Are Autonomous Cars Disrupting the Supply Chain?: Page 2 of 3

In the development of self-driving vehicles, Tier Two suppliers say they’re communicating directly with automakers in ways they hadn’t previously.

invested more than $1 billion in tiny Cruise Automation last year, while Ford invested in Teledyne Lidar, Inc. Again, both would technically be considered Tier Twos.

To be sure, Tier Ones are no less involved in these arrangements than OEMs. Delphi Corp., too, has partnered with MobilEye, as well as with Lidar maker, Quanergy Systems, Inc. Bosch recently teamed with Nvidia on “deep-learning artificial intelligence” and Continental acquired a division of Advanced Scientific Concepts that makes Lidar sensors.

The upshot is that, when it comes to autonomous cars, the auto industry is now a patchwork of partnerships between OEMs, Tier Ones and Tier Twos. The straight-line hierarchy is fading fast.


Increasingly, OEMs are forming partnerships, or even acquiring, suppliers. In 2016, GM president Dan Ammann (right) greeted Cruise Automation co-founders Kyle Vogt (center) and Daniel Kan (left) after the giant automaker acquired Cruise for an estimated $1 billion. (Source: GM)


Some Tier Two suppliers, as well as automakers, say that the autonomous partnerships are merely the visible part of the changing landscape. Direct line communication between OEMs and Tier Twos, they say, has been quietly taking place for nearly a decade.

“It’s been happening in infotainment, cockpit instrumentation and safety systems,” Amrit Vivekanand, vice president of automotive for Renesas Electronics America , told Design News. “What’s new is that the OEMs want to take a more direct hand in the selection of silicon. And the discussion about Level 5 autonomy is accelerating those relationships.”

What’s also new is the added element of public urgency. In 2016, the National Highway Traffic Safety Administration (NHTSA) mandated the addition of automatic emergency braking as a standard feature on all new vehicles by 2022. That’s a concern for automakers because it means that the average vehicle could have as many as six radar sensors on board in a few years, compared to one today. And that, in turn, translates to a sudden bulge in the automaker’s bill of materials, because radar sensors and associated parts typically cost $50 to $80 each.

“By 2022, we’re going to have to take a zero off that figure because radar will no longer be a premium option,” Jacobs said.

The same goes for Lidar (light detection and ranging) systems. The best Lidar systems today are pushing $8,000, which is an unrealistically high cost for most vehicles. Again, automakers are looking to cut that cost, and they need to partner with Lidar developers to make it happen by the 2030 time frame.

Software, too, is driving a need for partnerships. The proliferation of cameras, radar and Lidar sensors means that automakers suddenly have a dire need for sensor fusion software to help them sort through the sea of signals being transmitted to the vehicle’s processors.

Mentor Automotive, which recently unveiled a sensor fusion package called DRS360, said it has seen a sudden surge in direct communication from automakers. “They explained to us that they wanted to develop their own unique capabilities,” Glenn Perry, vice president and general manager of Mentor Graphics Embedded Systems Division , told Design News.

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