Car electronization trend in automotive industry

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Automotive ElectronicsTrend in Automotive Industryby: Kenji Suzuki ESPEC CORP.

Dec. 17, 20141ContentsIII.Obstacles & SolutionsIV.Related StandardsV.AppendixI.Structure of the IndustryII.Electronics: Today & Tomorrow2ContentsIII.Obstacles & SolutionsIV.Related StandardsV.AppendixI.Structure of the IndustryII.Electronics: Today & Tomorrow3

1890~1970Local->RegionalCars made locally, using locally supplied partsCars distributed locallyServing the local economy and communityProduct taste matching the locals

2000~Glocal (multi-domestic)Export of the whole supply chain and technologyGlobal platform with taste matching exterior and design > volume discount with no compromise in tasteHedging currency exchange risk and import dutyIndustry Structure Trend

1970~2000GlobalExport of complete vehiclesGlobal standard productsPrice advantage based on volume discountCurrency exchange riskProduct taste not matching the localsIndustry Structure

Tier 1System Mfr.Tier 2Parts Mfr.Tier 3Material Mfr.Car Mfr.(OEM)

5OEM = car manufacturerTier 1 = Supplier who supplies products and services to OEMs factory.Tier 2 = Supplier who supplies products and services to Tier 1s factory.Tier 3 = Supplier who supplies products and services to Tier 2s factory.None of these structures are fixed, as companies can have a multiple role in the industry. For instance, DuPont can be a Tier 1 supplier as they supply car paints directly to the OEMs, but at the same time, they may provide plastic materials to Tier 2 suppliers.In last 10 or 15 years, the relationship between Tier 1 mfr and OEM changed dramatically. The biggest change of all, both GM and Ford spun off their electronics parts division, Delphi and Visteon, respectively. They used to mfr as much as 70% of all parts and caused rise in cost.The idea of using parts mfr in Europe and US began as an outsourcing of modules. It was due to difference in labor cost between OEM and Tier 1 mfrs. In Japan, however, the difference was so small, there were no benefit of outsourcing. Supply Chain Structure

Source: Ministry of Economy, Trade and IndustryOnce believed to have an ideal structure, was denied completely by the earthquake that hit Japan in 2011.Industry Structure (Keiretsu)



Toyoda Koki Automotive23.62%22.56%Merged 0624.77%9.1%7.85%39.36%

Toyota Boshoku Corp.

Arakawa Auto BodyNote: Numbers show the percentage of stake owned by ToyotaToyota Ind. Corp.



31.16%7Toyota has been increasing the amount of share of their group companies. This is called Keiretsu and some American and European economists criticizes this as a disclosed system. However, group companies, on the other hand, they want to have relationship with other OEMs hedge their risk.Due to this structure, Toyota has been able to maintain their lead in technology along with strong partners such as Aisin and Denso. Also, due to this structure, the new comer in the parts industry is mostly Tier 2.Industry Structure TypeClosed: Owning parts mfr. as a division or a group within a company.

Semi-Closed: Parts supply to be outsourced to limited number of companies (Owning a fair amount of their stake).KEIRETSU

Open: Having parts supply to be outsourced as an open bid as required.8Closed is how things were at Ford and General Motors up to the 70s. During the 80s, their electronics department spun off as Visteon and Delphi, respectively. Closed structure will not create competitive environment and therefore not easy to bring the cost down.OEM and SuppliersOEMCar Mfr.Tier 1System Mfr.Tier 2Parts Mfr.Traditional RelationshipTier 1 SupplierSystem Mfr.OEMCar Mfr.Tier 2 Supplier(Parts Mfr.)Current RelationshipIn the past, OEMs dealt directly with Tier 1s and only with their Tier 1s. There was no direct communication between OEMs and Tier 2s. However, today, the relationship is more triangular rather than vertical, OEMs communicate with both the Tier 1s and Tier 2s at the same time.9OEM and SuppliersCooperation of Parts Mfr. And OEMA must-have relationship to adapt the latest and best electronic technologies available.Adaptation possibilities and cultivation of Newborn Tech to car applications. Key: Adaptation to Car ApplicationsExamplesAutomotive MicrocomputerACC* Radarmilliwave, laser, camera)ProgressOEMParts Mfr. Fundamental DevelopmentSystem Mfr. Product DevelopmentTier 1 SupplierSystem Mfr.Tier 2 SupplierParts Mfr.OEM(Car Mfr.Tier 1 SupplierSystem Mfr.Tier 2 SupplierParts Mfr.OEM(Car Mfr.CourtesyNissan Motors Corp.*ACC: Automatic Cruise Control10For instance, OEM do not know the difference between CMOS and CCD, but Tier 2 does. CCD manufacturer may come up with an idea to use their CCD sensor for automotive application, but in such cases, it is better to talk to OEMs instead of Tier 1. Once the application and specification requirements are clear, they will talk to Tier 1 to system-up to become a final product. The tier 1 will integrate other systems and they design the HMI.Development Lead TimeSource: Initia Consulting

11Vehicle Development The DifferenceSource: Roland BergerRegionDevelopment TimeCostQualityRatingReasonRatingReasonRatingReasonEU/NAShortBy modularization - Specifying modules in pre-development stage - Less newly developed partsLowScale merit by utilizing modules to multiple vehiclesClear development time frameRFQ to multiple suppliersHighImprovement per module or architectureEfficiency in productionJPNShortGood understanding by parts suppliers - Instant understanding of OEM's request - Acucmulation of daily meetingsLowCost reduction by working togetherBecoming difficult to meet price requirements in global competition environment.VeryHighBroad approach to safety, quality, and reliabilityApproach done at every stage of suppliersPossibilities of over qualityCHNShortUsing conventional parts and modulesLeast amount of evaluation and testingLess demanding marketVeryLowVolume purchase of conventional partsStringent request of cost reductionSelf-production as an optionLowMany copies and counterfeit by reverse engineeringUnbalanced vehicle dynamicsLow interest in NVHVehicle ArchitectureThis is not a matter of right or wrong, but manufacturers are always looking for better ways to make profit. The European manufacturers failed to pursuit the Japanese way of building cars. They found their style in modularization, pioneered by Volkswagen.80s and 90sCurrent MajorityVolkswagen and a fewSource: Roland Berger

Modular Design (VW)

The idea of module has been implemented in all levels from components to vehicle.The base is to utilize whats already available.One of the prominent characteristics of the Modular Transverse Matrix is the uniform mounting position of ALL engines.Volkswagen Modular Transverse Matrix (MQB)14Group Responsibility in Dev. (VW)Vehicle Architecture-RelatedMake design rules and vehicle architectures on ALL VW and Audi vehiclesModule-RelatedContinuous development per modulesModule Manager will decide what will be used for each vehicleNon-module parts are developed by orders from Project Team.

Vehicle-RelatedOrganized team per vehicleResponsible for the total packaging of a vehicle excluding modulesUtilize modules already available and consider development of what is not available

Unlike many of their Japanese rivals, the vehicle project manager is NOT in charge of that vehicle. 15Modularization

Mazda Common Architecture

Toyota New Global Architecture

PSA Peugeot Citroen EMP2 Efficient Modular Platform

Renault/Nissan Common Module FamilyMegaplatformsOEMPlatformVolume(in mn)No. of ModelsSample Models1VWMQB6.341VW Golf; Passat, Audi A32ToyotaMC5.225Auris, Corolla, Vibe: Scion xB3Hyundai/KiaHD3.016Hyundai i30; KiaCee'd4GMDelta2.519Opel Astra; Chevrolet Cruze5PSAEMP22.324Peugeot 308; Citroen C4, DS46Renault/NissanB2.210Renault Clio; Nissan Cube, Juke, Leaf7FordC12.218Focus, C-Max, Kuga8Hyundai/KiaPB1.918Hyundai i20; Kia Rio; Venga9Renault/NissanCMF11.920Renault Megane, Nissan Qashqai10FordB2E1.811Fiesta, B-Max; Mazda2/DemioSubtotal29.4202ContentsIII.Obstacles & SolutionsIV.Related StandardsV.AppendixI.Structure of the IndustryII.Electronics: Today & Tomorrow18

a. Pursuit of Better Efficiency and SafetyGREEN :Low (Zero) emissionMultiple powertrain (Hybrid)CVT, DCT and other high efficiency transmissionSafetyAdvanced Emergency Brake System (AEBS)Adaptive Cruise Control System (ACCS)Lane Departure Warning System (LDWS)Pedestrian AirbagAlcohol Ignition InterlockTraffic Avoidance SystemComfort:Cabin Air quality managementLinear Motor SuspensionWellnessHealth monitor of occupantsCourtesyNikkei BPHitachiDrger Safety AG & Co. KGaATEAC Corp.19CountryRate per100,000populationAbsoluteDeathsChina16.596,611Indonesia16.216,548Vietnam16.112,800Thailand19.612,492Japan56,639Malaysia23.66,282Bangladesh12.64,108Afghanistan391,779Cambodia12.11,668Myanmar23.41,638Philippines201,185Singapore4.8214Bhutan14.4111b.PriorityGreener and Safer

Protection of pedestrians and occupants, and earths environment is a MUST, regardless of geographical area. These are GLOBAL ISSUES!! Courtesy: AltEnergyStocks.comGlobal Emission Standard TimelineSE Asia Traffic Death StatisticsIn the past, it was common to see so-called Trickle down effect in car features. The latest and best technologies were only available to those sold in developed countries. But Not anymore! They have to provide as much hi-tech and new technologies to ALL of their customers.Courtesy: WHO survey 2009Both safety and environmental protection is something that all OEM must provide to all their customers worldwide. They need to find ways to provide these new technologies without any increase in cost, and avoiding any possibilities of recalls. THIS is their challenge.20Cars on Diet

Source: Automobili Lamborghini S.p.A.Source: BMW AGSource: Nissan Motor CompanySource: General Motors CompanyHigher Voltage1920s19552015?20XX7V(6V Battery)14V(12V Battery)42V(36V Battery)Multiple-VoltageLoad: AccessoriesLampIgnitionLoad: Body electronicsLampEngine management systemAudioNavigation SystemLoad: PWR electronicsHEV, ISGX-by-wireHigh fuel-efficiencyLow emissionHEV, FCEV 150 300VPower: 42VECU: 7VMerit:Higher voltage = lower amps (1/3 less) = thinner cables, smaller connectors, and smaller motors = Weigh less = better fuel efficiencyBe able to use high-wattage system (E-air compressor, motor generator, integrated starter generator, E-heated windshield, and etc.)Less use of converters = less power loss = better overall efficiencySource: Tatsuo Teratani Edited by author22

Internet of Things (IoT)Internet connection is something we cannot live without. That is also true for carsat least thats what people in governments, IT and auto industries think.But how it should be disclosed by the government and/or the companies who are involved, and the security of data and privacy protection are something that must to be solved.

Regulations or Source: Automotive Technology Magazine translated by author

Assessment of technology and disclosure of test results by institutions may encourage manufacturers to implement and improve the technology earlier than their original plan.System in SyncTrend of Vehicle SystemIndividual ControlSystemVehicle Integrated SystemVehicle + Infrastructure IntegrationVehicle Integrated SystemApplicationSystemSoftwareIntegrated APHardwareEngineBrakeSteeringSteeringAPBrakeAPEngineAP

Next GenerationPresentPast

Evolution in BrakesShrink in size, IntegrationEx: Used to be a separate unit, but now they are integrated as one.

ABS CPUABS Hydraulic PumpABS Unit

Camera or RadarUnit


SynchronizationEx: A group of parts work in-sync to execute a function, as a system.70s ~ 80s80s ~ 90s2000s ~26Increase of Electronics (1)In semiconductor industry, sales to automotive industry was US$11 billion in 2000. However, that number reached US$25.5 billion in 2012, and by 2017, it is expected to reach US$40 billion. (Annual growth of 11%)

Cost of Electronics in a Vehicle2005Avg. 20%2015>Avg. 40% (expected)CourtesyPricewaterhouseCoopersCourtesyNikkei BP


1990sToday2020sApplication for MCU will continue to growIncrease in number of 32 bit MCUs used in ECUs may be small. However, due to new applications such as vision and sensor systems, number of 8 and/or 16 bit MCUs will increase.By integrating multiple ECUs, the number should decrease.However, introduction of new systems will require more complex system LSI and graphic LSI, which may lead to increase in number of ECUs.Number of ECUs stabilizes, while number of MCUs continue to grow.Integration of multiple ECUs has begun. However, there are new systems that requires MCUs to control, are waiting to be adapted. As a whole, number of ECUs may stabilizes while the number of MCUs expected to continue to grow.Increase of Electronics (2)Number of ECUsNumber of MicroprocessorsCourtesy: Nikkei Automotive Technology28ECU Groupings/Integration

IntegrationbyFunctionApprox. 60 to 100 ECUsIntegrated into 4 function groupsPowertrainMultimediaBody ControlSafetyIntegration of approx. 60 to 100 ECUs to 4F groups.Toyota Motors has announced that they will integrate ECUs to 4 function groups. 4 function groups are:PowertrainBody Control MultimediaSafetyCourtesy: Toyota Motor Company29

MiniaturizationMounting TechniqueSemiconMLPCMaterialTodayECU PlacementDead SpaceFutureNo more dead space= MiniaturizationHattori, Toyota Motors) MES2005TodayFollowing consumer electronicsFutureLeading miniaturization technique and technologyLeader not Follower30

Direct-Mount ECUMiniaturization andHigh Temp. OperationECU directly mounted on engine to cut the use of wire harness and production cost. Some vehicle even submerge ACU in transmission oil.New TechnologyAluminum Oxide SubstrateHigh-Temp. Application ICBare-chip mounting techniquePower semiconductor devicesChange in EnvironmentPhotoMercedes Benz CLS 350 CGI

OBDII Electronic Transmission Control UnitPorsche Cayenne Hybrid ECUBMW M5 ECU31

Change in Expectations in a CarFor globalization of the business, the expansion of mfg. capability while maintaining the quality will be the key.5010183Courtesy: DensoCourtesy: Nikkei BPKey: Manufacturing QualityCar Production per Region32Something You Want to Avoid

These are the last thing you want to see!!33

The Challenge Volume ZoneThe volume zone is shifting to low-end cars. No bells and whistles but with low, low price tag. These cars are to be sold mainly in BRICs, ASEAN, S. America, Africa and E. Europe, where mobility itself is becoming a part of their life. N. America, W. Europe, Japan(Saturated market)

BRICs, ASEAN,S. America, Africa, E. Europe(Potential market)


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HONDA CIVIC JPY 1.9M US$ 18,000The percentage of the population of N. Ameri...