Electronics to Comprise Over Half of Vehicle Costs by 2030, Says BCG-ACMA Report

The automotive industry is undergoing a profound structural transformation as electronic components become the dominant cost driver in modern vehicle manufacturing. According to a new report from the Boston Consulting Group (BCG) and the Automotive Component Manufacturers Association of India (ACMA), electronics are projected to account for 50-55% of a vehicle's total cost by 2030. This represents a significant escalation from the 30-35% share recorded in 2020, reflecting the rapid integration of sophisticated digital systems into both internal combustion engine (ICE) and electric vehicles.

This shift is driven by the widespread adoption of advanced driver assistance systems (ADAS), complex infotainment platforms, integrated sensors, and enhanced connectivity features. As these technologies become standard across vehicle segments, the traditional manufacturing landscape is being reshaped, forcing component suppliers to pivot toward high-tech capabilities. The report highlights that this transition is not merely a trend but a fundamental change in how vehicles are designed and valued, creating new, high-growth component pools that were previously peripheral to the automotive supply chain.

Despite the rapid rise in electronic content, the report reveals a significant disparity between current industry capabilities and future market demands. In the 2025 fiscal year, the electricals and electronics segment accounted for only 12% of India’s total component supply. This low penetration rate underscores a substantial gap that domestic suppliers must bridge to remain relevant as the industry moves toward a software-defined future. The current reliance on imported electronic components presents a strategic vulnerability that the industry is now being urged to address through aggressive localisation.

For Indian manufacturers, the path forward involves capturing the value currently lost to imports. The report identifies specific high-value segments where domestic firms can establish a foothold, including electronic control units (ECUs), power electronics, and battery management systems (BMS). By focusing on these areas, Indian suppliers can transition from traditional mechanical manufacturing to becoming integral partners in the global automotive electronics ecosystem, effectively widening their addressable market through both domestic substitution and export opportunities.

To capitalize on this shift, the BCG-ACMA report emphasizes that component makers must move beyond traditional manufacturing paradigms. The emerging value pools in sensors, ADAS, and connectivity require a different set of competencies, specifically in software integration, advanced engineering, and rigorous research and development. The report stresses that the industry’s future success depends on the ability of suppliers to own design and technology, rather than merely acting as contract manufacturers for legacy parts.

This transition requires a concerted effort to invest in human capital and technical infrastructure. As vehicles become more electronic, the rewards will increasingly favor firms that can demonstrate mastery over complex electronic systems. The report suggests that the structural changes currently reshaping the industry are creating a unique window for Indian suppliers to elevate their position in the global value chain, provided they can successfully navigate the transition from mechanical to electronic-centric production models.

Beyond the raw increase in electronic costs, the industry is being pushed forward by a convergence of factors including premiumisation, electrification, and stringent safety requirements. These forces are collectively driving the demand for more sophisticated electronic architectures. Whether a vehicle is powered by a traditional engine or a battery pack, the underlying electronic infrastructure is becoming increasingly standardized, creating a uniform opportunity for suppliers to scale their operations across different vehicle platforms.

This transformation is also being supported by a broader policy and market environment that encourages localisation. As global supply chains become more fragmented and regionalized, India’s ability to build a robust electronics ecosystem is becoming a critical component of its industrial strategy. The report notes that the shift toward higher electronics content is not just an opportunity for individual firms but a necessary evolution for the entire Indian automotive sector to maintain its competitiveness on the global stage.

Looking ahead, the next five years will be decisive for Indian auto component manufacturers as they attempt to scale their electronics capabilities. The industry is expected to face pressure to accelerate R&D investments to keep pace with global technological advancements. While the potential for growth is significant, the challenge lies in the speed of execution and the ability to integrate advanced electronic manufacturing into existing production lines.

Unresolved questions remain regarding the pace of adoption for specific technologies like ADAS in the Indian market, which may influence the timing of these investments. However, the trajectory toward 50-55% electronic content by 2030 appears to be a firm industry consensus. As the sector prepares for this transition, the focus will likely shift toward partnerships, technology transfers, and the development of a specialized workforce capable of supporting the next generation of automotive engineering.