Automotive Megatrends Magazine - Q4 2015

AUTOMOTIVE MEGATRENDS Magazine | Q4 2015

The Manufacturing Issue

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#ConnectedCar #eMobility #FreightEfficiency #PowertrainInnovation #Safety #Retail(R)evolution

Welcome to Megatrends Q4 2015

Welcome Welcome to Automotive Megatrends Magazine - the only global publication dedicated to the business models, technologies and trends which are shaping the automotive industry of tomorrow.

Core focus areas

Connected Vehicles

Road Freight Efficiency

eMobility

Manufacturing & Materials

Powertrain Innovation

Retail (R)evolution

Safety

Readership Every quarter, Automotive Megatrends Magazine is sent to 20,000+ opted-in automotive industry stakeholders:

Suppliers

39%

OEMs

29%

Finance / Consultants

12%

Oil / Lubricants

Logistics

6%

4%

4%

Government

Academia

3%

Other

3%

The publication is downloaded in more than 150 countries worldwide:

27% 11%

9%

7%

5%

4%

4%

4%

29%

Publisher: Automotive Megatrends Ltd 1-3 Washington Buildings Stanwell Road, Penarth CF64 2AD, UK www.automotiveworld.com T: +44 (0) 2920 707 021 hello@automotiveworld.com Registered number: 08000516 VAT number: GB 171 5423 23 automotiveworld.com/megatrends/

Editor: Martin Kahl

Powertrain & eMobility Michael Nash

Business Editor: Megan Lampinen

Production & Design: Michael Franklin & Anmol Mothy

Manufacturing & Materials Xavier Boucherat

Chief Executive: Gareth Davies

Suppliers & Safety Freddie Holmes

Cover image courtesy of: Honda R&D Americas Inc. / 3DEXCITE

Š Automotive Megatrends Ltd

Automotive Megatrends Magazine ISSN: 2053 776X

Megatrends | 3

Contents

Contents

> Manufacturing & Materials

> About this issue AUTOMOTIVE

S MEGATREND15 Magazine | Q4

20

8 - Industry 4.0 and the digital transformation of the automotive industry Niranjan Manohar, Program Manager - Connectivity and Automotive IT at Frost & Sullivan’s Intelligent Mobility Practice, investigates the automotive industry’s preparedness for "I4.0"

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sue acturing IsEffic iency The Manuf #Freight tion Car #eMobility #Connected #Retail(R)evolu vation #Safety #PowertrainInno

Welcome to Megatrends magazine the manufacturing issue The unstoppable advance of connectivity has made it from personal communications via on-demand infotainment into the automotive world.

Cars - already the long-standing ultimate mobile device - are widely considered to be an integral part of the Internet of Things. Previously the most resilient of Internet black spots, the car has finally made its way into our connected lives.

Taking that connectivity into manufacturing is a logical next step, as the world of vehicle production graduates from high-tech to smart.

What gets made, how it gets made, what it gets made with and from - even who makes it... vehicle manufacturing is evolving, and fast.

Industry 4.0 is coming, and those companies who choose to ignore it have much to lose.

Martin Kahl, Editor

4 | Megatrends

12

Printing the automotive industry of the future – 3D style!

16

The quest for the ideal automotive material mix

21 - Interview: David Paratore, Chief Executive, NanoSteel Offering a product that’s both new and familiar, NanoSteel is in a great position to innovate. Xavier Boucherat talks to the company's Chief Executive to find out more

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Manufacturing gets connected – and smart

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Come back to steel to save weight (and money), says ArcelorMittal

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Contents

> Connected Vehicles

31

Multi-modal HMI – the new normal?

33

Interview: Phil Eyler, Executive Vice President and President, Infotainment, Harman

36

Emerging markets need smart maps too!

39

Emerging markets are emerging telematics markets

43

Keep it simple? No longer an option, says Mathworks

47

Mainstream car buyers, emerging markets - everyone wants high-end cockpit electronics

> eMobility

50 - “We will be legislated into electrification,” says UPS Chief Alternative Fuel Engineer Michael Nash talks to Mike Britt, UPS Chief Alternative Fuel Engineer and Director of Maintenance & Engineering International Operations Ground Fleet

52

Fuel cells: taking a wider commercial view

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57

Electric mobility at a crossroads

Megatrends | 5

Contents

> Powertrain Innovation

61 - Interview: Terrence Hahn, President and Chief Executive, Honeywell Transportation Systems Michael Nash speaks to Terrence Hahn about the future of the global turbocharger market

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China’s electrified future: gearing up for growth

66

Asia Pacific is the place to be says Total Lubricants

> Retail (R)evolution

69

It’s time for OEMs to transform information into knowledge

74 - Ageing population - the greatest challenge for society (and OEMs), says Ford’s top futurist

71

3D visualisation? It’s virtually everywhere in the auto industry!

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Sheryl Connelly, Ford’s Global Trends and Futuring Manager, paints a picture of life in the automotive world of 2030 and beyond automotiveworld.com/megatrends/

Contents

> Safety

80

Passive safety vital beyond 2050, says Autoliv

82

Interview: Chris Mason, Chief Executive, FISITA

78 - Regulating safety in a semi-autonomous world: the US AEB agreement Ian C. Graig, Chief Executive of Washington, D.C.-based Global Policy Group, reflects on the significance of the US automotive industry’s voluntary commitment to standard fitment of automatic emergency braking (AEB)

> Freight Efficiency

85 - Tomorrow’s fleets must prepare for tomorrow’s roads Megatrends speaks to Per Ericson of Edscha TS, who says that traffic increases will need trucking companies to maximise efficiencies everywhere they can

87

Global trucking outlook: expect significant and far reaching change

automotiveworld.com/megatrends/

91

2016 freight strategy could be “critical for the future of the US”

Megatrends | 7

Manufacturing & Materials

Industry 4.0 and the digital transformation of the automotive industry Niranjan Manohar, Program Manager - Connectivity and Automotive IT at Frost & Sullivan’s Intelligent Mobility Practice, investigates the automotive industry’s preparedness for "I4.0" ‘Industrie 4.0’ is a German government initiative responding to the growing needs of the manufacturing industry regarding customers. The focus of this transition is to identify look at avenues to develop an enhanced manufacturing model capable of competing with emerging economies that have advantages in terms of cost of production, labour rates, etc. Industry 4.0 (I4.0) is a framework that will be able to bring about the union of technologies, collaborative exercises and process 8 | Megatrends

innovations, and bring forth enormous potential for value creation in the future.

Why the automotive industry in particular? The need for customer services has increased with several non-automotive companies eyeing the consumer engagement channels beyond the point of vehicle sale. OEMs lose significant opportunities with respect to product planning, newer services, and time-to-market reaction with the lack of customer/vehicle data

feedback. Direct interaction between an OEM and customer/vehicle will help the former understand and gauge customer preferences and reduce several inefficiencies. The consumer piece of the pie is like an Apple Store model, where every transaction can be monetised, and manufacturers will also need to work towards understanding avenues that can have a positive impact on internal savings and ways to improve the bottom line. I4.0 is expected to bring forth the idea that automotiveworld.com/megatrends/

Manufacturing & Materials advances in manufacturing will help the industry focus on key functional pillars such as technology, collaboration, and processes.

I4.0 will chart certain Mega Trends that are expected to be key enablers for the automotive industry‘s transition, namely Cloud computing, cyber security and Big Data analytics.

Below is an overview of these three megatrends: 1. Cloud computing Improving quality and productivity while reducing operating expenses remains at the heart of every process improvement. Cloud is one area that could possibly highlight a new era where IOT will not merely be used as a purchase puller, but more as a tool that can impact internal savings and improve OEMs’ bottom-line performance. Criticality and latency are the two most important factors that come into play while deploying Cloud in any industrial environment. For instance, a Cloud-based PLM system eliminates supply chain inefficiencies caused by miscommunication.

Prototype review and up-to-date information across the supply chain results in significant savings, helping suppliers provide competitive quotations to end customers. A Tier 1 HVAC (heating, ventilation and air conditioning) supplier in North America, for example, was able to achieve a reduction in injection mould tool cost from 33% to 50%, and time-to-procure supplier quotations were reduced by 20%. In addition, manufacturers were able to achieve instant prototype review

among the supply chain partners, which results in quicker design change and a reduced development cycle.

Vehicle manufacturers with no internal capability should ideally work with Cloud-based ecosystem partners to leverage their strengths in terms of managed services, reduced investments on licensing fees, and realtime computational power.

2. Role of cyber security beyond the car As the automotive industry prepares for a connected future, security should be incorporated as a part of any design principle parallel to business strategy, and not treated as an investment Source: Bosch

concern. A cyber-secure architecture uses IT security needs as a design standard and not as an additional layer that increases complexity, which, in turn, enables greater multichannel integration, supporting modularity and protected APIs to permit integration among ecosystem partners. To weather the digital transition, the automotive ecosystem needs to evolve with security protocols at customer and value chain touch points for a comprehensive defence against a larger business risk.

The future could see a connected ecosystem that integrates new technologies and services, such as V2X communication and VRM, and look at investments as a positive approach to tackle both vehicle- and infrastructurelevel security concerns. Intelligent mobility trends will see non-automotive companies raising mandates around data and authentication.

For instance, the value of electronics accounts for about 20%-25% of the value of a present-day car; this is likely to increase to 40%-45% or more by 2020. If OEMs ignore cyber security, they would be compromising their users, risking brand value, and drawing financial and moral liabilities.

The liability of a security threat must be addressed by the OEM both inside and outside the vehicle; it cannot be sold to a customer as an aftermarket solution.

Current tools are heterogeneous in nature; a collaborative approach from vehicle manufacturers, governments and IT companies (IBM, Cisco and others) is required to tackle such issues.

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Megatrends | 9

Manufacturing & Materials 3. Being predictive is better than being reactive – the role of analytics Analysis of Big Data marks the beginning of the increased potential for the automotive industry to negate existing challenges and look beyond customer expectations. Customer behaviour, risk management, resource optimisation and process improvement are the four broad categories where manufacturers look to utilise relevant data insights. Such an approach will give vehicle manufacturers a view into the imminent trends that will help them structure research and guide investments, while avoiding risks and associated losses. By connecting the production line to suppliers, all stakeholders can understand interdependencies, the flow of materials, and process cycle times.

For many vehicle manufacturers, product differentiation is important, and they are focusing on customer feedback on social media. Access to predictive analytics based on real-time data helps manufacturers identify issues before they happen, lower inventory costs, and potentially reduce capital requirements. In effect, some of the key opportunities from analytics across functional areas in the

10 | Megatrends

manufacturing value chain are time to market, inventory management, asset utilisation, and operational downtime.

Supply chain analytics will also lead to planning, scheduling and product traceability within the manufacturing ecosystem. The next step is prescriptive analytics, where a proactive approach is used to find out when and how the equipment might fail prior to actual breakdown; the related benefits are cost, process efficiency and even equipment self-learning from surrounding environments.

The ‘Internet of Cars’ and its pivotal role in the industry’s transition The role of the connected car has increased ever since phrases like autonomous cars, Big Data, IOT and Cloud became buzzwords in the automotive industry. This transition is mainly due to the presence of connectivity promising high-speed, high-bandwidth connectivity like LTE and, eventually, even 5G in the car.

The goal is to have the ability to collect gigabytes of data from a variety of sensors, OBDII and CAN, and analyse it in two ways: with respect to services for the driver, and analytics going back to the carbuilding process. Connectivity will be able to provide multitude of services

for the end consumer, which, in turn, will enable OEMs to create new revenue opportunities and turn the car into a digital wallet.

Outside the car, a key challenge is security. There needs to be an internal collaboration between OEMs, or they must work with cyber security specialists to begin basic risk testing.

There needs to be a fundamental change, like a cradle-to-grave approach; the Fiat Chrysler hack is an example of a remote hack that caused a first-of-its-kind recall of more than a million vehicles, leading to the SPY Car Act. The SPY Car Act will begin the standardisation of cyber security systems, albeit with each OEM operating unique security measures.

The cyber dashboard will be the first time consumers are exposed to what historically has been a back-end solution. The legislation will promote a holistic approach that also encourages partnerships with the security community.

As the Apples, Googles and Ubers of the world threaten the automotive OEMs with their mobility solutions that would draw customers away from traditional car ownership, automotive OEMs will need to enable their connected strategies to work for them.

automotiveworld.com/megatrends/

Manufacturing & Materials The potential that could be unearthed for the manufacturers is like the submerged part of an iceberg, which is where the real value lies. This is where enough data is being generated and the impact is on the profit and internal savings, like warranty, product development, supply chain optimisation, and so on.

The transition to Industrie 4.0 will enable OEMs to focus on how advancements in manufacturing can enable them to use the value-packed, submerged part of the iceberg. This is where longer-term customer engagement models lie, which is their basis of long-term sustainability.

I4.0 and the opportunities that will shape the future of the auto industry Use cases such as 3D printing, robotics, and collaborative IT can aid OEMs to enhance product design and transform traditional production and supply chain inefficiencies. As the automotive industry’s needs shift toward complex products, minimal lead times, raw materials and custom products, it is certain that most of the industry participants will adopt this transition.

For example, the automotive industry is expected to account for 20% of the 3D printing market by 2025. This industry transition will create a platform where labour will account for a smaller proportion of overall manufacturing costs, and cost advantages in lowcost countries will decrease rapidly.

The emergence of new business models arising from industry convergence (both horizontal and vertical) will look more viable than a standalone approach. For instance, the convergence of healthcare and vehicle manufacturers is expected to grow, with Health, Wellness and Wellbeing becoming a brand differentiator beyond automated vehicles.

The future development of I4.0 and its effect on the automotive industry will require synergetic efforts from all ecosystem partners (OEMs, policymakers, suppliers, end users, etc.) to boost reliability and deliver massive benefits. Such collaborative efforts will result in wider awareness among end users of the immense potential of I4.0, which will ultimately lead to higher demand for newer services and sustainability of the automotive industry beyond the influx of technology disruptors. automotiveworld.com/megatrends/

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Manufacturing & Materials

Printing the automotive industry of the future – 3D style!

Indraneel Bardhan of EOS Intelligence believes vehicle manufacturers should take a lead in innovating with 3D printing technology D printing has been around for almost three decades but OEMs have only recently begun to realise its commercial benefits beyond prototyping.

It has significantly altered the ways OEMs approach model designing, development, and manufacturing. It is helping car manufacturers across the globe shorten their product development phase, reduce prototype costs, and test new ways of improving efficiency.

3

With 3D printing, OEMs are able to use CAD software to design parts and then print a prototype themselves, saving them both time and money.

Previously, OEMs outsourced the process of prototyping to machine shops, which not only resulted in

additional costs but also took weeks to produce a part. Moreover, if the produced part needed modification (which in most cases it did), then the modified blueprint was sent to the machine shop again for production, resulting in a repeat of the entire process.

Due to lower costs and turnaround time, this technology has given OEMs the flexibility to use a fleet of printers to try out multiple designs at once, rather than being limited to one design and then restarting with another in case the first result did not meet expectations.

This has largely helped OEMs boost quality levels as they do not waste too much time applying modifications to their designs and then testing them.

Various stages in 3D printing adoption by OEMs 3D Printing for Producing Direct Parts

3D Printing beyond Prototyping

3D Printing for Simple and Exploratory Prototyping

Printing of automobile parts for end use in commercial vehicles Use of a wide array of materials for 3D printing end parts

Printing functional hand-tools for use on shop floor Advanced prototypes used in running test vehicles

Basic prototyping using single printer Prototyping of multiple designs/modifications throughout product development phase ACHIEVED

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Using 3D printing for prototyping has become almost of a standard in the industry today. The 3D printing automotive industry, which is estimated at a little less than US$500m in 2015, is expected to more than triple by 2020.

Who is using 3D - and what for?

GM uses 3D printing technologies of various kinds, such as selective laser sintering (SLS) and stereolithography (SLA), across its design, engineering, and manufacturing processes and rapid prototypes for about 20,000 parts.

Chrysler uses 3D printing for prototyping a wide variety of side-view mirror designs and then selecting the one that looks and performs the best.

Ford, on the other hand, has been one of the earliest adopters of 3D printing technology. It runs five 3D prototyping centres, of which three are in the US and two are in Europe. The company churns out about 20,000 prototyped parts per annum from just one of these centres (Michigan, USA).

Other OEMs, such as Mitsubishi - which bought its first 3D printer in 2013 - have been late adopters of the technology.

IN-PROCESS

FUTURE

automotiveworld.com/megatrends/

Manufacturing & Materials

CASE STUDY: BMW AND STRATASYS BMW uses 3D printing’s FDM technology to build handtools for vehicle assembly and testing. In addition to the financial advantages, FDM process helps the company to make ergonomically designed assembly tools that perform better than traditionally made tools.

For one such tool, BMW worked with 3D printing company, Stratasys, to reduce the weight of the device by about 72%, thereby enhancing its ease of use considerably. Apart from improving the handling abilities of tools, the technology has helped enhance functionality. The company has managed to print parts with complex shapes that allow workers to reach difficult areas specific to BMW-produced vehicles. In one such instance, the company created a tool using 3D printing for attaching bumper supports, which features a convoluted tube that bends around obstructions and places fixturing magnets exactly where needed.

While 3D printers continue to be widely used for rapid prototyping across the industry, several large vehicle manufacturers have advanced into the next stages of 3D printing technology adoption. Although still in nascent or experimental stage, these OEMs have applied 3D printing to produce hand tools, fixtures and jigs to enhance production efficiency at floor level. Ford, which is one of the most advanced users of 3D printing, uses this technology to produce calibration tools.

Leaders in the use of 3D printing, such as Ford, also apply the technology to prototype parts that are of such strength that they are installed on running test vehicles. The company uses engine parts, such as intake manifolds, from 3D printing white silica powder, to install it in its running test vehicles. With the use of 3D printed prototypes of components such as cylinder heads and intake cylinders in test vehicles, Ford is successful in avoiding the requirement of investment castings and tooling, and in turn saving significant amount of time and dollars.

Another advancement in 3D printing encompasses the use of new and innovative materials. While most companies use silica powder, resin, and sand, few OEMs are innovating with forming test parts out of clear plastics. This allows them to validate designs as the team can visualise what is happening inside the part.

Chrysler uses transparent plastic in 3D prototyping their differential and transfer cases. By inserting oil, they can monitor whether the gear stays well-lubricated under the prototyped design/model.

Local Motors LM3D car

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Manufacturing & Materials

Strati is born in 44 Hours…

Arizona-based Local Motors has created the world’s first 3D printed car, Strati, which it plans to launch in 2016 (providing it passes the crash and other requisite tests).

Strati’s body and chassis are completely 3D printed; components such as wheels and suspension, however, are sourced from Renault. The battery-operated car is expected to cost in the range of US$18,000-30,000 and have a top speed of 50mph (80kph). …Shuya to follow!

Taking a cue from Local Motors, Chinese OEM Sanya Si Hai has unveiled its own 3D printed vehicle called Shuya.

While Shuya takes relatively longer (5 days) to print and has a top speed of only 25mph, it costs only US$1,770.

The use of metal as a printing material is an innovation that, although still in its nascent stage, is being used by OEMs such as BMW to 3D print (using SLM technology) a metal water wheel pump for its DTM racing car. Autoparts manufacturer, Johnsons Controls Automotive Seating, also uses 3D printers to print metal parts that have complex shapes and are difficult to produce using traditional welding.

With these new applications taking the industry by storm, several OEMs are increasingly investing in and exploring the uses of additive manufacturing.

While few companies have been slow in adopting to 3D manufacturing initially, it is expected that they will soon come up to speed with the advances in the use of this technology, given the holistic benefits it offers.

The biggest challenge: beyond the prototypes

match the production volume requirements, thus inhibiting the use of this technology for direct part manufacturing. This in a large way restricts the use of 3D printing for mass production. While there is ongoing research into high-speed additive manufacturing, it still remains a concept.

Even if large automobile components are to be produced using this technology, they still need to be attached together through welding or other techniques. This lowers the benefits accrued from 3D printing the parts in the first place. This aspect of 3D printing is also being researched, and unlike high-speed additive manufacturing, 3D printing companies have made good ground in building large 3D printers that do not restrict the size of the component produced.

seeing

One of the biggest drawbacks of 3D printing is that in an industry driven by volumes, its current speed cannot

Another indirect but real challenge to the widespread adoption of additive manufacturing is high levels of intellectual property theft. Since additive manufacturing products can

only be patented (and not copyrighted), there is much ambiguity regarding what falls under patent protection. Until there are clear guidelines regarding intellectual property and 3D printing, OEMs will remain wary regarding the extent to which they should use this technology.

The biggest challenge, however, is the mindset of OEMs which continue to look at 3D printing as primarily a prototyping tool.

On reflection The automotive industry must take its cue from the aerospace and defence industry, which, along with additive manufacturing companies, has heavily invested in developing new materials and technology in 3D printing to meet evolving requirements. Instead of sitting and waiting for 3D printer manufacturers to bring about new uses of 3D printing for the automotive industry, OEMs themselves should proactively seek to innovate with the technology.

Companies such as Ford and BMW, which are exploring other uses of this versatile technology have the opportunity to not only save costs, but also improve overall performance. And this is what may just provide these OEMs the competitive edge they are looking for. The question is, who else is willing the take the big leap of faith?

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automotiveworld.com/megatrends/

We are not just engineers.

We are bodyguards.

If we were only steel producers, delivering cutting edge steel technology that provides the highest level of safety would be impossible. To do it we have to be experts in high strength steel, but also experts in car safety – and have the experience to back it up.

For over 30 years, SSAB has been creating Docol High Strength Steel, which makes products lighter, stronger and more sustainable – so that every single car safety component can be optimized and more lives can be saved.

It’s not about steel. It’s about life.

www.docol.com

Manufacturing & Materials

The quest for the ideal automotive material mix Rajeev Singh, Partner, Automotive at KPMG India, outlines the changing material mix in vehicle manufacturing he automotive industry is investing heavily in R&D to make vehicles more fuel efficient, improve performance and make them lighter.

There is an unending quest by OEMs and suppliers to find ever lighter materials in automotive production.

However, lightweighting strategies involve a combination of substitution of materials, innovation in manufacturing process and component design.

Lightweighting also aims to make vehicles greener by reducing emissions without any compromise on safety.

T

Today, several advanced materials are being considered for almost all parts of the vehicle. Aluminium, plastics, hightensile steel, titanium alloys, carbon 16 | Megatrends

Advanced and ultra-high strength steels Advantages

• Low material cost

Disadvantages

• Joining, rolling and forming processes of UHSS grades are still inadequate.

Current spot weld approach may lead to corrosion

• High strength and stiffness (modulus) • Modelling and simulation software not available for AHSS/ UHSS to test their physical performance thoroughly.

• Outstanding formability • Established infrastructure both in terms of manufacturing and design make it highly cost effective for vehicle applications automotiveworld.com/megatrends/

Manufacturing & Materials fibres, polymer composites, amongst others, are replacing components made from cast iron and conventional steel. Most OEMs are considering steel for key body structures, body panels and body frame end modules. The use of carbon fibre composites has made its way into body panels but it’s mainly the automakers in North America and Europe who are considering carbon fibres in body structures, whereas OEMs in Asia are looking at carbon fibres primarily for interior applications.

Aluminium and magnesium and titanium alloys are also widely being considered across small body parts, powertrain and chassis in North America, Europe and Asia.

Advanced and ultra-high strength steels Application of advanced high-strength steel (AHSS) and ultra high-strength steel (UHSS) can make vehicles stronger to protect the cockpit and passengers in the event of crash.

According to the Office of Energy Efficiency & Renewable Energy, AHSS could reduce component weight by up to 25%. OEMs and suppliers have used AHSS and UHSS to produce components which are critical for safety.

This has helped them to reduce fuel consumption and meet CO2 emissions as an effect of the reduced weight. Both UHSS and AHSS steel are being considered beyond today’s use in Body In White (BIW). Even in applications which are weight-sensitive, steel is preferred over aluminium. For example, BMW has found that CO2 reduction of 10-15g/km can be achieved for each 100kg (220lbs) of weight reduced and by using high-strength steels (HSS), weight reduction of 20% can be achieved.

Steel companies actively involving

Aluminium Advantages

Disadvantages

• Has density one third of steel that can • Lack of formability help in reducing weight in the range of • Limited strength at high temperature 30-40% for components made in • Joining process not fully developed aluminium • Investment in new machinery themselves in HSS, with many exploring savings of additional 2%.

UHSS comes at high cost per tonne (approximately US$250-US$300) compared to conventional steel grades, but as less material is used for making the part or component, these are widely gaining popularity as a cost effective alternative. Also, with established manufacturing infrastructure for steel (welding and stamping machines) OEMs and suppliers are in no rush to invest in replacements.

Aluminium During the last decade, OEMs’ use of aluminium has grown exponentially across the entire spectrum of the automotive component value chain.

Today, aluminium is widely recognised as the best alternative to steel due to the emphasis on fuel economy, carbon footprint by both consumers and industry as a whole. According to a study by Ducker Worldwide, the use of aluminium

by OEMs is expected to grow from an average of 147kg per vehicle in 2008 to 249kg by 2025, saving 81-92kg of direct kerb weight and 35kg of secondary kerb weight. For example, Ford reduced the weight of its F-150 truck by 318kg by replacing the vehicle’s steel body panels with aluminium sheet metal.

Using aluminium is not very different from steel in terms of designing.

Vehicle manufacturers have used aluminium in engine cradles, rear axle sub frames, suspension parts and body shells, and have launched models with all-aluminium bodies. For example, the third-generation Range Rover weighs an impressive 20% less than its predecessor, and its aluminium monocoque is reported to be 39% lighter. Bentley also uses aluminium in its bodywork, engines, sub frames, and wheels. In short, aluminium has enabled the new cars to be bigger, cleaner and crucially, lighter.

Although the alloy has been around as a structural material in the aerospace industry for years, OEMs have had trouble combining aluminium with other metals. Currently, spot welding is the most prevalent robotised joining method used in the industry and riveting and adhesives are being used for joining aluminium sheets. With improvements and adoption in joining technologies, we should hopefully be able to join aluminium with steel, composites and even to plastics in the years ahead.

are

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Megatrends | 17

Manufacturing & Materials Another problem that looms around the use of aluminium is in recycling. A few OEMs have collaborated and built a closed loop ecosystem for recycling aluminium. The entire automotive ecosystem still needs to evolve to recycle its own scrap, something which could turn out to be an expensive affair.

Carbon fibre composites Advantages

• Material has strength to weight ratio • Value chain well established for that can be used to design components that are nearly 50-60% lighter than steel

Carbon fibre in suspension / body applications still inadequate

While HSS and aluminium have their own benefits, carbon fibre (CF) composites may have a larger chunk to contribute in reducing the weight of a vehicle. However, the cost at which it can be done continues to pose a major challenge.

18 | Megatrends

aerospace industry. Value chain for auto industry still evolving

• Joining technologies to incorporate

Carbon fibre composites

While on one hand, the share of carbon fibre has been increasing in the aviation industry (mainly driven by reduction in fuel costs and an intent to increase the number of people and goods carried by a flight), its usage in automotive applications has been restricted to passenger enclosures, hoods, frames, and interior panels.

While premium OEMs have been using carbon fibres to reduce weight in high performance cars to improve efficiency, the cost of input and processing of the material, along with complicated recycling of the material, makes it less attractive for mass produced cars.

Disadvantages

• Understanding

of CF in crash environment is still insufficient.

Technology to detect damage to CF parts and repair them is also still immature

Resistance and rigidity of the material are also a disadvantage, which is more likely to deform it more quickly rather than absorb energy during collisions.

Other advanced materials (titanium alloys, Ni-based alloys, metal matrix composites) Research into advanced materials like titanium alloys, Ni-based alloys and metal matrix composites has shown that these materials have unique properties that cannot be achieved by other materials such as aluminium, steel or composites. This makes them ideal for use in engine and

transmission parts. With most of the research into these materials (still in powder form) restricted to research labs, there is limited commercial capability for mass production of parts made from these advanced materials.

Challenge ahead - commitment to the right material Vehicle manufacturing today consists of using a mixture of different set of materials within the body structure. The challenge of joining these materials implies OEMs have to think long and hard before switching to these lightweight materials. Companies have

automotiveworld.com/megatrends/

Manufacturing & Materials Table 1: Key technical gaps for materials for light-duty vehicles Light weight material

Mass reduction

Three most significant technology gaps impeding widespread implementation

50-70%

Lack of energy efficient conversion process for carbon fibre

Design methods and predictive modelling capabilities are inadequate

Lack of high-volume manufacturing methods amenable to non-epoxy resin systems

Magnesium

30-70%

Cost-effective, environment friendly process for magnesium does not exist

Current alloys exhibit poor corrosion properties and nsufficient ductility for crash protection and manufacturability

Models for predicting properties and behaviour of components not available

Aluminium

30-60%

Joining process for Al alloys inadequate

Modelling, simulation and design tools are inadequate for optimisation

Processing techniques for high performance castings are unreliable

Glass fibre composites

25-30%

Lack of technologies to improve properties

Incomplete property database and Immature modelling and design knowledge simulation software

Advanced materials

10-30%

Lack of commercial manufacturing methods

Inadequate thermal performance

Cost/availability of raw materials

10-30%

Understanding of structure inadequate to guide development of material properties

Joining process inadequate

Immature modelling and simulation software

Carbon fibre composites

Advanced high strength steels

Source: Department of Energy, USA, Workshop Report: Light Duty Vehicles Technical Requirements and Gaps for Lightweight and Propulsion materials, 2013.

to invest in new technologies and machinery - a double-edged sword to effectively integrate these materials into already existing manufacturing process and value chain. On the one hand, there is growing resistance to new capital investment amid ongoing economic uncertainty. On the other hand, evolving industry trends such as improved fuel economy and emission controls with a greater focus on environment make it imperative for the use of lightweight materials.

The automotive industry also has to leverage learnings from the aviation industry to improve its adoption of advanced materials.

There is a huge learning curve for industry stakeholders to understand crash simulation, material failure mechanisms, assembly technologies, engineering and knowledge of composite designs.

OEMs also need to understand sustainability of repair costs and vehicle life cycle assessments to

determine the benefits of these advanced materials.

While OEMs are investing in R&D with producers of steel, aluminium and other materials, they must also collaborate with suppliers to maximise the opportunity for usage of these lightweight alternatives. While high strength steels and aluminium seem to be the best alternatives in current scenarios, efforts to find their replacements should never stop.

Table 2: Importance of key trends for light weight material suppliers Key trend

Priority

Comment

Safety

Contrary to popular belief, carbon fibre is stiffer and five times stronger than steel. In addition, it has a higher energy-absorption rate than steel, and can increase safety in a collision

Cost

Companies are innovating new techniques to reduce the cost of carbon fiber, such as use of ‘forged composites’ manufacturing process by Lamborghini and Callaway Golf Company, and mass production of a mold for an automobile frame by Teijin Ltd

Fuel Efficiency

With tough fuel economy mandates set by developed countries, many OEMs (such as GM) are planning to use carbon fibre

Innovation

Companies are developing new innovative methods to improve the quality of the carbon fiber and reduce production time for mass usage

High

Medium

Low

automotiveworld.com/megatrends/

Source: KPMG analysis

Megatrends | 19

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Manufacturing & Materials

Interview: David Paratore, Chief Executive, NanoSteel Offering a product that’s both new and familiar, NanoSteel is in a great position to innovate. Xavier Boucherat talks to the company's Chief Executive to find out more

ith OEMs employing mixedmaterial strategies in the production of their vehicles, steel no longer enjoys the same security it once did in the automotive industry. The material still has distinct advantages: it’s stronger, cheaper, and critically, it’s familiar – the infrastructure built around steel is the product of more than a century’s work. The challenge lies in being able to provide these benefits whilst simultaneously meeting demand for lightweighting solutions.

What makes NanoSteel different from steel giants like ArcelorMittal, or Tata?

NanoSteel is one company dedicated to meeting this challenge. The Providence, Rhode Islandheadquartered nano-structured steel material design company has created a grade of advanced high strength

We’re an advanced materials company that designs iron-based alloys. Unlike traditional steel mills, we do not produce steel for commercial sale. Our sole focus is on the development of steel alloys that meet customer-defined

W

automotiveworld.com/megatrends/

steel (AHSS) which it claims can provide 87% of an aluminium body-inwhite’s weight savings at a far lower cost. In a recent conversation with Megatrends, David Paratore, Chief Executive, began by explaining how NanoSteel’s setup allows it to operate on the bleeding edge of steel technology.

requirements, and can be produced using existing manufacturing techniques and equipment. As such, we’re able to focus on advancing the state of the art for steels.

Without mills, how are your products produced?

We are partnered with qualified automotive steel producers who can manufacture and supply our AHSS products to OEMs and Tier 1s. By partnering, we can combine our expertise in designing new alloys with our partners’ expertise in process technology and efficient production, their investments in plant capital and their existing links with the supply chain serving the automotive industry.

Megatrends | 21

Manufacturing & Materials How do you go about establishing these partnerships?

We want to develop partnerships with steel producers within each major global region to remain competitive for our automotive customers, while ensuring our steel partners see reasonable levels of demand. Partnerships are made possible through license agreements that allow our steel partners to produce our grades for sale to the automotive customers. In addition, we license OEMs and Tier 1s to utilise the steel produced by our partners.

What can you offer OEMs that’s new?

Our development approach is different from other automotive sheet steel products in that it makes use of nanotechnology. This does not mean we create tiny nano-sized steels, but rather steels with microstructures at the nanoscale. When examined under a microscope, all steels are comprised of crystals and in the steels that we design, those crystals form on the scale of nanometres. These nanostructures are important because they offer very high strength as well as high formability. This unique combination of performance properties along with the ability to achieve these capabilities using inexpensive ingredients and standard existing production equipment is ultimately our unique technology.

What challenges will NanoSteel face as lightweighting becomes more and more important, and more materials enter the market?

The largest challenge NanoSteel will face is a general aversion to trying something new. It’s easy to default back to what is known, and carries the lowest risk possible to those accountable for decisions. However, as lightweighting initiatives force change in the automotive industry and material choices become increasingly part of the solution, our ability to offer a product that can be shaped, welded and repaired in a similar way to other sheet steels is a valuable advantage.

success with ferrous materials. When other options are explored, such as aluminium or carbon fibre, the level of investigation has to go much deeper given the number of changes needed in both the supply chain and production.

OEMs would need to consider everything from how much the material costs, to how it’s produced, shaped into parts, joined to other materials and inspected.

So when it comes to NanoSteel’s automotive sheet, we anticipate the product will be perceived in two ways.

On the one hand, we bring a new and truly advanced material technology to the market, but on the other hand, we are something familiar, something comfortable.

What demands do you expect from the automotive industry over the next ten years?

We believe that the need for automotive structural lightweighting will only get greater given both accelerating fuel economy standards and the additional weight associated with new features consumers will require in their vehicles.

Lightweighting is certainly not a new phenomenon - Henry Ford himself has been quoted multiple times about the need to eliminate excess weight in a vehicle, but the fact is that the pressures to cut weight have never been higher and will only get more intense as we get closer to 2025.

Another trend in the automotive industry is the evolution from regional to global platforms requiring the availability of the same steel grades in multiple geographies. To support this trend, NanoSteel will license its proprietary technology to both automotive OEMs for use in their automotive designs

globally, and to the regional steel producers to assure the product is available worldwide.

How will your relationship with OEMs evolve over that time frame?

Over the next ten years, our relationships with the automotive OEMs will deepen as we move through the stages of new material qualification, and introduce additional products. Currently we are in the manufacturing optimisation process. The materials produced at the lab scale can achieve the desired properties, and now we are working with our partners on scaling up to production equipment.

Upon completion of this phase, our materials will be released to automakers for validation and qualification, where we will assist them in their testing programmes. Afterwards, we will work with the automotive engineers and designers to create parts that take advantage of our material capabilities.

Once we reach this stage, we will also be working with OEMs on developing the parameters for the next sets of alloys to come out of NanoSteel, and then we take those new materials through that same process.

What will be important for NanoSteel moving forward?

Once production coils are available, our largest priority will be working with OEMs across the globe to identify early applications for our automotive sheet steel. As part of this process, our engineering team will work with structural designers at OEMs and Tier 1s to identify opportunities where our steels can improve upon existing solutions and reduce weight.

In this way, we’re fortunate to sometimes be viewed as “just another steel” given the industry’s 22 | Megatrends

automotiveworld.com/megatrends/

CARBON COMPOSITE

TWO-LAAYER TWO-LAYER YER CARBON

WOVEN CARBON FIBER WOVEN

CARBON FOR EVER EVERYY SYNCHRONIZER SMOOTH SHIFT CHANGES . COMP SMOOTH COMPATIBLE COMPA ATIBLE WITH BROAD BROAD SPECTRUM OF TRANSMISSION FLUIDS . .

ENHANCED DURABILITY CONSISTENT SHIFT PERFORMANCE OOVER VER TRANSMISSION LIFE

Manufacturing & Materials

Manufacturing gets connected – and smart Digitally connecting everything and adopting Industry 4.0 enables the delivery of innovative new products and services, says Infosys

By Megan Lampinen mart manufacturing, also known as Industry 4.0, promises to revolutionise the automotive industry, and Europe is leading the way. Infosys, an Indian-based specialist in business consulting, software engineering, information technology and outsourcing services, expects that almost €150bn (US$165bn) will be spent in this area in Europe alone over the coming five years. “Almost all of the customers to which we are talking have started initiatives in this direction,” Ruchir Budhwar, Regional Head Designate - Manufacturing (Europe) at Infosys, told Megatrends.

S

Digitally connecting everything Budhwar believes that smart manufacturing is dramatically changing the traditional focus areas for manufacturing companies - namely productivity optimisation, cost reduction and quality improvement.

“Smart manufacturing is being seen as an enabler of delivering innovative new products and services,” he added.

Smart manufacturing is all about digitally connecting everything inside and outside the manufacturing industry.

As Budhwar elaborated: “When it is inside, we are talking about horizontal integration, digitally connecting various aspects like the supply chain and consumers.” This involves sensors and 24 | Megatrends

devices communicating with each other, providing information directly from the supply chain to the shop floor.

The vertical aspect refers to integrating a company’s business information management systems. “There is a lot of real time analysis happening at a corporate level to get real time operations and metrics around those operations,” said Budhwar. “We are seeing a lot of activity happening on the horizontal side as well as on the vertical side.”

Benefits and risks The adoption rate has been slow but steady, with Europe in the vanguard.

As for the benefits this approach can bring, it all depends on the use case.

One of the most common applications is in the area of preventive maintenance. “Whether it is a chemical plant or an automotive plant or any other manufacturing operation, the most important aspect from a productivity, cost and quality standpoint is that the plant be up and running to manufacture the goods and services,” he said. “By putting in sensors and gathering information, this is used to prevent failures at plants.

Earlier we used to talk about mean time to repair and mean time to recovery, and now we are talking about preventing any failures at plants.”

Most notably, these sensors can gather “tons of information,” added Budhwar, and Big Data use cases are being applied. With it, however, come security concerns. “Security is a big topic in smart manufacturing,” he commented.

“With so much data available and flowing around, how do you secure it so that it is not hacked into or mismanaged? That is a bigger question.”

Standards no hindrance Standards, or a lack of them, can make or break the rise of any new technology.

As more vehicle manufacturers show an interest in smart manufacturing, are new guidelines required? “Most of today's integration and high productivity levels have been because of standards that have evolved over the last two decades,” explained Budhwar.

“Before that, particularly in industrial automation, they have had numerous challenges on proprietary technologies where we struggled. But new devices and optimisation and communication mechanisms, together with the Internet of Things (IoT), have enabled the applications and strategies to evolve.”

While Budhwar isn’t saying that the necessary standards are all here today, he emphasises that “significant progress has been made and we are reaching a situation where standards would not be a hindrance to this kind of transformation.” automotiveworld.com/megatrends/

Manufacturing & Materials

ON-BOARD SOFTWARE

HARDWARE HA RDWARE

CONTENT / CONNECTED SERVICES

DELIVERY INFRA

CONNECTIVITY CO NNE CTIVITY

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OEM/ OEM/Manufacturers Manufacturers

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Big B ig Data

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HMII HM

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New New Technologies Technologies & Disciplines Disciplines

Connected Vehicles Ecosystem focusing on IT in the car and innovation inside the car. That's the disruption that is happening in the automotive industry,� he said. “Customers are expecting a huge amount of automation from us in terms of the way we provide those services. And reducing waste in IT services and automation are all things which are aligned with lean production or lean production techniques. As a service provider, the way we operate has to change. We have to focus more on automation and that's what we are doing.�

Shift to high-tech industry One of the key industry forces behind smart manufacturing is the convergence with the high-tech industry. “The manufacturing industry is moving closer towards the high-tech industry.

Historically, it's been all about assembly lines and machines and putting together a beautiful product. But today the whole thing - the move towards autonomous cars, electric cars - has to be enabled by more and more IT,� said Budhwar. “The more you move from manufacturing to high-tech, the closer you get to IT. Software is going to become the core of the car going forward.�

company in this environment is to adopt a learning-based culture. “Technology has been changing and will continue to change. The topics of discussion today have changed from what they were yesterday and will change in the future,� he observed. “We used to talk about technology like the Internet a few years back. It evolved into responsive web design and we are now talking about Big Data. What is important is that we are a learning organisation.�

Infosys has been investing heavily in internal training facilities, and offers one of the largest corporate universities in the world, located in Mysore. “That training is evolving,� he pointed out. “Learning plays a big role, and any shortage of technology skills has to be overcome by building a learning-based culture in the organisation.�

A learning-based culture As technology advances at an increasingly rapid pace, how can companies like Infosys ensure access to a workforce with the right skills?

Budhwar believes that the key for any

Successfully adapting to this movement requires a huge amount of change from companies like Infosys, demanding greater attention to innovation. “We are increasingly

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Megatrends | 25

Manufacturing & Materials

Come back to steel to save weight (and money), says ArcelorMittal It may be lighter, but aluminium is fundamentally a quick fix, and OEMs currently using aluminium will convert those parts back to steel to reduce mass and cost, as the world’s largest steel supplier explains to Megatrends

By Xavier Boucherat t’s been almost two years since Ford unveiled the thirteenth generation F150.

The aluminium-intensive incarnation of America’s favourite pickup was well received, and whilst few OEMs have embraced the steel alternative quite so enthusiastically, the

I

lure of lightweight aluminium has given the steel industry much to think about.

“That was a bad surprise for us,” says Brian Aranha, Vice President of Global Automotive at ArcelorMittal. “We just didn’t see it coming.”

Aranha is adamant that steel’s influence over the automotive industry remains firm. He predicts that over the next ten years, steel will regain ground lost to materials like aluminium. This, he says, is because OEMs are always going to go with the fastest, most cost effective option. And when it comes to cost-effective lightweighting, steel holds the key.

“Our steel solutions can reduce cost as well as weight,” he says, “and where there are cost increases, they are in the range of €1 to €1.5 per kilogram of weight saved. Conversely, aluminium solutions can mean cost increases of between €3 and €15 per kilogram of weight saved, depending on the application.”

The difficulty, he says, is promoting steel solutions early enough in the design cycle, and letting OEMs know that the potential exists. Whereas

26 | Megatrends

automotiveworld.com/megatrends/

Manufacturing & Materials aluminium can be swapped in at a late stage of the manufacturing process, maximising efficiencies with steel requires consideration from the start.

The later it is left, the harder it is to implement a steel solution across an existing assembly line.

“I think over the next ten years, we will need to use our influence to become more and more involved in vehicle redesigns as early as possible,” says Aranha. “When OEMs have a chance to take full advantage of steel, we suspect they will take parts that have been converted to aluminium and change them back. In doing so, they will be able to lower their costs.”

A battle on two fronts A CO2 emissions target of 95g/km has been confirmed in Europe for 2021, whilst corporate average fuel economy (CAFE) standards in the US will require light vehicles to achieve 54.5mpg by 2025. In assisting OEMs to hit these targets, ArcelorMittal is looking to provide potential for a 20% reduction in body-in-white (BIW) weight.

The major challenge moving forward is that steel suppliers face conflicting demands from the automotive sector.

Lighter vehicles are a must, but they have to be sturdier too, and capable of delivering a five-star crash performance. This is particularly the case in emerging markets such as India, where increased safety requirements on new vehicles will soon be enforced. The question is, which technologies will make the development of a lighter, stiffer material possible?

Aranha predicts that OEMs will further embrace hot stamping, as the inefficiencies of cold stamping techniques become more and more pronounced. Hot stamping is the process in which high strength steel is formed when hot, and quenched in the die. “Reducing weight is very simple,” he suggests. “You make a stronger material with a higher strength. That way, you can make it thinner. But this is far more difficult when it’s cold. Cold stamping has a lot of wear on the dies, and there’s the problem of spring-back.”

Aranha believes, therefore, that the trend will be for more hot stamping.

“We have a product called Usibor, which right now has a strength level when formed of 1500 megapascals (MPa),” he continues. “Within the next automotiveworld.com/megatrends/

Megatrends | 27

Manufacturing & Materials financial year, we will make a 2000 MPa product available, and beyond that we have research labs working on stamping materials with strengths of up to 2500 MPa. These materials form the basis of the trend we predict for hot stamping, which in spite of the extra processing still amounts to a lower overall cost when compared to aluminium solutions.”

Future developments will also take advantage of laser-welded blanks, composed of two or more flat steel sheets welded together with a laser.

These sheets can have different thicknesses, coatings, and be made of different alloys. This will allow engineers to consolidate multiple parts into single parts, within which weight and safety properties can still be optimised accordingly.

Combined with hot-stamping techniques, the company is confident that over the next two years, technologies like these could bring additional weight savings of 3% in Csegment, pick-up and D-segment vehicles.

Over the next ten years, steel will also play a role in the development of composites, as existing materials are developed to their limit. Certain

materials, explains Aranha, have deficiencies that mean they can only be taken so far in the lightweighting process. Door skins, for example, can only be made so thin before the stiffness is compromised, and the sheet becomes wavy.

“In a case like this, there’s potential for use of additive manufacturing technologies,” says Aranha. “For example, 3D printers could be used to produce a stiffening material that could be laid down over a sheet of steel. This is a trend we’ll be following as it emerges, and promoting if necessary.”

Steel parts before and after crash test

Lighter batteries leave extra room Another trend that could see further returns to steel is the increasing electrification of vehicles, and the subsequent development of lighter batteries. “There are huge amounts of effort going into battery lightweighting, both on the part of the battery industry and the automotive industry,” says Aranha. “The incentive is huge, and this is definitely something that will work in our favour.”

With lighter batteries, cars will require less power, leaving designers room to use steel in other parts of the car without breaching their weight targets.

In addition, he adds, battery-operated vehicles will require specific material to protect the battery, and this, says Aranha, is something that can be achieved very effectively with steel.

Further development of engines used in EVs and hybrids will also see further demand for high-performance, electrically capable steel, required for a longer drive range and the high-speed at which the electric motors spin compared with other appliances.

Currently, the company has facilities in Europe dedicated to research and production in these areas.

Moving forward, the challenges may be daunting, but as Aranha points out, ArcelorMittal has already seen success. Existing grades of advanced high strength steel are already capable of helping OEMs to meet the company’s suggested target of a 20% reduction in BIW weight, and as GM’s 2015 advert for the 2016 Silverado demonstrated, steel still exerts considerable influence over the industry. Reports of steel’s demise, it seems, are very much exaggerated.

28 | Megatrends

automotiveworld.com/megatrends/

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Connected Car

Multi-modal HMI – the new normal?

Megatrends speaks to Luxoft’s Georg Doll about the shift towards smart human machine interface systems

By Freddie Holmes EMs are beginning to integrate new high-tech human machine interface (HMI) systems in place of traditional controls. Warning lights, hard push buttons and rotary controls are gradually being overtaken by multimodal input methods such as touch screen, haptic feedback, gesture and voice control.

O

However, will these new HMI systems become the new norm for driver information? Georg Doll, Managing Director of software development company Luxoft, thinks they will.

“However, I don't think we will immediately see features like gesture control as standard”, he advises.

Key for survival

The trend has been initiated by growing demand within the luxury segment and is expected to sweep across most vehicle segments in the coming years.

According to a recent report released

by Grand View Research, the global HMI market is expected to register a CAGR exceeding 10% up to 2022, reaching US$6.31bn. Most recently, the new BMW 7 Series was launched with optional gesture control, allowing functions such as heating and music to be adjusted with pre-programmed hand motions.

30 | Megatrends

Doll points to varying cultural nuances that will need to be addressed by the industry. HMI systems need to be – ideally – usable across various countries and languages without a significant overhaul of the system. With push and turn buttons and knobs, there is very little that needs to be adapted by the OEM, but when the decisionmaking process is controlled by the driver’s expression – be it through speech or gesture – there are challenges to overcome.

“If you look at cultural differences, it can be confusing going from one car in Germany to another in the UK, for example. It’s easy to activate the wiper instead of the indicator by mistake. The behaviour of the driver and the input methods we use – such as what ‘yes’ means, what ‘no’ means – and how you show this with a gesture may differ from region to region,” he observes.

Luxoft has been a player within the automotive space for the last decade, with a focus on HMI development – an area that has become increasingly lucrative for the company. “We keep increasing our investments, and firmly believe that this software is going to be key for survival in the automotive industry,” Doll explains.

Indeed, the company recently received awards for its HMI development at the CAR HMi Concepts and Systems 2015 automotiveworld.com/megatrends/

Connected Car HMI systems can alert the driver to road hazards more effectively than traditional warnings – such as lights or audible chimes – by displaying vital driver information more clearly, and enabling the driver to react more efficiently. “With semi-autonomous driving there are completely new tasks for the HMI system, such as keeping the driver alert and informing the driver of special situations. Arriving at fully autonomous driving will require even more new requirements,” explains Doll.

Congress in July 2015. In the Most Innovative Human Machine Interface (HMI) Feature category, Luxoft took second place after Continental and ahead of Ford in third.

The award was received for its Body Comfort Climate feature, which allows driver or passenger to interact with the vehicle’s climate control system.

Energy-efficient climate control systems can be designed by employing zonal climate control targeted to specific body parts of a passenger.

Seeing clearly The topic of HMI ties in closely with autonomous driving, as the smorgasbord of sensors required to make driverless vehicles a reality can relay various alerts to the driver.

automotiveworld.com/megatrends/

Today, many premium vehicles can evaluate potentially hazardous movements of nearby traffic and determine which information is brought to the driver’s attention. This ‘workload determination’ can be used to assist drivers in a critical situation, Doll explains. “The HMI can display exactly what they need at that point.

Historically, we are hunters. That means when it comes to a critical situation, we tend to only focus on one point.” ADAS paired with HMI can significantly help drivers by placing their attention on the correct situation, and therefore lead to the most efficient or the safest action.

The industry appears to be targeting 2020 for the first commercially available autonomous drive technology, but how does the timeline look for the crossover to smart HMI systems? “The technology is just deploying now,” says Doll, “and you can see the first gesture control systems in new vehicles today.”

However, he observes that as with autonomous driving, while the HMI technology may be nearly ready, public roads are not. This is for local

government to decide, he says: “Standardisation is something that regulatory bodies are going to need to take care of, and that does not happen overnight.”

For the many One of the challenges facing Luxoft and other developers of HMI systems is bringing a solution to market that meets the needs of both exclusive marques and mass-produced models.

Bringing these systems to market in India, for example, would present particular challenges. With a high volume of compact and three-wheeler vehicles and a growing premium sector, the middle market is yet to flourish.

How drivers interact with their cars will continue to evolve with each new model hitting the market. Suppliers will look to develop increasingly sophisticated HMI platforms that can be shared across an OEM’s entire model range, customised to suit branding requirements, and efficiently relay growing levels of information for the driver.

“The driver of technology within the automotive industry is in the premium sector. In the volume market today, you take existing functionality, apply a classic cost-down exercise for the system functions, and then deploy the resulting system in cars which have technology that has already returned an investment. As a result, the cost of the HMI functionality is relatively small,” Doll explains. “On the software side, if an OEM can get volume into emerging markets, that might be a game changer.”

Megatrends | 31

Connected Car

Interview: Phil Eyler, Executive Vice President and President, Infotainment, Harman Phil Eyler provides an update on Harman's Connected Car activities and the forces shaping its strategy.

By Megan Lampinen an you tell me about your role in the company?

C

I have been with Harman for 18 years in a variety of positions spanning from infotainment to audio. Today, I lead Harmanâ&#x20AC;&#x2122;s Connected Car division and am responsible for driving our multibillion dollar business with 8,000 employees throughout the world.

Since stepping into this role in July, I have been focussed on expanding upon our four core areas of growth: embedded infotainment, telematics, connected safety and cyber security.

With this focus we have secured automotiveworld.com/megatrends/

several recent significant customer wins, including new contract awards with BMW, Daimler, and Subaru.

How has Harman's business focus evolved over the years, from straightforward audio to connectivity and autonomous driving? How abrupt or seamless was the evolution?

Harman has been a trusted brand for more than 60 years and began investing into the connected car space in 1995 when it acquired Becker. Today it supplies infotainment

systems to OEMs worldwide, with an 80% market share in the infotainment industry. Nine out of the top 20 OEMs are Harman customers. There are more than 25 million automobiles on the road with our connected solutions.

We continue to evolve our business through investments in R&D and through acquisitions. This year, Harman expanded its expertise in connectivity technologies with the acquisition of Redbend, a leading provider in software management technology for connected devices and over-the-air software and firmware upgrading services.

Megatrends | 33

Connected Car

When it comes to connected car developments, what's the biggest driver?

There isn’t just one driver for this segment. The infotainment system is the brain of a vehicle in which safety, security and connectivity play equal importance.

update on your own acquisitions of Redbend Software and Symphony Teleca? What sort of partnership strategy does Harman pursue?

The integration is going well. With the addition of Redbend, we added a critical component to our automotive

systems and services portfolio that allows us to essentially future-proof software in cars, ultimately making them safer, smarter and more efficient.

The Symphony Teleca acquisition provides a critical foundation and deep bench strength for a comprehensive systems and services portfolio. These

How do you see over-the-air (OTA) software updates shaping the area of automotive recalls?

OTA capabilities greatly change the automotive industry – for OEMs and drivers alike. They provide a gateway for automakers to deliver system updates quickly and seamlessly without relying on drivers to bring in their vehicles to be serviced. We can see OTA capabilities being helpful throughout the vehicle maintenance ecosystem – from remote diagnostics to rapid response to new issues as they occur in a fleet. Of course, Harman has also expanded its managed services capabilities to provide automotive OEMs with a complete end-to-end solution for managing software updates to the car.

The industry has seen a rise in partnerships between telematics companies and other suppliers as well as OEMs. Can you provide an 34 | Megatrends

Phil Eyler automotiveworld.com/megatrends/

Connected Car

additions further our ability to deliver seamless, connected car and connected lifestyle consumer experiences.

How do you foresee the general relationship between telematics companies and OEMs evolving in the coming years? Are we likely to see a telematics company acquire an OEM? Gartner predicts that by 2020, there will be 250 million connected vehicles on the road, so I think we can expect a significant upshot in the number of partnerships between telematics companies and OEMs as connected vehicles become more sophisticated and increasingly mainstream.

Clearly, the connected car is not and will not be an island – it will require a highly advanced infrastructure supporting it. We’ve learned that no one supplier or automaker can provide the singular solution, so industry cooperation among suppliers and OEMS, as well as standards bodies and private-public partnership organisations, will be critical to fulfilling the dream of connected cars and ultimately, autonomous driving.

Are these tech and OEM collaborations likely to encourage the automotiveworld.com/megatrends/

evolution of mobility into a service, moving away from traditional vehicle ownership?

Drivers have reached a point where they expect some form of infotainment system in their vehicle, and it’s now a matter of choosing how advanced they want their infotainment features to be.

In the next five years, we anticipate automakers and technology suppliers to close the gap between how mobile devices and cars are managed.

Harman is diligently working on providing solutions to keep up with this demand. Our incremental OTA update capabilities in infotainment solutions enables us to keep up with this demand, and we’re now able to service OEMs with faster and more intelligent, safe and secure solutions to meet consumer demands for a connected lifestyle.

What sort of role will government need to play in the rise of connected vehicle technology?

Today’s vehicles are becoming the ultimate mobile device, driven by consumers’ expectations to have a connected and personalised experience in their vehicles. An innovation gap continues to exist between the mobile technology and automotive industries, which has

resulted in examples of unsafe, unsecure and untested connected experiences in the car for consumers.

Vehicles are not like mobile phones and other mobile devices – vehicles must be regulated for consumer safety in much more complex ways.

Connected car legislation will be most effective if it’s created with the public sector, automakers and technology developers seated at the same table working together to develop safety and security standards that also support innovation.

What is the biggest uncertainty in today's landscape for Harman and companies like it?

The biggest uncertainty for Harman is also our greatest source of excitement.

The future of driving is undefined and we have the industry’s leading team of engineers, designers and developers creating solutions that help our customers seize new opportunities to excite drivers. Our heritage equipping more than 25 million automobiles on the road with Harman connected solutions makes us a trusted advisor, while our innovation and foresight delivering industry-first solutions ensures our customers navigate new technology trends, consumer demands and industry regulations.

Megatrends | 35

Connected Car

Emerging markets need smart maps too Navigation in developed markets moves forward at pace, but what are the challenges of rolling out complex mapping services in emerging markets?

Freddie Holmes talks to Peter Bolesza, NNG's Vice President of Emerging Markets n August 2015, growing competition within the mapping and location services market was highlighted by a multi-billion dollar deal for Nokia’s HERE business. The winning bidders – a consortium consisting of BMW Group, Daimler and Audi which combined to offer €2.8bn (US$3.07bn) – marked a significant acquisition. As Daimler Chief Executive Dieter Zetsche remarked at the time, “highly precise digital maps are a crucial component for future mobility.”

I

Demand for mapping is clearly picking up; HERE’s sales for the second quarter of 2015 increased year-on-year by 25%. In the same month, Bosch partnered with TomTom to develop high-definition digital maps for autonomous driving. Echoing a similar sentiment to Zetsche, TomTom’s Chief Financial Officer Taco Titulaer commented in October that demand was “substantially higher” than in previous years. In addition, Lexus and Volvo have both sparked up a relationship with INRIX to utilise its invehicle location services.

36 | Megatrends

Peter Bolesza European companies are clearly upping the ante, but it is worth noting the future importance of emerging markets. Credit ratings service Moody’s expects China to account for 27.8% of global automotive sales in 2016, and according to Deloitte, India will become the third largest global automotive market by 2020.

Megatrends spoke to Peter Bolesza, Vice President of Emerging Markets at NNG, who made the move to India

in 2010 to oversee growing business in Russia, the Middle East and India among others. Since his time in New Delhi, he has observed that rolling out mapping services in an emerging market presents new challenges.

“Four or five years ago, map quality was extremely low in India,” he said.

“This is changing now – quality is improving year after year and even some high-end features are coming in.” While the automotive industry as a whole is leaning heavily toward automotiveworld.com/megatrends/

Connected Car excellent connectivity in larger cities, but once you step outside, the quality drops.”

Just a pipedream?

Many anticipate cars with some form of autonomous drive technology first hitting public roads around the year 2020.

Given current shortfalls, can the same timeline be applied to markets outside of the US and Europe, which have been pioneering for the technology?

“In markets such as India, I can’t see it happening by 2020,” Bolesza admitted.

In what he describes as “closed environments” where traffic is less dense, this may be a different story. “In India, the traffic is chaotic, so I don’t see how a self-driving car would manage to navigate between all those rickshaws, bicycles and motorcycles.” connectivity, “we are struggling a little bit in India,” he added, “so we cannot introduce the newest technologies just yet.”

Emerging markets, emerging cities Some argue that the availability of mapping and location services is potentially more essential for emerging markets, yet possibly more challenging than in developed markets. However, Bolesza was quick to affirm that in fact, “Mapping data and traffic information is equally essential in every market.” The key difference is that in the majority of emerging markets, mapping providers have a harder time keeping up with the pace of change in technology and infrastructure. “In emerging markets, they are building cities out of nowhere.

The mapping companies don’t face these issues – at this level – in major markets,” he said.

problem will be the introduction of 5G. Following on from 4G and Long Term Evolution (LTE), this will allow for faster data transfer and more reliable cross-country connections – core principles for future mobility. If emerging markets are to meet standards of developed markets, this will need to be a hurdle, not a blockade.

In June 2015, around 20,000 ‘autorickshaws’ – three-wheeler taxis powered by small gasoline motors – were removed from the streets of South Mumbai. “In areas like this, I can imagine self-driving cars appearing,” said Bolesza, “but generally speaking I cannot imagine how a self-driving car would manage otherwise.”

Bolesza believes the widespread rollout of 5G would be a significant step forward, but questions the high number of used vehicles on the road that will be unable to leverage the technology. “In addition, I’m pretty sure that – just like in any other country – network providers will start with big Tier 1 or Tier 2 cities.

Connectivity will not be an issue there, but in rural regions or smaller cities it will be. This is pretty much the same everywhere around the world, even in the US or Europe. You have

Highlighted by the earlier buyout of HERE in Europe, Bosch’s longstanding relationship with TomTom, and INRIX’s recent partnership with Lexus and Volvo, the need to collaborate to succeed is evident. Is collaboration between mapping and location specialists the next step to spur autonomous driving developments in markets such as India?

“Not in the near future, but later on – of course,” said Bolesza, concluding: “India is going to pretty much mirror the European and US market, but not any time soon…We are really far behind.”

There are certain regional nuances, though. Navigation and mapping services will need to provide real-time traffic information in order for autonomous vehicles to function safely, continuously harvesting and analysing data from surrounding traffic. India is renowned for its level of traffic collisions, and according to the World Bank, accounts for 15% of global traffic deaths each year. Does this present a particular challenge for NNG? “Absolutely,” said Bolesza, “So we are struggling on two sides.”

One of the most significant step changes allowing emerging markets to, well, emerge, and tackle this automotiveworld.com/megatrends/

Megatrends | 37

Connected Car

Emerging markets are emerging telematics markets Not straightforward, but promising – that’s how Guenter Weber, Regional President of Bosch Aftermarket in India, describes India’s telematics market

By Freddie Holmes elematics technology is becoming increasingly useful as a tool for OEMs and for fleet managers.

Consumers, too, are realising the benefits through offerings like usagebased insurance (UBI). Driving data can be logged and analysed to reward safer, more efficient drivers with lower insurance premiums, while fleet managers can track their vehicles and monitor fuel efficiency.

T

The benefits of telematics are already established across the developed markets of Europe and the US; now consumers and fleets in emerging markets are beginning to explore how they can make use of the technology.

One of the fastest growing emerging markets is India, which is expected to become one of the largest automotive

automotiveworld.com/megatrends/

markets in the world over the next decade. Following an almost 7% decline in 2013, light vehicle demand in India grew by 1% in 2014 to reach 2.9 million units.

As Guenter Weber, Regional President of Bosch Aftermarket observes, “Everybody is talking about telematics, and it’s developing quite promisingly in India,” but he notes that the development has not been straightforward. “We have been able to track cars for many years, but additional services are now coming in.”

Emerging markets, emerging fast According to recent analysis by MarketsandMarkets, the global automotive telematics market will be

worth US$45bn by 2019; emerging markets may be late to the telematics party, but the development of telematics in those markets is emerging fast. “I would like Bosch to be the only player, but unfortunately it is not,” says Weber of India’s telematics market. “Competition is already here, and many big companies are now in the market. In addition, there are many start-ups.”

Rising competition between suppliers based in developed markets has been shown to spur M&A, as larger players snap up supplementary companies to gain market share and acquire specific expertise. Is there potential for similar consolidation within the Indian market? “This is natural in the automotive industry, so I don’t see

Megatrends | 39

Connected Car anything different happening in India,” Weber says, but advises that many companies are still testing the water.

“We have to see who will stay in the field, and who will leave.”

While, in the past, high-tech in-vehicle infotainment (IVI) systems were reserved for premium marques, almost all new vehicles on the road today feature IVI systems as standard.

As for whether this trend applies to the fitment of telematics systems, with all new vehicles eventually featuring integrated telematics as standard in the future, “It’s coming step by step,” says Weber. “Everybody is talking about it, and it will be implemented into the market slowly, similar to Europe.”

As it stands, telematics demand centres largely on the need for vehicle tracking, and currently to a lesser degree, fleet management, says Weber, although he noted that the latter is growing in importance: “This is the key system, and our customers are requesting more of it.”

Barriers to adoption Several key issues are slowing the adoption of telematics in emerging markets. The first of these is the need for a secure Internet connection across the region concerned.

Telematics systems require a constant flow of information from vehicle to Cloud, and then to back-office analysis. With India’s mix of vast open areas and highly dense cities, the required infrastructure may be a long time coming. This, however, is not unique to India or other emerging markets; similar issues have been seen in the US, for example.

Following the progression of various technologies allowing higher network coverage, most recently 4G and LTE, 5G is set to be the next step. Indeed, many believe 5G will act as an enabler for autonomous vehicles and vehicle-to-everything (V2X) communication, which will create a significant source of data, and thereby provide a significant need for data analysis. However, 5G adoption is currently challenged by poor network coverage and the lack of standard specification for the technology.

“In India, 5G can provide additional features. Its high speed can enable faster content streaming,” explains Bosch’s Weber. “For example, this will 40 | Megatrends

become more important for school buses and other vehicles that require real time data.”

Data protection is another issue, although this is a global challenge, and far from exclusive to emerging markets. Speaking at the 2015 IAA in Frankfurt, Renault-Nissan Chief Executive Carlos Ghosn made it clear that the OEMs are taking the issue of data protection very seriously. They are, of course, aided by suppliers like Bosch, which are well positioned to provide such a service. “The big challenge for everybody is around data security,” agrees Weber. “Here, we have something unique. At a recent telematics event in India there was considerable interest for the data security we can provide – both for the driver and the OEM. This is the nature of change that everybody is facing, and everyone discussing telematics is focussing on data protection.”

A platform for autonomous taxis?

According to ABI Research, global telematics penetration in passenger cars is expected to increase from 11.4% in 2012 to 60.1% in 2017. Much of this demand will come from car-share fleets such as DriveNow, and on-demand taxi services such as Uber, where data analysis can dramatically increase business efficiency.

These alternative business models also present an opportunity for the Indian market. In the state of Kerala, for example, Maruti Suzuki – the Indian market leader in passenger cars with an almost 50% share – has partnered with the Kerala State Women’s Development Corporation to help women reach their destinations safely.

She-Taxi integrates a telematics system within the vehicle, which monitors and tracks the activities of the taxi and the behaviour of the driver. Data is sourced from a wide range of sensors and features, including speeding, safety alert switches in the passenger cabin, a GPS tracking system, sudden turning, braking or acceleration, and theft protection.

Keeping track of things However, the market in India is changing, he observes. “We are seeing an increasing number of requests for commercial vehicle mileage reporting, accident recording, navigation, tracking, safety and vehicle diagnosis.

If you want to run vehicle diagnosis, a telematics system has to be available in trucks as well,” he affirms.

“Fleet managers have the benefit of being able to track the vehicles. By sourcing the correct information from the telematics, these operators can save fuel and reduce emissions across the fleet. They can also understand their drivers’ behaviour from a safety aspect, so for fleet owners it makes sense,” explains Weber.

Bosch currently supplies diagnostic solutions which can be installed as standard with an OEM, or fitted as an aftermarket retrofit solution. In addition, the supplier also provides the required hardware and software – a key benefit, Weber concludes: “Hardware is only one thing; if you’re transferring data, you need to have the software behind that. It is about bringing multiple things to the table, and this is what makes us a little bit different.” automotiveworld.com/megatrends/

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Connected Car

Keep it simple? No longer an option, says Mathworks As connected car technology evolves, OEMs will have to deal with the increased likelihood of costly bugs and errors

By Xavier Boucherat he connected car will require OEMs to sift through a lot many more lines of code than ever before. Verifying its ability to perform will become both increasingly important, and increasingly complex. If cars really are going to become smart phones on wheels, the automotive industry is going to need all the help it can get.

T

That’s the view of Kishore Rao, Managing Director for Mathworks India, who identifies this as one of the key trends that will shape his company’s strategy. Mathworks, a developer of technical computing software, serves a number of industries, but it’s within automotive where it currently finds itself most in demand.

For Rao, the trends driving the industry make it a great place for a tech company to be, particularly as technology becomes more affordable, and high tech systems are scaled down across all segments. A shift in focus from passive to active safety, says Rao, will see advanced driver assistance systems (ADAS) become features in entry-level cars. A combination of falling

automotiveworld.com/megatrends/

costs and legislative measures will see blind spot monitoring, advanced emergency breaking and pre-collision warning come as standard.

Mathworks specialises in the development of model- based design systems, with its two key platforms dubbed MATLAB and Simulink. The former allows for the modelling of vehicle sub-systems, such as safety systems, body electronics, infotainment systems and powertrains. Simulink then allows for simulation of these models. Once a system is run through simulation, it can be taken down to production. Combined, the two systems cater to two important demands from OEMs – reduction of time to market, and system verification.

between all of which there is increasing interaction. It is extremely very difficult to design something like that without being able to completely model and simulate them in the model- based design environment.”

In particular, the advent of autonomous driving, ADAS and vehicle connectivity will see an exponential rise in the complexity of on-board software.

Model- based design, says Rao, is going to become a standard framework for all OEMs. Increased connectivity and use of electronics will mean that the further down a line a bug or error can travel, the more costly and timeconsuming it will become to rectify.

Manufacturers will require access to tools that can detect them as early as possible.

Get it right first time “Systems today are already extremely complex,” says Rao. “For example, if you look at powertrain systems, and particularly hybrid systems, they’re extremely sophisticated and composed of multiple system domains – chemical, electrical, mechanical and physical,

“We’re already at a stage where a lotmany of the controls in vehicles today are managed by software or electronics,” he says, “and where that is the case, you need to make absolutely sure that when your vehicle is out there in the market, it performs exactly the way you’d like it to.

Products like ours allow OEMs to verify

Megatrends | 43

Connected Car

their systems, which dramatically reduces the number of errors and bugs.

We call this is early verification, where you’re able to verify early in the design process. This is the core benefit, as it directly impacts the time to market and the overall cost of development.”

Shortening the cycle Rao feels that driving down time to market will only become more important as tech giants such as Apple and Google begin to make their presence felt in the automotive industry. Whilst it’s not yet clear whether either company is going to put cars on the road, Rao believes feels its apparent they do want a role in vehicle technology ownership.

“They’re going to look to accelerate technology adoption in vehicles,” he says. “After all, they’re consumer goods companies.”

Such concerns should also remind OEMs that ways of integrating the lightning quick pace of technology development cycles into the comparatively sluggish model design cycle still require development. “This is something that’s already happening,” says Rao. “If you look at our local Indian market, we may not be as advanced as 44 | Megatrends

Western markets, but even here you can see that the leaders of the pack are the ones with very short development times, and these times are always shrinking.”

Making sense of the senses The connected car, and the increased use of sensors and cameras, will is going to keep tech firms like Mathworks extremely busy. Sensors are only as good as the software that analysesing what they can gather, and the role for Mathworks will be to further enhance a vehicle’s ability to leverage the information it can gather.

“For example,” says Rao, “both radar and vision sensors are a key part of a typical ADAS setup. There are specific tools for image processing and video processing.

Our tools make it possible to bring what we call sensor-fusion, which means integrating the data gathered from radar sensors with that gathered with vision sensors.” In turn, he continues, this can help OEMs to develop the increasingly complex algorithms that ADAS technology requires, particularly as further sensors are introduced.

ADAS development will also require a firm like Mathworks to further collaborate

with others in the tech sphere. In particular, the development of advanced display systems used by ADAS requires Mathworks, whicho operates on the logic side, to provide solutions that can be integrated with graphics and interface solutions. “Customer expectations mean that advanced display systems and infotainment systems are only going to become more complicated,” he says, and collaboration will be essential in producing systems that can respond to what a customer does, and modify its functions and behaviour accordingly.

Such is the versatility of Mathworks’s products that Rao sees opportunities beyond assisting in connectivity and safety developments, such as in improving fuel-efficiency, and powertrain electrification. “That’s the good thing about model- based design,” he says.

“It’s something that’s been established over the last few decades, and has been developed into a framework that has potential in all of the current concerns that OEMs have.” As time goes on, he concludes, and as tech firms become further integrated into the automotive industry, companies like Mathworks will be called upon to help OEMs face up to new challenges.

automotiveworld.com/megatrends/

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Connected Car

Mainstream car buyers, emerging markets - everyone wants high-end cockpit electronics Megatrends speaks to Amit Jain, head of Visteon India, about the companyâ&#x20AC;&#x2122;s focus on vehicle electronics and the importance of tailoring connectivity solutions for car buyers in emerging markets and mainstream consumers in all markets

By Freddie Holmes 46 | Megatrends

automotiveworld.com/megatrends/

Connected Car isteon’s transformation into what the company’s new Chief Executive Sachin Lawande calls “the new Visteon” has underlined the fact that electronics is big business within the automotive industry.

V

At the core of this transition has been a restructuring of its portfolio to specialise in cockpit electronics, including instrument clusters, head-up displays (HUD), infotainment and telematics – all key elements of the connected car.

Amit Jain has been at the company since 2007, moving from Director of Business Development globally to Country Head, India, and Associate Director South East Asia in October 2012. In an interview with Megatrends, Jain gave high-level oversight into the driving forces behind connectivity, and the company’s next steps.

In which areas of the connected car is Visteon seeing the strongest demand?

The automotive cockpit electronics market is one of the fastest growing segments and is expected to be 40% to 45% of the industry’s global demand in the next decade. Visteon is exclusively focussed on this segment and is well positioned to capitalise on this growth.

Cockpit electronics will influence the overall brand value of the vehicle. If the end consumer has a pleasant experience while interfacing with the cockpit electronics, the overall driving

experience will be positive. This is what Visteon wants to be known for. We want to be at the forefront of technology and invest in intellectual properties related to infotainment, instrument clusters, head-up displays, and connectivity to the Cloud and the Internet.

How does demand in India compare to your observations elsewhere?

In India, we see growth and fast adoption of apps and connectivity, such as device connectivity to the head unit, OEM specific apps and connectivity to the Cloud. Secondly, we predict growth in frugal innovation concepts like Bring Your Own Device (BYOD) in entry-level cars. The device could be a smartphone or a tablet, which can be used to interface with the audio system and provide tethered connectivity at the same time.

Thirdly, user interfaces with simplified human-machine interface (HMI)/regional HMI and voice-based user interface technologies connected to the cloud will also evolve. Finally, there will be a growth in telematics penetration in the market. Commercial vehicles (CVs) and the taxi segment would be the first to witness this growth, followed by the passenger car segment.

How important is the millennial consumer group, that is, those drivers brought up expecting hightech systems as standard?

Millennials are the first of the digital natives, the tech-savvy kids brought up in the digital age. They adopt new

technology earlier, spend significant parts of their day with digital media and produce more user-generated content online.

They desire the expansion of their networked life while driving as well.

Inside the car they expect seamless synchronisation between the vehicle and the various smart devices they use, be it a smart watch, smartphone, tablet or other wearable devices. They also expect the same intuitive user experience inside the vehicle that they know from their smart devices.

Connectivity is potentially more essential, yet also possibly more challenging, in those emerging markets that are less developed than India. Is this a fair point?

Yes, absolutely. Regarding connectivity in general, two thirds of the world is still not connected and the majority of this gap is in the emerging markets. Bringing connectivity to these countries would mean more access to and exchange of information offering an opportunity to facilitate social and economic growth.

What is the main focus of connectivity technology development for emerging markets?

Specifically for the automotive sector – and looking at future forecasts – I would say that for emerging markets, the priority for technology development and market introduction would be safety and connectivity.

Why is this?

In-vehicle connectivity would enable OEMs to build better and safer vehicles, and would allow government agencies to enforce traffic and other regulations more effectively. However, cost pressures, infrastructure limitations and the absence of important and affordable use cases – which can increase perceived value to consumers – inhibit the OEMs from investing more in connectivity.

Amit Jain, head of Visteon India automotiveworld.com/megatrends/

In the near future, with the proposed investment in digital infrastructure by government and telecoms, and the increase in the percentage of young car buyers who value and appreciate the need for in-vehicle connectivity, OEMs will consider investing in built-in modem and telematics technologies which would provide more options for connectivity, rather than relying only on the smartphone.

Megatrends | 47

Connected Car

Consumers now demand technologies in mass-produced ‘cost-efficient vehicles’ that were previously reserved for luxury or premium vehicles. How has Visteon approached the challenge of developing a system that can be integrated and adapted for a range of vehicle segments?

Today, consumers want more features; in fact they associate the car cockpit with their living room, expecting the same user experience whether they are driving a B-segment or C-segment car.

At Visteon, we are building scalable product ranges which address the cross platform and model variant needs of the OEMs. Our OpenAir infotainment range provides flexible invehicle connectivity and an advanced entertainment solution, and is based on open architecture, human-machine interface (HMI) command and controls,

48 | Megatrends

and off-board connections.

wireless

data

In addition, SmartCore is a new connected infotainment system that combines previously separate driver, infotainment and Cloud connectivity units into one box. Multiple domains can run side-by-side on scalable hardware with different operating systems, greatly reducing system complexity. Depending on the number of displays to be driven and the number of operating systems in the cockpit, SmartCore hardware can be scaled up or down thus catering to OEM and consumer needs at an optimum cost.

How does connectivity tie in with autonomous driving – can one work without the other?

Connectivity is independent of the launch of autonomous cars, but the vice versa is not possible. A plethora of

features which improve the user experience revolve around connectivity today.

From a global perspective, to make autonomous driving a reality, connectivity is required. This is going to take considerable effort by telecom service providers, government organisations, device manufacturers, content providers, OEMs and suppliers.

It is predicted that fully autonomous cars will make it to market only by 2030. In India, maybe in the next 15 years we can predict semi-autonomous cars which would alert the driver, however, this would first require advanced driver assistance systems (ADAS) to be implemented in cars in India. In turn, this will require the implementation of ADAS as a regulation, with stringent traffic rules, regulated traffic and investment in road infrastructure.

automotiveworld.com/megatrends/

eMobility

“We will be legislated into electrification,” says UPS Chief Alternative Fuel Engineer Michael Nash talks to Mike Britt, UPS Chief Alternative Fuel Engineer and Director of Maintenance & Engineering International Operations Ground Fleet

PS says that one of its top goals is to reduce its greenhouse gas (GHG) emissions from transportation relative to its shipping volume. In 2015, the company joined the White House’s American Business Act on Climate Pledge, committing to a 20% reduction in GHG intensity by 2020.

U

In a recent interview, Mike Britt, UPS Chief Alternative Fuel Engineer and Director of Maintenance & Engineering International Operations

Ground Fleet, described the process of adopting alternative powertrain technologies at UPS as key to meeting this goal. He also highlighted electrification as an important trend for the company.

to see if they are applicable in our vocation and our geography. The number one requirement is for the technologies to fit our duty cycles. We will not to take a technology if it compromises our operation.

How does UPS decide what powertrain technologies are suitable for its needs?

Our trucks that weigh around 20,000lbs typically do a route of 75 miles (1,207 km)and are operating for about ten hours every day. They are subjected to a fairly rigorous duty cycle, because the driver does about 130 stops and delivers around 200 packages.

I work with OEMs worldwide on different alternative fuel technologies

UPS believes that propane will “save 3.5 million gallons of gasoline and diesel annually”

A typical 100kWh electric truck would have a hard time doing that duty cycle. If we bumped it up to a 100-mile route, an EV definitely couldn’t do it.

So we have to decide on a powertrain technology that has a similar capability to that of diesel or gasoline, like propane or compressed natural gas (CNG).

How much real-world testing are alternative powertrains subject to before being deployed in the UPS fleet?

First we vet new technologies technically, making sure the component manufacturers are on our approved list. After that, we will take them out for a quick test run, carry out modifications to make sure they can meet our duty cycle, before placing them in a year-long test. These

50 | Megatrends

automotiveworld.com/megatrends/

eMobility vehicles use telemetry to provide us with data on the performance of the vehicle every single day of the year, which allows us to build trends and substantial knowledge. Armed with this information, we go back to the manufacturer and tell them if any further modifications need to be made.

Finally, we do larger deployments based on our needs. For example, we now buy a couple of hundred CNG Class 6 trucks every year because we are finding more places for them to operate.

Are there any issues that you regularly come across when adopting new technologies?

The US Department of Energy (DOE) usually helps us get it right the first time. However, new technologies are frequently pitched to us by small startup companies, which sometimes don’t have the stability or sustainability resources to stay in business.

A good example is that we bought a number of Modec trucks to operate in Europe. Since the company has been out of business, the models no longer have any technical support from the manufacturer. This has forced us to become the manufacturer, come up with technical solutions to any problems and source any parts too. It is very difficult and time consuming, and as a business we are not set up to do it.

fact, somehow, they are getting more expensive. It’s probably because the technology is getting more capable.

Hybrid technologies are out there, and are definitely becoming more competitive. This is a trend that we are optimistic about, and we think it could be the bridging technology between diesel and pure electric trucks. For UPS, the main benefit is the ability to use geofencing technology with hybrids. When the driver enters the city, the internal combustion engine (ICE) is switched off automatically and the vehicle runs in pure electric mode.

On exiting the zone, the ICE can fire up and recharge the batteries.

Using technology to have zero emissions in critical areas is how legislation is shaping up. And it is a scenario we see happening all across the world – in California, Paris, Toulouse, London, and so on.

Does UPS need to aim for a fleet that balances a mix of conventional diesel trucks and those that use alternative powertrain technologies?

Our whole fleet is based on commonality. We want to make sure that any one of our drivers, in any one of our vehicles, can do any route in any part of the world. We crave that versatility, but with the new technologies and emissions requirements it’s not really realistic, so we need to be more sophisticated in our expectations.

With electrification and other technologies, the range of vehicles is limited, making our operation more complicated. We have to be careful and know exactly which vehicles can operate which route and duty cycle.

In short, we know that we need to bring in these newer technologies, but we also need to have the ability to have trucks that can do those further routes with no questions asked.

Longer term, will UPS look to electrify all its trucks?

When it comes to heavy-duty vehicles, we don’t see electrification as a viable option for at least another 20 years. This is mainly due to duty cycles – in the US and the EU, we run Class 8 trucks between 700 and 1,000 miles a day.

The technology needs to progress significantly before the electrification of these trucks is possible.

Class 1 through to Class 6 is a different story. We are getting closer with the technology, but the cost is still way out of line. However, as the next wave of emissions legislations come into fruition, we will probably be forced to increase electrification. If we get the support of the federal and state governments worldwide, we will continue to move forward in pushing out electric trucks, as well as other technologies like hydrogen fuel cells.

A version of this article first appeared on AutomotiveWorld.com

We don’t want to buy vehicles from a manufacturer that is not going to be around for support later on. After the technology fits our needs and is economically feasible, it is vitally important for us that the vendor stays in business.

What powertrain technologies do you think will play a greater role in the UPS fleet?

I think we will be legislated into electrification before the technology stands on its own feet. However, there are still fundamental issues. Lithiumion batteries (LiBs) have not come down a dime in cost in the last five years. They were supposed to come down 10% a year, but are still well over US$600/kWh. The hydrogen fuel cells that we are working with also pose a difficult task.

They are not getting any cheaper – in automotiveworld.com/megatrends/

Megatrends | 51

eMobility

Fuel cells: taking a wider commercial view Fuel cell electric vehicles are gaining momentum in the passenger car segment but are there similar opportunities for commercial vehicles? Paul Roberts speaks to a UK energy technology company with a strong pedigree in fuel cell development that is steering a range-extender project in that direction he debate surrounding vehicle emissions is never far from the headlines and given the recent focus on diesel engines, NOX is under the microscope just as much as CO2, with road transport increasingly being cited as having a signiďŹ cant negative impact on air quality, especially in areas of high population.

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Hybrids and range-extended vehicles that feature an internal combustion engine are reducing the problem, but are unlikely to solve it on their own. The acceptance of electric vehicles â&#x20AC;&#x201C; for years championed as the obvious zero emissions solution â&#x20AC;&#x201C; has been held back by consumer concerns about price, convenience and range. Uptake varies geographically and remains inconsistent, not least because there is 52 | Megatrends

automotiveworld.com/megatrends/

eMobility is whether to have a large battery with a small fuel cell or a smaller battery and a larger fuel cell,” he says. “In the first instance the fuel cell power unit is used simply as a range extender, while in the second case the fuel cell provides full motive power.”

Overcoming the obstacles

little consensus among vehicle manufacturers on whether battery EVs are the best answer.

With no clear agreement on which technology or combination of technologies is likely to prevail, development in the ‘alternative fuel’ arena continues apace - and companies at the cutting-edge of researched solutions are the ones best-placed to benefit. Intelligent Energy, an independent UKheadquartered energy technology group with more than 25 years of experience in fuel cell system R&D, is already working with a number of vehicle manufacturers on undisclosed programmes and believes it can accelerate the take-up of fuel cell technology still further by overcoming the limitations of existing EVs – and not only in the passenger car sector.

overcomes the range anxiety and slow recharging rates associated with battery EVs while still delivering the benefits of a zero emission vehicle.”

Despite his enthusiasm for fuel cells, Skelton believes future vehicle powertrains will be drawn from a portfolio of alternatives, each optimised for particular applications. “For the foreseeable future, there will be a place for the battery; the choice for a fuel cell solution

The usual objections to hydrogen fuel cell technology are based on cost or infrastructure concerns but Intelligent Energy is positioning itself to overcome these issues, with close to 1000 patents granted and more again pending, many of which are related to manufacturability. With three business divisions – Motive, Consumer Electronics and Distributed Power and Generation – the company’s philosophy is, says Skelton, “to develop once and deploy many times.” That means shared knowledge across divisions and technology transfer between apparently disparate market sectors, all linked back to hydrogen fuel cells.

Highly cost-focused products already developed by Intelligent Energy include the Upp micro fuel cell generator (which retails at around US$150) for recharging smart phones without an electrical supply and – in conjunction with Suzuki – a fuel cell Burgman scooter,

“A fuel cell EV is just an EV that refuels with hydrogen instead of recharging the battery pack,” says Dan Skelton, business development director of Intelligent Energy’s Motive division. “It automotiveworld.com/megatrends/

Megatrends | 53

eMobility the only type-approved vehicle of its kind in Europe. The Burgman uses an air cooled 4kW fuel cell stack, manufactured by a company that is a joint venture between the Japanese company and Intelligent Energy.

A recently announced contract to supply energy to more than 27,000 communication towers in India is valued at US$1.8bn over a decade and provides a platform to deploy fuel cell systems at large scale as a replacement for diesel generators and provides significant economies of scale in stack manufacture; much of the technology is equally appropriate for automotive applications and the numbers involved dwarf the current requirement for fuel cell vehicles.

In addition to commercial relationships with individual vehicle manufacturers, Intelligent Energy is participating in a number of consortium projects, including one to develop a new class of light commercial vehicle (LCV). Backed by the UK’s APC (Advanced Propulsion Centre), a government-industry partnership for low carbon powertrain development and production, the three year programme will work towards the development and commercialisation of fuel cell range extension technology in a battery electric van. The

54 | Megatrends

combined expertise of Intelligent Energy and its partners in the Zero Emissions Range Extender (ZERE) project - Millbrook, Frost EV, Frost Electronics and CENEX together with fleet operators British Gas and DHL - is capable of producing not just a vehicle, but also a mature supply chain and commercial framework.

“Some fleet operators are already active in the BEV market to comply with current and future legislation, achieving corporate environmental sustainability goals, as well as pushing for increased range and faster refuelling times to allow greater fleet flexibility and reduce costs,” says Skelton. “Many have indicated that without range extender technology, perhaps just 10% of total LCV fleets are likely to be switched to battery EV propulsion. Using cost-effective fuel cell technology, that estimate rises, in the short term, to over 30%.”

By targeting the LCV market, where fleet operation on a daily return-tobase principle is commonplace, Intelligent Energy is neatly side-

stepping the need for widespread refuelling points. And while delivery fleets face the same emissions restrictions in city centres as other road users, they have been slow to adopt EV technology because of prolonged recharging times impairing productivity. Skelton’s view is that increasing the population of fuel cell EVs through fleet applications will accelerate the rollout of the hydrogen refuelling infrastructure.

The ZERE project A technology demonstrator showcasing the ZERE technology has already been produced; in fact it is now in its second iteration, housing both the fuel cell stacks and hydrogen fuel tanks in a bespoke roof-mounted structure.

“The roof-mounted module suits both factory-fit and retro-fit applications and has no impact on cargo space,” explains Skelton. “It also makes it easier to adapt to different vehicles and, if required, removable at the point of resale

automotiveworld.com/megatrends/

eMobility protecting the residual value of the base vehicle.”

The demonstrator utilises a base electric vehicle – in this instance, a Nissan e-NV200 – which is factory fitted with an e-driveline to which a high efficiency, air cooled 4kW fuel cell stack is added, doubling the standard vehicle’s range to over 300km (180 miles). The hydrogen tanks can be refilled in under five minutes and the only gas emitted from the vehicle is water vapour.

The ZERE debuted in September at the LCV2015 low carbon vehicle event in the UK, six months after the project was announced. It was subsequently displayed at the Asia Clean Air Summit, which took place in Singapore at the end of October.

Manufacturing for the mass market While a ‘back-to-base’ strategy of one refuelling point may work for light- and indeed heavier commercial vehicles, private motorists will need a network of hydrogen refuelling stations (HRS).

This was confirmed recently in Europe with the announcement in September of the €68m (US$73m) H2ME hydrogen mobility project. Committed to the deployment of 200 FCEVs and 125 light commercial FC RE-EVs (Fuel Cell Range-Extended Electric Vehicles) and an additional 29 HRS across ten European countries, the initiative is being undertaken by a consortium in which Intelligent Energy is one of more than 20 partners.

To accelerate progress still further, a separate three-year programme charged with demonstrating that fuel cell stacks can be economically manufactured in high production volumes for vehicle applications by 2020 was launched in October. Again involving Intelligent Energy – in this instance as the lead partner – the VolumetriQ project will see a pan-European industry working group focusing on the development of a 90kW version of the company’s proprietary EC fuel cell architecture.

Part-funded by the Fuel Cells and Hydrogen Joint Undertaking, a publicprivate partnership between the European Commission, European industry and research organisations, the initiative also involves Johnson Matthey Fuel Cells, Solvay Speciality Polymers, ElringKlinger and Pretexo, as well as BMW Group and Daimler participating to set out fuel cell stack requirements.

Heavy commercial vehicles Looking beyond passenger cars and LCVs to larger road transport, the fuel cell stack used in the ZERE project is also suitable for

automotiveworld.com/megatrends/

auxiliary power generation or refrigeration on heavy commercial vehicles (HCVs). In this role, it would eliminate the prolonged idling of diesel engines when the vehicle is at rest, a particularly sensitive situation for the build-up of harmful emissions.

Several major vehicle manufacturers also predict that fuel cells could be an appropriate technology not just for auxiliary power, but for the motive power source in HCVs. Certainly a number of transit bus programmes are already well established.

Intelligent Energy has already developed 100kW fuel cell architecture and core technology which would be appropriate for the higher power levels required in such applications. The 100kW platform uses Intelligent Energy’s evaporatively cooled (EC) stack technology, which removes the need for individual cooling channels between each cell.

Compared to conventional liquidcooled fuel cell stacks, the EC design delivers a considerable advantage in terms of stack mass and volume, and the company claims that the resulting stack power density of 3.5kW/l (volumetric) and 3.0kW/kg (gravimetric), is best-in-class.

Megatrends | 55

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eMobility

Electric mobility at a crossroads Will the EV be buried alongside various other hypes? Arthur D. Little’s Wolf-Dieter Hoppe, Associate Director and Klaus Schmitz, Automotive Partner discuss five key EV issues ehicle electrification has been and still is one of the key automotive megatrends. Thanks to pioneers such as Tesla and many OEMs offering an increasing number of electric vehicles (EVs), the customer perspective has changed: EVs are possible – and can sometimes be a fun ride.

V

However, the ambitious sales targets – often laid out by regulators and politicians – are far from being reached.

For example, German legislation still stands by its target of having 1 million electric cars on German roads by 2020, but at the start of 2015, there were only around 20,000 registered EVs on the country’s roads. In addition, manufacturers are working hard to further improve internal combustion engine (ICE) and hybrid powertrains to decrease fuel consumption and emissions.

Will the EV be buried alongside various other hypes? Five key points need to be discussed. automotiveworld.com/megatrends/

Wolf-Dieter Hoppe The customer perspective on electric mobility First, the bad news: in the new 2015 Global Automotive Mobility Study, Arthur D. Little industry experts shed light on the three megatrends of car sharing, autonomous driving, and electric mobility. 6,500 end consumers from ten automotive core markets have drawn a clear but not surprising

Klaus Schmitz picture of the EV situation: the main obstacles are the still-high prices (64% of respondents), limited operating range (53%) and insufficient availability of charging stations (41%).

And many end customers say they “miss the fun of the ride” – without ever having tested one. The market will not accept electric vehicles until these key barriers are solved - and the market is always right.

Megatrends | 57

eMobility Diesel discussion will impact the powertrain mix The current emissions scandal highlights diesel technology and today’s regulations and testing standards. Public attention is currently focused on diesel technology.

Predictions regarding the future of diesel vary, but in the short term a diesel volume loss will increase sales of gasoline-based ICEs and hybrid vehicles – not EVs. Nevertheless, the ongoing dispute on emissions and testing standards will have a significant impact on the mid-term powertrain mix, since tougher testing standards and legislation will increase costs to achieve cleaner ICE-based vehicles.

This will drive their prices up and reduce the price difference between ICE and electric vehicles, which is one of the key barriers to end customers buying EVs. Battery technology speeds up

development

For years, advances in battery technology lagged expectations. Even now, battery capacity and price prevent an EV operating reach comparable to ICE propulsion concepts at competitive costs, which is what the end customer wants – and that’s without even considering the charging problem, which needs to be solved in parallel.

Nonetheless, energy storage and battery technology will be the key determinants for the success of EVs. Many players are

58 | Megatrends

therefore working on the cost side, such as Tesla designing a battery mega factory. Bosch and many more players are working on highly advanced battery concepts, and progress on lithium-ion batteries has been recently propelled.

Battery performance may improve much faster during the coming years, but progress and timing are not clear.

development continues to progress at its current speed, it will be challenging for fuel cell technology. In any case, depending on battery or fuel cell and whoever wins the bet, EV concepts will overcome the big purchase barrier of operating reach.

Solving the battery problem is the dominant challenge – will it be solved before 2020? Some manufacturers are already placing their bets, and others are holding their cards: already, in 2012, Hyundai introduced its fuel cellpowered ix35 FCEV. Toyota recently brought the Mirai into series production – a 4.89 metre long, mature and serious car with 500km (310 miles) operating reach.

Daimler and BMW have increased their efforts too (the latter based on Toyota fuel cells), among others. But if battery

There is another strong argument: global vehicle sales are increasing – and most increases will happen in nonOECD countries in Asia. EVs may beat ICE emissions from tank-to-wheel, but what happens when calculating well-towheel for those countries? The share of electric power generation emitting CO2 for selected countries in 2012 is: China and India, more than 80%, and Thailand and Malaysia, more than 90%. Increasing the share of EVs in these countries will inevitably drive power generation emitting CO2. In other words, the CO2 advantage of EVs can be low to non-existent, depending on vehicle type and regional power generation mix. This discussion has not yet reached the broad public.

Manufacturers such as Mazda have already presented roadmaps for their respective ICE powertrain strategies, moving towards a further 25% fuel consumption decrease connected with hybrid concepts – and bringing them on a par with EVs on a global average CO2 power generation share.

The well-to-wheel discussion is on

automotiveworld.com/megatrends/

eMobility Electric vehicles are a key enabler for new automotive business models The Arthur D. Little study revealed that when autonomous driving becomes available, it will have a massive effect on annual mileage driven: on long distances, 30% of end customers globally would substitute train travel for journeys in autonomous cars, and a further 13% would use autonomous cars instead of air travel. On short distances, a global 22% of end customers would substitute autonomous cars for taxis, and 31% would no longer use public transport, opting instead to use autonomous cars.

The use of passenger cars and the annual distance driven will thus drastically increase when autonomous driving becomes available. As a consequence, emissions and pollution, especially in large cities, which are growing worldwide, and metropolitan areas, would reach a limit that is no longer acceptable without EVs. Autonomous driving without electric propulsion increases a problem, but with a clean electric drivetrain (in terms of power generation), it will contribute to the solution of many of today’s traffic problems.

Legislation in countries worldwide will act differently, but it is likely to favour EVs. China recently decided that 30% of government cars need to be electric.

automotiveworld.com/megatrends/

Customer willingness to pay a price difference for electric vehicles, for automotive key markets

0%

1-20%

21-40%

41-60%

61-80%

81-99%

100%

4% 2%

Japan

13%

52%

15%

12%

0%

2% Germany

27%

52%

9%

8%

0% 2%

5%

USA

23%

40%

13%

4%

14%

1%

Source: Arthur D. Little

Inner-city toll concepts have been introduced or are planned for many cities worldwide, and further tax subsidies for EVs contribute as well. So will EVs replace ICE-based powertrains and gain the majority in the powertrain mix? Probably not as fast as many have predicted. Will the EV be just another hype? Definitely not. The EV is the enabler for disruptive business models based on autonomous driving; the EV offers a solution for cleaner (especially urban) traffic, and will

ultimately account for a significant part of the powertrain mix. And – maybe – customers can be persuaded that EVs can also be fun to drive.

Megatrends | 59

Powertrain Innovation

Interview: Terrence Hahn, President and Chief Executive, Honeywell Transportation Systems Michael Nash speaks to Terrence Hahn about the future of the global turbocharger market he global turbocharger market has witnessed consistent growth for several years, and shows no sign of slowing. Many suppliers involved in the market have voiced positive projections for sales over recent months.

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Terrence Hahn automotiveworld.com/megatrends/

What is driving this growth, and how can these companies ensure it continues? We speak to Terrence Hahn, President and Chief Executive of Honeywell Transportation Systems, to ďŹ nd out.

Predictions for the global turbocharger market are extremely positive. Does Honeywell share a similar view?

Honeywell is very positive on the growth trajectory for turbochargers globally, as well as in all the regions we support.

With current global turbo penetration near 33%, we stated last year in our forecast that turbo sales would reach 43% penetration by 2019 worldwide.

This year, we have updated our numbers to reďŹ&#x201A;ect the global market moving to 47% by 2020.

Megatrends | 61

Powertrain Innovation This growth, from one-third of the global sales to nearly one-half in the next five years, really underscores how important turbochargers are to the industry and why we refer to this time as the ‘Golden Age of Turbo.’

Where in the world do you expect greatest demand for your products to come from?

Regionally, we see China and the US leading the way in terms of gains as all regions are expected to show growth during the next five years. We believe China will move from its 2015 turbo penetration of 28% to 47% by 2020.

With the US leading the North American market, we forecast a move from 23% to 39% in that same period.

Europe, the most mature turbo market in the world, is also experiencing growth from 69% to 73% based on more turbo gasoline applications as well as modern clean diesel applications. The European numbers show how far turbo penetration can go in any one of these geographies.

Why are turbochargers one of the preferred technologies as companies look to meet legislative targets?

Having been the pioneer and leader in turbo technology for more than 60 years now, Honeywell has helped downsizing and boosting establish itself as a mature technology that is proven and reliable. It works; it is a no-compromise solution that helps OEMs

deliver on the promise of better fuel economy, while simultaneously satisfying regulatory targets for emissions and delivering the fun-todrive performance consumers demand.

Furthermore, we are excited to help global OEMs bring fuel cell vehicles to market, having developed an innovative air compressor that makes the technology more viable.

Additionally, from the perspective of the fuel economy benefits of downsized turbos versus the vehicle cost, turbocharging is among the best values in available technology making it a foundational powertrain strategy. It is also highly complementary to other powertrain and vehicle technologies, like variable valve timing, direct injection, advanced transmissions, lightweighting, and others. Essentially, turbocharging is a key enabler for OEMs to use multiple technologies for maximum benefit.

What is next for Honeywell and the development of turbochargers?

Will the introduction of alternative powertrain architectures threaten the growth predicted in the turbocharger business?

Multi-stage boosting for diesel engines is another key innovation to help OEMs achieve greater engine performance, without breaching fuel economy regulations. By 2020 more than 2 million new light vehicles per year will be launched with multi-stage boosting systems.

Turbocharging works very well with advanced powertrains. It can help the internal combustion engine be more efficient when paired with a hybrid system, and we are starting to see that now in the industry. We are using our motorsport activities in Formula 1 and endurance racing at Le Mans to develop e-boosting and e-turbo technology, which are evolving the role of the turbo.

We also believe the industry’s development of hybrid electrification will involve our products to achieve vehicle goals at a systems level. In a hybrid vehicle, a turbo can use electrical power as well as generate electrical power for other systems.

There is a clear demand for more sophisticated turbo technology that covers the entire powertrain performance envelope. OEMs are turning to suppliers like Honeywell to meet the unique needs of fuel-efficient three-cylinder engines, increase power from four-cylinder engines, and soon deliver electric boosting and energy recovery systems for advanced hybrid powertrains.

Globally, modern diesel engines will retain an important share of light vehicle sales at nearly 20%, due to their lower fuel consumption and CO2 emissions. Therefore, Honeywell expects diesel technology to remain a key solution for OEMs to improve emissions and fuel economy, enabled by the latest diesel turbocharging and after-treatment technologies.

Consumers are adopting fast, and expect the highest levels of quality and reliability.

A version of this article first appeared on AutomotiveWorld.com

Honeywell’s GT12 turbocharger with wastegate and integral manifold for gasoline applications

62 | Megatrends

automotiveworld.com/megatrends/

NEXT GENERATION AUTOMATIC GEARBOXES

Punch Powertrain´s recent developments VT5 (CVT) and DT1 (DCT) meet the latest ƌĞƋƵŝƌĞŵĞŶƚƐ ĨŽƌ ŵŽĚĞƌŶ ƚƌĂŶƐŵŝƐƐŝŽŶƐ͘ &Žƌ ĞdžĂŵƉůĞ͗ ^ŚŝŌ ďLJ ǁŝƌĞ͕ ^ƚĂƌƚͲ^ƚŽƉ ĂŶĚ ^ĂŝůŝŶŐ ĨƵŶĐƟŽŶĂůŝƟĞƐ ĂƌĞ ĂǀĂŝůĂďůĞ͕ ĂƐ ǁĞůů ĂƐ ƉŽƐƐŝďŝůŝƟĞƐ ĨŽƌ ŵŽƌĞ ĞdžƚĞŶƐŝǀĞ ŚLJďƌŝĚŝnjĂƟŽŶ͘ WƵŶĐŚ WŽǁĞƌƚƌĂŝŶ ĂůǁĂLJƐ ĨŽĐƵƐĞƐ ŽŶ ĚĞǀĞůŽƉŝŶŐ ĞĐŽŶŽŵŝĐĂů ƚƌĂŶƐŵŝƐƐŝŽŶƐ ƚŚĂƚ ŚĞůƉ ŵĂŬĞ ǀĞŚŝĐůĞƐ ŵŽƌĞ ĞĸĐŝĞŶƚ ǁŚŝůĞ ŝŵƉƌŽǀŝŶŐ ĚƌŝǀŝŶŐ ĐŽŵĨŽƌƚ͘ WƵŶĐŚ WŽǁĞƌƚƌĂŝŶ ŚĂƐ Ă ǁŝĚĞ ŽīĞƌŝŶŐ ŽĨ ĐůĞĂŶ ƉŽǁĞƌƚƌĂŝŶ ƚĞĐŚŶŽůŽŐŝĞƐ ƐƵĐŚ ĂƐ ĨƵůů ĞůĞĐƚƌŝĐ ƉŽǁĞƌƚƌĂŝŶƐ͕ sd ďĂƐĞĚ W, s ƉŽǁĞƌƚƌĂŝŶƐ ĂŶĚ ĞǀĞŶ ŇLJǁŚĞĞů ďĂƐĞĚ ϰϴs ŚLJďƌŝĚŝnjĂƟŽŶ ƐŽůƵƟŽŶƐ͘

PUNCH POWERTRAIN NV /ŶĚƵƐƚƌŝĞnjŽŶĞ ^ĐŚƵƌŚŽǀĞŶǀĞůĚ ϰ ϭϮϱ භ ͲϯϴϬϬ ^ŝŶƚͲdƌƵŝĚĞŶ භ ĞůŐŝƵŵ ͮ dĞů͗ нϯϮ ϭϭ ϲϳ ϵϭ ϭϭ ĐŽŶƚĂĐƚ ƉĞƌƐŽŶ͗ Dƌ͘ 'ĞƌƚͲ:ĂŶ sŽŐĞůĂĂƌ ͮ ŐĞƌƚͲũĂŶ͘ǀŽŐĞůĂĂƌΛƉƵŶĐŚƉŽǁĞƌƚƌĂŝŶ͘ĐŽŵ ͮ ǁǁǁ͘ƉƵŶĐŚƉŽǁĞƌƚƌĂŝŶ͘ĐŽŵ

Powertrain Innovation

China’s electrified future: gearing up for growth Punch Powertrain believes there is growing scope for electrification in China

By Michael Nash

he Chinese automotive industry has been a hot pot of debate and analytical discussion over recent months. But what does the future hold for those companies that are heavily reliant on the country? Punch Powertrain believes the promise of growth is evident, especially when considering the electrification of powertrains.

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Four new products Speaking to Megatrends, Gert-Jan Vogelaar, the company’s Strategic Marketing Director, sees two main trends affecting business at the company: “Fuel economy and the growing introduction of electrification in the powertrain are vitally important at the moment, and are

both driven by government legislation across the world.”

To meet the demand in terms of fuel economy and electrification, Punch is planning a product launch offensive.

Firstly, it will unveil a continuously variable transmission (CVT) in 2017 that it says has a ratio spread bigger than any other single state CVT on the market. During the same year, it will introduce a plug-in hybrid B3 configuration based on the CVT.

The company is also planning the launch of two products in 2018 – its first seven-speed dual-clutch transmission (DCT), and a “single state electric powertrain.” The target market for these products? China, says Vogelaar.

The future reflects the current Each of the upcoming launches, he suggests, reflects the trends of the automotive industry and the Chinese market. “We have witnessed a boom occurring in the last few months, particularly for hybrids,” he remarks.

“There is huge interest driven by the legislation in China. OEMs have to take drastic steps, and are looking for viable solutions. Our hybrid systems seem to be a perfect fit.”

Vogelaar is referring to the company’s HT2 Flywheel Hybrid Powertrain and HT1 Hybrid Electric Powertrain. The latter is doing particularly well in China, “which was our target market when we first conceived the product. It was designed to suit the needs of the Chinese consumer.”

What are the current needs of the Chinese customer? Fuel economy is one that has been evident for a long time, and will remain dominant. “It is absolutely key to all vehicles in China,” Vogelaar affirms. “Legislation will require OEMs to improve their fuel economy values by about 8% per year, which is a huge challenge.”

He continues, “Chinese consumers are also getting more sophisticated in terms of what they expect of the car.

64 | Megatrends

automotiveworld.com/megatrends/

Powertrain Innovation “We

counterparts. This is largely driven by the fact that Chinese OEMs have “a selection of SUVs in their portfolios,” says Vogelaar. “Although sales from domestic OEMs account for roughly 25% of the overall market, they have about a 50% share of the SUV market. The negative news in China is less applicable to these Chinese OEMs, which is actually good for Punch Powertrain.”

High hopes

They are

demanding all kinds of features, for example, touchscreen with latest functionality. In general, there is an increase in demand for automatics in China, which is found most in the SUV segment.”

Blowing hot air If Punch Powertrain is developing new products for the Chinese market, how does Vogelaar view the country’s recent economic downturn?

automotiveworld.com/megatrends/

hear constant reports in the news on sales slowing down, but these do not take into account the downstock and upstock between OEMs and dealers. Therefore, they don’t accurately reflect the number of new vehicle registrations,” states Vogelaar.

He admits that foreign brands may not be seeing the growth that they once benefitted from in terms of sales. Has this had an effect on suppliers like Punch? Impact has been minimal, he claims, as most of the company’s business is through domestic OEMs, which are currently performing significantly better in terms of sales than their foreign

Despite all these positives, one of the challenges that all hybrid and EV powertrain suppliers must address is the fact that China has fallen far short of predicted sales for alternative powertrains. EVs in particular have struggled to meet earlier targets.

What role will Punch’s new technologies set for launch in 2017 and 2018 play in China’s attempts to promote alternative powertrains?

“There are already a number of brands that have come up with EVs for China.

We predict that there will probably be more in-house developments made by some of the domestic OEMs to build EVs, but for those that cannot or do not want to, they can find solutions from Punch Powertrain,” Vogelaar says.

And on the hybrid side, he adds, with the exception of BYD, “the offerings in the market are quite limited,” creating a gap in the market that Punch intends to fill.

As for which applications will be most important in the future, Vogelaar eagerly suggests that all are equally feasible and crucial to the company. “We are currently going through the next stages of development for all these products,” he says, adding: “The contracts have been signed with our customers for all, except for the EV. However, we are in the process of final negotiations with a number of interested parties for this. There is pressure for us to get each and every one of the products ready.”

Megatrends | 65

Powertrain Innovation

Asia Pacific is the place to be says Total Lubricants Despite challenging economic conditions, particularly in China, Total Lubricants holds high hopes for Asia-Pacific. Michael Nash talks exclusively to the lubricant supplier’s Global Chief Executive otal Lubricants is focused on fuel economy: “It is a must, and has been the key to our strategy for some time,” Philippe Charleux, Global Chief Executive, Total Lubricants tells Megatrends.

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Fuel economy, he remarks, is one of the main trends governing the lubricants business. It has become integral to Total’s operations, it is now a cornerstone of its research and development, and it lies at the heart of planned new product launches. “We are developing new products that will reach market shortly,” explains Charleux. “But it is becoming increasingly tough because we already have very efficient products on the market. It is always very difficult to add to these products and to find new ways of improving fuel economy. However, we are certain that there is some room for improvement and so we continue to work hard.”

Referring to Total’s two facilities at Lyon, France and Mumbai, India, he suggests that the research budget is growing. As a result, the company has been doubling its patents, examining potential products and finding new products and new technologies. “We are confident that we can keep on improving products and improving solutions for our customers, not only for passenger cars but also for heavy-duty vehicles.”

Challenging conditions Despite his optimism, Charleux describes a tough scenario. The global market slowdown has had “a big impact”; the company was originally expecting a 1.6% annual rise in global growth for forthcoming 66 | Megatrends

years in its ‘inland markets’ – both its automotive and industrial lubricant businesses. However, Total was forced to alter this prediction.

“We decreased this outlook to 1% growth rate, and then further to 0.6%.

Now, we think that the inland market is likely to be stable, maybe even shrinking in 2015. Why has it changed so much? I think it's difficult to analyse it as a whole; we have to look at it segment by segment,” he explains.

Philippe Charleux, Global CEO, Total Lubricants

For marine and industrial lubricants, growth is heavily linked to GDP, he says. Automotive, on the other hand, has many different factors at play: “It's a question of new cars being built and sold on the market, and China is playing a big role in that field. We see quite a difficult situation for China for the time being, and that is the main explanation, in my opinion, for the market stabilisation.”

shrinking.” This essentially reduces demand for lubricants. However, he is confident that the industry will still be heavily reliant on lubricants for the foreseeable future, but thinks the continued improvement of its products is vital for Total’s prospects.

Also, the evolution of consumer habits has had a detrimental effect on the automotive lubricants business, he continues. Cars are “being used less in most countries, so mileage is

When looking ahead to the future of the lubricant business, Charleux touches on some of the innovative products that the company is already producing that tick the right boxes.

Interesting innovation

“We have been producing regenerated and recycled oils from our plant in France for a number of years now, so we have a good knowledge in that field. We are also working on bio-based oils,” he affirms. “Both are hot topics at the moment, but topics that are also quite difficult.”

The difficulty lies in the fact that while being environmentally positive, bio-based and renewable lubricants tend to require some compromise in performance. “They always automotiveworld.com/megatrends/

Powertrain Innovation introduce a little bit of variability in terms of quality,” admits Charleux.

However, the company intends to continue its work in the area. “We believe it will be useful at some point in time,” says Charleux. “At the moment, we do not see a big demand from customers, and we are not expecting a big market shift, unless they are obliged to adopt them because of regulations. It will happen at some point, and we will be ready.”

Adapting to the challenges of the market Even though Total’s predictions for China have changed, Charleux remains positive. “We believe that there is room for growth and new sales for Total. The market is not as good as it was two years ago, but we really think that AsiaPacific is the place to be. In this area, China and India are the big ones, but there are other emerging markets that are currently strong,” he says.

Of these emerging markets, he notes Singapore as having substantial importance to Total. This, he says, is because of its considerable export potential. Consequently, the company recently opened a new blending plant, its largest in the world, in Tuas, Singapore.

Charleux envisages continued demand for production at this plant, with the products reaching many corners of the world: “The plant will really help us in the forthcoming years to be more efficient and more competitive in this part of the world. We are going to produce all kinds of lubricants at the facility. We’ll make marine lubricants, industrial lubricants and of course automotive lubricants.

Singapore is also one of the best places in the world for export. We plan to use this facility to export to almost 30 countries, so it's really a big step for us.”

Furthermore, Total plans to use the new plant as a blueprint for other facilities to come. “We plan to do almost the same in various other countries,” he adds. “An integral part of our strategy is to produce near our customers. If the market and country is big enough, and the reliability of supply is strong, we will produce locally.”

Charleux concludes, “At Total, we are adapting to the challenges of the market whilst simultaneously gearing up to launch new products in the forthcoming years. We are preparing for the future in each and every segment.” automotiveworld.com/megatrends/

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It’s time for OEMs to transform information into knowledge Data, and the knowledge it can enable, has the potential to revolutionise business performance, writes Paul Carysforth, head of digital intelligence at Amaze he sheer volume of global data available is staggering and constantly growing. Incredibly, 90% of all data is digital and was created in the past two years1 and this trend shows little sign of abating. According to analysts IDC, the digital data universe will continue to double in size every two years; but what does this mean for automotive brands?

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The speed and growth of data generation has pushed the issue of data management to the top of the business agenda and for those in the automotive industry, more so than in any other sector, a seamless omnichannel approach is absolutely critical to ensure brands can continue to deliver exceptional experience to their customers, particularly as consumers increasingly research their next car automotiveworld.com/megatrends/

online first, before even setting foot in a showroom.

website conversion, ultimately boosting the brand’s bottom line.

Toyota’s data-driven action plan

The programme constantly and consistently monitors factors such as SEO optimisation, landing page effectiveness and conversion points (calls to action). Even small changes to content, calls to action (CTAs) or labelling can have a significant impact upon overall website performance, and ultimately, conversion.

Between June 2014 and April 2015, Toyota – together with Amaze – rolled out its new website to 43 European markets. With the launch of the new website and new shopping tools, the strategic focus for the local markets turned to optimisation – making the local website work harder to achieve KPI targets and specific business objectives.

Through 2015, Toyota continued its focus on supporting local markets to optimise the performance of its websites by turning insights into action. The collaborative programme has data at its core and has helped to maximise

For any recommended actions, appropriate to specific local markets, these are presented within an action plan. The action plan details each recommended action, the KPI metric that will be impacted and a target deadline for the market to implement the change. The performance of each change implemented on the website, and its Megatrends | 69

Retail (R)evolution resulting impact upon KPI performance, is then continually monitored on an ongoing, monthly basis.

By closely monitoring the brand's online shopping tools and via a continued programme of enhancement, data intelligence teams can make meaningful recommendations and actionable changes. For Toyota, this has significantly increased conversion rates with customers and improved the overall customer experience of both the site and the brand.

1.Implement a centralised data strategy Businesses need to have a joined-up approach for capturing and analysing data i.e. departments cannot work in silos. By building a data intelligence roadmap as part of a wider intelligence strategy, organisations can benchmark performance, identify intelligence opportunities and start to deliver appropriate, actionable strategies.

2. Connect with your audience

How to use data to gain a competitive advantage While organisations recognise that data is key – 99% of organisations think some form of data is essential for marketing success – only 20% of businesses have a company-wide data strategy in place.2 Even among those who do have a strategy, 83% admit revenue is affected by inaccurate or incomplete data and only 50% have a measurement framework in place.3 If approached correctly, however, there is no doubt brands can reap huge rewards. But often, businesses don’t know where to begin or how best to implement a strategy of this kind.

We recommend the following steps for delivering real value through data:

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By taking a sophisticated approach to encourage a value exchange, consumers will be more willing to share information. If they get value in return, organisations can create a consistent, continuous and complementary experience for users, without the need for brands to dictate conversations.

3. Empower your team Data quality and governance is hugely important; it is the people who transform information into knowledge.

Investment in these people is vital.

4. Demonstrate value For a digital intelligence strategy to really add value, it ultimately needs to have a positive impact on an

organisation’s bottom line. Many organisations focus on maximising the opportunities to capture smart data, and do not put enough effort into maximising the value that comes out of it.

5. Optimise, optimise, optimise Many marketers are still planning and budgeting their digital investments using a practice of ‘launch and forget’.

In today’s digital world, companies should operate on the principle of permanent beta model and adopt a customer-centric model that reacts to feedback and real-time data to support performance optimisation strategies.

Data, and the knowledge it can enable, has the potential to revolutionise business performance.

However, it does require an ongoing commitment and investment that infiltrates all areas of an organisation, and is constantly reviewed. It’s a big challenge to take on, all while empowering employees to become better analysts, yet the benefits that can be reaped are well worth the outlay, if you get the steps right.

1 SINTEF ICT research 2013 2 Econsultancy Online Measurement and Strategy Report 2013\ 3 Experian Global Data Quality Research 2015

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3D visualisation? It’s virtually everywhere in the auto industry!

Mass adoption of high-end 3D visualisation is just around the corner, says 3DExcite

By Martin Kahl rom Hollywood blockbusters to TV commercials, the days of wincing at poor quality computer-generated imagery (CGI) are numbered; advances in the software and hardware required to create highly realistic images mean that it’s increasingly difficult to identify where reality ends and virtual reality begins.

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With that in mind, it’s worth noting that many of the realistic-looking images of cars – and other products – seen online, in magazines and on television have been produced not using top-ofthe-range digital camera technology, automotiveworld.com/megatrends/

but with high-end 3D visualisation software.

increasing, and we provide the relevant software and creative services.”

Digital product visualisations are built on CAD data. 3D visualisations can be found everywhere – and the visualisation technique can be applied to any product, whether it’s an aeroplane, a car, a train, a T-shirt, a suit or a pair of trainers.

The marketing and sales processes begin long before vehicles are built. “We feed marketing with product visuals based on the data from the design and development process. Once you go deeper into the sales space, that's where OEMs usually use online car configurators to promote their products to the full. Cars are of course very visual. You go online to configure your chosen car, adding minute details to your vehicle, right down to the colour of stitching on the seats.

“We apply it across the value chain,” explains Roberto Schettler, Chief Executive of Dassault Systèmes’ highend 3D visualisation brand, 3DExcite.

“The use of digital vehicle marketing is

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“This kind of experience already happens at manifold points of sale and in virtual showrooms, and in the future, people will experience more life-sized cars in dealerships of all kinds. There are various concepts, from virtual tours where you can sit virtually in the car, walk around it and experience all the different aspects of the car, up to X-ray views that reveal the vehicle’s workings.” Sounds familiar? 3DExcite supported Audi when the OEM created its Audi City line of stores in London.

So, how does it work? “First of all, we provide 3D visualisation software. Our core product is called Deltagen. In addition, we have a product called Picturebook for asset management and automation, and a number of different visualisation products. At the other end, we offer creative services with a focal point on CGI stills and movies. And inbetween the two, our solutions team takes those software portfolio and artistic capabilities and merges them together in solutions, whether that’s at the point of sale or for engineering.”

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least every six months, agrees Schettler, due to face-lifts and model updates. And the field is becoming competitive. “But there is nobody like us – we combine all the required capabilities under one roof,” he explains. “That's why we are the leading company in the field of visual configurators for web, dealerships and mobile applications. There are literally thousands of such systems out there in the showrooms across many brands, and we are the only company that has this industrial strength to carry-out projects from A to Z.” Not only do configurators need to be kept up to date, they need to be accurate, and they need to be easy to update, notes Schettler. “That's where the industrial processes come in and that's where the solution team also acts on building a data pipeline that hooks up to the engineering processes, taking the latest CAD data to help create a 3D model that represents the true product, digitally.

When the next update of the product comes around, the model year update for a car for instance, you just exchange the few aspects in the

master model that have changed, instead of rebuilding the whole thing.

This is where you save cost, and that's where our strength lies.”

In addition to its marketing work, 3DExcite provides solutions for designers and engineers, such as 3D crash visualisation. “We take crash simulation data and add our capabilities to create a movie or stills that show the crash as if in real life.

When we think about cars, we think about beautiful surfaces that shine.

When we experimented with crashed cars, we realised what huge potential lies in the implementation of very accurate and lifelike 3D visualisation in crash test analysis.”

Schettler goes on to explain what he means. “Much of the engineering phase is about communication. A crash engineer knows exactly what the numbers mean in the data columns produced by a crash simulation. But try communicating that to someone who is not an engineer! That's where we come in. We create photorealistic true life visualisations based on this data.

And that is something that engineers automotiveworld.com/megatrends/

Retail (R)evolution

3DExcite’s crash test 3D visualisation solution was created in collaboration with Honda R&D Americas, which together developed a Deltagen plug-in called Deltagen Real Impact. This plug-in enables Honda’s engineers to create highly-realistic 3D renderings of crash events, and the results serve as the basis for testing and analysis of different designs with greater speed and efficiency.

can use amongst themselves, but they can also use it in their communication with designers or management, for example.” Indeed, adds Schettler, since the launch of the Deltagen Real Impact crash test visualisation solution, the company has received urgent requests from other companies in the industry that have not yet fully adopted 3D visualisation, but urgently needed a visualisation of one particular part to illustrate a point to senior management.

However, it was through its work with Honda that 3DExcite further understood the importance of this application not just for engineers, but also for marketing departments. “They loved it!” grins Schettler. “It was the first time the marketing people had visual proof of what happens underneath the skin of the cars they were promoting. With our software, we can take the sheet metal off - virtually - to show the structures underneath.

A user can point a virtual camera at any structure they want, and see the crash in ways they've never seen it before. We were in Honda’s TV commercials in the US because they wanted to show customers the levels of detail they go to when developing their cars.”

Using visualisation software means that engineers and other interested parties within a car company in different global locations can all look at the same thing at the same time – on a virtual basis.

“And we have even shown a proof of concept around that,” says Schettler.

“Imagine, there are engineers and other employees around the world in their own offices using virtual reality glasses.

They feel like they are in the very same room and talking about a product that appears to be standing in front of them.

They can see their colleague and work with them on that particular product.

That's about to happen. There are some other requirements that still need to be created or come together, but I would predict that in a very short time that will be the norm rather than the exception.”

Moving from the exception to the norm usually involves overcoming hurdles, and with something like high-end visualisation, this can often be a cultural or traditional hurdle. How does a company like Schettler’s respond to those in the automotive industry who say they have been working perfectly well using real life instead of 3D visualisation, and believe they can work just as well or even better without virtual prototypes?

“I would say that, as with all new technology, there are some early adopters who show the rest of the sector the great work that can be done with that technology,” nods Schettler.

“Once it is proven, the rest will jump. The car industry is adopting lifelike 3D visualisation to varying degrees, and outside the automotive industry, 3D visualisation is already catching on in an increasing number of other industries. I don't see a difference between adopting this and adopting other breakthrough technologies. We are on the verge of a large number of players adopting this across many industry sectors”

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Ageing population - the greatest challenge for society (and OEMs), says Ford’s top futurist Sheryl Connelly, Ford’s Global Trends and Futuring Manager, paints a picture of life in the automotive world of 2030 and beyond

By Martin Kahl he year 2030 is a decade and a half away. However, that 15-year time frame incorporates just two vehicle model cycles in traditional automotive terms - while from the consumer electronics (CE) industry’s perspective, it's as many as 30 model cycles away.

This creates considerable challenges for an automotive industry seen from the outside as slow and cumbersome, an industry that knows it must adapt to the changing needs and aspirations of consumers used to regular and frequent over-the-air software updates and rapid product replacement cycles.

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Not only is the year 2030 just two model cycles or 30 CE product cycles away,

it’s also the timeframe for one single generation of children, points out Sheryl Connelly, Global Trends and Futuring Manager at Ford. “The new-borns or the toddlers of today will be entering college or the workforce in 2030.”

In this exclusive interview with Megatrends, Connelly provides a vehicle manufacturer’s perspective on how the automotive industry must adapt its sales and marketing strategies – and even its product offerings – to remain relevant for the future. For so long a convenient, vague, far-away target, 2020 is suddenly just around the corner, and so 2030 has been selected to give the discussion focus.

“We’re already at 7 billion people and the number is going to grow. It is estimated that we'll have anywhere between 10 or 11 billion people by midcentury, so by 2030 we'll have a billion more people if that forecast proves to be true.” That, says Connelly, will have a disruptive, albeit revolutionary effect.

“Much of that population growth will be in parts of the world that are not well suited to handle such change, where there may be widespread poverty, an extraordinary gap between the haves and the have-nots, malnutrition, and limited access to education. All this could add up to some major social problems.”

Ageing population and the dependency ratio Interestingly, although Connelly suggests this growth will affect emerging economies, she does not believe it will directly impact North America and Europe. “One of the reasons that the population growth isn't going to affect North America and Western Europe is that we're having fewer children. An ageing population is probably the biggest thing that we'll be dealing with in 15 years, and for some time after that.”

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Age is one of two components of a major problem, says Connelly; the other is the so-called dependency ratio. automotiveworld.com/megatrends/

Retail (R)evolution

“Economists use the dependency ratio as an index to determine how many workers are supporting a country’s non-working population. I'm getting beyond 2030 here, but around 2050 there will be some countries that are upside down, and so a country like Japan - which will have a dependency ratio of 108 retirees supported by 100 workers by 2030 - will be halfway there. And a country with an ageing population will have an imbalance that could negatively impact its economic output and bring down its GDP, leaving less money for investment and innovation.”

Those will be among the key determinants of where political, economic, technological and social influence will exist in the world, adds Connelly.

The challenge, then, is for countries on one level and companies on another level to work out how to deal with this change. One way is through immigration, says Connelly, and that is one of the reasons why some countries are very eager to bring in immigrants, while others are not. “From the pure mobility standpoint, however, we have to think about the physiological changes that come with ageing, including reduced response time, impaired vision and limited range of motion.” automotiveworld.com/megatrends/

Cars and quality of life Car companies like Connelly’s employer, Ford, are already thinking about mobility, she says. “Our designers and engineers have a number of technologies that are in the vehicle today to address those issues. But I think it'll become more acute. One of the best business cases you can make for autonomous vehicles is for an ageing population. Around the world, the baby boomer generation created the modern day car culture. They love their cars. And the oldest baby boomer here in the United States is 69. So, 15 years from now they will be 84. Are they going to continue to drive, and, if so, how can they do so safely?”

The freedom to move about whenever, wherever and however you want is a major aspect of human dignity, and essential for a decent quality of life, believes Connelly. “If we can come up with a solution, and if autonomy helps us to allow people to age graciously, I think that's something that will be wellreceived by the market.”

As to when we can expect autonomous driving solutions, Connelly is reluctant to commit. “I can't predict when that will happen because I believe the issue of autonomy doesn't lie solely in the hands of the OEMs. There are so many other stakeholders. You Megatrends | 75

Retail (R)evolution have to think about legislation, litigation, insurance and urban planning. I think the technology is not our biggest obstacle - the obstacle is figuring out how to put a fleet into operation. And I haven't even touched on the very hot topic of how we make sure the communications components are secure in a way that protects us.

“Also, I do not believe that means that autonomous driving will become ubiquitous. I think it will be in pockets and I think it will be where it's needed, where it makes sense. For that matter, I'm not sure there will be a universal powertrain solution. I think that people will use different energy sources and it'll be based on what is most convenient, affordable and accessible to the region.”

Emerging markets are essential to any OEM’s future growth strategy; those emerging markets might also lead product development, since people’s needs in those markets could well be for entirely different products than those offered in mature markets like Europe or North America. “If you are dealing with an emerging market,” suggests Connelly, “the chances are high that it will have a megacity. There are some 25 megacities in the world today. The US has two, namely LA and New York, depending on how you draw the boundaries. China has eight, ten or 12, depending on how you count those boundaries. By 2030, there'll be at least ten more, and maybe more than that, so we'll have to think about mobility more as an ecosystem. We're going to see new forms of mobility solutions, many of which will be multi-modal.”

From selling cars to...not selling cars Something else that OEMs will need to factor into their future strategies is the trend away from ownership and towards ‘usership’, and the impact that the

growing sharing economy will have on companies that at the moment aim to sell as many cars as possible.

“We're lucky, because at Ford we have the vision of some really extraordinary leaders,” says Connelly. “Bill Ford, our Chairman and the great-grandson of Henry Ford, gave a talk in 2011 in which he shocked the audience when he said that for the last 30 years of his life, he would wake up every day and think, ‘how do I sell as many cars as possible?’ But in recent years he had started to worry about, ‘what happens if we continue to sell as many cars as possible?’

He talked about global gridlock, and asked, climate change, carbon footprint and CO2 notwithstanding, what happens if we continue adding more vehicles to the road? Who will that serve if those cars don't move anywhere?”

In that talk, Ford said he wanted to be part of the solution, and began discussing a blueprint for mobility, using sensors in the vehicle for more automated features that could eventually lead to autonomous features.

“Then we have Mark Fields, who is certainly not new to the company but is now Chief Executive,” adds Connelly.

“He is really pushing the organisation to be as innovative as possible.”

In January 2015, Ford announced 25 global experiments to try to better understand mobility. “In addition to those 25 experiments, we have sponsored a programme called ‘Techstars Mobility, Driven by Detroit’, where for the next three years we will bring ten start-ups each year to the city of Detroit, and people within Ford will act as their business mentors. We will help them develop their plan. We will even teach them how to pitch their innovations towards the investors.”

Ford is taking an approach unlike any it has taken before, says Connelly. “Ford Credit announced a couple of months ago that it will offer peer-to-peer car sharing. And we've been a long-time sponsor of Zipcar, the car-sharing platform. What I am really proud of as a

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Retail (R)evolution Ford employee is that we are seeing ourselves being not just a manufacturer but an enabler of mobility in the many different shapes or services in which that might manifest itself.”

It’s time for some outside-thebox thinking Perhaps external, outside-thebox thinking is an essential requirement for the automotive industry’s future product development? “Yes, definitely,” says Connelly. “I see evidence of that already in Ford. But speaking as a futurist, I think you're going to see categories start to collapse in ways that are surprising and unexpected.

When we published the Ford trend report for 2015, we had one trend called The Many Faces of Mobility.

That highlighted the fact that, if you ask somebody over 30 years of age what mobile means to them, their first instinct is probably going to be somewhere in the domain of transportation. But if you ask someone under 30 what mobile means, they think about communication.”

The connection people had to their cars in decades past is also changing, says Connelly. “The car today is more of a computer on wheels. Years ago, people had a great affinity to their vehicle. Baby boomers would get under the hood, tune their engine, change their oil and replace a fan belt. Today, most people don’t even look under the hood. The way that emotional affinity comes to the car is based on the way that it connects people to those they love and the things that are important to them.

I think software is a conduit to

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feeling that emotional connection to your car.”

Listen to the futurists Predictions made by futurists like Connelly are far from unique to the automotive industry; but how willing is the corporate world and specifically the automotive industry - to accept the ideas presented by futurists? “I think that a better way to describe what futurists do for Ford is to serve as the polite contrarian, challenging existing assumptions. I don't have a stake in it, and I don’t say someone's point of view is right or wrong, but in a meeting, if someone says something will never happen, part of my role is to suggest that, rather than debating whether it will or won't happen, we should focus on how well prepared we are if it did happen.”

The need for visionary leadership to shape corporate culture and a company’s willingness to change and adapt to new ideas is oft debated. “It doesn't necessarily have to start at the top,” says Connelly, “but if it's not embraced at the top, then it can be very difficult. Even those organisations that don't have a futurist in title probably have a futurist in function somewhere in the company. Anyone who develops strategy, works in product development or longterm planning, marketing, design or engineering - even those consumer electronics companies that have a six month turnaround cycle - they are all thinking about what's in the future.”

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Regulating safety in a semi-autonomous world: the US AEB agreement Ian C. Graig, Chief Executive of Washington, D.C.-based Global Policy Group, reflects on the significance of the US automotive industry’s voluntary commitment to standard fitment of automatic emergency braking (AEB) n early September, the US Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) announced that ten vehicle manufacturers had agreed to make automatic emergency braking (AEB) systems a standard feature on cars sold in the US in the relatively near future. The announcement was notable due to its implications for vehicle safety, but also because it involved a voluntary commitment to make a new safety technology standard without a regulatory mandate.

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AEB systems use sensors, radar, cameras, or lasers to detect an imminent crash and, if the driver does not do so, automatically engage the brakes. NHTSA and the IIHS said in their announcement that AEB systems can have a notable impact in reducing vehicle crashes, especially rear-end collisions that involve driver error. The IIHS also noted that AEB systems reduce insurance injury claims by as much as 35%.

AEB systems are currently installed as standard equipment on only 1% of cars sold in the US, although they are

available as an option on other models.

The ten companies that signed on to the commitment – Audi, BMW, Ford, General Motors, Mazda, MercedesBenz, Tesla, Toyota, Volkswagen, and Volvo – will work with NHTSA and the IIHS to develop a timeline and performance standards for installing AEB systems as standard equipment on their vehicles. The ten vehicle manufacturers represented 57% of US light-vehicle sales last year, according to NHTSA. NHTSA has been exploring how to expand the availability of AEB systems automotiveworld.com/megatrends/

Safety for some time. The agency has been under pressure from safety groups and the National Transportation Safety Board (NTSB) to mandate the use of collision-avoidance technologies such as AEB to reduce rear-end collisions. In May 2015, the NTSB recommended that manufacturers install forward collision-avoidance systems as standard features on all new passenger and commercial vehicles, for example, and that NHTSA take several steps to expand the availability of such systems.

The agreement announced in September makes it clear that NHTSA (and IIHS) decided that a voluntary industry commitment, rather than a formal rulemaking, offers the fastest approach to getting AEB offered as standard equipment on vehicles in the US. The process of writing and finalising a federal motor vehicle safety standard can take years, and an AEB mandate likely would not take effect for at least seven or eight years. NHTSA concluded that a voluntary agreement could have an impact much sooner.

“The only reason to do this is if it goes faster” than writing a regulation, NHTSA Administrator Mark Rosekind said earlier this year. The agency has not set a specific timeline for implementing the voluntary agreement, however, so it is not yet clear when the OEMs intend to meet their commitment.

NHTSA is taking other steps to expand the availability of AEB systems. In January, the agency requested comments on a proposal to include AEB as a recommended safety technology in its “five-star” New Car Assessment Program (NCAP) beginning with model year (MY) 2018.

The agency announced in early

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November that it was in fact doing so, pointing to two AEB technologies: crash imminent braking, which applies the brakes to avoid an imminent rearend collision if the driver is not doing so, and dynamic brake support, which provides supplemental braking if the driver is not braking enough to avoid a rear-end collision.

AEB systems that meet NHTSA’s performance specifications will be added to the NCAP list of recommended safety technologies, which also includes forward collision warning, lane departure warning, and rearview video systems. (NHTSA will remove rearview video systems as a recommended safety technology in MY 2019 since those systems will be required on all new vehicles manufactured on or after 1 May 2018.)

NHTSA and the IIHS are now calling on other vehicle manufacturers to commit to making AEB systems standard equipment in their vehicles.

NHTSA is reportedly also talking to the truck industry, calling for AEB to be made standard equipment on new trucks. In October, the board of the American Trucking Associations called on vehicle manufacturers to equip all new vehicles sold in the US, including trucks, with AEB systems. NHTSA is reportedly considering whether a voluntary or regulatory approach would speed adoption of such systems in the truck market.

These steps to expand the use of AEB technologies are illustrative of one approach NHTSA could take in regulating safety during an era of rapidly changing vehicle technologies.

OEMs, component suppliers, and

information technology companies are actively developing new products, especially in the areas of vehicle-tovehicle (V2V) and vehicle-to-infrastructure (V2I) communications technology.

Regulators like NHTSA face a challenge in crafting rules to protect highway safety in an era of rapid technological change.

NHTSA opted in the case of AEB for a voluntary commitment by vehicle manufacturers to equip vehicles with AEB systems that meet performance standards, combined with informing consumer choice through NCAP. Some critics disagree with this approach, arguing that OEMs should be required through a formal regulation to install AEB as standard equipment. NHTSA could still choose to write a regulation at a later date, of course. Electronic stability control and now rearview video systems, for example, have moved from NCAP recommended technologies to regulatory mandates.

NHTSA is certain to face many more decisions about how best to ensure that increasingly automated vehicles are safe, and the agency will not always opt for the voluntary approach used in the case of AEB. NHTSA is crafting a rule to mandate transmitters for V2V communications in all new cars, for example, which will help open the door to a new world of vehicle automation.

NHTSA is likely to explore other regulatory approaches as it grapples in the years ahead with rapid changes in active safety systems and semiautonomous vehicle technologies – and potentially with the development of fully autonomous vehicles.

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Safety

Passive safety vital beyond 2050, says Autoliv Autoliv has affirmed passive safety’s importance despite the push for cars that can avoid collisions altogether

By Freddie Holmes xecutives from Autoliv have affirmed passive safety’s continued importance in new vehicles “way beyond 2050” despite the onset of autonomous driving.

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Autoliv started out with a focus on passive safety systems but has edged closer to active safety by adding vision-

and radar-based safety technology to its portfolio. In fact, sales from the passive safety segment decreased 4.4% yearover-year to US$1.93bn between Q2 2014 and Q2 2015. Underlining this, on 1 January 2015 the company announced it would be operating through two business segments: electronics, and passive safety.

However, speaking at the Autoliv Capital Markets Day recently, George Chang, Head of Passive Safety explained that despite growing interest in advanced driver assistance systems (ADAS), “passive safety is by far the largest business.”

Developing steady passive safety

growth

for

While ADAS will ultimately enable autonomous driving, collisions on public roads will still occur. Because of this, Chang believes that passive safety will remain the main driver for fatality reductions. “Therefore, passive safety in the vehicle will continue to be a business segment with steady topline growth for years to come,” he observed.

Passive safety is primarily driven by demand in developing markets such as India and China. “Developing markets are driven not only by growing light vehicle production, but increased content in vehicles, increased safety 80 | Megatrends

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Safety awareness, NCAP and evolving legislation,” Chang explained.

Within developed markets there are continued incremental passive safety innovations as a result of growing active safety penetration. For example, autonomous emergency braking (AEB) systems are gaining fitment across most markets, which is triggering fitment of high-value seatbelt pretensioning systems as a result.

“The fact remains that for a long time to come, autonomous vehicles will have to co-exist with a majority of vehicles driven by normal human beings who are prone to making mistakes,” Chang pointed out.

Therefore, “protection of passengers in autonomous and non-autonomous will be a complex real-life safety problem which requires new solutions.”

Passive safety required “way beyond 2050” Many believe autonomous vehicles will be on public roads in some form by 2020, but if the industry reaches a point in future where all vehicles are autonomous, is there still a need for passive safety systems?

Johan Löfvenholm, Group Vice President, Product & Process Development, remarked: “I think it is clear that we will see a need for passive safety systems way beyond 2050. We have to adopt those passive safety systems together along with the autonomous driving trend, but until there are no accidents in the world, we will need passive safety.”

Jan Carlson, Chairman and Chief Executive of Autoliv added. “Are we trading active safety to gain passive safety? That is not the case, and with OEM negotiations there is typically not

a trade-off. Sometimes there is a tradeoff between whether you get seatbelt or airbag business, because they may not want to award it all to one supplier.”

Inflating sales Steve Fredin, Group Vice President, Sales & Engineering advised that airbag demand in particular is continuing to register significant penetration growth, “be it India or China, but generally, the technology is not shifting as much as seatbelts.”

Recent unforeseen market instances have also caused a surge in demand for the company’s airbag inflators. In February 2015, Autoliv was pulled in to assist Takata’s growing backlog of orders for replacement airbag inflators as a result of well-publicised and highly controversial global vehicle recalls. At the time, Autoliv announced that it had signed contracts with several undisclosed OEMs to deliver up to 26 million replacement inflators up to 2016 alone.

A matter of life or death

Transparency Market Research has observed a similar trend, forecasting the global airbag market to reach US$29.72bn by 2020, growing at a CAGR of 8.1%.

Sourabh Banik, an analyst at Transparency Market Research has attributed this mainly to the increased levels of global vehicle production and government regulations. “Various countries mandate the compulsory installation of airbag systems by the automobile manufacturers into their various vehicle segments, including low cost small cars,” said Banik, adding that that Autoliv is making “huge investments in R&D to explore new technical possibilities in the passive safety systems and improving the safety standards of its existing products.”

Takata’s recalls stemmed from issues concerning quality control. Addressing how Autoliv ensures similar woes do not occur within its operations, Chang explained that quality is the foundation of the company’s corporate value: “Our focus on quality is relentless, because we are in the business of saving lives. Our products do not get a second chance, and for the end customer, it is a matter of life and death in a real crash situation.”

“We know that over time, as quality improves, we can spend less time fixing problems and more time growing our business so that we an save more lives,” he added. Through a paradigm shift, the company has changed the way it analyses mistakes.

“Mistakes are not something to be feared, and are an opportunity to learn. The same mistake will never be repeated again,” Chang stated.

As it stands, 200 production lines across the company’s global operations currently operate at zero defects. “To many people, zero defects is still a dream. Here at Autoliv it is not only possible, but an increasingly growing reality across our global organisation,” he concluded.

A version of this article first appeared on AutomotiveWorld.com

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Safety

Interview: Chris Mason, Chief Executive, FISITA Chris Mason, Chief Executive of FISITA, the International Federation of Automotive Engineering Societies, talks exclusively to Megatrends magazine about the future of automotive safety and how semi- and fully-autonomous drive technology can help in the battle against road traffic-related injuries and fatalities

By Martin Kahl

o matter how far automotive technology advances, the fact remains that over 1 million people die each year in vehicle-related deaths. To what extent is this the automotive industry's problem to solve?

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Chris Mason, Chief Executive, FISITA 82 | Megatrends

Road safety is a major global issue, and fatalities need to be reduced.

However, this is not an issue that vehicle manufacturers alone should be expected to solve. Safety is a shared responsibility, which is why FISITA supports the work of the United Nations Road Safety Collaboration.

The international motor industry has invested significantly in safety technology over the last few decades – both in terms of pedestrian detection and driver-based safety technologies.

These types of technology are helping make great strides in reducing incidents, especially as many of the features that were previously the preserve of high-end vehicles become more mainstream. You only have to jump into a middle-of-the-road hatchback and find it now comes with an impressive array of safety features such as airbags, ESP, ABS, seat belt reminder and collision-assist as standard. automotiveworld.com/megatrends/

Safety

According to the data released by OEMs and suppliers operating autonomous car tests on public roads, human error caused all of the collisions involving autonomous cars.

What does this say about the need to take responsibility for driving away from humans?

In a world where cars are increasingly capable of talking to each other and the world around them, it is clear that as we move forward, more road traffic incidents will be avoided. People will get more and more used to having these technologies on-board and the way they behave and interact with them will change. At the moment we are not in a position where cars can be without a driver for various reasons including regulatory, liability and of course consumer acceptance. My sense is that differing levels of autonomous support will begin to address these matters over the coming years, but full autonomy is still a while away.

Autonomous car technology is being pitched variously as a comfort feature and as a safety feature. What is your view?

For the consumer, knowing that the car will contribute increasingly towards a less stressful and safer journey has to be a good thing. However, as every motorist has differing needs and perceptions of autonomous driving, it is clear that we will see the continued introduction of various driver support technologies which will familiarise us and ensure a graduated acceptance ahead of fullautonomy.

Various OEMs have said they'll have autonomous cars ready by or in 2020.

What is your view on when such vehicles will be available?

Technology is moving at an unprecedented rate, and one that no-

one could have predicted only a few years ago, when the thought of fullyautonomous vehicles on our roads seemed a very long way off. Now, this seems increasingly feasible. Today, manufacturers are selling semiautonomous technologies, with new technology introductions happening as a matter of course as the building blocks for future autonomous vehicles, whilst already testing fully-autonomous vehicles on the road. With this said, my technological evaluation for 2020 is yes, but there are other nontechnological factors to consider which may slow the pace of delivery against such an aspiration.

We've seen that the technology can drive better than humans. But how safe is it to leave the responsibility for driving on public roads to technology which can be hacked?

As more and more cars become connected, cyber security becomes an ever greater issue. As with any industry, technology issues are followed by technological advancements which combat these problems. Manufacturers view safety and security as paramount, and are investing signiďŹ cantly to ensure the security of their vehicles. They will continue to design vehicles with ever more enhanced security and continue to invest in combating these cyber security threats.

Can autonomous cars safely share the roads with human drivers?

Yes, they can! It is an exciting prospect to see a world in which autonomous vehicles are improving peopleâ&#x20AC;&#x2122;s lives and helping tackle some of its most signiďŹ cant social challenges.

automotiveworld.com/megatrends/

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Freight Efficiency

Tomorrow’s fleets must prepare for tomorrow’s roads Megatrends speaks to Per Ericson of Edscha TS, who says that traffic increases will need trucking companies to maximise efficiencies everywhere they can

By Xavier Boucherat ver the next 20 years, the number of vehicles on the roads in the world’s emerging markets is going to increase dramatically. India is just one example. Provided overall growth in the economy continues at a rate of between 7.5% and 9%, the targets laid out in the second phase of the government’s Automotive Mission Plan (AMP) are not considered unrealistic.

This could see passenger vehicle sales in the country increase from 2.6 million units in 2014-15 to anywhere between 9.4 million and 13.4 million units in 2026.

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Growth like this will bring with it a whole set of new challenges, including further congestion, increased pollution, and a greater need for stringent safety measures. These challenges will change the rules of the game for all automotive segments, not least the trucking and freight sector.

Practices such as overloading, for example, will become unacceptable.

That’s the view of Per Ericson, Chief Executive of Edscha Trailer Systems (Edscha TS). Since 1969, the company has specialised in the development

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and manufacture of roof and canopy cover systems for trailers, designed to help the heavy-duty vehicle (HDV) segment maximise efficiencies and comply with tightening regulations.

These include curtain slider systems, tarpaulin roofs, and sliding bow roofs.

The company also performs a high degree of customisation on its products, depending on factors such as what type of loading will be used to move goods onto a vehicle.

Acquired in 2005 by VBG Group AB in Sweden, the company’s strategy has been to target and grow with emerging markets like India, which over the coming years will see its infrastructure become far more sophisticated.

Ericson identifies four areas in which he believes suppliers to the HDV segment will play an increased role – load optimisation, safety, fuel consumption and efficiency. “These are our corner stones,” he says. “We believe that our product concept will have a positive impact in a market like India where these corner stones will have to be considered with the development of complex infrastructures in the future.”

Per Ericson Flexibility is a must Along with more cars on the road, skyrocketing vehicle sales in emerging markets like India will be accompanied by increased production; indeed, some are predicting that India will become the world’s third largest car manufacturing location by 2020, with an annual output of of seven million units.

Ericson says that in order for emerging markets to cope with increasingly complex logistics and supply chains, more flexible loading solutions will be

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Freight Efficiency

required. “Trucks will need to be able to load and unload in varying situations,” he explains. “This will give owners higher flexibility in terms of the types of customers they can service.”

Steel container solutions, which can only be loaded onto a trailer from behind, and significantly reduce available payload on account of their weight, will not prove adequate.

Instead, Ericson predicts wider adoption of the more versatile solutions offered by Edscha TS, such as sliding curtain bodies. Designed correctly, these can allow forklift trucks to load from the side, cranes to load from the top, and still allow for easy rear-loading.

This, says Ericson, will help to keep logistics operations smooth as ports and loading docks become busier, and delivery times become increasingly critical along the supply chain. The challenge will be to further develop the speed at which covers and roofs can be removed and replaced, whilst ensuring the process remains safe.

“Payload is another important area that our systems will continue to try to optimise,” he continues. “By optimising the upper body construction, payloads can be increased by up to 20%. This also improves fuel efficiency, which makes cost savings possible, and also helps with respect to the environmental situation.”

The industry wide trend for lightweighting plays well for suppliers like Edscha TS, as its products have the potential to provide the solution.

This, says Ericson, will further become the case with the electrification of powertrains: “That’s going to have a positive effect on our solutions and products, as weight optimisation will become even more important.”

Ericson predicts that the development of frames used in Edscha products will see increased use of highstrength steels in the frames.

Reinforced steel-plastic hybrid materials and advanced technical

textiles will also have a role to play.

Further load optimisation, he adds, will be made possible with the addition of sensors on its roof products that will allow for the continuous monitoring of body and load conditions.

The Edscha TS lightweighting strategy, on which the company works closely in its home country with major German body builders, sees continuous development: “You always have to transport more with less,” says Ericson. “Today, no other competitor can meet our weight level.”

Education, education, education The challenges are numerous, but emerging markets present an added difficulty – one that Ericson refers to as “the biggest challenge of them all”.

With the situation set to transform so rapidly, and with emerging markets lacking the same industry experience as their Western counterparts, the onus will fall on Edscha TS to convince potential customers that its products have a role to play in meeting efficiency targets. In some cases, says Ericson, even the concept of efficiency improvements, and their growing importance, is something that will need to be explained.

“We will have to be able to communicate well, and convey the message that there are substantial savings to be made by implementing a more efficient transport concept,” he says. “There will be considerable uncertainty, due to the fact that this is a new way of thinking which demands investment. But there is also the possibility for those who implement concepts like ours early to save a lot of money.”

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Freight Efficiency

Global trucking outlook: expect significant and far reaching change Oliver Dixon considers the megatrends shaping the global truck market hile the global commercial vehicle business can never be said to stand still, even by its standards the next five years or so look set to be a period of frenetic development.

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The reasons for this are numerous. On the one hand, as the Triad markets move away from the demands of the clean air acts and towards a regulatory environment founded on greenhouse gas (GHG)-based legislation, so will the design and the technology that underpins the next generation of commercial vehicles change. But, at the same time, so too will the market served by those same vehicles.

Fundamentally, goods will still be moved between two points by that vehicle, but that which surrounds the process is already changing, and will continue to change markedly.

The Triad markets The shift towards a regulatory environment predicated on the control and ultimate reduction of GHG emissions from heavy trucks is already ongoing. The proposals for Phase 2 of the joint NHTSA / EPA standards were published in June 2015 and we should see clarification as to what the period following 2021 will look like some time during 2016. It’s clearly premature to speculate in terms of detail at this point, but we can now begin to consider what the shift from oxides of nitrogen (NOx) and particulate matter (PM) towards GHG will do in terms of industry structure.

that – despite the NHTSA / EPA proposals currently being constituted of separate standards for both vehicle and engine – the direction in which we are heading is one that will eventually favour a holistic approach to emissions control.

This is a trend that will play clearly to the OEMs, for whom the adoption of a European verticalised model now looks to be a core strategic aim. Only recently, Daimler announced the launch of an integrated medium duty driveline for North America, thus mirroring its approach to this segment in Europe. Increasingly, therefore, it becomes difficult to see quite where Tier 1 suppliers will fit into this altered marketplace.

This is a discussion that has been ongoing for a while, and the future of concurrent sourcing within the North American marketplace has been increasingly questioned over the past couple of years. However, it may now be time to consider this from a

different angle. It is not that Tier 1 suppliers cannot produce that which is fit for market in the post-2021 era; it is that they may not be able to do so at a unit rate that justifies their continued participation. Consider for a moment the impact of, on the one hand, a diminishing addressable market – something the Tier 1s clearly now face – coupled with a likely significantly increased unit cost of design and production of those same products. At some time, a tipping point is reached and for simple commercial reasons, a supplier confronted with that tipping point has to consider either addressing the cost-benefit disparity or exiting the market. It becomes increasingly difficult to see how the former can be achieved; that leaves the latter as the logical commercial strategy to adopt.

While this may seem an outcome that favours the OEMs, the direction that GHG looks set to take the industry in is not without strategic risk. As the North

While the United States has taken a lead in terms of GHG reduction, it seems probable that Europe will not lag far behind. What also seems probable is automotiveworld.com/megatrends/

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American market now seems to be into the down-cycle, we are seeing clear examples of overbuilding. Inventory is bloated, and, rather than a manufacturing philosophy based upon demand pulling product, what we have seen is a more European approach of manufacturing pushing product. The days of a lean approach appear to be on the wane.

Push manufacturing is fine when the market is in the upswing; it is anything but fine when it is in a downturn.

Arguably, the OEM that can predict the point at which the market turns is - to a certain extent - insulated from this problem. Unfortunately, changes to the regulatory environment – we are likely to no longer see the pre-buy volatility of previous cycles – make such predictions rather less easy to get right. This makes control of the trading

cycle far previously.

more

important

than

Exercising control over a trading cycle is a tough call, but one that is made markedly simpler if the supplier-buyer relationship is changed to a supplierlessor relationship. Leasing of some form now accounts for a significant volume of trucks sold within the Triad.

The relationship between OEMs and independent leasing companies has never been a particularly easy one, and now it seems likely to be one that gets rather more fractious. If the OEMs desire to exercise control over the trading cycle, those same OEMs have little choice but to extend – or even develop – a presence within the leasing market. This puts those same OEMs squarely in competition with their customers, and it is difficult to see how this can end happily.

The non-Triads If the Triad markets are evolving as a function of regulation, what then of the non-Triad markets? Here, too, regulation is playing an increasing role, but the challenges for OEMs competing in the BRICs markets are clearly distinct from those confronting the Triad.

Brazil It’s difficult to see how anything other than the passage of time can cure the malaise that now bedevils not just Brazil’s truck industry but the country’s broader economy. However, the issue of at what point the industry might be said to have been cured is one worthy of some debate. FINAME is the key driver for truck and capital equipment sales in Brazil. During the era in which FINAME amounted not just to an interest-free but an effective interest bearing loan to buyers – net out inflation and subsidy against prevailing SELIC and you end up with an effective payment to buyers – quite obviously trucks were sold. That situation has now reversed and trucks are not being sold. At issue here, therefore, is the question of which of the two scenarios is more sustainable in the long run. If it is the former, then we should hope to return to a level of demand witnessed during the height of FINAME impact. If it is the latter, then such hope is rather misplaced.

So it comes down to a judgment call in terms of what happens with FINAME. Given that Brazil seems to be in a period of increasing monetary tightening, it seems improbable that FINAME will drive sales. Until this is reversed, Brazil looks set to remain static.

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Freight Efficiency

Russia Russia has also been in a parlous state over the past few months. World Bank data now implies a return to growth – of 1.5% – in 2017, but clearly there any number of exogenous factors may yet impact this, with sanctions and depressed oil price being just two. As with Brazil, the truck industry in Russia is a hostage to a broader economic malaise. And as with Brazil, recovery looks to be a function of time rather than strategic change.

China China and Brazil are linked in many ways. So too are they comparable; reversion to mean is a well documented theory and one which – in terms of fundamental economics – has much to recommend it. But if that same mean is at odds with reality – let us say that someone has kept a finger on the scale – then a reversion to that which is not a reflection of a long-term average is less easy to argue for.

China, like Brazil, is an economy that has depended in no small measure on marked and sustained intervention on the part of government for past success. The extent to which this can continue is difficult to assess. China at present is suffering. In time, things may well improve. But the extent to which they improve is difficult to gauge. As an analytical proposition, at present China remains a case of piercing a mirage.

6% a year – during the period 20252050. A nearer-term view – that of the IMF – sees India’s growth rising to 7.3% in 2016. India benefits at present from a low oil price, and, arguably, when compared with the three other BRICs markets, currently presents itself as a beacon of stability.

Does stability sell trucks? Recent data shows signs of an improving market, with Tata posting 15 straight months of increasing domestic sales. But longer term, the India truck story seems to be one predicated more upon exports; Daimler Asia head Marc Llistosella sees 25% of its Indian production going to export markets, while Tata is reportedly looking to treble unit exports by 2020. In terms of future development, India seems to be all about exports.

Expect significant and far reaching change This article has divided into two parts; Triad and non-Triad. As of late 2015, that remains a relevant means of analysis.

But increasing regulatory homogeneity and the prospect of more free trade agreements look increasingly likely to blur this distinction. Ultimately, inexorably, we are moving towards a global marketplace in which traditional barriers to entry may not be removed but will certainly be lowered. The extent to which this will change things will be a focus of industry debate for the next few years.

That it will create significant and far reaching change, however, remains beyond doubt.

India A recent HSBC report predicts that India’s rate of merchandise exports will grow faster than that of China – by automotiveworld.com/megatrends/

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2016 freight strategy could be “critical for the future of the US” California believes its new freight strategy will be vital for improving air quality

By Michael Nash overnor of California Edmund Brown recently announced an Executive Order that directs California’s Transportation Agency (CalSTA), the US Environmental Protection Agency (EPA) and Natural Resources Agency (NRA) to establish a strategy for reducing emissions from the state’s freight system. The plan will be implemented by July 2016, and will include ideas to improve freight efficiency and transition to zeroemissions technologies.

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In a recent interview, Melissa Figueroa, Deputy Secretary for Communications and Strategic Planning, CalSTA, described how the plan could be vitally important for both California and the US as a whole.

What are the main barriers facing California as it hopes to improve its freight system?

We view a sustainable freight transportation system as one that meets California’s environmental, energy, mobility, safety, and economic automotiveworld.com/megatrends/

needs. But making it a reality requires cooperation from many stakeholders, both private and public.

Governor Brown’s Executive Order requires state agencies to work together to identify strategies and actions that will help us transition to a sustainable freight transportation system. This includes enhancing freight system efficiency, deploying zero and near-zero emission freight equipment powered by renewable energy sources, providing reliable velocity while increasing safety, mobility, and capacity, and improving the competitiveness of the state’s logistics system.

Better roads, focussed corridor improvements, and early maintenance are also part of the equation as California increases its freight system’s efficiency, competitiveness and sustainability. All these things, many of which are the subject of ongoing negotiations during the legislative special session on transportation funding, will help freight move more smoothly through our system,

Source: CARB

strengthening the state’s economy and reducing environmental and community impacts.

How big an impact does California’s freight network have on air quality, and who does this affect?

Recently, California Air Resources Board (CARB) determined that emissions from California’s freight network remain a large contributor to air pollution, and currently account for about half of the statewide diesel particulate matter (PM) emissions, approximately 45% of the Megatrends | 91

Freight Efficiency statewide nitrogen oxide (NOx) emissions, and 6% of statewide greenhouse gas (GHG) emissions.

It is difficult to pinpoint freight activity as the greatest contributor of impacts on disadvantaged communities because California has a vast and complex transportation system, used by over 33 million registered vehicles. But it is clear that freight activity is a major contributor.

Is there an end goal with freight improvement – will California continue with these efforts until all its transport is zero-emission-based?

Upwards of 37% of California’s GHG emissions come from the transportation sector, according to CARB. Any serious attempt to combat climate change must therefore aggressively address the transportation sector.

California is currently developing specific goals, targets, and performance measures for its freight transportation system. It has recently set new, aggressive targets for reducing pollution, including decreasing GHG emissions by 40% below 1990 levels before 2030, and cutting gasoline use in cars and trucks

92 | Megatrends

implementing innovative strategies and new technologies, and the state’s role as a laboratory for testing new approaches is one that can benefit the rest of the globe.

Transforming California’s transportation sector into a more sustainable system that addresses environmental, livability, energy and economic objectives is critical for the future Source: CARB of the state – and the entire US. California welcomes the by up to half from current levels before opportunity not to compete, but to assist the same deadline. other states in transitioning towards Since freight transportation in clean and sustainable transportation California generates a high portion of systems. local pollution in parts of the state with poor air quality and an increasing What is next for the state and its contribution of statewide GHG dedication to investing in clean emissions, our goals must support air technologies for the automotive industry? quality and climate objectives.

Do you think other states can compete on the same level as California when it comes to reducing emissions from the transportation sector?

The landscape is fast moving and ever changing. We’ll be focussing on the continued progress of the nation’s first high-speed rail network, implementing the next round of the Transit and Intercity Rail Capital Programme climate investments, and completing the unified freight strategy on an aggressive schedule.

California is a leader in innovation. The Golden State is often at the forefront of

A version of this article first appeared on AutomotiveWorld.com

To effectively combat global climate change, we believe that California must strive for a zero-emission transportation sector.

automotiveworld.com/megatrends/

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