Just How High-Tech is the Automotive Industry?

The Alliance of Automobile Manufacturers has sponsored a report by the Center for Automotive Research (CAR), based in Ann Arbor, Michigan, that quantifies the high-tech nature of the automotive industry.

Below is the Executive Summary, to download the complete report click here or visit CAR’s website.

EXECUTIVE SUMMARY: Just How High Tech is the Automotive Industry?

Products manufactured by the automotive industry are among the most technologically sophisticated available to the general public. The vehicles American consumers drive off dealership lots across the country are the end result of a long series of high-tech stages encompassing education, research, testing, and manufacturing – leading to machines that typically operate for a decade or more and travel hundreds of thousands of miles in all types of weather and over all kinds of roads.

This report measures the technological nature of today’s auto industry and compares it to other sectors of the economy often viewed as technologically advanced. Of course, defining “high-tech” in an ever-changing economic environment is challenging because it must include many and various metrics. After careful review of the works of several researchers and government agencies, the Center for Automotive Research (CAR) developed a working definition to differentiate high-tech industries from other sectors.

To summarize, high-tech industries generally have the following characteristics:

  • Significant Research & Development expenditures, often over three percent of output; 
  • Significant concentration of technical employees, often with engineers, technicians, scientists, and mathematicians comprising 10 percent or more of the workforce; 
  • Systematic application of scientific and technical knowledge in the design and/or production of goods or services; 
  • Continuous engagement in the design, development, and introduction of new products; 
  • Geographic clusters of educational institutions and research facilities to concentrate critical skills and talents to foster the proliferation of innovation and development of new technologies; 
  • Engagement in the design, development, and introduction of innovative manufacturing processes.

Using the definition above, this study finds the automotive industry is not only “high-tech,” it is frequently a leader in technological developments and applications.


The automotive industry spends nearly $100 billion globally on R&D – $18 billion per year in the U.S. alone – or an average of $1,200 for research and development per vehicle. In fact, the auto industry provides 16 percent of total worldwide R&D funding for all industries. Despite the trend towards being evermore reliant on suppliers for R&D, large automakers are still among the top companies, worldwide, for R&D spending. One study found auto companies make up one-quarter of the top 20 corporate spenders on R&D globally. Also notable, unlike many other industries, automakers devote billions of dollars without the large amount of government support provided to other industries.


To remain competitive in today’s fast-paced, global market, auto companies require educated workers, who quickly develop and adopt new technologies in vehicles and factories. Nearly 60,000 people in the U.S. alone are employed in automotive research and development activities. In raw numbers of electrical, industrial, and mechanical engineers, Michigan – the center of the U.S. automotive industry – ranks second only to California. In terms of engineers per 1,000 jobs, Michigan vastly outranks all others. And the automotive industry as a whole employs more engineers per 1,000 jobs than other major sectors.


The level of education required to work in the automotive industry has risen significantly in recent decades. An increasing portion of workers have associate, bachelor’s, and other advanced degrees. Automotive education programs have been created to provide the industry with a highly-skilled and educated workforce. Within Michigan, Indiana, and Ohio alone, there are more than 350 higher education institutions offering programs related to engineering, designing, producing and maintaining automobiles. In all, these institutions alone offer more than 1,900 distinct degrees pertinent to the auto industry.


Automakers are constantly adding new high-tech content to their products, partly evidenced by thousands of patents the auto industry is awarded per year. As the complexity of technology in today’s vehicles rises, the concomitant electronics content has also climbed dramatically, enabling the expansion of features that has improved safety, performance, and efficiency. An average vehicle contains around 60 microprocessors to run electric content – four times as many as a decade ago. More than 10 million lines of software code run a typical vehicle’s sophisticated computer network – or over half the lines of code that reportedly run Boeing’s 787 Dreamliner. Traditionally, three to five percent of all patents granted in the U.S. are awarded to the auto industry, a number that has risen to approximately 5,000 new patents per year. With automated and connected vehicle technologies, innovative materials, new joining methods, advanced powertrains, and alternative fuels, the technological development will further improve driving experiences in the future.


In the Great Lakes region, an automotive R&D cluster has grown as companies sharing similar needs for talent and technology amassed, particularly in the state of Michigan. Today, Michigan alone is home to more than 330 automotive R&D companies and hosts R&D facilities for nine of the 10 world’s largest automakers. Additionally, 46 of the 50 top global automotive suppliers have research facilities located in Michigan.


High-tech manufacturing methods are a trademark of the automotive industry. The automotive industry has historically been a major driver for the robotics industry, and continues to develop new ways to implement robotics systems in order to improve manufacturing precision and efficiency. The industry is also rapidly increasing its use of state-of-the-art processes and materials, such as new digital engineering and nanotechnologies to improve the design and production of vehicles.

© 2014 Center for Automotive Research