From the 2014 SEMA Show Technical Briefing Seminars, NVIDA’s Danny Shapiro discusses the future of digital technology in vehicles.
SEMA News—April 2015
By Steve Campbell
Auto 3.0: Fast, Cool, Smart and Connected
SEMA’s Vice President of Vehicle Technology on the State of Advanced Vehicle TechnologyToday’s cars, trucks and the auto industry and performance aftermarket as a whole are being reinvented, restructured and re-envisioned. Cars are quickly moving from standalone mechanical products to smart electronic products and connected smart products in what might be called Auto 3.0, the Third Automotive Revolution. Not since the beginning of the industry have we seen such disruption in how cars are designed, developed, customized, sold, serviced and owned. Vehicles drive themselves, avoid accidents and connect to their owners’ digital lifestyles. They produce lower emissions, go faster and are safer, smarter and cooler than ever.
The disruptive technologies leading the auto industry and aftermarket product revolution are also creating many new and exciting business opportunities and careers in science, technology, engineering and math (STEM) that did not exist in the industry just six years ago—roughly one or two high school or college generations. New talent pipelines, career paths and skill sets, such as gaming, apps and software development for design, manufacturing, production and marketing, are required to fuel Auto 3.0 and connect the next generation of drivers and workers to digital tech in their cars. Innovation is the number-one driver for creating a competitive advantage and staying relevant with advancing vehicle technology.
“SEMA’s roots are in making cars faster and cooler,” said SEMA’s Vice President of Vehicle Technology John Waraniak. “Today’s performance aftermarket offers established SEMA companies and next-generation SEMA companies a wide spectrum of new and exciting opportunities to dream, build and drive their preferred future in making cars faster, cooler, smarter and more connected. Automakers give a car heart. SEMA companies will continue to give a car soul.”
In what has become an annual tradition, Waraniak recently gave us his take on the changing face of the automotive world and the specialty-equipment market.
SEMA News: What are the hottest new technology advances of the past year? What tech trends should specialty-equipment manufacturers have on their business and product-development radars?
John Waraniak: SEMA companies need to be tracking how their products and the vehicle systems they are integrated with are becoming smarter and more connected. The number of cars connected to the Internet worldwide will grow to more than 52 million by 2020, compared with 36 million today. Vehicle technology is the top selling point for 39% of car buyers—more than twice the 14% who care most about horsepower and handling, according to a survey last year from Accenture.
While some drivers prefer 4G to a V8, horsepower and performance under the hood are being matched by the computing power and street cred of the center stack. Drivers are demanding that their cars keep them constantly connected.
The hottest trends that offer members new opportunities for growth and new challenges are connected and self-driving vehicle technologies, as well as powertrain developments to achieve greater fuel efficiency and reduced emissions while still delivering performance. Seventy-nine percent of automotive CEOs surveyed in PricewaterhouseCooper’s annual automotive report believe that advanced vehicle technology will transform their businesses over the next five years.
The aftermarket industry’s structure is driven by five competitive forces: the bargaining power of buyers, the bargaining power of suppliers, the intensity of rivalries between existing companies, the threat of new entrants and the threat of new technologies, products or services. The industry’s structure changes when new vehicles, business technologies and customer needs shift these five competitive forces.
The SEMA Data Co-op (SDC) is a great example of how members are using the latest business technology to increase sales. The SDC is operating a centralized product data service for manufacturers. It organizes, houses and then distributes online product catalog information to WDs and retailers to drive sales growth.
SN: What is the most recent progress with autonomous, connected and self-driving cars? We’ve seen a few examples at recent auto shows. Are they getting closer to widespread reality?
JW: Autonomous vehicle systems, automated, connected and self-driving cars are already here, and the rivalry between the Motor City and Silicon Valley to deploy these technologies, systems and products is good for OEMs and the SEMA community. Automated driving affects every aspect of the vehicle and will increase safety, fuel efficiency, comfort, personalization and mobility.
Google has been working on self-driving cars for years and is finding friends in the OEM and aftermarket industries. Roush Enterprises—a longtime SEMA-member company—is building Google’s driverless cars in Livonia, Michigan, adding to the company’s portfolio of performance parts, military vehicles and NASCAR stock cars. Ford, Nissan, Audi, General Motors, Mercedes-Benz, Tesla and many other automakers, suppliers and aftermarket companies are developing and deploying connected and autonomous vehicles, systems and technologies as well.
Ford is well aligned with Auto 3.0 and views itself as both a mobility company and an auto company. Ford recently opened its new Research and Innovation Center in Palo Alto, California, to accelerate its development of technologies and experiments in connectivity, mobility, autonomous vehicles and customer experiences with digital technologies in its cars.
Mark Fields, Ford Motor Co. president and CEO, said that “the new research center shows Ford’s commitment to be part of the Silicon Valley innovation ecosystem—anticipating customers’ wants and needs, especially on connectivity, mobility and autonomous vehicles. We’re thinking of ourselves as a mobility company and not only a car and truck company.”
In addition, the Mercedes F015 that was revealed at the North American International Auto Show (NAIAS) in Detroit is one of the most advanced OEM applications of autonomous and fully connected technology—but it’s not just about new vehicles. There are more than 250 million vehicles on U.S. roads today. Retrofitting existing vehicles with basic vehicle-to-vehicle (V2V) communication systems and sensors as well as updating and upgrading vehicle electronics and software means big business opportunities for the aftermarket.
Automakers often focus on new-vehicle sales with the latest technology but disregard the needs of the consumer several years after purchase. According to a recent Gartner survey, 58% of consumers believe that car manufacturers should allow tech companies to develop in-vehicle technologies for consumers. Auto 3.0 OEMs recognize that their companies are behind the curve and need to develop better ways of addressing mobile connectivity and consumer needs for maintaining the latest technology in their vehicles for new as well as aftermarket sales, or they risk a diminished brand experience.
SN: Can you give us some examples of what is currently under development from specialty-equipment companies?
JW: Self-driving technologies and products are being adapted to the aftermarket by Auto 3.0 entrepreneurs such as Kyle Vogt at Cruise Automation. Kyle and I were on a panel together at the Connected Car Expo during the Los Angeles Auto Show. He clearly represents the next-generation of SEMA members that customize cars with a keyboard, digital technologies, software applications and vehicle electronics.
“Seventy-nine percent of automotive CEOs believe that advanced vehicle technology will transform their businesses over the next five years.”
The RP1 sensor pod contains a radar and a number of cameras on the roof to watch the road. A computer that occupies less than two square feet in the trunk crunches the data and controls actuators under the pedals and on the steering wheel to move them as needed. New aftermarket companies such as Cruise that integrate their products with autonomous, connected, smart-vehicle systems will be well positioned when the market for autonomous cars reaches an expected $42 billion in 10 years, and nearly 25% of all cars are expected to drive autonomously by 2030.
Another example is Nvidia, based in Silicon Valley. It is best known for the graphics cards it builds for high-performance video gaming systems, but it’s also accelerating its move into cars with two purpose-built automotive computers, the Drive PX and the Drive CX.
The Drive PX auto computer is intended for autonomous driving. The Drive CX, is for graphics-heavy infotainment systems and instrument clusters, complete with the varied textures and lighting effects found in modern video games.
Nvidia sees autonomous driving as a huge growth area and believes that there will be more computing horsepower inside a car than anything you own today. The Audi TT’s monitor is powered by two Nvidia Tegra K1 mobile processors and uses a computing system called MIB, a German acronym that means “modular infotainment toolkit.” It allows a new graphics chip to be added to an infotainment system after one or two years rather than waiting for the completion of a full six-year product cycle.
“VOXX and Pioneer are excellent examples of traditional aftermarket companies and brands embracing Auto 3.0 technologies and business opportunities.”
Last year, Pioneer was the first SEMA company to hit the road with Apple CarPlay. This year, it plans to do the same with Android Auto. Ted Cardenas, vice president of marketing for the car electronics division of Pioneer Electronics USA, recently told me that his company is integrating Android Auto into its second-generation NEX receivers to provide compatible Android smartphone owners with the ability to utilize the power and connectivity of their devices for in-vehicle navigation, communications, music and more.
VOXX and Pioneer are excellent examples of traditional aftermarket companies and brands embracing Auto 3.0 technologies and business opportunities. Suppliers such as Visteon are also making the transformation to Auto 3.0. More than half of Visteon’s engineers are software engineers.
This transformation is creating new aftermarket opportunities for vehicle personalization with reconfigurable instrument clusters and cockpits. Visteon will equip vehicles with blank screens where clusters and infotainment packages are downloaded from the cloud. Customers may want to personalize the instrument panel or upgrade after a few years. And when the vehicle comes off lease, the automaker, dealer or aftermarket company could download a new cluster with the latest software and get a higher residual. You could download your favorite musclecar instrument cluster that looks just like the original but is a virtual 3D display.
SN: How can existing SEMA-member companies, young enthusiasts and next-generation companies that may want to join SEMA learn more about the association’s vehicle technology initiatives and advanced vehicle electronics?
The idea of the VEP was announced at our annual Technology Briefing Seminar program at the 2014 SEMA Show to help gather information directly from members that should be included in the program. Members can view an excellent series of videos with John Ellis and Greg Krueger at SEMA’s YouTube Channel (www.youtube.com/user/SEMAChannel). The VEP would be modeled after the successful SEMA Vehicle Dynamics Program, in which baseline vehicle information and data are shared among participating members.
SN: What are the latest developments in terms of active safety technology?
JW: The auto industry’s approach to safety is shifting from crash survival to crash avoidance. The U.S. Department of Transportation (DOT) is in the process of writing vehicle communications rules and pending regulation FMVSS 150 that would require all automakers to incorporate connected-car technology into their vehicles, but automakers are not waiting for the rule to become a regulation.
V2V and vehicle-to-infrastructure (V2I) technologies will be onboard GM vehicles as early as 2017, and more than 30 of GM’s ’15 models are already equipped with 4G LTE wireless connectivity. Chevrolet has crash-avoidance technologies on many of its ’15 cars and trucks, including rear-vision cameras, a rear cross-traffic alert that uses two radars to let drivers know if a car is approaching from the side when backing, a side blind-zone alert, a forward collision alert that can sense a crash situation before you do, an adaptive cruise control and a lane-departure warning that can alert drivers who drift out of detected lane lines unintentionally or without a turn signal.
“SEMA-member companies participating in the Vehicle Dynamics Program have conducted more than 50 aftermarket-modified vehicle tests to demonstrate FMVSS 126 compliance.”
The Connected Vehicle Research Program, initiated by the DOT and led by the University of Michigan Transportation Research Institute (UMTRI), involves a pilot program with nearly 3,000 vehicles from eight OEMs and is the largest test bed in the world for V2V technology. U-M’s Transportation Research Institute and the federal and state transportation departments have plans to equip 9,000 cars with wireless communication technology. SEMA members working through the VEP would be able to test their latest products and systems with vehicles on UMTRI’s 32-acre test facility, known as “M City.”
JW: SEMA’s collaborative relationship with CU-ICAR and Art Center College of Design is now in its fifth year. The full-scale vehicle testing and hardware-in-the-loop simulation technology and product-development methodologies available to members are the same as those used by all OEMs and major suppliers around the world. They allow SEMA members to develop, test and simulate vehicle dynamics, new chassis-system components, suspensions, engines, powertrains, drivelines, vehicle emissions and electronic control systems.
The innovative and collaborative approach developed by SEMA has minimized costs while establishing unique capabilities for members that want to know the impact of their products on vehicle dynamics and vehicle emissions. SEMA’s Vehicle Dynamics Program helps members analyze and determine the impact of their products on active safety systems and vehicle dynamics performance. Members have conducted more than 50 aftermarket-modified vehicle tests to demonstrate FMVSS 126 compliance.
Powertrain technology advancements will continue at an unprecedented level for the next decade as OEMs strive to meet aggressive 2025 fuel-economy targets. New regulations are driving OEMs to deliver innovative powertrain technologies that will create new challenges and opportunities for performance aftermarket companies. These advanced powertrain technologies will significantly increase vehicle complexity, making it harder, more costly and more time consuming for SEMA companies that manufacture and market performance parts that must comply with the latest regulated emissions requirements. Our SEMA-Clemson Vehicle Emissions Projects, along with SEMA’s Emissions Lab and Executive Order program for vehicle compliance, can help members predict the impact of aftermarket powertrain modifications on vehicle emissions.
The CU-ICAR facility in Greenville, South Carolina, offers data analysis for problem solving, including analysis of pre-catalyst and post-cat emissions data and analysis of combustion and calibration for aftermarket performance parts makers seeking CARB certification. It’s like putting an engineer in the combustion chamber. Member companies that engineer and manufacture high-performance products for powertrains have to face the reality of the “do no harm” umbrella imposed by federal and state regulations. Failure to comply could lead to huge fines.
The California Air Resources Board (CARB) has issued fines approaching $1 million for noncompliance. SEMA is working with CARB to develop a process with a specific set of representative vehicles. The Ford F-150, the Mustang, the Camaro and the Chevy Silverado have tentatively been agreed upon. Once the list of vehicles is complete, SEMA will buy the vehicles and make them available to CU-ICAR for baseline testing, analysis and data acquisition.
It’s important to note that the immediate goal of the SEMA-Clemson Grant Projects and partnership is to help members and the industry ensure reliable and high-quality operation of aftermarket performance products. The transformational goal of the SEMA/CU-ICAR collaboration is to establish and grow new business opportunities in the areas of customization and accessorization while simultaneously educating the next generation of automotive students and SEMA members on performance product development, vehicle technology, system engineering, integration and solutions critical to the performance aftermarket industry.
SN: After another year of development, what are the most promising current powertrain developments and challenges?
JW: Ford just won the Rolex 24 at Daytona with an EcoBoost-powered Daytona prototype, proving again that green performance technologies continue to advance both at the track and on the street. The race for automakers to achieve 54.5 mpg by 2025 is on. Powertrain technology advancements have continued and will do so at an unprecedented level for the next decade as OEMs strive to meet those 2025 fuel-economy targets. By then, when cars and light trucks will fall under the same Tier 3 emissions regulations, an automaker intending to sell one “dirty” vehicle at the top of the bin scale must sell 13 vehicles at the bottom to achieve the fleet average.
Complying with these requirements will force automakers to sell a lot more small vehicles if they want to continue producing performance vehicles, large pickups and SUVs. New regulations driving OEMs to deliver innovative powertrain technologies will continue to create more challenges and opportunities for performance aftermarket companies. Advanced powertrain technologies also significantly increase vehicle complexity, making it harder, more costly and more time consuming for SEMA companies that manufacture and market performance parts that must comply with the latest regulated emissions requirements.
SN: Fuel prices have plummeted. What does that do to the development of alternative energy powertrains, hybrids and the future of the internal-combustion engine?
SEMA’s Vehicle Technology Mission
SEMA’s vehicle technology department helps members understand the latest vehicle technologies and connects them to cost-effective resources, programs, solutions and benefits relevant to their businesses and product-development plans. The goal is to help members customize with confidence by knowing how advanced vehicle technologies and new regulations impact their products and businesses. Three areas of priority for members are vehicle dynamics and emissions, vehicle electronics, and vehicle-technology alerts.
Vehicle Dynamics and Emissions: Ensure that members’ products and modifications can be successfully integrated with the latest and emerging vehicle dynamics and emissions technologies and comply with federal and state motor-vehicle regulations.
Vehicle Electronics: Integrate members’ products with the latest automotive and consumer electronics technologies and leverage emerging opportunities with digital lifestyles and connected vehicles.
Vehicle Technology Alerts: Provide members with the latest information about advanced vehicle technologies, new business opportunities and regulations impacting their products and businesses.
Consumers also want big vehicles. Light trucks accounted for 55% of U.S. auto sales in 2014, whereas hybrid and electric car sales fell 8.8%. Gas prices are expected to average $2.33 a gallon this year and $2.72 in 2016. Ford announced that it is introducing 12 new performance vehicles in the next five years—including the new the Shelby GT350R Mustang supercar and the high-performance ’17 F-150 Raptor off-road pickup—through its new global Ford performance unit headed by Dave Pericak, who will be a speaker on this year’s Technology Briefing Seminar Program at the SEMA Show. Automakers will continue to make halo performance vehicles to raise a brand’s profile and bring consumers into showrooms.
Aftermarket engine performance-parts manufacturers will soon be facing new challenges due to the increasing effect of the Corporate Average Fuel Economy (CAFE) standards. Brett Smith, program director at the Center for Automotive Research in Ann Arbor, Michigan, and a leading powertrain expert, stated at the SEMA Show that only 5% of 2013 production could meet the 2025 EPA CO2 emissions standards—and those are hybrids (HEVs), plug-in hybrids (PHEVs) and electric vehicles (EVs), so considerable work has to be done to improve gasoline engines.
Since the 2025 standards are more than a decade away, there’s time for OEMs to make continued improvements and innovations in gasoline internal-combustion engines for CAFE. However, it means that gasoline engine powertrains may suffer decreased performance in exchange for greater fuel economy, which could create opportunities for SEMA members.
The internal-combustion engine is likely to remain the dominant choice for automakers while PHEVs and EVs are struggling to get high-volume market acceptance. California regulations require that 15% of vehicles for sale in the state in 2025 be zero emissions—EVs and some PHEVs. If other states that normally follow California’s emissions and fuel economy lead do so with the zero mandate, that could affect more than 30% of the market.
SN: Is there anything we haven’t mentioned that we should add to the discussion?
JW: Digital technology, software-based customization and vehicle electronics in the car are major growth opportunities for SEMA companies. Product is king, but vehicle electronics and software rule. Smart, connected cars will enable greater personalization and customization through designs that will support ongoing technology and product upgrades. While some SEMA members may believe that self-driving cars signal the end of driving as we know it, I don’t believe that is true. I think connected-vehicle technologies will reemphasize the importance of automobiles, and cars will become more important because of these technologies. Vehicle performance and connectivity are leading the way in 2015 and offer street cred to both old-school and new-school enthusiasts.
MTV just released a report stating that Gen-Y Millennials between the ages of 18 and 34 want their cars, SUVs and pickups. They are 100 million strong and represent $1 trillion in buying power. Like other generations, they see car ownership as a way to establish independence and a way to shape their unique adult identity. The survey found that 75% would rather give up social media for a day than their cars, and 72% said that they would rather give up texting for a week than their cars. This new information reveals that Millennials are more interested in driving and buying cars than much research has led automakers and aftermarket companies to believe—but the industry needs to do a better job of reaching them.
The auto industry has been a source of pride for generations. It’s an engine of America’s manufacturing horsepower and a gateway to the middle class for millions. For next-generation enthusiasts and younger SEMA members who missed the excitement of living in the musclecar era, no worries. The Auto 3.0 era will be even more exciting, with cars that are not only fast and cool but smart and connected.