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Car Sparks - what price automotive electronics? 5/11/2004
Automobile manufacturers are facing a glum future with several of the major names in the industry reporting disappointing quarterly returns. And the mood has, over the past few months, been increasingly reflected in concerns over the rising cost of electronic systems in new and upcoming models - a cost which has had to take into account a poor record of reliability and the consequent warranty claims in an area of vehicle production that now accounts for around 90% of innovations in new vehicles.

Underlining the problems that come from such an unfettered rate of change, Bernie Robertson, former senior vice president at DaimlerChrysler said, during a speech at the October meeting of Converge 2004, that as much as 70% of all quality problems are the result of issues with electronics. In consequence the automaker has announced plans to eliminate hundreds of troublesome electronic functions from some of its vehicles in an effort to reduce the problem.

In reality, removing several hundred electronic functions from the modern vehicle is unlikely to make much difference to the overall problem. Many top-of-the-range models now contain as many as 13,000 passive electronic components and will, by 2010, represent something like 35% of the vehicle's average value. These same vehicles now carry at least 25 microprocessors and need anywhere from one to three million lines of code to make them run. The increasing use of sensors, particularly in advanced driver assist systems, will also raise the cost and complexity of the electronic systems. According to a recent study from Delphi, the cost of the average sensor content is set to grow from $132 per vehicle to $164 over the next two years.

"The continuing advancement and sophistication of electronic vehicle control systems," said a statement issued by Toyota in the past few weeks, "are drastically increasing the development costs of Japanese automakers and are expected to keep on doing so (to an even) greater degree in the future."

Given the level of concern being expressed at the top of the industry, it would be surprising if there were not a consequence in terms of the speed with which new products are introduced to market, even in spite of the plethora of software products designed to identify problems and reduce the development cycle. The attitude expressed by DaimlerChrysler's Bernie Robertson seems symptomatic of a concern which has spiraling cost, in its many manifestations, at its root. Unreliability and the associated burden of warranty claims - said to amount to $700 a vehicle - may be the expressed reason for caution but the potential for legal action also weighs heavily on the minds of senior managers.

This is particularly true of the United States where the introduction of advanced electronic driver assist systems lag well behind Japan and Europe in spite of the huge ongoing investment in ITS in that country.

"In the United States, driver distraction is a bigger thing than in Europe," Norbert Seitner, head of product planning for Audi North America is reported to have told the New York Times last week. "People in America tend to sue companies very easily."

The same attitude results in many vehicle navigation systems in the US displaying terms and conditions on the screen before they can be used. In another example, Toyota has no plans to introduce its Intelligent Parking Assist system to the American market for fear of litigation although it is already fitted to one of its Japan-only models. The list goes on. Adaptive cruise control was a late comer to the US while ESC (Electronic Stability Control) is only now beginning to be fitted to American vehicles outside the narrow range of SUVs (Sports Utility Vehicles) and four-by-fours.

What appears to be happening, in the US as in the rest of the developed world, is a concentration by the consumer on those electronic systems that offer some tangible benefit, especially in terms of safety. Speaking in Detroit last month, Wolfgang Ziebart, CEO of Infineon Technologies, the Munich-based maker of computer chips, said interest in safety-related electronics is now greater than ever while, conversely, interest in connectivity including the Internet was on the wane.

Even the introduction of telematics, once expected to be present in at least 50% of all new cars sold in the US by 2006, is not now expected to reach "half of that". The reason, according to Jeff Owens, president of Delphi Electronics and Safety Systems, is, once again, the ongoing issue of cost.

What then of the future? The electronics industry desperately needs what Peter Konhaeuser, a Senior Manager within DaimlerChrysler's Research and Technology Division and chairman of the European Union's PReVENT Co-ordination and Core Group has described as "a killer application". And that application is most likely to be found within the area of active safety systems such as collision avoidance, adaptive cruise control, obstacle/pedestrian recognition and the like.

At the end of 2004, many of the technologies that support these systems are at an advanced state of development. Some are even being described as 'mature' yet it will, even on the most optimistic of forecasts, be another 2 to 4 years before they appear in production vehicles. Other technologies, such as ISA (Intelligent Speed Adaptation), have only the remotest chance of seeing the light of day much before the turn of the decade in spite of their life-saving potential. In the latter case the reason is a lack of political will at both the national and regional levels.

In the case of the sensor-based technologies that will underpin much of the safety-critical systems of the next few years, the reasons for delay are much more difficult to discern In Europe, several EU sponsored projects are researching electronics-based safety-related applications under the e-Safety initiative but there is still no guarantee that any of the systems will go into commercial production. "The aim," said Angelos Amditis of the ICCS-NTUA I-SENSE Group in Athens Amditis, "is to develop new, more effective, more integrated and cleverer (electronics) … But in the end …it is for industry to decide when the time is right for the commercial production of these systems."

And underpinning the success of any such decision are, according to Franz Fehrenbach, chairman of the board of management of Robert Bosch, three critical factors - the complexity of the systems, their quality and an adherence to a common standard.

"These issues are interrelated and impact one another. If our industry does not commit to mastering complexity, we will never achieve common standards or improve quality," said Ferhenbach. "Without developing common standards, we will never master complexity in the systems we deliver to the market."

Notice the careful avoidance of the word cost. Yet that, in the end, is what Ferhenbach is talking about. Overcoming the complexity of the systems and achieving a quality of production is a costly business which can only be commercially justified if the market is large enough. This, Ferhenbach believes, can only be achieved through the adoption of technical standards.

But identifying a solution may be a great deal easier than achieving it. It has always been notoriously difficult to reach agreement on standards, particularly at the international level. Ten years was required to reach any kind of accord on the European microwave DSRC standard at 5.8 GHz and almost as long for an agreed standard on the new digital tachograph for use in European trucks and passenger coaches.

Despite all this, there is every reason to expect the further expansion of electronic systems in the automobile industry, albeit a more narrowly and carefully focussed expansion. Endorsement of some applications such as ESC (Electronic Stability Control) by the NHTSA (National Highway Traffic Safety Administration) is helping to propel such active safety systems beyond the narrow confines of SUVs and other 4X4 vehicles, even in the US.

"New (active-safety) technologies are such proven life-savers that the public will recognize their value in protecting vehicle occupants …" said to Joseph Gaus, Vice-President of Continental Teves at an October meeting of the Detroit's Automotive Press Association in Pontiac, Michigan. "The risks of non-deployment when a crash is impending or of inadvertent deployment without cause have all but been eliminated … (and) we expect that availability across the board will spread rapidly from the largest SUVs fairly quickly."

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