As someone who spends a reasonable amount of time aboard aircraft, I have a certain interest in air safety. I recently came across an article on MSNBC titled "Are airline pilots forgetting how to fly?" This essentially argues that some recent fatal crashes have been caused by pilots being unfamiliar with how to operate the airplane when the automatic systems fail.

The automotive industry is clearly well behind aerospace in the levels of automation offered.  The article states that it is commonplace for the crew to only manually fly the aircraft for 90 seconds at each of take-off and landing.  However, with the increasing level of ADAS (Advanced Driver Assistance Systems) and other support, do we risk de-skilling drivers?

What will the driver who has relied on their automatic parking system do when it fails?  What will the driver used to autonomous cruise control do when driving a rental car without it?  I know from my own experience the momentary confusion that can often arise when switching to and from vehicles with manual and automatic transmission.

The industry is progressing upon generally sensible lines.  For example, the Volvo City Safety system, which can apply emergency braking effort automatically, offers no audio/visual warning to the driver.  This is deliberate, the thinking being that if it did, drivers may begin to rely on the system to keep an eye out for them.  The system intervention is deliberately late and harsh, so that it is truly an emergency aid only.

However, we regularly see examples of people taking dangerous and unsuitable roads because their sat-nav told them to.  Some seem to have already delegated navigation responsibilities to a machine, and will obey it blindly.

Safety and support system designers will need to keep a close eye on ensuring that they do not unintentionally de-skill drivers and leave them in situations that they no longer have the talents to deal with.

While production volumes remain modest compared to conventional powertrains, we can none-the-less expect strong growth rates for Hybrid Electric Vehicles (plug-in, mild and full) and for pure Electric Vehicles (EV).  Indeed, September's forthcoming Frankfurt Motor Show (http://www.iaa.de/en/visitors/daten-fakten-besucher/details-iaa-2011/) will reinforce the message that HEVs and EVs are here to stay with numerous carmaker concept and production model previews planned for the event e.g. Renault's Frendzy EV concept and Toyota's much-anticipated Prius Plug-in model unveiling.

Based on its latest projections for HEV and EV production, Strategy Analytics forecasts that semiconductor demand for HEV/EV powertrain control (pure EV auxiliary inverters included) will be worth over $2 billion by 2018.  Notably 92% of this semiconductor demand will be for analog components, for while digital logic will provide the brains for Hybrid Electric and pure Electric Vehicles drive, analog semiconductor chips will provide the bulk of the interface, measurement, protection and muscle-power for these alternative powertrains.

Consequently, production growth for the existing and the soon-to-market HEV and EV models will provide a significant boost to automotive-grade analog semiconductor demand:  HEV/EV analog semiconductor market value CAAGR over the 2011 to 2018 period is forecast by Strategy Analytics at 23%.  This is significantly above the 7.2% projected CAAGR growth forecast for standard automotive analog/linear products - creating significant new business opportunities for analog IC vendors.   

Full analysis can be found in Strategy Analytics' report "Analog Semiconductor to get Market Boost from HEV/EV Growth".

We've recently spent some time chatting with Dan Mahoney, President and Chief Executive officer at Renesas Electronics America, Inc. We discussed how Renesas - the leading automotive semiconductor vendor - has recovered from the terrible earthquake and tsunami that hit Japan on 11th March 2011.  The story is one that blends a well-organised, efficient business recovery with the very human stories of loss, hardship and extraordinary hard work.

In the immediate aftermath, five of the company’s ten Japanese fabs were shut down, although four of these came back on line very quickly.  Worst impacted by far was the Naka fab, which contains 200mm and 300m production and testing facilities, and which provided around a quarter of the company’s automotive microcontroller capacity.

It took a week to sort things out enough to be able to enter the Naka plant with electricity available to enable an initial damage assessment.  Very early estimates were that it could take 6 months to restore the clean room, with full production perhaps not achievable for the remainder of 2011.  However, recovery has been much quicker than expected, due to a number of factors:

• Large numbers of highly dedicated people put in a massive effort.  This was while sometimes themselves living in very basic dormitory accommodation, with limited access to essentials such as running water.  Renesas estimates that across all the company’s recovery efforts, an additional 80,000 non-Renesas people were involved.
• Competitors allowed Renesas to “jump the queue” in gaining access to the replacement equipment that it required from its suppliers.  Although altruism and camaraderie were certainly key motives, there was also business sense in this.  End-product manufacturing that had stopped due to a lack of Renesas parts also meant that competitors were not shipping parts either.
• Renesas shifted much of the Naka product manufacturing to other domestic fabs, including its Tsugaru facility in Northern Japan
• Renesas accelerated its existing plans for the use of outsourced foundries, shifting some products (including some automotive ones) to TSMC and Global Foundries. In some cases this required a temporary relaxation of qualification requirements by customers until the requirements could be completed.

The scale of the effort can be seem in the photo below, which shows the rapid progress over (in this particular instance) a time period of only just over 3 weeks.

The result was that production at Naka restarted for the 200mm line on the 1st June, and the 300mm line followed shortly afterwards on 6th June.

Production is not yet back up to pre-quake levels.  Renesas estimates that will be achieved by the end of September, considerably earlier than first thought.  Electricity supplies throughout Japan remain problematical, and Renesas has brought in a number of on-site generators.  As the site includes a clean room, Naka is exempt from the planned rolling blackouts that still impact much of Japanese industry.

So, now that much of the hard work of the recovery process has been done, what has been the impact on Renesas and the wider semiconductor and automotive industries?

• Dan Mahoney asserts that Renesas now has better customer relationships than before the crisis.  He cites a number of accounts where they had limited visibility and access beyond the engineering teams, but now have good relationships with C-level staff. 
• The installation of new equipment at Naka, and the refurbishment of equipment that could be salvaged, means that yields for some products are now claimed to be higher than they were before the disaster.
• There has been a significant reassessment of the supply chain.  There is a general realisation that – in terms of continuity of supply – things could have been much worse.  If, for example, a similar tragedy had hit Taiwan, then the impact for the global electronics industry would have been much, much greater.  This has led to many customers now requiring manufacturing redundancy of supply as a basis for new contracts.
• This rethink on the supply chain means that the company’s use of foundries such as TSMC and Global Foundries will not be a temporary thing.  Renesas will emerge from the recovery process with about 10 per cent greater production capacity – without having put in any additional capital investment.  
• Although it appears that no firm decisions have been made on whether automotive-grade products that are currently outsourced will be pulled back to Naka, requirements for redundancy of supply makes it likely that outsourced suppliers will manufacture automotive products.
• However, this requirement for redundancy will cost more.  Renesas clearly believes that customers will have to share in this cost.  That is not always easy to achieve in automotive!

The recovery to date, and the dedication and hard work of all of those involved, is very impressive.  The wider industry impact of the disaster has clearly accelerated the outsourcing trend.  Strategy Analytics believes that future fab investment is highly unlikely to be concentrated in regions that already have a high density of such facilities.  

Redundancy of supply and supply chain robustness are now key competitive grounds for automotive semiconductors.  What costs can be passed on to customers remains to be seen.

Electric vehicle studies seem more prevalent that electric vehicles themselves at present. One of the more recent ones to cross my desk was from Boston Consulting Group (BCG), entitled "Powering Autos to 2020: The Era of the Electric Car?".

A Reuters article covering the report was titled “Consultant cuts growth outlook for electric cars”, highlighting the fact that the EV market is incredibly easy to over-forecast.  As detailed in my Insight of December last year “Electric Vehicles: What Is Different This Time?”, we have been here before.  The mid-1990s saw a huge hype-cycle, with EV concepts dominating car shows.  GM’s EV1 was gaining the sort of media coverage that most PR managers only get to dream about.  And then everything went quiet.

I’ve yet to find a single EV study authored in the last 20 years which proved to be too pessimistic.  It would seem that the statistics are not on the side of EV-optimists.

The BCG study sets its stake in the ground at a global penetration for pure, plug-in and range-extended EVs at around 6-8% of global passenger car sales in 2020, depending upon oil prices.  This equates, by my calculations, to likely volumes of 6 to 7 million vehicles.  One of the assumptions behind their data is that battery pack costs fall to around $400/kWh by 2020.  This would mean that a typical 20kW electric vehicle battery would STILL cost around $8000 in 2020.  And therein lies the problem.  All of the consumer research that we have carried out shows that car buyers have significant interest in EVs right up until the point that you ask them to pay more than they would for a conventional car.  Sure, there are some eco-motivated buyers who are willing to pay more for an EV, but I’m yet to be convinced that 7% of global car buyers fall into this category.

Strategy Analytics projections for 2020 would suggest that a pure/plug-in/range extended market of 2 to 3 million units would seem more likely.  Costs aren’t coming down fast enough and government budgets (and thus the subsidies that they can offer) are under pressure in many parts of the world.  In addition, as the BCG study rightly points out, conventional gasoline and diesel cars will become ever more fuel efficient, thus continually raising the bar for EV cost-effectiveness.

It’s at this point that you need your two heads to understand the EV market.

• Head #1 needs to see the fast growth rates.  My latest forecasts show compound average annual growth rates for pure EVs of almost 80% over the period 2010 to 2018.  That’s amazing growth.
• However, head #2 needs to understand that even these fantastic growth rates lead us to only 1 million pure EVs manufactured in 2018.

If you only have head #1, you’ll be sorely disappointed at the time it takes you to recoup your EV market investments.  If you only have head #2, you risk missing the fact that, even though we are towards the pessimistic end of the forecasting range, Strategy Analytics does believe that increased electrification of the vehicle fleet is inevitable.  It’s not a question “if”, but rather one of “how fast”.  

Remember, as the saying goes: two heads are always better than one.

Strategy Analytics previously reported (in the blog, Automotive Electronic Design Heads East) on the expansion in research and development to support the recovery in the automotive industry during 2010 and the growth in the emerging markets.  However, caution was advised because of growing uncertainty in 2011, such as the ending of government incentives, rising inflation in China and the threat of a currency crisis occurring in Europe.

While the demand continues to grow, albeit at a lower rate, in the emerging markets, Tier 1 vendors are turning more of their attention towards diversifying their customer base and towards growth application areas, such as ADAS (Advanced Driver Assistance Systems) and electrified powertrains.

Tier 1 vendors are keen on diversifying their customer base, in order to increase revenue and to lower the risk of a future economic downturn. 

• The 2009 recession heavily affected North American operations, particularly the “Detroit Three” car makers and their suppliers. 
• In 2011, the earthquake has heavily affected the Japanese car makers and their suppliers.  By spreading business on a more global scale, the Tier 1 vendor is able to offset the loss of business in one region.  It could also be argued that Japanese suppliers would not have been disrupted as badly if they could transfer production capacity to operations outside of the affected areas in Japan.

Evidence of this trend, over the last six months, can be seen in the latest Strategy Analytics "Tier 1 Vendor Regional Design Center Database".

Examples of diversifying the customer base include the opening of new technical centers outside the home market and the expansion of existing ones:

• Bosch recently completed an expansion of its Kanagawa facility, where it develops braking systems, ECUs and gasoline fuel injection systems for Japanese customers. At Memanbetsu, it intends to expand its capabilities in developing stability controls systems, to be completed by 2013.
• Garmin opened a new technical center in Novi, Michigan, having made its OEM navigation business a strategic priority - to bring about global opportunities and to win new business, such as the uConnect system for Chrysler, the integrated navigation system on the new Aston Martin Virage and navigation software for Daimler.  With an initial 20 staff, it aims to build relations with the auto makers before expanding the facility.  The company is already a leading brand in PNDs (Portable Navigation Devices).
• Johnson Controls completed its expansion of its European headquarters in Burscheid, Germany, to raise its technical competence in order to increase its business from European customers.

Examples of growth application areas affecting technical centers include:

• Bosch, in its collaboration with the Reutlingen University of Applied Sciences and the University of Stuttgart, opened a new technical center to develop power electronics for electrified powertrains in return for students attaining their PhD degrees.
• Continental recently acquired the Ottobrunn technical center from Magna International, which develops automotive radars.  It also expanded its capability in transmission control systems by opening a new center in Nuremberg, where it has also hired another 240 staff from a US$100 million investment in expanding its existing facilities in the same city, some of whom will be developing systems for electrified powertrains.
• Valeo is planning to expand its facility in Tuam, Ireland, over the next three years.  The center specializes in developing software for camera-based ADAS systems, as in the optional 360Vue system fitted to the BMW 7-Series.

Meanwhile, new technical centers are continuing to open in the emerging markets.

• China has seen at least seven new centers being opened.  Bosch, Faurecia and Key Safety Systems have opened new facilities in Shanghai, while TRW is planning a larger replacement center to open in 2013.  UAES (a Bosch joint venture) has opened a new center in Chongqing, while Valeo’s Interior Controls division aims to double the staffing levels at its newly-transferred Shenzhen center.
• In India, Bosch is to add Diesel and Gasoline Systems Electronic Controls (DGS-EC) capability to its Bangalore center.  The expansion will be completed by 2013, culminating in the hiring of 800 additional staff.  Panasonic has recently opened a technical center in Gurgaon to develop energy management and infotainment systems to its Indian customers.
• Visteon has also expanded operations at its Guarulhos facility in São Paulo State, Brazil.

Strategy Analytics believes that with increasing competition, development activity will expand towards a more global scale, not just to service the needs of new customers in new markets but also to utilize a wider pool of talent and to speed up the rate of development in a race against rivals.  However, such investments will be costly and may require collaboration with other vendors, as is the case with OEMs in electrified powertrains.

Raw Material Threat To Semiconductors – Resulting In Disruption To Suppliers and OEMs

The overall impact of the earthquake and tsunami is yet to be played out for Japan.  What is clear is there is great uncertainty regarding the full impact on the automotive electronics supply chain and potential disruption for vehicle OEM production.  Damage to lower tier supplier facilities, particularly to the semiconductor and suppliers to the semiconductor industry, varies considerably and are causing knock-on effects that will affect upper tiers and OEMs on a wider scale.  Even undamaged facilities are being impacted by rolling electricity blackouts and some water shortages.

• Immediate damage to operations has lasted for two weeks since the disaster struck (by March 25th), mainly confined to the affected Tohoku region.  This is to ensure safety inspections are carried out following a major earthquake.  Limited operations have now resumed in many facilities.  Certain upper tier vendors have also transferred some production to areas unaffected by the disaster, such as in the west of Japan.
• Full production is likely to resume four weeks or one month after the disaster struck (by April 11th), although facilities that have suffered direct damage may be closed for longer, perhaps for another two or three months.  Aftershocks in Tohoku have prevented the reopening of several plants. 
• Even when production operations resume, the immediate challenge is the lack of a continuous supply of electricity, gas and water

• Fujitsu’s wafer fabs have been idled and will not proceed to full production capacity due to a lack of water and electricity, perhaps three or four weeks later.  The facilities that have restarted production in other companies have had to operate with limited lighting to conserve power.
• Furthermore, restrictions on fuel supply and damage to transport infrastructure will mean the difficulty of transporting components, systems and finished vehicles – although Mitsubishi Motors can assemble vehicles, it is having difficulty transporting them to customers because of damaged roads, resulting in a further shut down. 
• The plants that have received direct damage from the disaster include a Toyota plant supplying batteries for electric and hybrid vehicles, causing delay to launches of new hybrid models; and the Nissan engine assembly plant in Iwaki – possible alternative supplies for Japanese vehicle assembly plants could be sourced from Decherd, Tennessee, USA. 
• Among the worst affected Tier 1 vendors include Alpine and Yazaki, where one facility remains evacuated being located close to the Fukushima power station, and Hitachi Automotive. 

However, particular concerns in the potential lack of raw materials reaching the semiconductor vendors will have a longer effect on the automotive supply chain.

• Nearly all of the world’s supply of BT (bismaleimide triazine) resin, an epoxy resin used in the packaging of some chips, comes from two plants located in Fukushima and owned by Mitsubishi Gas Chemical.  These were directly damaged by the disaster and could take three months to repair and bring back into service.  Qualcomm, meanwhile, is using its buffer stock and is making adjustments to its near-term material mix as a result.
• Hitachi Chemical also supplies 50 percent of the world’s ACF (anisotropic conductive adhesive), used in panel module driver ICs and silicon wafers, according to the China Times.
• New supplies of copper-clad laminate, which is needed in the production of printed circuit boards, have been delayed following disruption in two chemical supply companies: Mitsubishi Gas Chemical and Hitachi Kasei Polymer.  These suppliers amount to 70 percent of the world’s supply of the material. 
• Silicon wafers supply has also been disrupted. Two major plants, Shin-Etsu Chemical's Shirakawa and MEMC Electronic Materials’ Utsunomiya facilities, have stopped production. These plants reportedly accounted for 25 per cent of the global supply of silicon wafers.

A raw material shortage will restrict the production of semiconductor components and delay assembly of systems, all the way to vehicle assembly, no matter where these are assembled. 

• For example, disruption in the supply of electronic components has delayed the assembly of diesel engines at PSA Peugeot Citroën in France.
• General Motors has also blamed the shortage of parts from Japan that led to the suspension of engine assembly operations at Tonawanda, New York, and of vehicle assembly operations at Shreveport, Louisiana. 
• GM has halted or slowed production of some model due to shortages of Mass Air Flow (MAF) sensors supplied by Hitachi Automotive.
• Overtime and other shifts have been cut at other assembly plants.  For example, the supply of some infotainment systems could bring disruption to some OEMs assembling outside of Japan.
• Should problems persist with the semiconductor supply chain, knock-on disruption to OEMs may worsen by early- or mid-April, when inventories run dry.
• Leading automotive semiconductor vendor Renesas has been badly affected and is issuing regular updates on progress on restarting its worst affected wafer fabs.

A further impact will be on Japanese OEMs that have a large proportion of exports sold in North America, especially with models assembled exclusively in Japan.

• The absence of Acura, Infiniti and Lexus-branded models will enable rivals to increase their market share in profitable luxury segments.
• Volume sales of compact models, such as the Honda Fit and Scion models, will also impact on sales turnover.  By the end of March, lost car production could amount to 450,000 units in Japan and 10,000 units overseas.

The vulnerability in the electronic supply chain may bring about the substitution of raw materials or the localization of raw material production to different regional markets (away to Europe and North America).  And flexibility may also be required from the lower tiers, to bring about contingency plans to their production capabilities.

The situation at suppliers can be expected to remain fluid for weeks to come with perhaps some acute shortages coming into sharper focus.  Although this is an exceptional event, vehicle OEMs and their tier suppliers are likely to review future supply policies in light of its impact on their business. 

It will be some time before the full impact of the earthquake becomes clear. However, there is a need to provide some form of top-level assessment of the impact that the global automotive industry will see as a result of the earthquake and tsunami, insignificant as this impact is when compared to the suffering of those involved.

I have developed a simple model that attempts to quantify the possible impact on ECU demand across the vehicle domains.  It has three input assumptions:

1. the production decline relative to expected levels of Japanese OEMs in Japan
2. the production decline relative to expected levels of Japanese OEMs elsewhere
3. the production decline relative to expected levels of all other OEMs

From this it can be seen that the impact on ECU demand is ahead of the total production decline, as Japanese OEMs in Japan are expected to be hardest hit, and these vehicles typically have high ECU content.

It is far to early to get robust input figures for the model, but to give you an idea of the range of possible impacts, I've prepared the following table.  

From this it can be seen from the left most data column that a modest oveall 1.7% global fall in vehicle production, centred on the Japanese OEMs, would lead to a 1.9% decline in ECU demand, and a 4.1% drop in HEV/EV ECU demand.  

The full tool, with information by each vehicle domain, can be downloaded by Strategy Analytics AES clients here:

https://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=6194

All of us at Strategy Analytics would like to express our heartfelt condolences to everyone who has been affected by the earthquake which hit Japan on Friday.  The images are shocking and the destruction unimaginable.  

On a global scale, quantifying the impact of the earthquake is far from a priority right now.  However, a number of our clients have been asking what information we have, and so the following links collate some of the available data at the moment on how the earthquake has impacted the automotive industry.

Renesas: http://www.renesas.eu/press/notices/notice20110315.html

Toshiba: http://www.toshiba.co.jp/about/press/2011_03/pr1401.htm

Fujitsu: http://www.fujitsu.com/global/news/pr/archives/month/2011/20110314-01.html

Toyota: http://www2.toyota.co.jp/en/announcement/110312_3.html

Honda: http://world.honda.com/news/2011/c110314Earthquake-Northeastern-Japan/index.html

Nissan: http://www.nissan-global.com/EN/NEWS/2011/_STORY/110314-01-e.html

Mitsubishi: http://www.mitsubishi-motors.com/publish/pressrelease_en/corporate/2011/news/detailb315.html

Suzuki: http://www.globalsuzuki.com/globalnews/2011/0314.html

Mazda: http://www.mazda.com/publicity/release/2011/201103/110315a.pdf

Recent reports suggest that fuel economy mandates, such as Corporate Average Fuel Economy (CAFE), may soon be implemented in more emerging markets, while the US is to impose tougher mandates for the long term.

• There have been conflicting reports on how China will set future fuel economy standards, but at present, minimum fuel economy standards are set for 16 different weight categories.  Plans for the next phase are to set tougher minimum levels for an averaged equivalent of 42.2 mpg (5.6 l/100 km) by 2015 (an 18 percent improvement), with reports suggesting an averaged equivalent of 52.3 mpg (4.5 l/100 km) by 2020.
• India will also be planning a fuel economy mandate on car makers, also with varying limits depending on the weight of the vehicle.  This will replace the current Vehicle Excise Duty that varies on the size and engine capacity of the vehicle.  The change marks a shift in government policy, to persuade car makers to use technology to raise efficiency than merely to force consumers to buy smaller vehicles.
• The US Department of Transportation and the Environmental Protection Agency are planning to raise US CAFE levels to 62 mpg by 2025, having recently implemented the 35.5 mpg level for 2012.  Consultations are under way for a possible, additional carbon dioxide (CO2) emission mandate.
• Japan and Korea have also implemented fuel economy mandates based on vehicle footprint, while Europe has corporate average mandates on CO2 emissions.

Should more fuel economy mandates be implemented in emerging markets, this will mean that vendors have to quickly prepare to offer fuel efficiency systems at a lower cost and in greater volumes than is presently been offered to mature markets.

• Stop-start is now being featured on almost every new model launched in Europe, since the summer of 2010, realizing greater volumes and cost reductions through economies of scale.  According to the Strategy Analytics System Demand Forecast (Q3 2010), penetration rates for these systems are rising rapidly.
• As a result of these and other improvements, OEMs, such as FIAT and Toyota, are likely to lead the way in meeting the first European CO2 target of 130 g/km by 2012.  This is according to a report on new cars manufactured in 2009 by the European Federation for Transport and Environment. 
• The recently-launched tandem starter-alternator from Denso promises a more compact solution over current belt-driven systems.  Denso’s new stop-start starter motor is also lighter than its predecessor.
• Johnson Controls and its subsidiary, VARTA, are offering a more cost effective Enhanced Flooded Battery (EFB) as well as their current Absorbent Glass Mat (AGM) battery for stop-start applications.
• In North America, the General Motors eAssist mild hybrid system was previewed on the Buick LaCrosse. It uses a smaller battery pack and electric motor to realize a 25 percent fuel saving over the conventional four-cylinder version.  As more unit sales come from China than from the US for GM, then eAssist may see wider deployment there.
• At the same time, more hybrid and electric concepts are being previewed.  Chinese domestic car makers, such as Jianghuai (JAC), have launched EV models on the back of the Chinese government’s US$15bn plan to promote EV technology.  As consumers have less disposal income to purchase vehicles in China than elsewhere, then developments in hybrid and electric vehicles will be more cost driven.  For further details, go to the Strategy Analytics report, China Aims High For Plug-In Electric Vehicles.

This analysis is drawn from the latest Strategy Analytics EV/HEV Technologies Supply & Fitment Database and Hybrid Technologies Legislation/Support database.

Many automotive companies have a long and noble history.  They also tend to have a fairly rigid internal structure.  You have your powertrain engineers over here, your safety engineers over there, and your infotainment engineers somewhere else altogether.  

As vehicle functions become more and more sophisticated, their functionality increasingly relies on information from across numerous vehicle domains.  It makes sense to many head-unit vendors to try and integrate some driver assist functions, such as surround view.  Head units have a large, powerful processor, and access to a large screen.  What they don’t typically have is access to the camera data over a high-speed digital bus.

One view of the future is that Ethernet will become the dominant solution for moving high-speed data around the vehicle.  This is across all vehicle domains, and the vision crucially crosses the infotainment/rest of vehicle divide.

Rick Kreifeldt, Vice President, Global Automotive Research and Innovation at Harman Automotive is an enthusiastic evangelist for this vision.  Perhaps, given that he is also the AVnu Alliance chairman and president, this is understandable.

In a recent discussion with Strategy Analytics, Rick outlined his view of an Ethernet-enabled future for automotive.  He admitted that AVnu has focused on high-end professional audio/visual applications to date – but claimed that this was part of the intended roadmap.  2011 will see a vehicle OEM along with one or two Tier One suppliers and key automotive semiconductor vendors join the Alliance, he asserts.

He sees the potential for Ethernet in the vehicle as huge, with a future vehicle architecture potentially containing only Ethernet and low-speed CAN buses.  No LIN.  No FlexRay. No MOST.

It’s still far from certain how soon – or if at all – this vision will be realized.  As explained already, and highlighted by Rick, the internal structure of many automotive companies is an active block on pursuing this approach.

Strategy Analytics believes that the first major casualty may well be MOST.  Although volumes are likely to grow further for a few years (a volume OEM is expected to launch soon, and Audi and Mercedes Benz are committed to MOST 150 rollout) – by 2015 or so MOST could well be in decline.

The bigger – and as yet far from answered – question, however, is the relevance of this to mainstream vehicles.  MOST and FlexRay have been solutions that have found application almost exclusively on high-end vehicles and prestige brands.  Will the conventional CAN/LIN vehicle architecture be a bottleneck for the Ford Fiesta class vehicles of 2020?  If Ford can implement Sync using nothing faster or more exotic than USB 2.0 and CAN, is Ethernet an engineer’s solution to a problem that largely doesn’t exist?

When it comes down to it, Rick sees Ethernet in the car as coming down to the silicon ecosystem.  The range of products and suppliers – together with his prediction of Ethernet’s future ubiquity in vehicle diagnostic systems – could tip the balance.

“There’s a convincing economic argument for Ethernet-enabling each vehicle ECU based upon flash/re-flash times alone” he reckons.  “Hey, if it’s in there and already paid for, you’d be crazy not to use it.”

We’ll see.  There are still big blocks and vested interests that are far from sold on Ethernet.  Some of those heavily involved in Ethernet are also forging their own paths and own standards.  It would still seem unlikely to us that a 2020 Fiesta class vehicle will have an Ethernet-enabled architecture.

But if you’re a vendor with significant LIN, MOST or FlexRay revenues, it’s certainly something worth thinking about.  And if you’re an OEM or Tier One with high and wide internal walls, it could be the push that gets those barriers a-tumbling down.