•    Cerence AI is at the center of automakers’ efforts to integrate generative AI with their in-car digital assistants
•    In 2024, approximately 46 million vehicles were sold with Cerence AI software on board—62% of all passenger vehicles sold that year
•    Looking ahead, the company is working closely with several automakers and ecosystem players to elevate their in-cabin digital assistant experiences to the next level, both for future programs and current generations available in cars on the road today
•    Cerence AI leverages its automotive industry expertise and data, and its ability to fine-tune generative AI models for automotive use cases, to compete

Cerence AI has been focused on the intersection of artificial intelligence (AI) and voice-based human machine interface (HMI) for many years. In March, the company announced its latest solution suite, Cerence xUI, which is a voice-based digital assistant and an AI framework. It leverages a set of larger and smaller scale language models in the cloud and on the edge that the company has branded as Cerence AI Automotive Large Language Model (CaLLM) and that are enhanced by Cerence AI’s unique automotive data sets. Within the company’s CaLLM group of models is CaLLM Edge, which are embedded (on-device) models that includes Microsoft’s Phi models and Meta’s Llama models.

Cerence xUI enables automakers to create a voice-based digital assistant that can complete tasks and provide both driving-specific information and general information and entertainment. It can orchestrate responses to different agents to solve the user’s request, depending on the prompt and broader context for that prompt. Another key feature is that it can offer coherent responses across multiple interaction turns and apps by keeping complex, multi-step queries from users in context. The solution can create responses that utilize real-time and background information from in-vehicle (embedded) and cloud-based data sources, from curated content partners as well as from open online data searches.

Cerence AI has been in a state of transition for the last several years, moving from licensing embedded solutions to offering hybrid solutions that use connectivity to provide an improved user experience. The company has focused on the application of AI to the automotive digital cockpit market for many years. As a result, Cerence faces competition from major technology companies.

In this competitive environment Cerence AI has taken an integrator role with its OEM customers as many of the technology firms will only dedicate limited effort to customizing AI models for automotive use cases. Some companies provide tools that automakers can use, but OEMs must focus on every aspect of vehicle development and have, for years, leveraged Cerence AI’s expertise in this domain to implement in-car digital assistants.

Looking ahead, although the company will face challenges as the automotive industry focuses on cost reduction, especially in an increasingly fraught global trade environment, the company’s relationships with OEMs and other ecosystem players, the growing automotive AI market, have put the company in a stable position. To move beyond its ~$300 million average annual run rate, though, the company needs to build a strong pipeline of connected services customers with more partner integration to scale its capabilities.

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