Automotive News - June 26, 2017 - Supplement - S3

2016 Final Pages DC-REVISED-071017.qxp

7/6/2017

1:55 PM

Page 3

> INSIDE: Top 100 Global Suppliers | PAGES 4-8 | Top 50 Europe Suppliers | PAGES 9-10 | Top 100 North American Suppliers | PAGES 11-15 |

Suppliers ready for next gold rush
David Sedgwick
dsedgwick@crain.com

G

lobal vehicle production may be
leveling off for parts suppliers, but
the fledgling market for self-driving cars is already morphing into
their next gold rush.
In 2020, automakers are expected to produce 85.9 million vehicles equipped with collision avoidance systems, up from 10.8 million last year, according to a forecast by Gartner Research.
That's eye-popping growth in an industry
that was beginning to think the decade's
roaring business cycle was nearing its end.
And it explains why companies such as
Bosch, Continental and Autoliv - the megasuppliers that dominate the Automotive News
list of the Top 100 Global Suppliers - are promoting their ability to integrate the necessary
array of sensors, computer chips and software.
"Revenue is growing extremely fast," Mike
Ramsey, a Detroit-based Gartner analyst,
said of the emergence of autonomous technologies. And the new trend favors megasuppliers "who are best positioned to take
advantage."
That's because they enjoy economies of
scale, deep pockets for product development, and have long-standing relationships
with automakers, Ramsey said.
"If they don't deliver, the automakers can
wring money out of them without putting
them out of business," Ramsey noted. "The
automakers feel a lot of security dealing with
the big suppliers."

Economies of scale
Since r&d costs are considerable, the
world's largest mega-suppliers hope to make
the new technologies competitive by exploiting economies of scale.
Bosch, the top-ranked company on Automotive News' Top 100 Global Suppliers list, gener-

Top-ranked supplier Bosch will spend $336
million over the next five years to develop
artificial intelligence for self-driving cars.
ates annual sales of more than 1 billion euros
($1.12 billion) for the sensors, software and actuators needed for collision avoidance and selfdriving vehicles.
Now the company is upping the ante. In
May, Bosch announced it will spend $336
million over the next five years to develop artificial intelligence for self-driving vehicles.
But even a behemoth such as Bosch is relying
on newly formed partnerships to fill gaps in its
menu of technologies, rather than rushing into
the new world alone. In April, Bosch formed an
alliance with Daimler AG to produce a fleet of
driverless taxis. The company also has announced plans to manufacture vehicle processors with Silicon Valley's Nvidia, and it is working with digital map maker HERE to develop
crowd-sourced road maps.
The task of designing self-driving vehicles
"is too big for one company alone," said Kay
Stepper, Bosch's vice president of automated

driving. "We need the partnerships."
While Bosch is forming partnerships to
gain access to key technologies, other companies are making acquisitions, and some of
the deals have been blockbusters.
ZF Friedrichshafen - ranked No. 2 globally, with 2016 original-equipment sales of
$38.5 billion - roiled competitors in 2014
with the $12.4 billion acquisition of TRW
Automotive, a key producer of radar, cameras and brakes.
Last year, chipmaker Qualcomm Inc. disclosed a $38 billion bid for NXP Semiconductors, the auto industry's top supplier of semiconductors. And this year, Intel Corp. announced the $15.3 billion takeover of Mobileye N.V., the top producer of obstacle-detection software.
In all three cases, the bidders sought instant status in a key new technology. In this
market, patience is not a virtue.
Large suppliers also have scrambled to acquire smaller companies - often Silicon Valley startups - to fill gaps in their technology
portfolios.
In 2015, Delphi Automotive (No. 12, with
$16.7 billion global sales) bought Ottomatika
Inc., a Pittsburgh-based supplier of automated-driving software.
The same year, Delphi invested in Quanergy, a startup developing solid-state lidar. And
in 2017, Delphi partnered with two Israeli
firms and a German company that specialize
in technology for cloud connectivity.
Delphi is marketing itself as a company
that can integrate a customer's sensors, software and computer chips required for selfdriving cars. Other companies are taking the
same approach.

Agnostic software
Fully automated vehicles won't hit the
market until next decade, but sales of their
core technologies - such as radar, cameras

and obstacle detection software - are
booming already.
That has been a windfall for Autoliv Inc.,
the world's top airbag producer, and also a
major supplier of radar and cameras. Autoliv's active safety electronics division reported sales of $740 million last year, up 17 percent from 2015. The company expects sales
will continue to grow 15 percent annually
through 2020.
That's a nice boost for Autoliv - which
ranks 23nd with sales of $10.1 billion - because it is occurring at a time when the airbag
market has matured through saturation.
The key to Autoliv's strategy is Zenuity, the
company's newly formed joint venture with
Volvo Car Corp. that will develop the decision-making software that allows self-driving
cars to plot their course.
The partnership hopes to have its software
production-ready in 2019, which means a
customer could put it on the road in 2021.
Like Bosch, ZF, Delphi and others, Autoliv is
positioning itself as a company that can manage the complex task of integrating sensors,
software, actuators and computer chips.
Which is why Zenuity is so important. The
goal is to design decision-making software
that can be used with any supplier's sensors,
actuators and control units - not just Autoliv's own hardware, said Johan Lofvenholm,
president of Autoliv Electronics.
"Zenuity is a software-only venture,"
Lofvenholm said. "We have to make a system
that is 'hardware agnostic,' so that we can
make sure we have maximum versatility for
customers."
To be sure, Autoliv and other mega-suppliers have made a big bet on a technology that
is a decade from mass-market acceptance.
But that doesn't bother Lofvenholm.
"Autonomous driving is the logical next
step," he said. "That's how we are approaching this whole segment." c
3



Table of Contents for the Digital Edition of Automotive News - June 26, 2017 - Supplement

Automotive News - June 26, 2017 - Supplement - Intro
Automotive News - June 26, 2017 - Supplement - S1
Automotive News - June 26, 2017 - Supplement - S2
Automotive News - June 26, 2017 - Supplement - S3
Automotive News - June 26, 2017 - Supplement - S4
Automotive News - June 26, 2017 - Supplement - S5
Automotive News - June 26, 2017 - Supplement - S6
Automotive News - June 26, 2017 - Supplement - S7
Automotive News - June 26, 2017 - Supplement - S8
Automotive News - June 26, 2017 - Supplement - S9
Automotive News - June 26, 2017 - Supplement - S10
Automotive News - June 26, 2017 - Supplement - S11
Automotive News - June 26, 2017 - Supplement - S12
Automotive News - June 26, 2017 - Supplement - S13
Automotive News - June 26, 2017 - Supplement - S14
Automotive News - June 26, 2017 - Supplement - S15
Automotive News - June 26, 2017 - Supplement - S16
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