Connected Vehicles Market Size, Share, Growth, Trends, and Global Industry Analysis: By Vehicle Type (Passenger Cars, Commercial Vehicles), By Connectivity Type (Embedded, Tethered, Integrated), By Application (Navigation, Infotainment, Safety and Security, Vehicle Diagnostics, Remote Control Features) and Region Forecast 2020-2031

Connected vehicles market size was valued at US$ 81.4 billion in 2024 and is projected to reach US$ 181.0 billion by 2031 at a CAGR of 12.1% from 2025-2031. The Connected Vehicles Market refers to the ecosystem of vehicles equipped with internet connectivity and advanced communication technologies that enable real-time data exchange between vehicles, infrastructure, and external networks. These vehicles leverage embedded systems, sensors, and wireless communication protocols such as cellular, Wi-Fi, and dedicated short-range communications (DSRC) to facilitate features like navigation, infotainment, safety, remote diagnostics, and vehicle-to-everything (V2X) communication. The primary objective of connected vehicles is to enhance driving experience, improve road safety, optimize traffic management, and support autonomous driving capabilities.

The market is witnessing robust growth driven by increasing adoption of Internet of Things (IoT) technologies, rising consumer demand for advanced in-car connectivity, and government initiatives to improve transportation safety and efficiency. Technological advancements such as 5G connectivity, edge computing, and artificial intelligence are accelerating the integration of connected vehicle systems across passenger cars, commercial vehicles, and electric vehicles. Key market players are focusing on partnerships, product innovations, and investments in vehicle communication infrastructure to capture expanding opportunities globally. The market is expected to evolve significantly over the coming years, fueled by smart city developments and the growing emphasis on sustainable and intelligent mobility solutions.

Facts & Figures

• According to the U.S. Department of Transportation, vehicle-to-everything (V2X) communication technology can reduce road accidents by up to 80% by enabling vehicles to share critical safety information in real time.
• The European Commission reports that connected vehicle technologies are expected to cut traffic congestion by approximately 30% in major urban areas through improved traffic management and smarter infrastructure coordination.
• Data from the International Telecommunication Union (ITU) highlights that over 50% of new vehicles globally will be equipped with some form of connectivity by 2025, reflecting rapid adoption fueled by advancements in 5G networks.
• The National Highway Traffic Safety Administration (NHTSA) states that connected vehicle systems contribute significantly to lowering emergency response times by providing instant crash notifications, thereby improving survival rates.

Key Developments

• In March 2025, the European Commission proposed draft legislation aimed at granting insurers, leasing companies, and repair shops fair access to vehicle data. This move seeks to resolve existing conflicts over data ownership among car service groups, Big Tech companies, and automakers. The proposed law is expected to be introduced later this year, potentially transforming the connected car market, which is estimated to be worth hundreds of billions of euros by the end of this decade.
• In September 2024, the U.S. Commerce Department proposed a rule to ban the sale of connected and autonomous vehicles in the U.S. that include Chinese and Russian software and hardware. The ban aims to protect national security and driver privacy, with software prohibitions commencing with the 2027 model year and hardware prohibitions taking effect in 2030. This measure is part of efforts to prevent foreign adversaries from exploiting vehicle data, which can include sensitive information like home addresses and locations frequented by drivers and their families.

Connected Vehicles Market Segmentation

Based on the vehicle type

• Passenger Cars
• Commercial Vehicles

The Passenger Cars segment is anticipated to lead the Connected Vehicles Market, driven primarily by the rising consumer demand for enhanced in-car connectivity and advanced safety features. Increasing awareness about vehicle safety, comfort, and convenience is motivating automakers to integrate sophisticated connected technologies in passenger vehicles. Features such as real-time navigation, infotainment systems, and driver assistance are becoming standard expectations among consumers. Moreover, stringent government regulations promoting vehicle safety and emission controls are accelerating the adoption of connected solutions in passenger cars. This segment’s dominance is reinforced by continuous innovations and strong investments by leading automotive manufacturers focused on passenger vehicle connectivity.

Based on the connectivity type

• Embedded
• Tethered
• Integrated

The Embedded connectivity type is expected to dominate the Connected Vehicles Market, driven by the increasing demand for seamless, reliable, and always-on vehicle communication systems. Embedded connectivity offers integrated hardware and software within the vehicle, enabling real-time data exchange without relying on external devices. This enhances functionalities such as navigation, safety alerts, and remote diagnostics, which are highly valued by both consumers and manufacturers. Additionally, embedded systems support over-the-air updates and advanced telematics services, making them essential for modern connected vehicles. Strong investments by automakers to embed connectivity features directly into vehicles reinforce the growth of this segment.

Based on the application

• Navigation
• Infotainment
• Safety and Security
• Vehicle Diagnostics
• Remote Control Features

The Safety and Security segment is anticipated to lead the Connected Vehicles Market, driven by increasing concerns over road safety and stringent government regulations worldwide. Connected vehicle technologies enable real-time monitoring, collision avoidance, emergency response, and driver assistance systems, which significantly reduce accidents and fatalities. Consumers and manufacturers alike prioritize safety features, encouraging rapid adoption of connected safety applications. Moreover, advancements in vehicle-to-everything (V2X) communication are enhancing situational awareness and hazard detection. This growing focus on improving passenger safety and complying with regulatory standards positions Safety and Security as the leading application in the market.