Suppliers prepare for self-driving bonanza

Technology suppliers are getting their game ready for whats coming in the global automotive industry.
In this article we will learn more about how revenue is growing and about the development for self driving vehicles.
This article was posted originally on www.autonews.com by David Sedgwick


Global vehicle production may be leveling off, but the fledgling market for self-driving car components is already morphing into suppliers' next gold rush.In 2020, automakers are expected to produce 85.9 million vehicles equipped with collision-avoidance systems, up from 10.8 million last year, according to Gartner Research.

That's eye-popping growth in an industry where it was beginning to look like the decade's roaring business cycle was nearing its end.And it explains why companies such as Bosch, Continental and Autoliv — the mega-suppliers that dominate the Automotive News list of the top 100 global suppliers — are promoting their ability to integrate the necessary array of sensors, computer chips and software.

"Revenue is growing extremely fast," Mike Ramsey, a Gartner analyst in Detroit, said of the emergence of autonomous technologies. And the trend favors mega-suppliers, "who are best positioned to take advantage."That's because they enjoy economies of scale, deep pockets for product development and long-standing relationships with automakers, Ramsey said."If they don't deliver, the automakers can wring money out of them without putting them out of business," Ramsey said. 

"The automakers feel a lot of security dealing with the big suppliers."Since r&d costs are considerable, the world's largest mega-suppliers hope to make the new technologies competitive by exploiting economies of scale.

Bosch, the No. 1 company on Automotive News' top suppliers list, with $46.50 billion in original equipment sales in 2016, generates annual sales of more than 1 billion euros ($1.12 billion) for the sensors, software and actuators needed for collision avoidance and self-driving vehicles.Now the company is upping the ante. 

In May, Bosch announced it will spend $336 million over the next five years to develop artificial intelligence for self-driving vehicles.But even a behemoth such as Bosch is relying on newly formed partnerships to fill gaps in its menu of technologies rather than rushing into the new world alone. In April, Bosch formed an alliance with Daimler AG to produce a fleet of driverless taxis.The company also has announced plans to manufacture vehicle processors with Silicon Valley's Nvidia and is working with digital mapmaker TomTom to develop crowdsourced road maps.

The task of designing self-driving vehicles "is too big for one company alone," said Kay Stepper, Bosch's vice president of automated driving. "We need the partnerships."