Why L2+ is Taking the Lead Over L3 Autonomous Driving
- Counterpoint projects that the global adoption of Advanced Driver Assistance Systems (ADAS) and autonomous driving technologies will increase significantly, rising to 94% by 2035 from 66% in 2025.
- This expansion will be largely driven by Level 2 and Level 2+ systems, which are expected to account for nearly 65% of total penetration by 2035.
- The industry has generally viewed the Level 3 market as smaller than Level 2, and over time smaller than Level 4. Level 2+ is scaling rapidly.
The global adoption of Advanced Driver Assistance Systems (ADAS) and autonomous driving technologies is forecast to surge to 94% by 2035 from 66% in 2025, according to Counterpoint Research’s Global ADAS and Autonomous Vehicle Forecast, 2025. This expansion will be largely driven by Level 2 and Level 2+ systems, which are expected to account for nearly 65% of total penetration by 2035.
Global ADAS and Autonomous Vehicle Sales Forecast by SAE Level
Source: Counterpoint Research
Although the industry is sceptical about the viability of vehicles with Level 3 autonomous driving capabilities, the main question has always been what the size of that market segment will be. Currently, it appears the market for Level 3 vehicles will likely be small as the Level 2+ segment rapidly scales up. The Level 3 segment is facing a reality check as several leading automakers are slowing down or stepping back from their plans.
Level 3 growth has a more regional flavor and automakers continue to pursue opportunities in this segment in China and North America, where OEMs like Ford, General Motors, BYD, NIO, Xpeng, and Li Auto have committed to Level 3 segment deployments. In these markets, highway-focused use cases and faster regulatory progress make deployment more practical.
L2+, L3 and L4 Key Differences
Source: Counterpoint Research
The difference between Level 2+ and Level 3 is not limited to technology alone, rather it is about how drivers use it. Vehicles with Level 2+ capabilities require a driver to be in control. Drivers can use L2+ features almost every day on highways and city roads, making it practical and easy to scale. Level 2+ systems also do not need full system redundancy, since the driver acts as the fallback, resulting in lower system complexity and lower costs.
Level 3 vehicles, on the other hand, allow “eyes-off” driving, but only in limited conditions like specific highways or low-speed traffic. So even though it is more advanced, it tends to be used far less often, especially since the driver is still expected to take control when outside the permitted operating domain. Level 3 requires full redundancy, along with additional sensors, parallel computing, and backup braking and steering systems. This added complexity makes Level 3 systems significantly more expensive for consumers as compared to Level 2+ systems.
Level 4 takes this a step further by removing the driver entirely within its operating area. As a result, the system must be fully self-reliant, with complete redundancy and much higher compute and system complexity, making it the most advanced but also the most challenging to scale.
Why Level 3 is Losing Momentum for Some Automakers and Markets
BMW introduced Level 3 capabilities in the 2024 7 Series, which comes with BMW Personal Pilot L3. Mercedes-Benz introduced Level 3 models in 2025, such as the 2024 and 2025 Mercedes S-Class sedan and EQS, each of which have Drive Pilot. These systems only work in specific conditions, like on certain highways or in slow traffic. Due to regulations such as UN R157 for Automatic Lane Keep Assist in Europe, both OEMs had to be cautious in progressively defining their ODDs. Their ODDs have a limited geographical scope, restrict top speeds to around 60 km/h at launch, and include a phased expansion plan. Dealers in Europe offered these systems as expensive options priced at around €6,000. Due to the limited capabilities of these systems, the automakers’ long-term plans were to expand the ODD to cover larger geographies and higher speeds of up to 130 km/h. These limitations, combined with restrictions on use, ultimately led both companies to scale back their Level 3 strategies.
OEM Stellantis has also paused its Level 3 plans, which shows that the industry is starting to rethink how practical it really is.
At the end of the day, it comes down to value. Level 3 systems are expensive, but most drivers do not get to use them often. This means people are paying a premium for a feature that remains inactive for much of their daily driving. In comparison, Level 2+, where the driver remains responsible, is less restrictive and operates across a wider range of scenarios, making it far more useful in everyday driving.
This also affects how companies make money from these features. Brands like Mercedes-Benz and BMW offer Level 3 as a high-cost, one-time feature. The industry, however, is shifting toward subscription models, as seen with General Motors, Ford, and Tesla.
Why GM and Ford Are Still Investing
While many automakers are stepping back, General Motors and Ford have committed to invest in rolling out Level 3, but with a more focused strategy.
Both companies are targeting highway-centric Level 3 use cases, where driving conditions are more predictable, and the feature can be used more consistently. Ford aims to bring Level 3 capability to more accessible vehicle segments with the launch of its UEV platform.
In this case, subscription models can become more viable. Systems like GM’s Super Cruise and Ford’s BlueCruise already show strong adoption and are enabling the building of recurring revenue streams. GM reports that around 30% of Super Cruise users renew after their trial period, while Ford has seen hands-free driving usage grow by 88%, showing that drivers are actively using these features.
China: A Different Approach
China has the largest adoption of Level 2+ systems. Features like adaptive cruise control, lane centering, and automated parking are now widely offered and increasingly expected by buyers in China, especially in mid- to high-end vehicles. This is reflected in how quickly OEMs like BYD and Xpeng have expanded these features across their portfolios. Level 2+ has gained strong traction because it is cost-effective, widely usable across highways and urban environments, and easier to deploy without heavy regulatory constraints.
At the same time, China is actively pushing toward Level 3 as a pathway to Level 4 autonomy. OEMs see L3 as the next step to build their capabilities and collect real-world data. This push is now supported by regulatory progress. China’s Ministry of Industry and Information Technology (MIIT) has granted permits to two electric sedans, one from Changan Automobile and the other from BAIC Motor’s Arcfox brand to offer Level 3 functions on select roads in Chongqing and Beijing. With the opening of Level 3 test licenses by Ministry of Industry and Information Technology (MIIT), companies can now validate and deploy these systems faster in real-world conditions. Beyond initial approvals, the government is also strengthening the broader regulatory framework. As China’s MIIT has drafted the country’s first mandatory safety standards for higher-level autonomous driving systems, titled “Intelligent Connected Vehicles - Safety Requirements for Autonomous Driving Systems,” with implementation proposed from July 1, 2027. This policy update focuses on expanding operating conditions for Level 3 systems while introducing stricter safety requirements, effectively moving the technology closer to Level 4 readiness. Authorities are also supporting large-scale pilot programs across major cities, enabling faster real-world testing and deployment.
This coordinated, top-down approach combining regulation, pilot programs, and industry alignment has become a key differentiator for China, accelerating innovation, cost reduction, and the scaling of Level 3 beyond premium segments.
This is also reflected in Counterpoint Research’s Global ADAS and Autonomous Vehicle Forecast, 2025, where the country alone is expected to account for nearly 60% of all Level 3 adoption globally by 2035, driven by its supportive ecosystem, faster regulations, and strong competition.
L4: Driverless
While Level 3 implementation remains selective due to limited real-world use cases, the industry is also moving ahead with Level 4. Robotaxi deployments where high costs are justified through high utilisation of vehicles is the main use case for Level 4 technology.
As costs come down, Level 4 is expected to move beyond fleets. Early adoption could come from premium vehicles and from owners who want to participate in robotaxi networks. As suggested by Elon Musk, Tesla owners could allow the OEM to include these vehicles in Tesla’s robotaxi network, allowing them to serve as robotaxis when not in use and turning them into income-generating assets.
A good example of this shift is Mercedes-Benz, which, after slowing its Level 3 expansion, is now focusing on platforms built with NVIDIA DRIVE AV to enable Level 2+ and Level 4-ready architectures. Similarly, BMW has launched the iX3 as a Level 2+ vehicle on its Neue Klasse platform while stepping back from Level 3. This reflects a broader trend where OEMs are preparing for a full spectrum from driver-assisted to fully autonomous systems rather than boxing solutions based on different levels of autonomy.
Over time, as people experience the benefits of vehicles with Level 4 capabilities, such as convenience, time savings, and reduced driving effort, it could also become attractive for everyday use, especially for routine commutes. In the long run, Level 4 is not just about autonomy, it is about changing how vehicles are used, owned, and valued.
Analyst Take
- The path to autonomy is becoming less about reaching specific levels of autonomy and more about what delivers real value in everyday use. Limitations around cost, usability, and scale have made some OEMs rethink their deployment strategy for models with Level 3 capabilities. Meanwhile, Level 2+ is gaining traction because it provides drivers with additional driver assistance for minimal incremental costs and fewer ODD restrictions.
- Simultaneously, Level 4 is progressing along a different path toward mobility through robotaxis, supported by new business models and long-term potential that go beyond traditional vehicle ownership.
- Overall, the industry is shifting from a technology-first approach to a more practical one, prioritizing solutions that can scale, generate value, and be used consistently.
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Team Counterpoint
Counterpoint Research is a global industry and market research firm providing market data, intelligence, thought leadership and consulting across the technology ecosystem. We advise a diverse range of global clients spanning the supply chain – from chipmakers, component suppliers, manufacturers and software and application developers to service providers, channel players and investors. Our veteran team of analysts serve these clients through our offices located across the key innovation hubs, manufacturing clusters and commercial centers globally. Our analysts consistently engage with C-suite through to strategy, market intelligence, supply chain, R&D, product management, marketing, sales and others across the organization. Counterpoint’s key coverage areas: AI, Automotive, Cloud, Connectivity, Consumer Electronics, Displays, eSIM, IoT, Location Platforms, Macroeconomics, Manufacturing, Networks & Infra, Semiconductors, Smartphones and Wearables.