Modern Cars – A Paradigm Shift
Published on : Sunday 01-11-2020
With smart combination of electronics and intelligence, modern cars have caused a paradigm shift in the auto industry, asserts Dr Deb Mukherji.
Cars have been around us for more than 100 years. Cars have since gone through massive changes in concepts, design and performance. The modern automotive industry follows technology leads from aerospace industry. Major changes seen in past 2 decades have been on safety, material sciences and electronics. Cars have become lighter, faster and safer. This is aptly demonstrated in the modern day Formula 1 racing. At the same time cars have become more like electronics gadgets with huge content of electronics parts.
Broadly, the segments of electronics usage in car can be categorised as follows:
i. Safety items
ii. Information and Infotainment
iii. Engine side and emission management, and
iv. Automation, digital connectivity and data management.
In the automotive sector, the adoption of safety-related electronics systems has grown explosively. Semiconductor components that make up these electronic systems will cost USD600 per car by 2022. There is a huge surge in demand for various semiconductor devices in cars, including microcontrollers (MCUs), sensors and memory. The content per car for electronics items has grown exponentially from just 10% in 1980 to 40% in 2020. It is expected to reach 50% of the car cost by 2030 as per Deloitte report – Semiconductors the next wave April 2019.
Changing automobile scenario
The use of electronics has caused major changes in the area of car automation. These could be summarised as below:
1. Microprocessors usage systems – Ignition and fuel injection are electronically controlled, providing lower emissions and greater fuel economy.
2. Engine control units (ECU) include modular transmission control and engine control modules. Up to 50 engine parameters are used, measuring pressure, temperature, flow, engine speed, oxygen level, and NOx levels. ECU outputs connect to up to 30 actuators, for the throttle valve, EGR valve, rack, fuel injector, etc. ECUs and transmission control share data, sensor, and control signals for transmission operation.
3. Car electronics handle engine management, climate, propulsion, antilock braking, passive safety systems, navigation, battery system management, etc.
4. Sensor technology advances and signal processing algorithms provide the groundwork for a variety of new systems.
5. Autonomous cars incorporate advanced sensors, networking, and navigation systems.
6. Several chassis subsystems are actively controlled, including anti-lock brakes, traction control systems, electronic brake distribution, and electronic stability.
7. Passive safety is electronically controlled and includes air bags, hill descent control, and emergency brake assist systems.
8. Driver assistance, passenger comfort, and infotainment systems are the latest to be designed and implemented.
9. Data capture, analysis and communication systems through large capacity computers on board.
Many of these innovations took place as a result of tightening emission and safety norms by the government. OEMs were forced to incorporate these into the vehicles. Also the learnings from space crafts were huge from space explorations vehicles in the 80s and 90s. These space crafts used lots of new age materials, navigation, auto controls and safety features. Gradually we see many of these technologies and knowledge being used in automobiles. To achieve the above cars use a large number of sensors. A modern car uses over 500 sensors in its various systems.
The new age of cars would be connected cars. The car would be processing enormous amount of data for the users, generating business avenues. In fact, some experts estimate that data would be more profitable than making the car itself. Car becomes a part of life, capturing user information like choice of music, financial information through payments made on the car internet, insurance data, purchases made, and so forth. It would be connected to the office and household equipment through Internet of Things (IoT). The car is also going to become part of the energy eco system,
with its connection to the energy grid. During idle time car batteries would hook up to the grid and sell electricity to users. Shared mobility is another big thing coming. We do see enormous opportunities as more people would like to work on asset light model. Leasing, subscription based usage models will develop around the car.
Modern vehicles generate around 25 gigabytes of data every hour! Autonomous cars will generate even more – up to 3,600 gigabytes of data per hour, according to expert forecasts. Vehicle data is not just generated on the road. These modern cars use blockchain technology on distributed networks for enhanced data security.
The on board computer has to process huge amounts of data in real time and make it available on cloud to the users. Adequate data security measures are built into the system. With 5G roll out soon, we will see tremendous strides in data processing technologies. These data would be used and monetised by car companies to generate revenue for them.
The new value pyramid for suppliers
We see the traditional tier 1/2/3 structure in automotive industry will change soon. Traditionally the auto components industry has been operating in a tiered structure, wherein the Tier-3 at the bottom end are the small parts makers which are supplied to Tier2 and 1. At Tier2 level we have makers of sub-assemblies, typically metal parts, which are supplied to Tier1. Tier1 at the top of pyramid makes the assemblies which are supplied to OEM-car maker. These are not necessarily the final ready-to-fit in the car parts, the car maker also does several operations on these parts. The profitability of Tier1 is highest as he deals with OEM car maker directly. The profitability reduces as we come down the pyramid.
In the new age auto makers value chain we will see all the traditional component makers in metal and plastics category in Tier 2/3. At the top of value pyramid we see the suppliers with cutting edge technologies featuring electronics and intelligence. These companies would be working directly with the OEMs and also with some of the module makers, e.g., steering system, instrument panel, brake system makers, etc. These suppliers would be highest value providers in the auto value chain.
In the last 3 decades we have seen large technical advancements in steel in material behaviours, alloy formation, etc. EG steels have become lighter and stronger with higher tensile strength for deep draw components. Alloy steel in various combination of metals is used in high efficiency engine and other parts which undergo heavy wear outs. In the non-metal parts we have seen great advancements in the plastics with high performance polymers, heat resistant plastics, etc. Also we see advancement towards composites and carbon fibre, etc.
However the advancement in the electronics and intelligent parts has been manifold than metals. The electronics parts today have much higher computing power than the ones 10 years ago. The development of artificial intelligence, machine learning and IoT has changed the face of the industry. Computer chips today can process massive amounts of data and connect with other equipment for decision making on real time basis. The supplier industry in traditional metal industry would be left behind in these new age technologies. All part makers would need to interact with part development with the electronics parts and IT services companies. There needs to be an integration between IT and automobile electronics.
To conclude, we see a massive new wave of electronics usage coming to the automobile industry. These changes would be driven by Artificial Intelligence, Big Data and IoT. All these technologies would converge in the automobile along with GPS, optics and camera technologies. Battery cars would be the new wave, which would make cars a part of the energy eco system.
Shared mobility, connected cars and data processing would constitute the new mobility eco system. We see supplier industry undergoing a major shift from traditional tier based system to a more interconnected system where the suppliers with electronics and intelligence expertise would interact with everyone from lowest level supplier to the OEM. With millions of lines of codes written into these cars, they would do everything from shopping to bank transactions to energy sales. The automotive industry is set to undergo a radical change from a mechanical piece of equipment to an information processing software driven equipment with huge computing power. We need suppliers to take a note of this and develop capabilities in intelligent high IQ parts. This will enhance the value of business many times over.
Dr Deb Mukherji, PhD, is a veteran of the automotive industry in India for past 35 years, and has handled CEO level positions for more than 10 years for Japanese and other MNCs in India. As an entrepreneur for past 10 years Dr Mukherji has successfully run his own businesses, also helped several businesses in their expansion and turnaround plans. In 2018, he merged his companies with Anglian Omega, a business group in automotive and infrastructure businesses in India, and is Managing Director on the Board of the Group. During his career, Dr Mukherji has been instrumental in bringing in several foreign joint venture partners and set up successful projects in India, and also set up and successfully run several large scale businesses with direct P&L responsibility. He has served as consultant to the Ministry of Industries for MSMEs. His research work includes evaluating Indian auto components industry competitiveness on global scale using a comprehensive evaluation model based on World Economic Forum research model on Global Competitiveness Report. Dr Mukherji has been active in alternate energy mobility business and part of the team that developed an electric 3-wheeler with 100% in-house R&D and launched recently under the “Rage+” brand, in the cargo space for B2B and B2C customers. The smart mobility business model is developed to create a complete eco-system of mobility solution. It consists of mobility, connectivity and energy management as three major pillars of business. The IT platform manages the cargo space, route and travel optimisation thereby enhancing efficiency in the system. It uses high end AI and IoT to predictive decision making and communication.