Driving the Future of ADAS: Navigating Consumer and Government Demand Denis Ulicny Senior Industry Analyst WardsAuto

Purpose To highlight how consumer demand and government regulations are defining the market for Advanced Driver Assistance Systems (ADAS) Where the trends converge and work together Where the trends diverge and one needs to lead the other What are the options to make it happen

Global Trends Significant trends that impact consumer/business/regulatory behavior Can be regionally based or global 2 significant global trends are: Demand for safety and security The need for government to regulate Others include: People living longer Connectivity Concern for the environment Increased demand for natural resources Demand for convenience

Source: IIHS/HLDI

FMVSS Divided into 3 categories 100 series – Crash avoidance 105 – Hydraulic and electric brake systems 126 – Electronic stability control systems 138 – Tire pressure monitoring systems 200 series – Crashworthiness 208 – Occupant crash protection 214 – Side impact protection 300 series – Post-crash survivability

FMVSS - Results Between 1966 and 2014: Annual vehicle deaths on the road decreased from 50,894 to 32,675 1966 – 54.9 deaths per billion vehicle miles traveled 2014 – 10.8 deaths per billion vehicle miles traveled 2015 witnessed a spike in motor vehicle fatalities 38,300 deaths (NSC estimate) Boston Consulting Group estimates that wide availability of ADAS technologies could save nearly 10,000 lives and $251 Billion annually Source: IIHS/HLDI

Automotive Safety – Need to Improve 2015 statistics have clearly caught the attention of regulators Improvement from 1966 – 2014 is clear, but so is the need for further improvements, given the numbers Growth in the number of vehicles in operation has grown from approximately 91 million (1967) to 258 million (2014) Source: WardsAuto.com

Safety Is Maturing Over Time

Autonomous Driving Levels Source: SAE

Advanced Driver Assistance Systems (ADAS) The next phase of active safety Most recognizable forms today include: Adaptive Cruise Control Park Assist Lane Departure Warning/Lane Keep Assist Rearview Camera Blind Spot Detection Forward Collision Avoidance(FCA)/Forward Collision Warning(FCW) Automatic Emergency Braking

Advanced Driver Assistance Systems (ADAS) Some lesser known systems include: Adaptive Light Control improves the headlamp illumination by means of continuous adaptation of the headlamps according to the current driving situation and current environment Driver Drowsiness Detection Steering pattern monitoring Primarily uses steering input from electric power steering system. Vehicle position in lane monitoring Uses lane monitoring camera. Driver eye/face monitoring Requires a camera watching the driver's face. Physiological measurement Requires body sensors for measure parameters like brain activity, heart rate, skin conductance, muscle activity.

Advanced Driver Assistance Systems (ADAS) Some lesser known systems include: Hill Descent Control Works in a similar fashion to adaptive cruise control, where the ABS controls each wheel’s speed Intelligent Speed Adaptation System that ensures that vehicle speed does not exceed a safe or legally enforced speed. In case of potential speeding, a human driver can be alerted, or the speed reduced automatically.

Driver Assistance Features Source: IIHS

ADAS – Current Market % Factory Installation on U. S ADAS – Current Market % Factory Installation on U.S. Vehicles – 2015 Model Year Source: WardsAuto.com

Advanced Driver Assistance Systems (ADAS) The market has been slow to develop due to: Technical reluctance of the customer Consumer needs to be better educated Consumer needs to trust the technology Limited levels of mandating by the federal government Willingness of the consumer to pay doesn’t necessarily match the cost of the technology

Where the Trends Diverge Cost to Consumer Willingness to Pay Gap Surround View Systems $900 $380 $ (520) Park Assist $250 $190 $ (60) Lane Departure Warning $400 $170 $ (230) Blind Spot Detection $600 $270 $ (330) Adaptive Cruise Control/Forward Collison Warning/Forward Collision Assist $1,500 $470 $ (1,030) Automatic Parking $ 400 $230 $ (170) Source: Boston Consulting Group/MEMA

Source: IIHS/HLDI

ADAS Adoption Source: IIHS

Fully Autonomous – Ultimate ADAS Some questions regarding full autonomy include: Will weather affect it? What about older vehicles not equipped? Aftermarket availability and cost Can the car be hacked?

Cyber Security – Something Else for the Consumer to be Concerned About What motive(s) would someone have to hack a car’s system??? Data theft Extortion/denial of service threat Fraud and deception (altering or deleting logs) Freight and goods theft Ideological Immobilization General mischief Premises security and burglary Source: Knowledge Transfer Network

Cyber Security – What is Being Done to Make Sure it Doesn’t Happen? Auto-ISAC (Information Sharing Advisory Center) Initiated by Alliance for Automobile Manufacturers Joined by Association of Global Automakers, and parts supplier Delphi Creates a voluntary information sharing and analysis center for the industry Intends to bring together 25 automotive manufacturer members with other industry and government stakeholders Currently, 15 OEM’s are members Source: Knowledge Transfer Network

ADAS and the Movement Towards Fully Autonomous Commercial Vehicles A natural fit…some might argue even more than light vehicles Over the Road Off-Road Incremental cost estimated at $30K per vehicle Forecasts global sales of 8K units by 2025 and 182,000 units by 2035 Source: Frost & Sullivan (picture courtesy of Daimler)

Recent Happenings Google to open test driving development center in Novi, Michigan GM closes purchase of Cruise Automation Google and FCA sign deal to build 100 self-driving minivans Toyota made clear plans to invest $1B over the next 5 years to develop technology Rearview cameras to be standard technology starting in 2018 20 manufacturers have committed to making forward collision warning and automatic emergency braking a standard feature by September, 2022

Conclusions ADAS will continue to gain momentum as it responds to several major global trends Safety and Security/Government regulation U.S. consumers EXPECT their vehicles to be completely safe Increase in the number of drivers and vehicles on the road increases chances for accidents People living longer Creates more drivers, and they will drive longer Also will assist disabled drivers Increased connectivity Home, office, car…all the same thing Convenience Need for more useful time…creating more opportunities to be distracted The exact timing isn’t etched in stone Will be defined by industry cooperation and government mandate The world will not come online together What impact might companies like Google and Apple have??? Both are recruiting considerable automotive talent

What can be done to make sure ADAS happens sooner rather than later? Government mandate NHTSA leader considering changing procedure to allow more flexibility in regulations (dynamic, change over time) Currently, a regulation takes 8 years to be completed Build insurance company support Consumer discounts (According to the Boston Consulting Group, Allianz offers a 20% discount on selected Subaru products equipped with Eyesight technology, which is a front crash avoidance system) Insurance companies need more empirical data before they agree Educating the public Knowledge builds confidence http://www.iihs.org/iihs/ratings/crash-avoidance-features Allows you to search by year and make to see which technologies are optional or standard on which models Incentivizing the sellers of the technology Trading CAFÉ credits Incentivizing the consumer Similar to electrified vehicles or fuel efficient home improvements Extend to retrofit market

ADAS WILL CONTINUE TO DEVELOP Trends demand it Government wants it Society NEEDS it The most important consideration remains getting the consumer to embrace it.