2018 CES – A confluence of technologies to drive automotive innovation
At CES 2018, experts from IHS Markit expect to see a wide-range of companies from automakers and traditional industry suppliers to start-ups and mega technology firms touting their newest ideas, concepts, and production-ready innovations - all with the aim of reinventing what the automobile is and what it can do.
Regarding the automotive industry, the announcements made and exhibits on display will likely fit into one or more of these six categories:
- Autonomy & Mobility
- Connectivity & Data
- Software & Cybersecurity
- User Experience
- Electronics Consolidation
Each category has an amazing breadth and depth as firms both inside and outside the automotive industry position themselves for the biggest piece of - what is expected to be - a very lucrative pie. IHS Markit expects global revenues from cockpit electronics, ADAS and automation systems, and electrification components to reach $183 billion by 2022.
IHS Markit covers each of these sectors very closely and will have several experts at the 2018 CES to witness the innovation and provide commentary about the impact of the various announcements to the global automotive industry.
Autonomy & Mobility
In 2017, we witnessed the first real deployments of SAE L4 autonomous vehicles in pilot programs with ride-hailing fleets. Granted this was on a small scale, but it marks the start of what will grow to thousands of L4 driverless cars in ride-hailing platforms by 2019. By then, it is expected these vehicles may not even need a back-up driver for certain types of routes.
Nevertheless, 2018 will bring further momentum as OEMs continue to get their technologies closer to production-ready for additional layers and deployments in mobility programs. Looking ahead to the future, IHS Markit projects 33 million autonomous vehicles sold in 2040, up from only 51,000 in 2021. In addition, by 2040, there will be 12 average mobility-as-a-service users per car, illustrating a mobility marketplace with increased vehicle usage from fewer overall vehicle sales. Additional detail on this new forecast is available here.
As this market transitions from a product-based economy to a service-based economy, the supply chain is ripe for innovation and disruption. Right now there is an autonomous vehicle platform battle underway. On the hardware side companies like NVIDIA, Intel/Mobileye, Aptiv, Bosch, ZF, and others are working to secure future competitive advantages and long-term growth. Meanwhile, companies like Waymo, GM-Cruise, NuTonomy, Baidu, and others are angling for the most robust autonomous vehicle software platform. These companies and many more will continue to invest, acquire, and innovate to secure the best possible position to leverage the growth in this sector.
Lastly, as a critical component to success in autonomous driving, innovations in LIDAR sensing will be the catalyst to achieving the goals put out by any company trying to deploy autonomous vehicles. Right now, LIDAR is primarily a R&D tool for mapping and data collection, but as sizes and costs drop rapidly, IHS Markit projects the automotive LIDAR system revenues to reach $2.5B by 2026.
Connectivity & Data
Connectivity is now - finally - a commoditized feature among automobiles both luxury and volume across nearly every corner of the globe. What comes next is advanced connectivity solutions to increase bandwidth or provide new revenue channels.
While it is highly touted among the wireless communications industry right now, 5G connectivity is unlikely to unseat 4G LTE connectivity as the automotive standard until 2023 or beyond. IHS Markit estimates 33 million vehicles will be produced with 4G LTE telematics across the globe in 2023. 5G is coming to the automotive industry, but it not in meaningful volumes for many years.
Meanwhile, OEMs and suppliers continue to invest and focus on cellular V2X technology as the industry desires new functionality and sensory inputs to their automated driving systems. While DSRC is still undergoing development, it is losing momentum compared to investments in cellular V2X.
With technological developments happening on the engineering side, the business leaders in the industry are beginning to calculate and organize opportunities to monetize the vast amount of vehicle data that is collected all over the globe. Now that the connected vehicle ecosystem is well-established, each player is looking for partnerships to drive analytics, provide data warehousing, or distribution for connected vehicle data, all with the end goal of developing a new revenue stream from the information. This development is in its early stages and much is still unknown about the best-practices or leaders in this area.
Software & Cybersecurity
CES 2018 will host many announcements and demos around vehicle cyber security, as OEMs work to protect their customers and vehicles from myriad potential threats. IHS Markit forecasts 68M vehicles will be equipped with cybersecurity firewalls by 2024.
As a medium for ensuring on-going maintenance of these security frameworks, as well as recall servicing and feature upgrades, OEMs will also use over-the-air (OTA) software platforms to keep vehicles up to date. By 2021, there will be more than 14M vehicles on the road with ECU-level OTA capabilities.
OEMs will also increasingly deploy intelligent OS and hypervisors in order to provide the backbone the consolidated and secure electronics architectures in their global vehicle platforms. As an example of the value of these software, IHS Markit estimates that global license revenue from ADAS OS and middleware will be worth $640 million alone by 2023 - an estimate that does not include additional software platforms for cockpit or powertrain systems.
Unfortunately, with all of this investment in automotive software, OEMs will also need to continue development and deployment of phone-projection software like Apple CarPlay and Android Auto. These two platforms have more clout and functionality than what many native OEM systems can provide to consumers, and as such IHS Markit projects a cumulative 200 million cars will be on the road with Apple CarPlay and Android Auto capabilities by 2024.
Innovation in HMI is converging into three central areas - removal of buttons, innovation in displays, and human-centric HMI, like gesture and virtual personal assistants (VPAs). The first area is pretty straightforward. Automakers are working to remove HMI complexity by replacing individual dedicated hardkeys with multi-function interfaces such as touch screens or disassociated controllers. This was started by the premium German brands, but has been democratized into global volume brands as well.
The opportunities for innovation in automotive displays are plentiful. Larger sizes, new applications, and new technologies are all in play as suppliers look to secure future growth in this area. New hardware-based 3D displays offer true depth for a full digital instrument cluster and is already getting traction. IHS Markit expects 1.3 million units of 3D displays in 2026.
Holographic waveguide HUDs are another area of automotive display innovation. These technologies promise better optical specifications wrapped into a smaller component package. The first deployments of holographic HUDs will be for augmented reality HUD systems, but will eventually become viable for traditional HUDs as well. IHS Markit forecasts 3 million units of holographic waveguide HUDs produced in 2026, which will represent approximately 16% of all windshield HUDs globally.
Finally, much of the industry's investment in HMI will be to design vehicle interfaces that listen to the human better. In the first instance, this will be literally true, as speech recognition evolves into a virtual personal assistant (VPA), not unlike what Google and Apple offer smartphone users already. The aim here is to use AI to create a "driving partner" instead of just a speech recognition solution. IHS Markit expects OEMs will develop and maintain their own VPA platforms in-house, shipping roughly 38 million licenses in vehicles in 2026. Meanwhile, third-parties like Apple, Amazon, and Google, will ship approximately 163 million licenses in that same year.
In addition to VPAs, automakers continue to invest in developing advanced driver monitoring systems to enable a more natural communication with the car. Hand-gesture recognition systems continue to grow in importance, intuitiveness, and volume. IHS Markit forecasts 36 million vehicles to be produced with hand-gesture recognition in 2026, which will include both luxury and non-luxury brands.
Up until recently, the addition of a new electronic feature in a vehicle often coincided with the addition of a new ECU, which added both engineering complexity and added costs. With the deployment of high-powered processing and flexible OS and hypervisors, OEMs and suppliers are now rethinking how to engineer and package individual customer-facing features.
Cockpit domain controllers will integrate displays, connectivity, and more into a single high-powered ECU. IHS Markit conservatively estimates 7.6 million vehicles produced with cockpit domain controllers by 2026 - a segment that will be growing at a 10% annual rate by then. Some suppliers claim deploying a cockpit domain controller could save OEMs between $150 and $200 per car, but this would of course depend on how many components are consolidated and how much volumes the vehicle program will produce.
In a similar vein, the ADAS domain has much to gain in consolidating its electronic architecture of sensors and ECUs into a simpler design with high-powered, centralized computing. That market is also forecasted to grow well, with an estimated 21.7 million units produced by 2023.
Regardless of which domain is considered, the trend toward consolidation is likely to occur quickly, slowed down (or accelerated) only by an OEM's organizational agility to adopt this trend.
Lastly, IHS Markit sees electrified vehicle propulsion systems continuing to advance in 2018, with battery electric vehicles gaining a large majority of the attention. As start-up and established automakers compete to deploy ever-improving specs for electrified powertrain platforms, the market will begin to shift toward more production of these vehicles than ever before.
In 2017, IHS Markit estimates 96% of the world's vehicle production had an internal combustion engine (ICE) or an ICE with Start-Stop technology, leaving only 4% of the world's vehicle production with a mild-hybrid, full-hybrid, plug-in hybrid, fuel cell, or battery electric powertrain.
However, with the investments OEMs have already made and the advancing ecosystem around materials, batteries, and other hybrid powertrain components, this ratio will shift significantly. By 2025, IHS Markit projects only 65% of the global vehicle production will have ICE or ICE with start-stop powertrains, where a healthy 35% of vehicle production will employ some sort of electrification.
Posted 5 January 2018
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