Thwarting LED cost erosion, high-value automotive sector is driving revenue growth

November 16, 2018 // By Julien Happich
According to market research firm Yole Développement, lighting is becoming the new photonic hub, with the ‘LEDification’ of vehicles set to propel automotive lighting revenues to $37.3B by 2023.

With the integration of light emitting diode (LED) technology, lighting has evolved from a basic, functional feature to a distinctive feature with high-value potential in automotive. Indeed, LED technology has given manufacturers the opportunity for strong differentiation via lighting design and additional functionalities. This is particularly true for exterior lighting. The integration of new solid state lighting (SSL) technologies is transforming automotive front lighting and rear combination lighting (RCL) systems and their applications, offering more design flexibility, increased efficacy, and intelligent functionalities.

LEDs are rapidly gaining popularity as their cost decreases and efficiency, luminance and package size improves. For example, full LED headlamps that first saw commercialization in 2008 on luxury cars like the V10 Audi R8 have since penetrated the compact, or C-segment, vehicle market in 2012, with the new Seat Leon, and are now being commercialized in emerging markets. Nowadays, nearly all car maker and Tier-1 part suppliers have developed full LED-based headlamp systems and such technology is a must-have in the C and also the D – compact executive car – automotive segments.

Laser and organic LED (OLED) sources are still emerging technologies but could also support the development of new functionalities. Laser-based headlamps could enable long-distance night vision, up to 600 meters, or be coupled with digital micromirror devices (DMDs) to provide high resolution lighting systems, up to 1M pixels. OLED RCLs could initiate a design shift from 2D to 3D light sources, made possible by the nature of the OLED device itself.

In this context, the automotive lighting market totalled $27.4B in 2017 and is expected to reach $37.3B in 2023 at a compound annual growth rate for 2017-2023 (CAGR2017-2023) of 5.3%. This growth is driven by natural LED cost erosion coupled with standardization and optimization of LED modules, which result in more vehicles equipped with this technology. Indeed, whereas SSL technologies represented 57% of automotive lighting value in 2017, this share is likely to reach 85% by 2023.


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