Global market for AI in Transportation to grow to USD 4.48 billion by 2025

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Artificial intelligence is the computer-operated tasks involving the simulation of human intelligence in machines that are programmed for decision making and visual perception. Artificial intelligence technology is applied in the field of healthcare, manufacturing, automotive, agriculture, retail law, defense, aerospace, and others.

Here, transportation is one of the important application sectors of artificial intelligence which comprises computer vision, technologies, deep learning, and natural language processing.

The rising adoption of semi and fully autonomous vehicles uses radio detection & ranging sensors, light detection, and video cameras as artificial intelligence-based software and hardware. In the sector of the automotive industry, AI-based software enables reliable and real-time recognition of objects around the vehicle.

Based on the type of technology and offering, the global artificial intelligence in the transportation market is comprised of the following categories:

Market Overview

The total market size of the global artificial intelligence in the transportation market is valued at USD 1.67 billion in the year 2019 and is expected to reach USD 1.97 billion in the year 2020.

Its market value is expected to grow at a CAGR of 17.8 % within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 4.48 billion by the end of the year 2025.

Based on geography, the Asia Pacific region is leading the global market with a market share of almost 25.7% of the total global artificial intelligence in the transportation market. The market size of this region is valued at USD 0.43 billion in the year 2019.

Based on the type of technology, the deep learning segment is leading the market with a market share of almost 65.21% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 1.09 billion in the year 2019.

Based on the offerings, the software segment is leading the market with a market share of almost 56.14% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.94 billion in the year 2019.

Based on the process, the data mining segment is leading the market with a market share of almost 58.82% of the global artificial intelligence in the transportation market. The market value of this segment is valued at USD 1.37 billion in the year 2019.

The rising development of autonomous vehicles, increasing popularity & adoption of artificial intelligence, strict governmental regulations for transportation safety, and increasing focus toward reducing the operating cost of transportation are the factors responsible for the growth and development of global artificial intelligence in the transportation market.

However, the dearth of professionals with artificial intelligence skills and the high cost of the development of artificial intelligence technology might restrain the growth and development of this market.

The key market players engaged in the operation of its market are Volvo, Daimler, Scania, Bosch, Intel, NVIDIA, ZF Friedrichshafen AG, Robert Bosch GmbH, Continental AG, Valeo SA, Tesla, NVIDIA Corporation, Intel Corporation, Microsoft Corporation, IPsoft, IBM Corporation, Apple Inc, and Baidu.

Market Risks

Dearth of professionals with AI skills

Globally, the artificial intelligence market is facing the issue of the scarcity of professionals equipped with skills and knowledge related to artificial intelligence. According to the World Economic Forum, artificial intelligence will give emergence to almost 133 million new jobs.

IT has been expected that almost 120 million workers will need to be reskilled because of artificial intelligence and automation. According to the Global AI Talent White Paper, there are almost 22,400 top AI academics and 36,524 people reported as AI specialists.

Although the number of people skilled in AI technology, the availability of professionals is quite limited. In a poll about AI skills, it has been confirmed that almost 56% of the senior AI professionals believed the lack of skilled AI workers is one of the most important obstacles to the AI implementation process.

Another survey conducted by SnapLogic has revealed that almost 40% of respondents believed that the lack of skilled talent as the top barrier faced with the execution of artificial intelligence initiatives. Along with this, some of the IT leaders aren’t skilled with the right mix of the required artificial intelligence skills.

A survey conducted by Snap logic has found that almost 51% of the respondents reported that they don’t have the right mix of artificial intelligence skills. In general, globally, it has been estimated that almost two in five companies observe the lack of technical expertise for artificial intelligence technology.

The dearth of skilled professionals might restrain the growth and development of global artificial intelligence in the transportation market.

Top Market Opportunities

Rising development of autonomous vehicles

Globally, the development and use of autonomous vehicles are in increasing trend. The number of autonomous vehicles is estimated to reach 51.2 million units by the end of the year 2025, increases from 17.7 million units in 2019. The volume of global autonomous vehicles is expected to grow at a CAGR of 17.1% within the forecasted time horizon of 2020-2025.

The market value of the global autonomous vehicle industry is valued at USD 54.23 billion in the year 2019 and will reach USD 556.67 billion by the end of the year 2026. The market value of autonomous vehicles is expected to grow at a CAGR of 39.47% within the forecasted time horizon of 2020-2025.

Artificial technologies are adopted in autonomous and semi-autonomous vehicles to study a large amount of data, generalize the patterns experiences, and assists to drive safely through the analysis of the recorded information and conditions,

These type of vehicles need artificial intelligence technology for object detection, advanced driver assistance system, crash avoidance, vehicle telematics control, image processing, speech recognition, and data analysis. The rising market for global autonomous vehicles is creating a significant opportunity for the growth and development of global artificial intelligence in the transportation market.

Rising popularity and adoption of artificial intelligence

Globally, the popularity and the adoption of artificial intelligence technologies by governmental, non-governmental, & private organizations is in increasing trend. For instance, private organizations in countries such as the US and UK are focused on artificial intelligence-based projects.

According to the report entitled AI Skills Gap 2019 prepared by SnapLogic, almost 93% of the US and UK organizations have considered AI and machine learning as the top business priority and have planned the projects for it.

Here, almost 30% of them has initiated their artificial intelligence project within the year 2018 and almost 33% of them had artificial intelligence projects in production for 1-3 years.

Almost 11% of them already had developed AI-based projects in production for more than 3 years. The rising popularity and adoption of artificial intelligence projects will create a significant opportunity for the growth and development of global artificial intelligence in the transportation market.

Market Trends

The factors driving the growth and development of the global artificial intelligence in the transportation market are growing demand for convenience and safety, shortage of truck drivers, rising popularity and adoption of artificial intelligence, growing demand for safety and security, increasing focus toward reducing the operating cost of transportation, growing adoption of advanced driver assistance systems, concerns of traffic congestion, and need to increase fuel efficiency.

The major drivers of global artificial intelligence in the transportation market are discussed as follows:

Strict governmental regulations for transportation safety

Globally, governmental and non-governmental organizations have developed strict policies, plans, and programs in terms of compliance, safety & accountability to ensure road safety and prevention of road traffic accidents.

These regulations and initiatives are related to adaptive cruise control, collision warning, lane-keep assist, advanced driver assistance system, and others. For instance, the government of the United States has developed Safety standards for commercial motor carriers & motor vehicle operators, Railroad safety, etc.

Some of the major initiatives of the government in the sector of transportation are Vision Zero, Road to Zero, Cell phone Bans, Dram Shop Liability, etc. Similarly, the government of China has developed Road transport regulations, Road Traffic Safety Law, and other initiatives. Along with this, the governmental authorities are focused on increasing their investment in automotive research.

For instance, according to the center for automotive research, Mexico has received an investment of USD 20 billion for the automotive sector in the past 4 years. The development of strict government regulations related to road safety is creating a significant opportunity for the growth and development of global artificial intelligence in the transportation market.

Increasing focus toward reducing the operating cost of transportation

Globally, most of the companies engaged in the automobile sector are focused to reduce the operation cost of the transportation system. Because of this, they are seeking technological methods to bring efficiency, safety, and accuracy to the transportation sector.

Here, artificial intelligence is one of the technologies associated with the multiple numbers of benefits in terms of enhancement in performance, efficiency, safety, and accuracy in the transportation sector.

For instance, a pilot project of artificial intelligence conducted by Stena Lines has shown that the use of artificial intelligence technology has reduced fuel consumption by almost 2-3% per trip and the artificial intelligence technology has been predicted as the most fuel-efficient way.

According to the Intelligent Transport Systems for Commercial Vehicles study by Ertico, the use of platooning can reduce CO2 emissions by almost 16% from the trailing vehicles and up to 8% from the lead vehicle.

Thus, the increasing focus of the market players engaged in the transportation sector on the reduction of the operational cost of the transportation and capacity of the artificial intelligence technology to enhance the performance and fuel efficiency is driving the growth and development of global artificial intelligence in the transportation market.

High cost of artificial intelligence system

The rising value of LIDAR sensor, GPS devices, graphics, hard drive, cameras, and other hardware-software devices used as the important component of the artificial intelligence system is increasing the cost of development and operation of the artificial intelligence system.

The cost of the development of the custom AI solution ranges from USD 6,000 to USD 300,000 per solution and the cost of the development of third-party AI software is about USD 40,000 per year.

The average cost of the development of artificial software is about USD 300,000 per unit in the year 2020. The high cost of the development and operation of artificial intelligence technology might restrain the growth and development of global artificial intelligence in the transportation market.

Industry Challenges

Issues of cyberattacks in the transportation sector

Globally, the issue of cyberattacks in the transportation sector is in increasing trend. For instance, in the context of the United Kingdom, almost 81% of the large businesses and 60% of the small businesses are affected by the cybersecurity breach.

The average cost of the breaches to businesses has almost doubled since the year 2013. Here, the transportation sector is considered to be one of the third most vulnerable sectors in terms of exposure to cyberattacks.

The average total cost per breach for the average company is about 3.79 million. It is quite challenging for the market players engaged in artificial intelligence in transportation to deal with the rising issue of cyberattacks in the transportation sector.

Technology Trends

The adoption of new and advanced technologies is creating a favorable environment for the growth and development of global artificial intelligence in the transportation market.

The major technological trends in artificial intelligence in the transportation market are emerging truck platooning, sensor fusion, Collision warning systems, lane keep assist, blind-spot detection, etc. Some of the key technological trends in this market are discussed as follows:

Collision warning system: This mitigation technology is embedded with the artificial intelligence system to prevent and reduce the incidences and severity of collisions. It continuously monitors the speed of the vehicle and provides a warning to avoid the crash.

Emerging truck platooning: This technology is used to link more than two trucks through the use of connectivity technology and automated driving support.

Sensor fusion: This technology can combine the sensory data from multiple radars, lidars, and cameras to create the image of an environment around a vehicle.

Automatic traffic sign detection & recognition system: This technological systemassists the image preprocessing, detection, and recognition of the traffic signal to facilitate the driving of the vehicles.

Lane departure warning system: This technological system is designed to warn about the movement of the vehicle outside the lane in freeways and arterial roads. It facilitates the minimization of accidents through the recognition and management of the causes of collisions, driver error, distractions, and drowsiness.

Pricing Trends

The price of the products of this market depends upon the type of technology, processing systems, offerings, functionality, and others.

For instance, the cost of the development of the custom AI solution ranges from USD 6,000 to USD 300,000 per solution and the cost of the development of third-party AI software is about USD 40,000 per year.

The average cost of the development of artificial software is about USD 300,000 per unit in the year 2020.

Regulatory Trends

Some of the major regulations directly or indirectly related to the global artificial intelligence in the transportation market are discussed as follows:

Comprehensive European Industrial Policy on Artificial Intelligence and robotics: This policy has included a specific chapter on transport and was developed by the European parliament in the year 2019. This policy promotes research and investment in artificial intelligence technology.

EU data protection rules: According to this rule, the transportation operators providing the essential services should have the appropriate measures to manage the risks related to the security of network and information.

Highway Traffic Act: This act was developed by the Ministry of Transportation of Ontario in the year 2016. Under this act, this government launches a pilot project to allow the testing of automated vehicles.

National AI Strategy and Directorate: It was developed by the Commission for the development of the Electronic Government of Mexico in the year 2018 to support Federal Public Administration agencies for the development and adoption of artificial intelligence technology.

Market Size and Forecast

The total market size of the global artificial intelligence in the transportation market is valued at USD 1.67 billion in the year 2019 and is expected to reach USD 1.97 billion in the year 2020.

Its market value is expected to grow at a CAGR of 17.8 % within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 4.48 billion by the end of the year 2025.

Based on geography

The Asia Pacific region is leading the global market with a market share of almost 25.7% of the total global artificial intelligence in the transportation market. The market size of this region is valued at USD 0.43 billion in the year 2019.
The North American region accounts for a market share of 19.43% of the total global artificial intelligence in the transportation market. The market size of this region is valued at USD 0.32 billion in the year 2019.
The European region accounts for a market share of 17.55% of the total global artificial intelligence in the transportation market. The market size of this region is valued at USD 0.22 billion in the year 2019.
The South American segment accounts for a market share of 19.43% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.32 billion in the year 2019.
The Middle East African region accounts for a market share of 17.86% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.3 billion in the year 2019.

Based on the type of technology

The deep learning segment is leading the market with a market share of almost 65.21% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 1.09 billion in the year 2019.
The computer vision segment accounts for a market share of 21.73% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.36 billion in the year 2019.
The natural language processing segment accounts for a market share of 13.04% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.21 billion in the year 2019.

Based on the offerings

The software segment is leading the market with a market share of almost 56.14% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.94 billion in the year 2019.
The hardware segment accounts for a market share of 43.85% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.73 billion in the year 2019.

Based on the process

The data mining segment is leading the market with a market share of almost 58.82% of the global artificial intelligence in the transportation market. The market value of this segment is valued at USD 1.37 billion in the year 2019.
The signal recognition segment accounts for a market share of 41.17% of the total global artificial intelligence in the transportation market. The market size of this segment is valued at USD 0.95 billion in the year 2019.

Market Outlook

The global artificial intelligence in the transportation market is expected to grow at the CAGR of 17.8% within the forecasted time horizon of 2020-2025 because of the rising development of autonomous vehicles, increasing popularity & adoption of artificial intelligence, strict governmental regulations for transportation safety, and increasing focus toward reducing the operating cost of transportation. Its market value will reach USD 4.48 billion by the year 2025.

Technology Roadmap

The adoption of the advanced technological trend in the artificial intelligence system in the transportation sector is enhancing the performance, efficiency, effectiveness, and safety of automobiles.

The major technological trends in artificial intelligence in the transportation market are emerging truck platooning, sensor fusion, Collision warning systems, lane keeps assist, blind-spot detection, etc.

The use of these technological changes in the transportation sector is driving the growth and development of global artificial intelligence in the transportation market.

Distribution Chain Analysis

The key stakeholders involved in the operation of this global artificial intelligence in transportation market are artificial intelligence hardware & software suppliers, raw material manufacturers of artificial intelligence system components, artificial intelligence service/solutions providers, connected vehicle system manufacturers, governmental regulatory agencies, and automobile industry and its related end-users.

At first, the raw materials required for the artificial intelligence system components are developed and software vendors are engaged in the development of the software & applications related to AI. The developed artificial intelligence software and hardware are available through the AI-service & solutions providers to the automobile industry.

Competitive Factors

The key market players engaged in this market are competing for the product portfolio expansion, mergers & acquisitions, geographical expansion, and collaborations.

For instance, Continental and NVIDIA have partnered to develop AI-powered self-driving vehicle systems. Scania partnered with Haylion technologies to develop solutions for public transport by electrified, autonomous, and connected buses.

Along with this, they are engaged in the development of the research & development activities on artificial intelligence technologies for the transportation system. For instance, Valeo launched a global research center for AI and deep learning named Valeo.ai to host an open-community network dedicated to the development of state-of-the-art automotive applications, integrated with artificial intelligence and deep learning.

Key Market Players

The key market players engaged in the operation of the global artificial intelligence in the transportation market are Volvo, Daimler, Scania, Bosch, Intel, NVIDIA, ZF Friedrichshafen AG, Robert Bosch GmbH, Continental AG, Valeo SA, Tesla, Microsoft Corporation, IPsoft, IBM Corporation, Apple Inc, and Baidu. Short profile of the key market players engaged in this market are discussed as follows:

Volvo: It is a Sweden-based multinational company engaged in the production, distribution, and sale of trucks, buses, and construction equipment. It was the second-largest manufacturer of heavy-duty trucks globally in the year 2016.

Daimler: It is a German-based multinational company engaged in the manufacture of automobiles and commercial vehicles. It is one of the world-leading manufacturers of cars and trucks.

Scania: It is a Sweden-based company engaged in the manufacture of commercial vehicles, diesel engines, and general industrial applications. It is operating and providing services all over the world except North America.

Bosch: It is a German-based multinational company engaged in the development and manufacture of automotive parts, power tools, security systems, home appliances, engineering, electronics, cloud computing, and the internet of things.

Intel Corporation: It is one of largest the US-based multinational technology company engaged in the development of semiconductor chips, microprocessors, vehicle automation sensors, modems, and other hardware components.

NVIDIA Corporation: It is a US-based multinational technology company engaged in the design and development of graphics processing units, system-on-chip units for mobile computing, and the automotive market. The revenue of this company is valued at USD 11.7 billion in the year 2019.

Strategic Conclusion

References

Appendix

AI= Artificial Intelligence
UK= United Kingdom
USD= United States Dollar
CAGR= Compound Annual Growth Rate