In the wake of the U.S. State of the Union Address by President Barak Obama on January 28th, there is a renewed focus on the automotive industry. Specifically, the issues around improved fuel efficiency standards and safety regulations, both of which are solutions supported directly by an increase in automotive electronics – that translates into a definitive boost to already strengthening automotive numbers for both industries, automotive and semiconductor & electronics.
Safety regulations promote the connected car
Hitting the news in the last few days is the ongoing, but now percolating, discussion around Vehicle-to-Vehicle (V2V) technology for crash avoidance (see CNN video also). The V2V technology is not new news, as we know from a few years of CES and the Detroit Auto Show demonstrations from automotive OEMs, the demo versions of this technology are already available and have gone through numerous testing phases. The question now is that of adoption and then the hopeful path of mandatory safety regulation – moving to a mandatory safety regulation means certain growth for that technology solution with the likely follow-on to other countries' safety regulation adoptions as well.
While many automotive OEMs have already begun adding Advanced Driver Assisted Systems (ADAS) technologies to alert drivers of events they may not be aware of, these packages are options at this point, meaning they are in the higher price ranges and elective features. As discussed in the Bloomberg, the U.S. National Traffic Safety Administration and Department of Transportation (DoT) released its draft proposal in May 2013 in support of these various ADAS technologies for vehicles. While it is not likely to move to regulatory status until 2016 or 2017, the march is on and momentum building for V2V and ADAS solutions as mainstream (see this Product Design & Development article for a more tech focused view of the V2V discussion).
Economy and ASPs making auto solutions feasible
At the forefront of the automotive OEMs checklist for these new automotive semi solutions are two points: first is the steady rise in automotive sales that underscores the recovery for the once stricken automotive industry; and second is the decline in Average Sales Price (ASP) for the automotive semi components and solutions series now available.
Price matters to automotive OEMs where margins and price differences as well as feature distinctions are essential comparison points at the end-sale moment. With the major automotive OEMs working closely with major electronics manufacturers, as we reported from CES 2014 and Detroit Auto Show over the past month, the tech solutions exist, are coming to maturity, and price points are within range for the automotive industry's consideration as part of their fleets.
Another economic point comes more from the macro-economic sphere – energy efficiency and the impact on the U.S. economy as highlighted in President Obama's State of the Union address. Pushing for stricter fuel efficiencies (auto-mileage rules), the question of lighter vehicles means various solutions such as different material solutions (such as Ford's new aluminum F-150 model) and/or smaller vehicles; both of which raise safety questions from the automotive and insurance industries – all the more support for V2V technologies to avoid collisions and add to existing safety regulations with the help of electronic solutions.