PwC: "Smartphone on Wheels" SDV to Begin Commercialization Within 1-2 Years

34% Annual Growth Rate Projected Through 2034
"One in Five Cars Will Be an SDV"

The Software-Defined Vehicle (SDV) market, often referred to as the "smartphone on wheels," is expected to enter full-scale commercialization within the next one to two years. As vehicles become increasingly managed by software and the software ecosystem expands, analysts predict the SDV market will grow at an annual rate of 34%.

On July 24, PwC Consulting released a report titled "SDV 2.0: The Next Momentum in the Automotive Industry" detailing these developments.

34% Annual Growth... Expected to Account for 20% of All Vehicles

SDV defines a vehicle as a high-performance computer. When automobiles transition to SDV, defects can be fixed through over-the-air (OTA) updates, much like smartphones. According to global market research firm IDTechEx, the SDV-related market is projected to grow from $28 billion (approximately 38.492 trillion KRW) in 2023 to $700 billion in 2034, representing an average annual growth rate of 34%. This will account for about 20% of the entire automotive market by 2034. Tesla, which introduced OTA for the first time in 2012, is the market leader, while Hyundai Motor has also announced plans to convert all its vehicles to SDV by the end of this year.

The report categorizes SDV development into five major stages. Starting from hardware-centric vehicle control, it progresses through Stage 1 (Electrical/Electronic, or E/E, architecture), Stage 2 (software-centric control), and ultimately evolves into vehicles managed entirely by software and positioned at the center of the software ecosystem. The report states, "While the core competencies of the SDV 1.0 era were devices, architecture, and operating systems (OS), the SDV 2.0 era will focus on vehicle software, applications, and the ecosystem."

Expansion of the Software Ecosystem... IT Companies Like Waymo and Huawei Enter the Market

Recently, major automakers such as Volkswagen and General Motors (GM) have begun actively developing E/E architectures, leading to the expansion of SDV into the software ecosystem business. As a result, non-traditional companies with strong software capabilities, such as Waymo, Huawei, and Mobileye, are rapidly entering the market. The report warns, "The expansion of the software business ecosystem means not only competition among original equipment manufacturers (OEMs) but also entering into unlimited competition with cross-industry players possessing software competitiveness. If OEMs fail to secure a leading position in the software business ecosystem now, they risk being relegated to hardware manufacturing partners."

As response strategies, the report highlights Tesla's SDV leap, GM's software business-first approach, and Volkswagen's acceleration of full-stack development (covering all stages of development). The full report is available on the PwC Consulting website.

Kim Jungyeon, a partner at PwC Consulting Strategy&, stated, "Currently, GM, Volkswagen, Toyota, and Hyundai Motor are planning to launch vehicles equipped with newly developed software architectures within the next few years. Therefore, we expect that genuine SDVs will become commercially available in as little as one to two years, or at most within five years." She added, "In the short term, to respond to the market in a timely manner, partnerships should also be considered to effectively pursue architecture, software, and full-stack development in parallel."