dot.gov} . Due to these advancements, vehicles can now benefit from over-the-air firmware updates, high-definition mapping, and timely hazard alerts.

Regulatory Mandates For eCall & Safety Telematics

European Commission Delegated Regulation 2024/1180, effective January 2025, compels all new light vehicles to migrate from circuit-switched eCall to packet-switched IMS networks, forcing the replacement of 2G and 3G modems with 4G or 5G chipsets ^{[3]“Delegated Regulation 2024/1180,” European Commission, ec.europa.eu} . India’s AIS-140 Amendment 3 extends real-time tracking and panic-button requirements to passenger cars by April 2026, deepening compliance demand. Russia’s ERA-GLONASS upgrade added LTE positioning in 2024, further solidifying the regulatory floor. These rules guarantee baseline connectivity but also raise engineering costs, since UNECE WP.29 Regulation 155 mandates a certified cyber-security management system before type approval. Smaller OEMs must now partner with tier-1 suppliers that already hold ISO/SAE 21434 certification to stay competitive.

Smart-Infrastructure Funding In United States, European Union, And China

In the near future, the United States, under its Infrastructure Investment and Jobs Act, allocated significant funds for smart corridors, approving multiple C-V2X pilots across key states such as Michigan, Ohio, and Texas. The European Union, through its Connecting Europe Facility, committed substantial financial resources for digital transport projects, facilitating cross-border C-Roads services. China's National Development and Reform Commission, recognizing intelligent transport as a cornerstone of its "New Infrastructure" initiative, is channeling a considerable amount of investment into V2X over a multi-year period. Such public investments are bridging the chicken-and-egg dilemma for roadside equipment, hastening both service rollout and user adoption.

Consumer Demand for In-Car Infotainment & Connectivity

Car buyers now demand seamless smartphone mirroring, uninterrupted streaming, and ongoing feature upgrades. In recent years, Samsung’s HARMAN division has significantly increased shipments of digital cockpit units with embedded 5G modems, highlighting OEMs' growing preference for unified infotainment and connectivity solutions. Tesla has consistently delivered multiple comprehensive software updates annually, bolstering the notion that cars should evolve akin to smartphones. Despite the looming threat of subscription fatigue, OEMs are countering by bundling data plans with lease payments or insurance premiums, ensuring sustained user engagement and tapping into post-sale revenue streams.

Cyber-Security & Data-Privacy Vulnerabilities

In recent times, the European Union Agency for Cybersecurity reported several exploits targeting connected-vehicle gateways. These included remote unlock and immobilizer attacks affecting multiple vehicle models. While ISO/SAE 21434 provides a framework for processes, a TÜV SÜD audit revealed that a significant portion of tier-2 suppliers were not fully compliant, highlighting potential vulnerabilities. The General Data Protection Regulation (GDPR) imposes substantial fines, acting as a deterrent against aggressive data monetization. Meanwhile, the California Consumer Privacy Act empowers drivers to request the deletion of their trip records, adding complexity to usage-based insurance models. In response, Original Equipment Manufacturers (OEMs) are implementing hardware root-of-trust modules and end-to-end encryption. However, the weight of compliance is delaying the rollout of new features and redirecting R&D budgets towards defensive engineering measures.

High Cellular Data Costs And OEM–MNO Revenue Conflicts

Connected cars, relying on maps, diagnostics, and streaming, consume a significant amount of data monthly. Yet, in numerous markets, wholesale 5G data prices remain relatively high. While OEMs lean towards bundling connectivity into the vehicle's price, carriers are pushing for direct contracts with drivers. Their argument? OEMs are missing the essential roaming and billing infrastructure. In 2024, disputes over data-plan terms led to a prolonged stall for FordPass Connect in Europe, as negotiations unfolded with Vodafone. Looking ahead, the European Commission's upcoming consultation on equitable in-vehicle data access could mandate OEMs to allow consumers to choose their carriers. This potential shift not only complicates integration but could also dampen service uptake.

Segment Analysis

By Technology Type: 5G Transition Reshapes Modem Economics

The 4G/LTE segment maintained a 43.47% slice of the connected vehicle market size in 2025, benefiting from mature component pricing and global network coverage. However, 5G/C-V2X units are scaling fast with an 11.69% CAGR through 2031 as OEMs chase latency improvements vital for autonomous driving and advanced driver assistance. Qualcomm’s Snapdragon X85, announced in 2025, integrates sidelink and millimeter-wave radios on a 4-nanometer node, cutting power draw by a minimal amount and reducing bill-of-materials by USD 35 relative to earlier discrete designs. Legacy 3G and 2G devices are being sunset, aligning with U.S. and EU shutdown schedules that make continued operation unsustainable.

Premium passenger cars adopt 5G twice as often as light commercial vehicles, but freight operators still favor robust 4G chipsets paired with electronic logging devices. China’s mandate for LTE-V2X in new-energy vehicles keeps 4G volumes high, while Europe leans straight into 5G NR-V2X. Dual-mode silicon that supports Release 14 sidelink and Release 17 positioning now adds only USD 15, down from USD 50 in 2023, helping global platforms standardize across regions. As economies of scale build, the connected vehicle market expects 5G modems to overtake 4G share before 2028, reshaping supply chains and semiconductor roadmaps.

Note: Segment shares of all individual segments available upon report purchase

By Application: OTA Updates Capture Software Monetization

Safety and security services held 38.13% of the connected vehicle market size in 2025 as regulatory eCall mandates locked in baseline demand. Over-the-air updates post the quickest climb at an 11.77% CAGR, reflecting the move to software-defined vehicles capable of receiving multi-gigabyte firmware packages. Tesla’s fleet alone uploaded more than 4 petabytes of sensor data in 2025, enabling cloud training and rapid feature releases. Driver assistance merges with V2X feeds, as BMW’s Highway Assistant now factors real-time work-zone data streamed from roadside units into adaptive speed profiles.

Infotainment and human–machine interface functions are commoditizing under Apple CarPlay and Android Auto dominance, compressing OEM differentiation. Mobility and fleet-management applications consolidate around scaled providers that optimize routing, compliance, and maintenance for millions of commercial vehicles. Meanwhile, telematics and diagnostics shift from aftermarket dongles to factory-installed gateways that stream health data to cloud analytics, cutting unscheduled service visits. Traditional application silos blur as a single update can address security, driveability, and entertainment in one payload, underscoring the growing importance of unified software pipelines.

By Connectivity: Embedded Gains On Cyber-Security Imperatives

Integrated head-unit designs represented 45.52% of the connected vehicle market size in 2025 because they merge infotainment and telematics to save components. Yet embedded stand-alone gateways are rising at an 11.79% CAGR as ISO/SAE 21434 risk assessments favor physical separation between safety-critical buses and public networks. Continental’s 5G Hybrid V2X module houses its modem in a hardened enclosure with a hardware firewall, limiting lateral movement if an attacker breaches the cellular stack.

Tethered architectures reliant on smartphone hotspots are waning as patchy connections delay firmware push campaigns. OEM-fitted programs leverage embedded hardware to negotiate decade-long wholesale data contracts, trimming bandwidth cost and cementing direct consumer relationships. Regional patterns diverge; North America and Europe adopt embedded systems to comply with stringent privacy rules, while cost-sensitive Chinese volume brands still prefer integrated units that cut antenna count. Aftermarket tethered dongles linger in heavy-vehicle fleets yet face obsolescence as regulators block uncertified devices from writing to in-vehicle networks.

By Vehicle Connectivity: V2G Unlocks Grid-Services Revenue

Vehicle-to-vehicle communication captured 48.81% of the connected vehicle market share in 2025, leveraging Release 14 sidelink to broadcast speed and heading ten times per second within a 300-meter radius. Utility operators now eye vehicle-to-grid, the fastest segment at an 11.84% CAGR, because bidirectional charging stabilizes renewable-heavy grids. ISO 15118-20 enables plug-and-charge sessions in which a Ford F-150 Lightning owner can automatically sign a demand-response contract and earn USD 800 a year by feeding excess energy back to the network.

Vehicle-to-infrastructure use grows in China’s smart corridors, where more than 1,200 intersections transmit signal-phase-and-timing messages, cutting commute times. Vehicle-to-pedestrian pilots in Japan push collision alerts to smartphones carried by cyclists and schoolchildren. Collectively, these modes require rigorous interoperability so that a car crossing from Germany to France can shift from ETSI ITS-G5 to 3GPP C-V2X without packet loss. The trend pushes OEMs toward modular telematics capable of firmware-level protocol swaps delivered over the air.

By Vehicle Type: Commercial Fleets Drive Adoption Velocity

Passenger cars delivered 73.34% of the connected vehicle market share in 2025 and continue to climb at 11.72% CAGR on the back of consumer infotainment demand and regulatory mandates. Light commercial vehicles post similar growth as e-commerce giants rely on real-time telematics to shave delivery costs and track battery health. Medium and heavy trucks integrate connectivity to satisfy electronic logging device rules, streamline preventive maintenance, and improve route compliance.

Electric powertrains intensify data needs because battery management hinges on continuous cloud analytics. Amazon’s Rivian delivery fleet reported a significant drop in per-package cost after enabling dynamic routing, illustrating how connectivity pays off in logistics. Geographies diverge: Europe’s eCall covers vehicles under 3.5 tons, leaving heavy rigs to adopt telematics voluntarily, whereas China mandates Beidou-linked cellular modules for all new commercial vehicles. Autonomous shuttle pilots in Singapore and Dubai further showcase how unwavering connectivity underpins higher levels of automation.

Note: Segment shares of all individual segments available upon report purchase

By End Market: OEM Integration Marginalizes Aftermarket

OEM-fitted solutions owned 87.13% of the connected vehicle market size in 2025 and expanded at an 11.81% CAGR as automakers seek lifetime customer relationships fueled by data services. Factory gateways access proprietary CAN messages and enable secure over-the-air updates, giving OEM programs like General Motors’ OnStar a feature set that aftermarket plugins cannot match. 

Aftermarket devices still serve older commercial fleets that need compliance-oriented logging and basic tracking. Yet carrier shutdown schedules and rising cybersecurity rules threaten these plug-in models. Regional economics shape adoption; North America and Europe lean toward OEM because data privacy legislation discourages third-party gateways, while cost-conscious consumers in parts of South America still retrofit older cars. Overall, the connected vehicle market tilts decisively toward embedded, factory-installed hardware that the automaker controls from cradle to grave.

Geography Analysis

Geography Analysis

Europe dominated with 34.57% of the connected vehicle market share in 2025. This surge was driven by the eCall packet-switched migration deadlines and the deployment of numerous C-Roads roadside units. These units stream hazard alerts across Germany, Austria, and the Netherlands. Germany boasts the highest density with a significant number of active units along its Autobahn corridors. In contrast, the United Kingdom faces delays, grappling with post-Brexit regulatory differences. Southern European nations are adopting at a slower pace, hindered by consumer resistance to subscription fees.

Asia Pacific posts the fastest 11.75% CAGR through 2031 as China mandates LTE-V2X on new-energy vehicles and channels into V2X infrastructure across Wuxi, Changsha, and Chongqing. Wuxi’s 1,200 roadside units cut intersection accidents in 2025, proving safety dividends. Japan and South Korea fund urban V2X pilots that retrofit hundreds of intersections, while India’s AIS-140 Amendment 3 extends real-time tracking to passenger cars by 2026, adding a compliance driver.

China's push comes as it mandates LTE-V2X for new-energy vehicles. Additionally, the nation is channeling substantial investments into V2X infrastructure in cities like Wuxi, Changsha, and Chongqing. Notably, Wuxi's deployment of roadside units in 2025 has already demonstrated safety benefits by reducing intersection accidents. Meanwhile, Japan and South Korea are actively funding urban V2X pilot projects, retrofitting numerous intersections. In a significant move, India's AIS-140 Amendment 3 is set to extend real-time tracking to passenger cars by 2026, driven by compliance needs.