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October 2025
The digital twins in automotive market is booming, poised for a revenue surge into the hundreds of millions from 2025 to 2034, driving a revolution in sustainable transportation. The digital twins in automotive market is expanding due to the continued adoption of connected cars, electric vehicles, and increased smart manufacturing efforts. Companies are leveraging this digital twin technology to ideate designs, test & monitor vehicle performance, systems, and parts without any physical prototypes.
The digital twin market is also being accelerated by advancements in artificial intelligence (AI), the Internet of Things (IoT), and cloud computing infrastructure. Automakers are prioritizing predictive maintenance measures, faster production, and cost-saving capabilities, among the key reasons for the rapid growth across various regions and aspects of automotive technology.
Digital twins are digital representations of real vehicles, parts, or systems used by automotive companies to validate designs, monitor performance, and foresee future problems. In addition, the use of digital twins can be found in several applications, including vehicle design, manufacturing, maintenance, and supply chain management. Digital twins in the automotive industry are being utilized by automotive companies, suppliers, and technology companies to support better-informed decisions for a variety of applications that increase safety and/or efficiency. As demand for electric and connected vehicles continues to accelerate, digital twin technology is poised to further emerge as an important tool in modern automotive developments and innovation.
| Metric | Details |
| Growth Drivers | Adoption of connected cars, electric vehicles (EVs) |
| Leading Region | Europe |
| Market Segmentation | By Component, By Deployment Model, By Application, By Vehicle Type, By End User, By Business Model and By Region |
| Top Key Players | Siemens, Dassault Systèmes, PTC, Altair Engineering, Microsoft, Robert Bosch |
The trends in the digital twins in automotive market are collaborations and partnerships.
Numerous companies in the market are collaborating to combine expertise in AI, IoT, simulation, and cloud computing. For instance, in June 2025, Schaeffler launched advanced digital twin technology to improve product development and reduce time-to-market. This move helped strengthen its position in smart manufacturing and supported efficiency gains in automotive component production.
Various firms in the market are entering into partnerships to strengthen technological capabilities and enter new regional or application-specific markets. For instance, in September 2024, AECC released a white paper highlighting how digital twins are transforming vehicle design and validation. The report provided insights into the role of simulation in improving vehicle safety, performance, and sustainability.
Major technological transitions in the digital twins in automotive market were driven by the growth of AI, IoT, and cloud computing, which facilitated the collection and analysis of real-time vehicle data. 3D simulations, digital modeling, and machine learning were first adopted by companies to evaluate and prove aspects of car parts ahead of manufacture. With the help of edge computing, those organizations experience even better speed and precision in smart factories.
The simulation & modeling module segment dominated and captured almost 28% of the market share, as it is an essential component of digital twin technologies, enabling automobile manufacturers to develop realistic 3D virtual models of vehicles and vehicle components for design, testing, and subsequent optimization of the product. Moreover, it reduces the need for physical prototypes, ultimately saving time and expense. Also, this segment grew rapidly as businesses put more focus on their products, reviewing ideas for ideal levels of vehicle safety, aerodynamics, and efficiency through accurate digitally derived simulations in the development of their products.
The analytics & AI engine segment is expected to grow at the fastest rate in the forecasted period, as it provides a way for better decision-making based on its real-time insights and predictive capabilities. Automotive manufacturers are using AI more frequently to analyze performance data and fault detection, improving vehicle reliability. As vehicles become more connected, data generation grows significantly, and demand for increased processing power for analytics engines will rise as a result. These analytics engines can be used for predictive maintenance, driver behavior analysis, and operational optimization of electric and autonomous vehicles.
The cloud segment dominated and captured almost 46% of the digital twins in automotive market, due to its scalable, flexible, and cost-effective infrastructure for digital twin and digital thread operations. The automotive industry favors cloud deployments since they offer an infrastructure for access to data from anywhere in the world, fastest updates for simulation, and connections for engineering and production teams to collaborate remotely. The cloud can also include integration with IoT and AI technologies, making it an ideal option to manage high volumes of secure data from vehicles and factories across their multiple manufacturing and testing sites.
The hybrid segment is expected to grow at the fastest rate in the forecasted period, since businesses are looking for the perfect blend of on-premise control with cloud flexibility. The hybrid solution provides the security of local data retention and the scalability of cloud-based systems. For instance, the combination is critical when computing or accessing sensitive data related to automotive design and automotive testing.
The product design & development segment dominated and captured around 30% of the digital twins in automotive market, as they can be used for virtual prototyping, testing designs, and validating performance. They generally allow engineers to create several designs and test them all prior to actually manufacturing a physical product, reducing costs and paving the way for faster development. Digital twins have been used in the automotive sequence of operations when testing materials, designing for aerodynamics, and testing manufacturing processes. The capability of the digital twin technology to identify design flaws and optimize solutions sooner rather than later made it an imperative innovation tool for building more innovative vehicles faster and at a higher quality.
The autonomous & ADAS validation segment is expected to be the fastest-growing segment in the forecasted period, as manufacturers heavily invest in self-driving and safety technologies. Digital twins in this context allow for advanced driver-assistance systems to be virtually tested in varied traffic and weather conditions. This eliminates or reduces the costs of physical testing and ratings, while also reducing the risks associated with physical testing. As the industry pushes towards autonomy, there will be a substantial need for safe training environments in which to develop autonomous algorithms for AI.
The passenger cars segment dominated and captured almost 34% of the digital twins in automotive market due to high production volumes and technology adoption of smart and connected technologies. Automakers implement digital twins to optimize design, performance, and maintenance on mass-produced vehicles. Growing consumer demand for customizations, enhanced safety, and increased fuel economy made simulation tools a necessity. Additionally, many major manufacturers use digital twins to minimize production errors and reduce time-to-market for new passenger vehicle models.
The electric vehicles segment is expected to grow at the fastest rate in the forecasted period because digital twins are critical for battery monitoring, thermal management, and optimizing energy efficiency in electric-centric vehicle systems. Automakers use digital twins to simulate battery performance and evaluate battery degradation for maximizing operational range. The surge of EV adoption around the world has necessitated reliable, sustainable, and optimized vehicle systems. As more EV startups and traditional OEMs include electrification as part of their business model, this sector continues to grow rapidly.
The OEMs segment dominated and captured almost 41% of the digital twins in automotive market, as they are leading the adoption of digital twin technology across vehicle design, manufacturing, and maintenance. OEMs are the largest beneficiaries of digital twins because the technology provides them with real-time monitoring, predictive analytics, and quality control. Their scale of operation and investment in research and development also contribute to them being early adopters. For OEMs, digital twins deliver savings on costs, faster time to market for new products, and help meet the ever-increasing consumer demand for advanced and connected vehicles.
The fleet operators & mobility providers segment is expected to grow at the fastest rate in the forecasted period. Forecasting maintenance needs, tracking efficiency, and monitoring the health of the asset base are the areas where fleet operators and mobility service providers will experience the most growth with adoption of digital twin technology. Fleet operators and mobility providers will be able to use their digital twins to forecast part failures, achieve less downtime, and extend the life of their vehicles. The industry's focus on shared mobility and a connected fleet has led to a greater portion of data-driven individual vehicle operations. As fleets have scaled in size, organizations have learned to leverage a digital twin across a single vehicle to improve performance and ultimately reduce operating costs.
The software license/subscription segment dominated and captured around 52% of the digital twins in automotive market because it offers predictable and consistent revenue for providers and flexible access for customers. Automotive companies especially like subscription-based software as it has high compatibility with both cloud and hybrid options. Additionally, updates and scalability with automotive software are much simpler through a subscription model and reduce upfront costs, making it more accessible for smaller and medium manufacturers. Moreover, constantly implementing emerging improvements to the software to maintain relevance of the systems to automotive, especially with AI updates, provides ongoing improvement of vehicles.
The managed services segment is expected to be the fastest-growing segment in the forecasted period as companies are now looking to outsource providers to manage the digital twin. Managed services provide setup, monitoring, and data crunching for the automaker's systems and allow them to fully focus on their design and production of the car. With the growing volume of data and the complexity of vehicle opposing modes and operating environments, managed services seek to provide cost-effective and expert assistance for the suitability, performance, optimization, success, and usability of the vehicle. In most cases, the managed services are part of the manufacturer/supplier team, and they assist in the management of the digital twin through work sessions and meetings.
Europe dominated and captured around 31% of the total digital twins in automotive market share due to its historic manufacturing capabilities, stringent controls on emissions and safety, and a robust trajectory into Industry 4.0 and sustainability. Government and industry investment in smart factories, standards for connected vehicles, and electric vehicle infrastructure was substantial in the region. European automotive manufacturers applied digital twins to meet stringent regulations and reduce energy waste, which supported the market growth in this region. European digital twin opportunities were in accelerating the design and optimization of electric vehicle batteries, performing test validation for autonomous driving systems, virtual testing to reduce physical prototypes, and providing digital twin platforms to OEMs and tier-1 suppliers.
Germany had been the dominant nation in the European digital twins in automotive market. It had strong capabilities in the automotive sector for engineering talent, stable R&D environments, and an early uptake of automation. The German government had industrial policies in the form of Industry 4.0 programs and smart factory initiatives that supported many pilot projects utilizing systems vehicles, including environmental testing, battery optimization, and predictive maintenance. These projects were able to be run successfully in Germany because of the existing infrastructure, workforce capabilities, and enhanced digital skills supporting the industrial base.
Asia-Pacific is expected to be the fastest-growing region in the digital twins in automotive market, as many countries in the region have large automotive industries, increasing demand for electric vehicles (EV) and connected vehicles, and robust government digitalization initiatives. Governments promoted the use of Industry 4.0, smart manufacturing, and infrastructure solutions, while businesses were enthusiastic about reaping the benefits of digital twins to save costs through virtual testing, remote monitoring, and production line optimization. The Asia-Pacific region is an opportunity for scaling digital twins and building on traditional, automotive-sector areas like EV battery development, fleet management, supply chain mimicking, and supporting the mobility systems of smart cities with digital twins.
China was the dominant country in digital twins in automotive market in China because of the large automotive production base in the country, along with government incentive programs and swift adoption of emerging technologies like IoT, AI, cloud computing, and smart factory capacities. China has heavily invested in electric vehicles, infrastructure, and digital transformation of the manufacturing sectors. Able to leverage large enterprises and state-driven industrial strategies meant that China has moved swiftly in deploying digital twin solutions in automotive-related development areas, including design, maintenance, and connected vehicles.
North America is expected to grow at a considerable rate in the digital twins in automotive market, as it has more OEMs than any other region, as well as advanced technology providers and a strong digital architecture for automobiles to generate value from digital twins. North America, particularly the US, also made strong investments in the relevant domains, including cloud, AI, and data analytics. The region tended to focus R&D funding on connected vehicles, more electric vehicles, and predictive maintenance.
The United States was the leading country in North America in digital twins in automotive market, due to its strong ecosystem of automakers, technology firms, and startups. Its scale of OEMs afforded it ample access to R&D budgets, good regulatory regimes, and early adoption of emerging technologies. US companies specializing in fintech were aggressive in developing methodologies for using digital twins in connected cars, electric mobility, safety systems, and over-the-air updates. These strategies were strengthening the original equipment manufacturers' size, experience, and global competitiveness within the automotive industry in North America.
| July 2025 | Announcement |
| Sundar Ganapathi, chief technology officer of automotive at Tata Elxsi. | Our partnership with Synopsys reflects a future-forward response to how vehicle development is evolving. As OEMs move away from traditional workflows, there is growing demand for engineering services that are tightly integrated with virtualization tools. This strategic collaboration enables us to jointly address that shift with focus, flexibility, and domain depth. |
| June 2025 | Announcement |
| Andreas Schick, Chief Operating Officer at Schaeffler AG. | Schaeffler is consistently and persistently driving the digitalization of its plants. To be able to shape the production of the future, you need strong partners like NVIDIA. Together, we will create a digital ecosystem for our more than 100 plants that will sustainably revolutionize production processes. The Omniverse and the use of digital twins will make our value chains more efficient and agile. |
| March 2025 | Announcement |
| Mary Barra, chair and CEO of General Motors. | GM has enjoyed a longstanding partnership with NVIDIA, leveraging its GPUs across our operations. AI not only optimizes manufacturing processes and accelerates virtual testing but also helps us build smarter vehicles while empowering our workforce to focus on craftsmanship. By merging technology with human ingenuity, we unlock new levels of innovation in vehicle manufacturing and beyond. |
| September 2024 | Announcement |
| AECC President and Chair Dr. Ryokichi Onishi, a Principal Engineer and General Manager at Toyota Motor Corporation. | As digital twins continue to gain traction across industries, the AECC remains committed to advancing this technology within the automotive sector. The white paper explores the concept of digital twins and delves into the automotive sector’s specific use cases, where digital twins can revolutionize traffic engineering, vehicle resource sharing, and personalized adaptive cruise assistance. |
The digital twins in automotive market are highly competitive. Some of the prominent players in the market are Siemens, Dassault Systèmes, PTC, ANSYS, NVIDIA, IBM, Microsoft, Altair Engineering, Hexagon AB, ESI Group, AVL List GmbH, Continental AG, Robert Bosch GmbH, ZF Friedrichshafen AG, SAP SE, Oracle Corporation, Autodesk, Inc., Rockwell Automation, Bentley Systems, and Ricardo plc. These companies are focusing on integration, innovation, and expansion for market dominance in the digital twin market. Digital twin firms are designing platforms to integrate AI, IoT, and cloud systems within full-service digital twin solutions while developing partnerships with automotive manufacturers and technology firms to develop design and manufacturing processes. Many have also acquired startups and firms specializing in predictive analytics, simulation, and real-time monitoring to increase functionality.
| Company | About |
| Siemens | Siemens, established in 1847, offers digital twin software that supports automotive manufacturers in designing, testing, and monitoring vehicles, using real-time data to improve efficiency and safety, as well as manufacturing performance. |
| Dassault Systèmes | Dassault Systèmes was founded in 1981. Dassault Systèmes provides 3DEXPERIENCE platforms that recommend creating virtual models of cars that allow engineers to simulate design and production, and determine performance, so they can innovate better and reduce development time. |
| PTC | PTC was launched in 1985. It provides digital twin and IoT solutions that assist automotive companies in tracking the performance of their products, optimizing condition-based maintenance, and improving manufacturing processes with real-time digital modeling. |
| ANSYS | Founded in 1970, ANSYS offers advanced simulation tools that enable automotive manufacturers to simulate aerodynamics, materials, and safety features of a vehicle before manufacturing, so they can save time and lower costs. |
| NVIDIA | NVIDIA, founded in 1993, develops AI and GPU-based platforms for creating digital twin simulations to optimize the training of autonomous vehicles, as well as real-time rendering of intelligent manufacturing systems. |
| IBM | IBM was established in 1911. The company provides AI and cloud-based digital twin solutions that analyze automotive data to predict condition-based maintenance, as well as provide support for smarter automotive design and manufacturing processes. |
| Microsoft | Microsoft was founded in 1975, with cloud computing and IoT platforms that provide digital twins for connected vehicles to help automotive manufacturers monitor vehicle performance while improving product development efficiency. |
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By Component
By Deployment Model
By Application
By Vehicle Type
By End User
By Business Model
By Region
October 2025
October 2025
October 2025
October 2025
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