Impact & opportunities for the connected cars
The automotive market, like many other industries, experienced significant disruptions due to the Covid-19 pandemic. Recovery in the automotive sector is projected to be gradual and impacted by various factors. Here are some key aspects of the slow recovery in the automotive market post-pandemic:
1. Supply Chain Disruptions: The pandemic disrupted global supply chains, causing shortages of essential components like semiconductors. These disruptions have led to production delays and lower vehicle inventories, affecting the market's ability to meet consumer demand. The new cars as more complex architecture systems need more sensors/connectivity. After Covid-19, car makers have rearranged the assembly line in order to accept different kinds of packaging supply components and try to contain the longer lead time.
2. Consumer Behavior Changes: During the pandemic, consumer preferences and buying behavior changed. Many people turned to online car shopping and expressed interest in digital services, influencing how automakers and dealerships operate. After Covid, the return to office policies of several companies and hybrid work style models are influencing the vehicle ownership decision.
3. Economic Uncertainty and rising vehicle prices: the monetary policy to bring under control the inflation rate with higher interest rates following the pandemic has made consumers more cautious about large financial commitments, like vehicle purchases. Moreover, Increased demand for vehicles combined with supply chain disruptions and rising raw material costs has led to higher vehicle prices. All of the above factors can affect a slower recovery and rebound of the market.
4. EV transition and governments: In several regions, government grants packages and local incentives, such as EV subsidies, have played a role in boosting automotive sales and stimulating the market's recovery.
5. Geopolitical tensions: Geopolitical tensions, between China and US and from February 2022 the war between Russia and Ukraine is conditioning the automotive market as Russia is one of the main producers of palladium (necessary for the catalytic converter in cars and semiconductor) and Ukraine is one of the main suppliers of neon gas necessary for foundries in making chipset processes. The Israel-Hamas war is affecting the surging oil prices across the world and pushing further potential supply chain disruptions that may affect also the automotive industry.
In my perspective, the automotive chip shortage will continue by 2025. From 2026 a gradual recovery, thanks to a huge capital expenditures of several chip foundries will benefit of a more production capacity for automotive chip nodes, assuring to cover all the chip demand from the market. Additionally, MaaS subscription models will have a faster vehicles turnover and life-cycle, balancing also the used car market. For these reasons, the total vehicle sales market is expected to reach 105 M units with a CAGR of 1,28% between 2019 and 2030.
Impact & opportunities for the connected cars and automotive IoT
Opportunities for:
1. Predictive maintenance maintenance costs are reduced by increasing the efficiency and reliability of the systems.
2. V2X connectivity exchanges information between V2V or infrastructure improving efficiency on SW for better managing cross-traffic patterns and reducing accidents or dangerous situations for the driver.
3. Driver profile detection & vehicle security car manufacturers and insurance companies are teaming up for creating a driver profile using sensors, with in-cabin monitoring systems & CPD.
4. Enhancing smartphone apps and functionality for monitoring parameters and access to vehicles.
5. Adopting AI increasing interaction between human and vehicle through gesture, or advanced voice control.
Impacts on:
1. New consumption model from ownership to sharing (MaaS).
2. All-round seamless ecosystem mobility, leisure, hospitality, charging infrastructure, etc.
3. Customized solution to the driver (driver centric systems)
4. Connectivity enhancement (5G bands, fusion positioning)
In the above graph are shown the percentage of each system on total car sales. Here below I will explain the main growth driving factors for each system.
1. Car navi share adoption is based on total GNSS chipset shipped. Car navi application is expected to increase the adoption in automotive with the enhancement of the ADAS system that from level 3 (HD map adoption) will require a fusion position system (GNSS+camera) for reducing the latency and trajectory error. In 2022 it is about 34% and in 2030 is expected to reach 71,4% or 75 M of total vehicle sales.
2. TCU embedded adoption is based on GNSS chip & module shipment perspective covering: dash cam, insurance black box, e-call system, smart OBD, smart tachometer use cases. EU, Russia already in 2018 adopted mandatory adoption for e-call and from 2024 all new vehicles will have to embed insurance black boxes in the EU. Among other Countries, China, Japan and South Korea also have a high presence of the TCU system embedded in vehicles. TCU is expected to acquire the major share in total vehicle sales in 2030, reaching 82,9% of the vehicle presence share or 87 M vehicles presence.
3. C-V2X share adoption is based on the ADAS enhancement timeline: level 2 ADAS with HD map are still niche, automotive E/E architecture with dedicated ECU will adopt level 3 ADAS on high-end EVs and gradually distributed to mid-end EVs by 2030. Currently, Level 4 ADAS is dedicated to MaaS (robotaxi) and is expected to take over level 3 after 2030. C-V2X application is expected to reach more than 33% of share among all sales vehicles by 2030.
4. Digital key share adoption is based on the number of vehicles that allow the use of smartphone-as-a-key functionality with BT, BT AoA, UWB or NFC, substituting the traditional smart key. Tesla, BMW, Honda, Nio, Kia, Hyundai (Genesis), BYD among others have already equipped this functionality. Thanks to the wide adoption of the smartphone, it is expected that digital key functionality will expand reaching 60% of the total vehicle sales by 2030.
5. ICMS (In-Cabin Monitoring System) & Child presence detection is driven by regulatory requirements. These systems are typically designed to enhance child safety in vehicles and prevent tragic accidents. In the United States, the "Hot Cars Act" requires automakers to install CPD technology into new vehicles, by 2025, to alert the driver if a child is left in the back seat. In the EU region EuroNcap will reward vehicles that offer such solutions as standard from 2023. As mentioned by the EuroNCap “Roadmap 2025”, from 2025 onward, CPD system will be mandatory to achieve the highest safety star rating. In South Korea the installation of exit confirmation devices on children's school buses has become mandatory in Korea since April 2019. The China New Car Assessment Program (C-NCAP) has added the CPD test of the program to provide safety bonus points for vehicles equipped with this function. Among other Countries, Australia and Japan are working on regulations to prevent child-related accidents in vehicles. Also other developing Countries may join this feature and for this reason it is expected that the CDP system will reach an installation in over 50% of the total vehicles sales by 2030.
6. Other connected applications are TPMS (Tyre pressure management system) and BMS (battery management system). TPMS is still niche with Tesla as the only OEM adopters, however, by 2027 the new US EPA standard for heavy duty vehicles has set stricter CO2 carbon emission rules, with the monitoring of tyres pressure system. In the EU if the Euro 7 legislation is approved, it will require the introduction of the TPMS and the BMS as an improvement for a carbon reduction footprint. About BMS that will be beneficial especially to the predictive maintenance, SoC (State of Charge) estimation, reducing total cost of ownership extending its durability.