Sales of autonomous vehicles worldwide are forecast to increase much faster than previously expected, thanks to a substantial increase in R&D investment through the automotive industry, according to market research firm IHS Automotive.

IHS Automotive, the automotive research arm of IHS Inc., issued a new forecast last week calling for some 76 million autonomous vehicles to be sold worldwide through 2035. The forecast calls for annual sales to grow from about 600,000 in 2025 to 21 million in 2035, a compound annual growth rate of 43% over the 10-year period.

Much of the early growth in sales is expected to occur in the U.S., where autonomous vehicles will be first deployed in 2020, and China, according to the Southfield, Michigan-based market research firm.

The forecast for 2035 sales is an increase of about 175% compared to the previous forecast from IHS. The firm has also raised substantially its projections for sales in earlier years, said Jeremy Carlson, principal analyst at IHS Automotive., in an email exchange with EE Times.

Carlson said IHS generally doesn’t compare its forecasts with previous iterations because they are constantly being updated, but in this case the increase is significant because based on recent developments the firm’s analysts “expect these technologies to find a home in more substantial ways around the world given all of the recent market activity.”

In a statement, Carlson said IHS expects entirely new vehicle segments to be created in addition to traditional vehicles adding autonomous capabilities. “Consumers gain new choices in personal mobility to complement mass transit, and these new choices will increasingly use battery electric and other efficient means of propulsion,” Carlson said.

The revised forecast is based on new developments such as the rise of ride sharing and car sharing programs, increased investment in autonomous car technology and regulatory activity, among other factors, IHS said. The forecast considers increasing investment in autonomy by automotive OEMs, suppliers and technology companies, as well growth in R&D centres and improved efficiencies, IHS said.

IHS projects that several thousand autonomous vehicles will be sold in the U.S. in 2020 as the nation works through challenges posed by regulation, liability and consumer acceptance. Sales of autonomous cars in the U.S. are projected to grow to 4.5 million vehicles by 2035, according to the IHS forecast.

The forecast calls for growth in China to be more rapid, despite a later start than in the U.S. By 2035, the firm projects that 5.7 million vehicles sold in China will be equipped with some level of autonomy, making China the largest market for autonomous vehicles.

Autonomous vehicle deployment will continue to be challenged by threats including software reliability and cybersecurity, though improvement has been shown in both areas, IHS said. The implementation of rules, regulations and laws around autonomous driving will also continue to prove challenging, according to the firm.

“Increasing competition from the high-tech and other industries is accelerating the auto industry’s autonomous software and cybersecurity development efforts,” said Egil Juliussen, director of research at IHS Automotive.

“Those who don’t adjust to a changing world will unfortunately be left behind, or will at least face a very different industry,” Carlson added.