Technology Trends and Drivers in the

Global Automotive Industry

Richard Wallace, Director, Transportation Systems Analysis

Center for Automotive Research rwallace@cargroup.org

Presentation to German Machinery Business Conference

October 6, 2015

Vehicles Evolving Quickly along

Several Dimensions

• Growth in vehicle communications and connectivity

• Increase in electronic content and amount (and importance) of software

• Proliferation of sensor-based safety systems

• Vast potential for aftermarket products

• Electrification of the powertrain

• Changing fuel economy standards

• Lightweighting

2

Global Light Vehicle Sales Also Evolving

4.0 5.2

6.3 6.8

10.3

13.8 14.5 15.5

17.9 19.7

45.2

47.8

50.6 49.7 49.3

55.4 57.4

60.5

62.8 64.9

9% 11%

12% 14%

21%

25% 25% 26%

29% 30%

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CHINA WORLD CHINA %

Due to the shift in production and sales volumes, global manufacturers will increasingly locate R&D activities in emerging markets to address local market requirements – growing markets are creating a “gravitational pull.”

Connected Vehicles Defined

• Connected vehicles use any of a number of different wireless communication technologies to communicate with:

– Each other

– Roadside infrastructure

– The “Cloud”

• Goals for connected vehicles are to enhance

– Vehicle and roadway safety

– Mobility

– Environment (e.g., reduced fuel consumption)

– Personal convenience 4

Source: U.S. DOT

Levels of Automation (SAE)

5

Delphi’s Conditionally Automated Vehicle—drove coast to coast, 3,500 miles, earlier this year.

Mercedes F015 Concept Car

Audi Piloted Driving System: Vehicle Drove Itself

from Silicon Valley to Las Vegas for CES 2015

Implications of V2V Connectivity

and Self-Driving Vehicles

7

CAV Cybersecurity • February 2015: “Modern cars are ripe targets for hackers, senator warns”

(Tracking & Hacking: Security & Privacy Gaps Put American Drivers at Risk, AKA the Markey Report)

• February 2015: “Using a laptop, the hacker dialed the car's emergency communication system and transmitted a series of tones that flooded it with data. As the car's computer tried sorting it out, the hacker inserted an attack that reprogrammed the software, gaining total remote control” (60 Minutes, “DARPA Dan” segment)

• January 2015: “BMW cars found vulnerable in Connected Drive hack” (PCWorld)

• March 2015: [Paraphrasing] not a big concern for Tesla (Elon Musk)

• April 2015: Letter Report “Review of the Status of the Dedicated Short-Range Communications Technology and Applications [Draft] Report to Congress” prepared by the Transportation Research Board of the National Academies also questions security and privacy aspects of the DSRC system

• July 2015: Charlie Miller (then with Twitter) and Chris Valasek hack a Jeep Cherokee and remotely drive it into a ditch while the actual driver sat helpless to counter; both hired by Uber a couple weeks ago

• September 2015: NHTSA Director Rosekind announced that “NHTSA will unveil specific actions to combat and prevent hacking in the fall” (no details yet)

8

Regulatory Environment Is Critical

• Automotive companies do not necessarily want connected-vehicle safety applications (in-vehicle signage, cooperative crash avoidance, etc.), or sensor-based ones, to be mandated anytime soon (based on CAR studies)

– In U.S., NHTSA announcement made in early 2014, generally positive, but vague on dates

– Advanced Notice of Proposed Rulemaking released in August 2014

• Decision date for heavy vehicles was set for 2014 (no word yet)

• Does battle for spectrum complicate matters? Who will run security certificate management system?

• Early summer 2105, Sec. Foxx urged NHTSA and industry to expedite deployment

– Numerous sensor-based approaches under regulatory review • Blind-spot detection, pedestrian detection, etc.

• NTSB recently urged automakers to make ADAS standard on all cars immediately and NHTSA to mandate them ASAP

• Market forces also are critical

9

NHTSA’s Role in the News

• Overall recall situation has given rise to close scrutiny of NHTSA recall processes and procedures by Congress

– GAO review of NHTSA’s oversight of defect investigations and new technologies is underway

• Meanwhile, NHTSA is looking more closely at FCA-US over its handling of 20 separate recalls involving about 10 million vehicles (and FCA not cooperating); FCA faces possible $35 million fine (already hit with $105 million)

• VW! Oh my. (EPA too.)

• Administrator Rosekind promising cybersecurity action

Fuel Economy and Emissions • This past June, the National Academy of Sciences released its

much-anticipated report on technologies for achieving 2025 fuel economy standards for light vehicles – Costs reported are modest and likely to be criticized within auto industry

• California (ARB) adjusted its Zero Emission Vehicle requirements to allow small manufacturers to comply through sales of plug-in hybrid electric vehicles

• EPA has proposed altering its Renewable Fuel Standard to increase percent of renewable fuel levels; NPRM published in Federal Register – This mostly means higher ethanol levels will be permitted in gasoline;

industry has some concerns that certain parts and components, especially for older vehicles, will be adversely affected

• VW, VW, VW… !!!

Certified Fuel Economy for Select 2013 and 2014

Model Year Vehicles v. Forthcoming CAFE Requirements

Note that only hybrids meet the standards for 2023 and beyond.

Source: NAS report Cost, Effectiveness and Deployment of Fuel Economy Technologies for Light-Duty Vehicles

Automotive Materials Market Penetration

Expect less regular steel and more aluminum and composites in the future

Example: Ford F-150

• Estimated 5 to 20 percent improvement in fuel economy

• 700 lb. weight reduction

• “Military grade” aluminum (5XXX and 6XXX alloys)

• High strength steel frame

• 2.7 L Eco-Boost engine w/start-stop

Second Example: BMW i3

• Designed to be a “purpose built BEV”

• CFRP design intended to offset weight of batteries resulting in normal weight vehicle

• Priced at $41,350 before incentives

– Optional range extender available for an additional cost

• 80 – 100 mile range

• 22 kW lithium ion battery

• 170 horsepower and 184 lb-ft electric motor

Conclusions • Vehicle technology did not change much for about 100 years—

now everything is changing rapidly, much of it driven by regulation

• Vehicles will be increasingly safer, eventually driving themselves via artificial intelligence, but will the fall in crash rates outpace rise in VMT?

• Vehicles will made of more different stuff (seriously).

• Cost of new vehicles will rise. This, combined with automation, will contribute to a significant increase in use of car-sharing services. Some analysts have predicted potential of a 40 % decline in new vehicles sales by 2035 as a result. We believe that estimate is too high.

• Center of the world vehicle market will not be North America much longer