SEMA News—April 2014

VEHICLE TECHNOLOGY
By John Waraniak

Silicon Valley Versus Motor City: Race for the Future of the Car

SEMA’s Vice President of Vehicle Technology on the State of Advanced Vehicle Technology and What’s to Come

The race to define future vehicles is on. Competition for the future of the auto industry is rapidly evolving between Silicon Valley and Detroit. While product is king, vehicle electronics and software rule. The recession accelerated the auto industry’s transformational changes, which are required for growth as well as the reinvention of vehicles—from mechanical to electrical systems, from stand-alone to connected, and from mass markets to personalization and customization. The changes we are going through today will impact the performance aftermarket industry for decades to come.

	Many connected-car technologies and opportunities for the aftermarket are addressed in our annual Connected Vehicle Forum at the SEMA Show to help members leverage automotive apps and connectivity opportunities. Connected car opportunities will also be presented at the SEMA Product Development Expo on April 10, 2014, in Diamond Bar, California.

The top three trends that members need to watch for are how the Internet of Things (IoT) is driving connected vehicles, automotive apps and sales; how semi-autonomous vehicles and systems are redefining the driving experience and personal mobility; and how engineers and mobile youth are leading the way in the current vehicle design revolution.

It’s appropriate to recognize here how important engineering is to the automobile industry today. Engineering touches every aspect of the vehicle, from design to development to manufacturing. Contemporary leaders with engineering backgrounds such as Mary Barra and Mark Reuss at GM and Raj Nair at Ford are determined to make the most of the latest automotive engineering renaissance. This is a very exciting time to be in the automotive and performance aftermarket business. It’s what Japanese engineers call Waku-Doki—heart pumping, racing adrenaline feeling of anticipation.

Driving Connected

Connected vehicles are the ultimate mobile devices in the Internet of Things, a term that refers to the idea of equipping all objects in the world with identifying devices. Connected cars are the hottest models on dealer lots, and connected vehicle technologies are the top selling point for 39% of car buyers today—which is more than twice the 14% who say that their first considerations are performance and speed. The connected-car market will reach $53 billion in less than five years; that creates many new and exciting opportunities for current and future SEMA companies. Twenty percent of cars in the United States will have app capabilities by 2017, and the global connected-car market is expected to reach 60 million vehicles by 2018.

		“The race between Silicon Valley and Detroit is a collective effort to jointly challenge the Motor City’s insular, conventional automotive wisdom with the non-traditional thinking and business models that Silicon Valley is noted for.” —John Waraniak, SEMA Vice President of Vehicle Technology

The growth of aftermarket products, such as displays, screens and connectivity modules as well as services, is directly linked to the growth of the OEM connected-car market. The biggest challenge is managing vehicle complexity. Today’s vehicles have more than 60 microprocessors and 50 million lines of code, compared to tens of thousands just a decade ago, and that number will double to 100 million lines of code in the next generation of vehicles. The space shuttle had only 500,000 lines of code, and Boeing’s 777 airliner has only 4 million. The aircraft industry has long relied on computers to fly planes; however, the auto industry has been held back by insufficient broadband and mobile technology infrastructure, the price of computing power, and regulations against automated driving.

The race between Motor City and Silicon Valley engineers to define the future of automotive is not a zero-sum game. Writing code for a social media website or building a smartphone is not as complex as building a car. But as the two industries grow intertwined, their disparate innovation, research-and-development processes and cultures are creating functional tension and conflict. The race is more of a collaborative or collective effort to jointly challenge Motor City’s insular, conventional automotive wisdom with non-traditional thinking and business models that Silicon Valley is noted for.

The Vehicle Technology Center is more than an exhibit at the SEMA Show. The VTC is a lab. It’s a social networking marketplace and a step into the future.

“Now is the time for us all to be looking at vehicles on the road the same way we look at smartphones, laptops and tablets,” says Bill Ford Jr., executive chairman of Ford Motor Co., “as pieces of a much bigger, richer network.”

Going It Alone Is a No Go

Automakers, technology and aftermarket companies need to partner so that consumers can seamlessly and safely bring their digital lifestyles into vehicles. Detroit automakers Ford and GM are taking different paths to Silicon Valley for innovation and technology; however, they are both opening their doors to app developers and have figured out that going it alone is a no go. Rather than trying to write their own in-car software, they’re turning to the experts—software engineers who already write hundreds of thousands of mobile apps and software for smartphones and tablets. Software is fast becoming a major competitive differentiator and is as important to automakers as design and styling.

Ford’s recent buyout of Livio—a small software start-up in Ferndale, Michigan, that connects the apps on your smartphone to your car’s dashboard—is an example of Ford’s commitment to connectivity. The deal with Livio marks Ford’s first acquisition of a technology company in 13 years and extends its leadership in the race to provide drivers with safe, seamless access to the electronic content and digital lifestyles they want while in their vehicles. The acquisition will focus on developing an industry standard for smartphone-to-vehicle communications—a market that is expected to reach 21 million vehicles by 2018.

The revenue potential is enormous, but the problem is that every automaker wants its own branded solution to help differentiate its connected-vehicle experience. That makes it tough for small app developers and SEMA companies to play in the automotive apps market. A single, common vehicle interface standard would let developers write software faster and more efficiently, providing customers with the apps they want to use more quickly. Livio software is already compatible with several commonly used apps and works with all major smartphone devices.

	Doug Evans, SEMA chairman-elect and executive vice president/group publisher for enthusiast media with Source Interlink Media, emphasized the importance of staying relevant and engaging performance enthusiasts through new technologies and media.

We address many connected-car technologies and opportunities for the aftermarket in our annual Connected Vehicle Forum at the SEMA Show to help members leverage automotive apps and connectivity opportunities. We are working with Livio and Ford as well as NVIDIA Corp. and MSD Performance on a connectivity forum session at the SEMA Product Development Expo, April 10, at the SEMA Garage located at SEMA headquarters in Diamond Bar, California.

There, we will introduce members to Ford’s OpenXC platform to create apps and new business opportunities. OpenXC is a combination of open-source hardware and software that allows for custom applications and pluggable modules. Revenue opportunities from connected-vehicle devices that transmit data from the car will grow to $25 billion by 2025, up from about $2.5 billion today.

Although automakers are taking different paths to speed innovation and technology in their vehicles, it’s clear that aftermarket and non-endemic players outside the traditional auto industry will help drive success as advanced vehicle technologies are deployed. Most GM vehicles will offer 4G LTE mobile Internet service through OnStar and AT&T by next year. Jim Farley, Ford’s head of global marketing, recognizes that partnerships are becoming increasingly important and says that we are at a “tipping point.” He realizes that auto and tech companies must collaborate more closely to enable the next-generation consumer experience in vehicles.

Driving Safe

Self-driving cars (SDCs) will fill our roads by 2030. Much of the driverless-vehicle technologies are already here, so it’s no longer a question of whether SDCs will be built but how soon and how many can we expect. Nearly every major OEM is working on self-driving technologies, and many of today’s vehicles already have automated and semi-autonomous driving systems such as lane-departure warning, adaptive cruise control and automatic braking.

The U.S. Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) has defined five levels of vehicle automation: Level-0 is no automation; the driver is in complete control at all times. Level-1 is function-specific automation like today’s electronic stability control systems. Level-2 is combined function-specific automation such as adaptive cruise control and lane-keeping assistance, which are also available on many vehicles today. Level-4 is semi-autonomous—limited self-driving automation that takes control of the vehicle only in safety-critical situations. And Level-5 is full self-driving automation or piloted driving, where the driver can do other things while the vehicle is driving.

Crash Avoidance Trumps Crashworthiness

The NHTSA also recently announced that it will begin taking steps to enable vehicle-to-vehicle (V2V) communication technology for light vehicles. This technology would improve safety by allowing vehicles to talk to each other and avoid crashes by exchanging basic safety data such as speed and position 10 times per second. Car-to-X technologies could reshape how Americans drive. The bottom line is that “crash avoidance trumps crashworthiness.”

	Nate Shelton, SEMA chairman and chairman of B&M Automotive, kicked off the SEMA Vehicle Technology Center’s briefing program at the 2013 SEMA Show with Mike Helton, president of NASCAR. They presented a keynote session on how SEMA and NASCAR have evolved together through innovation and technology over the past 50 years.

V2V technologies represent the next generation of auto safety improvements, ensuring that the United States remains the leader in the global automotive industry. Several SEMA companies played key roles in the nearly 3,000 vehicles in the Ann Arbor, Michigan, pilot that integrated 300 vehicles with aftermarket safety devices which draw data from the environment but do not link with the vehicle’s computer. The aftermarket transmitters are similar to the Wi-Fi devices in our computers but use a different wireless frequency called Dedicated Short Range Communication specifically for connected vehicle communications.

We demonstrated these aftermarket devices in the Vehicle Technology Center over the past few years and outlined the aftermarket opportunities for SEMA members to retrofit the 250 million vehicles already on the road. Nine of the top 10 auto manufacturers exhibited their latest automated and driverless concept vehicles at CES this year. Most importantly for SEMA companies, current driverless-car legislation has a provision that allows retrofitting of cars less than four years old with autonomous vehicle technology. If Google gets its costs down and sells aftermarket devices to consumers, self-driving cars could be on the road within five years—without input from automakers.

SEMA’s Product Development Expo on April 10 is an opportunity for members to learn about connected vehicles and how to compete and win as advanced vehicle technologies, product-development tools and automotive applications are deployed. This June, SEMA members are also invited to participate in Ford’s Developer Conference in Dearborn, Michigan. It will focus on bringing innovative mobile apps into the car through Ford SYNC and AppLink.

Driving Green

While many alternative-energy vehicles and powertrains are available to buyers today, 85% of cars and light vehicles will still be powered by traditional internal-combustion engines over the next 10 years, compared to 97% of vehicles today. Natural gas and flex-fuel vehicles will account for 6.5% of the market by 2025, hybrids will make up 6%, battery-electric vehicles will account for 3% and hydrogen fuel cells 0.5%. Internal-combustion engines will continue to dominate; however, today’s big improvements in fuel efficiency and green performance are coming from downsizing engine displacement coupled with hybridization, start-stop technology and advanced powertrain technologies.

Gas direct injection along with turbo- and supercharging have made significant improvements in fuel efficiency and green performance. Turbocharged vehicles allow automakers to keep power output high while they downsize engines for better fuel economy. But much of the fuel-efficiency gains are lost when drivers stomp the gas pedal and enjoy the turbo’s high performance. Turbos will reach about 25% of the new-vehicle market in North America over the next three years, which leaves plenty of opportunities for diesel, hybrid and electric powertrains in the coming years.

Ford has been the most aggressive with turbocharging. About 80% of its North American nameplates are available with an optional EcoBoost engine, which combines a turbocharger with direct fuel injection and other technologies. Ford’s turbocharged 3.5L V6 EcoBoost engine shattered the top speed at Daytona with a record 222 miles per hour—the fastest car ever to lap the legendary raceway.

		Automobiles will remain the cornerstone of advanced mobility for decades to come; however, the vehicle, the industry and the ecosystem we operate in are all rapidly evolving. The future belongs to those SEMA companies that prepare for it today.

General Motors has been an ardent supporter of the idea that boosted engines have no place in trucks, and that nothing can replace the durability, toughness and low-end torque of a V8. The company has several advanced technologies onboard the ’14 Silverado with a 5.3 EcoTec3 L83 V8 that are on par with a boosted V6 engine. Several of our SEMA-Clemson grant projects are focused on helping members with vehicle emissions and compliance of aftermarket-modified vehicles. The equipment available to members for performance product development is the same as that used at major OEMs. It’s like putting an engineer in the combustion chamber.

Racing Technology Transfer

Supercapacitors will soon make their way into the SEMA performance aftermarket. Supercapacitors and ultracapacitors bridge the gap between conventional capacitors and rechargeable batteries. While their energy densities are 10% of conventional batteries, which limits their energy storage capability, their power density is generally 10 to 100 times greater. Toyota is racing ahead with supercapacitors and other racetrack technologies with exciting street and aftermarket performance applications. The supercapacitor system used in the Toyota LMP1 race car recharges quickly during short periods of intense braking, and the energy that’s saved is used for bursts of power.

Toyota uses a supercapacitor-based hybrid system that automatically delivers 300 hp of boost on top of the 530 hp generated by a 3.4L, normally aspirated V8, giving a peak power of 830 hp—comparable to the output of a current F1 car.

Supercapacitors are start-stop technology on steroids. Kinetic energy produced by braking is converted into electrical energy in the same way a dynamo light works on a bicycle rubbing against a tire and is stored in a supercapacitor. When the driver accelerates, the electric energy is automatically released back to the driveshaft for added power. Supercapacitors have an advantage over other hybrid-battery systems because they charge quickly and can deliver a high level of energy from a single application of the brakes.

Driving Cool

Developing connected vehicles and advanced technologies is a critical way for automakers and aftermarket companies to attract younger buyers by being relevant and cool. Many 18- to 34-year-olds are not disinterested in cars. Research shows them to be as emotionally attached to their vehicles as their smartphones. Successful automakers and aftermarket companies will find innovative ways to safely mesh the two.

Every few years a product or technology comes along that creates new markets and business opportunities. A few years ago, it was the tablet. Before that, it was the smartphone. And before that, it was the MP3 player. This time, it’s a car—the Tesla Model S.

Tesla is no ordinary vehicle. The Model S has a high-resolution digital display that puts the car’s speed, range, audio controls and trip information in front of you with clear, crisp color. The 17-in. touchscreen morphs into whatever is needed at the moment, whether it’s directions or the controls to adjust the sunroof. You can even reach deep into the vehicle’s systems to fine-tune the way the car drives or uses energy. Tesla’s Model S is only one example of the cool stuff that’s already on the road thanks to new automotive players, such as NVIDIA.

Connectivity greatly influences customer satisfaction and sales. When it comes to new-car purchase decisions, two in three car owners between 18 and 35 years of age say that their vehicle’s technology has some or a great deal of influence on the next car they will purchase.

Mobile Youth

You can’t fake true cool. The focus of connected cars is not on the technology but the connection. The younger you are, the more you get it. Smartphones are emotionally empowering not because of the productivity but because they connect people. Cars are social by design. Put that connectivity in the car, and you bring back the love of the automotive lifestyle and experience. For millennials and mobile youth, it’s all about the social connection that the technology enables. It’s the same for aftermarket companies competing in connected vehicle markets.

Many Millennials—those born between the early ’80s and the early ’00s—are becoming new-vehicle buying age and are the fastest-growing demographic in the retail industry. So much so, in fact, that Gen-Y comprised more than 23% of retail sales in 2013.

This is the generation born online and raised on technology. Companies such as Apple and Oakley built their brands on the youth market. Youth markets and spending are good indictors of growth and are your best influencers and fans. They spend about 36% of their disposable income on mobile products and services and are the first to drive premium markets—48% of 18- to 23-year-olds own premium Samsung or Apple phones.

Millennials also have no “e-fear.” They are more willing to share information with marketers online, especially if they get something in return.

Leading original equipment manufacturers as well as performance specialty-equipment companies are negotiating a delicate balance between short-term profitability, medium-term growth and long-term sustainability.

Automobiles will remain the cornerstone of advanced mobility for decades to come; however, the vehicle, the industry and the ecosystem we operate in are all rapidly evolving. The future belongs to those SEMA companies that prepare for it today.

Partnerships and collaborations between Motor City and Silicon Valley engineers as well as OEM and performance specialty-equipment companies are critical to success. No one is rich enough or smart enough to go it alone. Some of the best Super Bowl XLVIII commercials offered important ideas and takeaways for SEMA members by featuring cars and trucks built by Detroit original equipment manufacturers and what they represent—American pride and resilience.