Q3 2022 revenue increased 8% YoY to reach ₩16.12 trillion helped by higher sales of vehicle solutions.
Vehicle solutions revenue jumped 46% YoY during the quarter, helped by the improved global semiconductor supply and increased auto production in China.
Operating profit increased 33% YoY to reach ₩0.79 trillion.
LG Electronics (LG) reported an 8% YoY growth in Q3 2022 revenue to reach ₩16.12 trillion despite considerable macro headwinds but helped by higher sales in its vehicle solutions and business-to-business segments. Quarterly gross profit rose 5% YoY to ₩5.05 trillion while operating profit grew sharply by 33% YoY to reach ₩0.79 trillion.
During the quarter, investor sentiment was weak due to a steep devaluation of the South Korean won against the US dollar, hurt by strong economic headwinds. The Korea Composite Stock Price Index (KOSPI) fell 6.5% in Q3 2022, which negatively affected LG’s performance.
Financial highlights:
Revenue from the consumer electronics segment fell 1% YoY to ₩11.19 trillion due to increased logistics costs and lower demand for premium products like TVs. This segment contributed to 69% of total revenue during the quarter.
Among all the segments, vehicle solutions was the best performer. The segment’s revenue jumped 46% YoY to ₩2.35 trillion during the quarter helped by the relative improvement in the global semiconductor supply chain. The segment accounted for 15% of the company’s total revenue. China faced a lot of factory shutdowns in the preceding quarter due to regulations related to the COVID-19 pandemic. As factories reopened in Q3, there was an increase in production which helped meet the heightened demand for electronics components in the automotive industry. This, combined with an improved cost structure, helped LG achieve strong growth figures for the period.
Revenue from other businesses grew 23% YoY reaching ₩2.60 trillion. Despite an increase in sales, the profitability of this segment decreased 63% due to lower demand for IT products and higher raw material costs.
LG’s gross profit increased 5% YoY to reach ₩5.04 While the company’s operating profit grew sharply, gross profit growth was relatively muted because of increased market competition, low consumer demand, increased raw material prices, increased marketing expenses and the energy crisis.
Market outlook:
The current global business environment is quite difficult, burdened by rising inflation, supply chain disruptions, geo-political tensions, increased logistic costs and the energy crisis, which have weighed negatively on consumer sentiment across industries. LG plans to prioritize on the development of new software platforms and adjust its channel inventory to overcome the ongoing crisis. LG will focus on its premium consumer electronics products and will likely maintain maximum margins to secure high profits. The company will also apply cost-saving initiatives to reduce raw material costs.
The vehicle solutions segment has the highest potential to expand as the global semiconductor shortage is easing out and OEMs like Honda, GM and Stellantis are working to jointly produce battery cells. Moreover, LG has secured an order worth ₩1 trillion from Tesla to supply automotive camera modules for the Tesla Model 3, Model Y and Cybertruck. These new deals will drive LG’s vehicle solutions segment to a great future.
LG is also strengthening its focus on new technologies like metaverse and robotics. It recently partnered with KT Corporation to expand its AI robot service business. LG will also establish an R&D centre and develop robots for logistics, education and healthcare services. LG’s strategic partnership with TmaxMetaverse will boost development across metaverse solutions and web-based metaverse services. The company will have the opportunity to capitalize on these technologies by the time they mature at the end of the decade, which will help it boost revenue.
India’s Connected Vehicle event is back offline after two years. Held in Bengaluru from May 4 to May 6, the event saw attendance from the chipset, NAD module, telematics, cybersecurity and mapping domains, besides regulatory bodies and communication service providers within the connected and autonomous vehicles ecosystem. Analysts from Counterpoint Research were also present. Here are their key takeaways from the sessions held at the event.
Connected, Autonomous, Shared, Electric and Smart Mobility
India is lagging in connected car penetration (17%) compared to the global market (43%). However, the country is also preparing for a shift towards smart electric mobility and focussing on local manufacturing. Such events will help Indian ecosystem players to remain updated on the latest in the field around the world and prepare themselves for the coming transformation.
5G Automotive Association, Tata Elxsi, Dell and what3words participated in this session and discussed the need for C-V2X technology for better communication, opportunities for ecosystem players from connected mobility, a paradigm shift from hardware to software-centric approach and a unique mapping solution that uses three keywords.
Source: Counterpoint Research Smart Automotive Services, 2022
Shifting Future of Automotive Industry to Top Gear with Connected Mobility
The rising demand for safety and comfort features is helping to increase connected car penetration. We expect more than 70% of cars will be connected by 2025 in the global market and one in four cars will have 5G connectivity. However, connectivity penetration will be lower than 40% in India by 2025.
This session mainly focussed on safety during driving, challenges in handling data generated from vehicles, creating actionable insights from telemetry data, and collaborative effort among OEMs and Tier-1 suppliers to make this transition smooth. Intel, Zeliot, VE Commercial Vehicles and Danlaw shared their understanding of this transition.
Driving Towards Connected, Secure, Autonomous & Electric Mobility
In the future, cars will be driven by software. We have already witnessed smartphone players such as Foxconn and Xiaomi entering this market. Data will be the new fuel and nearly 30% of the automotive market value will come from software and services. Moreover, electronic content in a car will rise with increasing smart electric mobility penetration.
According to Counterpoint’s latest research, India’s automotive electronics market will triple by 2027, driven by rising income levels and increasing customer preference for in-vehicle digital experience.
Collaborative efforts of all ecosystem players, whether OEMs, Tier-1 suppliers, regulatory bodies, system integrators or service providers, are important for a successful transition. The Indian government is also working to come up with AIS189 and AIS190 standards for connected vehicle security. Continental and Bosch share the same view on this topic and think a collaborative effort will be the key to connected mobility success in India. Secure Things highlighted how our vehicles are becoming more prone to safety issues and hacking. Both hardware and software level security will be required as preventive measures.
Emerging Technologies – Riding the Next Wave of Connected & Autonomous Mobility
Connected mobility is undergoing dramatic changes. Earlier, we used to connect smartphones to a car via Bluetooth or cable. Today, most cars come with embedded connectivity. In the future, cars will be able to communicate with other vehicles, pedestrians, networks, infrastructure, grid and home.
The upcoming connected and autonomous era will induce a huge influx of data for which substantial storage will be required. We expect Level 4 cars will require more than 1TB of data storage by 2025. Moreover, 30% of cars sold globally will support Level 2 or above. Western Digital is working on automotive storage products. It believes that one day storage will be a key feature at the time of selecting a vehicle. During this session, Bosch introduced Mobility Cloud Platform and Mobility Marketplace. This platform can support other IoT applications such as industrial and enterprise.
Download the full analysis from event sessions below:
ADAS – A Game Changer for Safe and Autonomous Driving
MG Motors introduced ADAS in India for the first time back in 2019 through its L1 SUV Hector. Even as ADAS technology is rapidly gaining acceptance in the global market, India is not that far behind. Currently, L2+ autonomy is being offered in most premium vehicles. With the changing landscape of vehicle architecture, the incorporation of ADAS will be easier and more cost-effective.
Windriver and Hexagon showed how the changing vehicle architecture will benefit system integration and deployment of autonomy. While Windriver has expertise in test and analysis of vehicle architecture and software and ADAS system, Hexagon helps deploy autonomy across sectors and platforms by blending the digital and physical worlds. Hexagon uses ML algorithms to create a simulation through well-captured surround photos. The simulation helps understand how a situation will look with automation, and also increases the accuracy of the automated process.
Shaping the Future of Mobility with IoT, Connectivity & Sustainability
The mobility roadmap is hugely dependent on connectivity. OEMs are constantly innovating to make the journey more pleasurable with better IVI system, better navigation, CV2X and ultimately autonomy, which will not be possible if a proper vehicular connection is not established. According to our research, global cellular IoT module shipments are expected to cross 1.2 billion units by 2030 with a CAGR of 12%. 5G will be the fastest-growing (60%) technology, followed by 4G Cat 1 bis, during 2022-2030. Among cellular IoT modules, global NAD module shipments are expected to reach 80 million by 2025, growing at 14% CAGR from 2021, with one out of every five connected cars projected to have embedded 5G connectivity by then.
Leading frontline companies like Cavli Wireless and MediaTek have shared some details about how they plan to increase connectivity across the automotive industry. As the future bets on autonomy, connectivity benefits are not just limited to in-vehicle internet browsing and autonomy but also extend to vehicle accident prevention, better navigation, precise tracking and more. In short, increased connectivity will enable a sustainable digital ecosystem that, if used properly, holds immense development potential.
Intelligent Transportation System to Promote Safety & Improve Mobility
Increased vehicle connectivity has made transportation safer, more reliable and timelier. Along with changing architecture and increased integration of improved software, the addition of newer technologies is becoming easier.
Intellicar, Skoda, and IBM took the stage to showcase how intelligent transport solutions could tackle some of the general and critical issues of the industry. Intellicar has a solution line from hardware and firmware customization to a low-latency data directory. Skoda showed how intelligent systems can reduce road accidents. IBM provided a global overview and discussed its strength as a software developer and system integrator.
Protecting Software-defined Vehicles with Cybersecurity Solutions
With the increased use of software and internet, present-day cars are no less than a computer and like every other computer, cars are also exposed to cyber threats like malware. If the system used in vehicles is not properly protected, a lot of damage can happen, including loss of life. Therefore, strong and effective anti-virus protection with an improved firewall is much required.
Escrypt, a cyber threat protection company, was of the view that vehicle data safety could be ensured through blockchain-based communication systems, smart gateways, cyber digital twin, AI-based detectors and other encryption systems.
Charting the Future of Connected Mobility with Automotive Telematics
The growing automotive sector holds a lot of potential for the development of new and smart technologies. The transition from conventional vehicles to EVs is also paving the road toward a sustainable connected future. Technologies that were limited to certain fields earlier are finding their way into the expanding automotive space. The use of security systems, blockchain, data tokenization and other platform-based and protocol-based technologies and services is penetrating the automotive space, making the sector more flexible, versatile and user-friendly.
Source: Counterpoint Research Smart Automotive Services, 2022
Market Outlook
Emerging technologies such as ADAS/AD, in-vehicle connectivity, upgraded cybersecurity for the software-defined vehicles, electric vehicles and connected vehicles are taking centre stage as the automotive industry undergoes a paradigm shift. The automotive supply chain is dynamically changing as well, with OEMs making huge investments and starting to adopt digital services to remain future-proof and not cede revenue monetizing opportunities to technology companies. Apart from traditional auto OEMs, the involvement of non-automotive tech companies has been increasing in this space. The future of the automotive sector will be heavily dependent on digital technology. Due to traditional auto OEMs’ lack of expertise in digitalization, non-automotive companies are partnering with them to secure a market share in this growing space.
Revenue reached a new record high of $14.48 billion during the quarter.
Operating profit recovered to a respectable level.
Other businesses registered the highest QoQ revenue growth of 51%.
In 2021, LG shut its smartphone business, which was generating nearly 6% of its total revenue. The closure of this segment has not affected the company much. LG’s revenue increased by more than 16% YoY in Q1 2022 to reach a new record high of $14.48 billion. 46% of this revenue was generated by strong demand for premium products across overseas markets. LG Innotek’s numbers are not included in this analysis.
Revenue from the vehicle solution business grew sequentially. Vehicle sales have been facing a tough time globally due to component shortages but LG is benefiting from the slight rebound. It has also signed deals with leading auto OEMs like Mercedes-Benz, to whom it will provide ADAS and cockpit solutions. Besides the electronics and vehicle solution segments, LG’s other businesses also witnessed growth in Q1 2022. There has been a sustainable growth in the sales of products for the B2B segment. Moreover, LG’s energy-related solutions (LG Chem) business, which has been included in other segments, contributed to a steep revenue rise. Price hikes of certain high-demand products also contributed to the high revenue generation during Q1 2022.
The revenue could have been more in the absence of the latest COVID-19 lockdowns in China and the Russia-Ukraine war. Also, the restricted supply of a few key raw materials and increased logistics costs negatively impacted the production.
Q1 2022 Financial Highlights
Revenue from the consumer electronics segment stood at $10.03 billion, an increase of 3.2% QoQ. This segment contributed to nearly 69% of the total revenue.
Revenue from the vehicle solutions segment stood at $1.56 billion, an increase of 13.3% QoQ. This segment contributed 10.8% of the total revenue. By strengthening business risk management and continuously improving the cost structure across products, LG reduced this segment’s losses by 33% in just two quarters.
Revenue from other businesses reached $2.89 billion, an increase of 49% QoQ. This huge increase was due to the transfer of LG’s electric battery business to this segment from the vehicle solutions segment.
LG’s gross profit reached $4.93 billion, a 28% QoQ increase. Gross profit was down during the last quarter due to supply chain disruptions following COVID-19 and increased raw material prices.
Market Outlook
LG Electronics’ future looks promising with the adoption of newer and advanced technologies across segments. Technologies like Plug-in for Intelligence Equipment (PIE) and Machine-learning based Vision Inspection system (MAVIN) are helping the company to minimize material loss and logistic delays. All these developments will have a positive impact on the coming quarter’s financials.
In the vehicle solutions segment, we expect to see a rise in business as demand for smart car technology combined with increased demand for in-vehicle connectivity is increasing. Being a leader in this segment, LG will leverage its position by forming various JVs and partnerships that will boost its future revenue generation from this segment. Apart from providing hardware solutions for automotive, LG is also entering the automotive software solutions space with its recent acquisition of TISAX and Cybellum.
Apart from the electronics and vehicle solutions segments, developments in LG’s other segments like energy storage and sales have been noteworthy. Recent partnerships for energy solutions have provided the segment with the necessary boost. Moreover, the increasing demand for EVs will only help the energy solution segment to grow from this point onwards.
In 2021, 4G cars were 90% of total connected car shipments.
5G cars are expected to be a quarter of connected cars by 2025.
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – February 15, 2022
The global connected car[1] market remained resilient in 2021 despite ongoing problems such as semiconductor shortages, production losses, cost inflation, and freight disruption. According to the latest research from Counterpoint’s Smart Automotive Service, 4G-enabled cars are reaching maturity in developed countries like the US, China, Germany, and the UK, alongside the entrance of 5G TCUs, which make use of real-time data transfer and fast cloud-car communication, among other improvements.
The semiconductor supply problem proved to be detrimental to the entire auto industry. OEMs like General Motors and Ford suffered significantly with thousands of cars sitting idle in parking lots waiting for chips to arrive. Such automakers are using a “Build-Shy Strategy” whereby cars are produced with available components and then kept aside until the required resources are acquired to complete them. This can be useful in the short term as it keeps the operations running, but there is no guarantee for how long the cars will remain unutilized. The shortages forced automakers to resort to different ways to minimize losses and avoid disruptions, such as diverting chips/inventory to more profitable models, removing certain features, and increasing vehicle prices. For example, BMW and Renault were selling certain models without digital screens while Nissan and Ford were doing so without navigation systems.
Commenting on the global connected car market’s performance, Senior Analyst Soumen Mandal said, “The shift towards digitization in cars is increasing at a rapid pace and is visible as the global connected car penetration has been on a consistent rise. As countries worldwide further strengthen their 4G network coverage and embrace next-generation cellular technology, we can see more connected cars coming to market with advanced safety and comfort features.”
“The US connected car market grew 16% YoY in 2021 with almost all players except General Motors shipping more connected cars as compared to the previous year. We see a dip in GM’s connectivity penetration thanks to its low overall sales and the removal of certain smart features from its portfolio. GM temporarily halted its ‘Super Cruise’ feature that enabled hands-free driving on highways in its flagship Escalade SUV. Other features that were discarded included auto start-stop, fuel management software, wireless charging, heated seats, and HD Radio in models such as Chevrolet’s Silverado and GMC’s Sierra. Despite the supply chain constraints and chip shortages, GM reported a 3.7% and 47% YoY growth in revenues and profits respectively for 2021. Supply chain disruptions and low inventory forced GM to slip to second place with Toyota moving ahead and becoming the first-ever foreign automaker to lead the US vehicle market.”
Mandal added, “China overtook the US in connected car shipments in 2021 and will continue to dominate the market through 2025. Other notable regions seeing growth include Europe, namely Germany, UK, and France. The increasing new electric vehicle registrations in Europe are a good indicator of the increasing connected car penetration in the region. In 2021, the leading battery electric vehicle (BEV) producer in Europe was Tesla, followed by VW and Renault. As we move towards an electric future, other brands like Hyundai and Fiat, which already have top-selling BEV models in their portfolios, will make the EV market more fragmented by introducing more models.”
In 2021, the automotive industry saw the first global deployment of a 5G-enabled car, BMW’s iX model. It was launched first in Germany in November, followed by shipments worldwide. Commenting from the connectivity perspective, Research Vice-PresidentNeil Shah said, “China, which is already the leader in 5G connected cars due to better network infrastructure and government support, will see new models enter the market in 2022 from brands including Chevrolet, Geely, Buick, Ford, and BMW. Furthermore, 5G car models such as the Arcfox Alpha T, Roewe Marvel R, and Great Walls 3rd Gen Haval H6, which were launched in 2020, will continue to gain traction. From 2023 onwards, we will see bigger players like SAIC and BAIC entering the market.”
Shah added, “By 2025, however, the 5G car market landscape will shift dramatically as the current global leaders will have penetrated the market with their next-generation offerings. We expect one in four cars to have 5G connectivity by 2025.”
[1]The connected car data here refers to only passenger cars with embedded connectivity.
Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.
In 2020, 92% of connected cars in the US were using 4G LTE networks.
80 million new connected cars will be added in the US during 2020-2025.
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – July 7, 2021
The US connected car market managed to weather the COVID-19 storm with a moderate decline of 6.8% YoY in 2020, according to the latest research from Counterpoint’s Smart Automotive Service. The cumulative connected car shipments in the US are expected to cross 80 million units during 2020-2025 with a CAGR of 10%. The connected car data here refers to only passenger cars with embedded connectivity.
H1 2020 proved to be painful for automakers worldwide, with most of them forced to shut down their manufacturing facilities to curb the spread of COVID-19. In the US specifically, from March onwards, most OEMs, including Ford, GM, Volvo, Toyota and Honda, suspended their production for nearly two months. Other factors that exacerbated the production delays included the semiconductor shortage, the storm in February that knocked US Gulf chemical plants offline, and massive blackouts due to cold weather that led to petrochemical shortages. US car sales continued to recover during H2 2020, declining 3% YoY compared to 21% YoY during H1 2020.
Commenting on the US connected car market, Research AssociateFahad Siddiqui said, “Connected car sales grew 2% YoY during H2 2020 mainly driven by a growing preference for connected services and late entrants like Toyota and FCA catching up with mainstream brands like GM and Ford. GM remained the market leader, accounting for a quarter of the market in H2 2020. In collaboration with AT&T, GM has been offering OnStar 4G LTE connectivity in its vehicles since 2015. Today, more than 95% of its cars offer embedded connectivity, with customers enjoying a host of services ranging from hotspot and navigation to vehicle diagnostics. It is the plethora of services that a connected car offers right at one’s fingertips that attracts customers towards it.”
He added, “Collaborations with telecom operators are helping automakers deploy cars with embedded connectivity faster than before. AT&T has more than 30 brands using its network, some notable ones being BMW, Ford, Chevrolet, Jaguar and Honda. Verizon’s connected car portfolio, on the other hand, has a handful of OEMs, including Toyota, VW and Mazda, with plans to add more soon. AT&T is the preferred telecom operator due to the variety it offers in its data plans, customizations for specific vehicle models, and its collaborations with manufacturers to speed up research and development in the connected car ecosystem.
Research AnalystSoumen Mandal said, “The US connected car market is becoming mature. OEMs’ electrification plans and push for driverless technology are helping speed up this process. GM has increased its budget for electric and automated vehicles from $20 billion to $27 billion and plans to launch 30 new EVs globally in the next five years (over 20 of these are planned for North America alone). In 2022, GM will launch 5G-enabled cars in China followed by the US region. Ford, on the other hand, plans to deploy cellular vehicle-to-everything technology (C-V2X) in its models in the US beginning 2022.”
Speaking from the connectivity perspective, Research Vice-presidentNeil Shah said, “In 2020, 4G LTE cellular connectivity had a mammoth share of 92%. Going forward, we can expect 4G penetration to increase, with 3G being phased out slowly. 5G-enabled cars entered the market in 2020 but they were limited to China only. The US will see 5G cars in the market from 2022 onwards with BMW and Ford leading the foray. By 2025, 5G cars will account for more than a quarter of the connected car market. With the growing adoption of 5G connectivity, there is a need to make use of C-V2X technology for improved safety features, better infotainment options and a greater capacity to process large amounts of real-time data. Automakers’ bullish sentiments toward electrification and aggressive plans for employing 5G technology will help TCU suppliers in expanding their 5G portfolios.”
Feel free to reach us at press(at)counterpointresearch.com for further questions regarding our latest research and insights, or for press enquiries.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Apple supplier Foxconn, with an aim to diversify its business and reduce overdependency on Apple for revenue generation, is betting big on electric vehicles (EVs). During the Hon Hai Tech Day 2020 (HHTD 20) event on October 16 last year, the company launched MIH, an “EV software and hardware open platform”, with an aim to position it as the “Android system of the EV industry”.
Foxconn is not new to the automotive industry. It has already entered partnerships with Yulon Group and FCA Group to produce EVs, provide parts and handle supply chain management. But will the self-declared aim of becoming the Android system of the EV industry make it a threat for traditional automakers? To find the answer, we will have to understand the extent of Foxconn’s ambitions in the automotive space.
MIH to target both software and hardware ecosystems
With the global smartphone industry maturing, Foxconn is looking for an alternative business opportunity. EVs and autonomous vehicles (AVs) perfectly fit into this strategy because here Foxconn can use its existing expertise in automotive and smartphone component manufacturing. However, Foxconn has no plan to make cars under its brand name. Instead, it will manufacture cars for its partners, just like it assembles phones for Apple.
Most of the automakers are using a closed system for developing cars. But Foxconn is aiming to build an open EV platform where any automaker can alter the design to meet specific requirements. Tesla is using its own platform to build EVs, just as Apple does in the smartphone industry. Since Tesla has come a long way in the race for EV industry dominance, Foxconn wants to become the Android of the EV industry. Getting into a partnership with a major automaker will be a challenge as such automakers may not be interested in sharing their core expertise with an open platform.
In the age of AVs, the software will play a crucial role. Foxconn is trying to tap this segment by having a software system that allows automakers and service providers to offer unique features.
Right partnerships to drive success
Foxconn has entered a partnership with Chinese EV start-up Byton, which is facing insolvency, to revive its EV brand. Foxconn is targeting to produce the M-Byton model starting 2022.
Foxconn has inked another partnership with Geely Holding Group to provide customised consulting service to automakers working with CASE (Connected, Autonomous, Shared and Electrified) technologies.
Apple is in talks with Hyundai Motor to build a pure electric autonomous car from 2024. It will be interesting to see how the iPhone maker and assembler compete in the same segment. Or will Foxconn start manufacturing cars for Apple as it does for its phones? the next couple of years, we may also witness more smartphone makers entering this space.
Whatever may be the situation, right partnerships with ecosystem players and the presence of an experienced leadership team will play a vital role in the success of the business.
Industry veterans to aid in faster development of MIH
Foxconn has hired an experienced leadership team for the MIH platform, which indicates that it is serious about this foray. Jack Cheng, who is a co-founder of NIO, ex-MD of Fiat China and chairman of XPT, besides earlier working with Magneti Marelli and Ford Motor, has been appointed as the CEO of MIH platform. William Wei has been appointed as the chief technology officer (CTO). He has more than 20 years of experience in internet and mobile computing which can help Foxconn build a software-powered car like Tesla.
MIH has already more than 400 partners, with ecosystem players like Amazon Web Services, Mediatek, Qualcomm, ST Micro, Texas Instruments, Eaton and Dana. Foxconn also launched an EV developer kit technical specification on January 31, 2021, displaying seriousness about following the declared timeline.
Foxconn’s aim goes beyond EV platform
As part of a new strategic plan, named 3+3= ∞, Foxconn is focussing on three emerging technologies: EVs, digital healthcare and robotics.
As part of a long-term plan, it is trying to become a key supplier for the EV and AV ecosystem. It is already working with CATL and SES to develop its solid-state battery by 2024, while aiming to get a 10% market share in the EV component and services industry by 2027.
Foxconn is also trying to build a state-of-the-art battery management system (BMS), powered by cloud-based artificial intelligence (AI) to improve battery efficiency.
Some airport shuttle buses with Level 3 autonomy and one of the smallest LiDARs (A15) in the world are supported by Foxconn technology. The MIH platform is being readied for 5G, 6G over-the-air (OTA) update and vehicle-to-anything (V2X) communication. Therefore, Foxconn is preparing for the connected and AV space in future. However, it may face strong competition from Qualcomm and Microsoft in this segment.
Counterpoint’s take
As Foxconn is not interested in building its car brand, it may not be a threat to major automakers. But EV component suppliers may face stiff competition from Foxconn. Scalability and price will play a key role in the selection of component players by EV makers.
Large automakers with a clear goal of electrification may not be interested in an open platform as it may raise questions of security and intellectual property. However, small players and start-ups will be more interested as a shared open platform will require less investment.
Continental, LG, and Harman together account for a majority of global TCU shipments.
One in four TCUs shipped in 2025 will be 5G-enabled. Automakers will focus on future-proofing their cars, accelerating the adoption of 5G TCUs.
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – January 28, 2021
The Telematics Control Unit (TCU) market is expected to grow at a compound annual growth rate (CAGR) of 14.4% during 2020-2025, with the market value surpassing $6.3 billion by 2025, according to the latest research from Counterpoint’s Smart Automotive service. The TCU data here refers to both passenger and commercial vehicles. Higher penetration of connected cars employing 4G-enabled TCUs will be visible till 2025. But with countries deploying 5G infrastructure rapidly, automakers will gradually shift to 5G-enabled TCUs having fallback compatibility to cover a wide range of connected car services with seamless network coverage.
In 2020, COVID-19 drastically impacted the already declining automotive sales in several ways:
Automotive factories operated irregularly for many weeks and also saw employee layoffs in H1 2020. This affected the final vehicle assembly.
Subdued consumer sentiments toward expenditure on non-essential items resulted in a decrease in new vehicle registrations. However, with vehicle purchase incentives in place, short-term recovery can be expected.
The implementation of E-call regulation in the EU initially led to a boom in TCU shipments while similar initiatives have been taken in other regions too, such as EVAK/ERA GLONASS (January 2017) in Kazakhstan and Russia, and K-ecall (2021 onwards). Other important factors driving TCU adoption include changing consumer preferences towards safety/entertainment features and the recent increase in interest in electrical vehicles (EVs), which employ upgraded TCUs for battery management and vehicle performance. For instance, GM has increased its budget for electric and automated vehicles from $20 billion to $27 billion and plans to launch 30 new EVs globally in the next five years (over 20 of them are planned for North America alone). The telematics industry is poised for growth in the coming years as automakers promote connected services to attract buyers and earn additional revenue through subscriptions.
Commenting on the TCU market, Senior Analyst Aman Madhok said, “Continental, LG, and Harman accounted for more than 50% shipments in 2020. Continental has been supplying to a variety of automakers, both luxury and non-luxury, besides having a presence in major markets worldwide. During the last few years, Continental has overtaken LG in terms of market share due to new contracts and the increasing penetration of TCUs in mass-produced vehicles. Harman bagged a contract from BMW to supply its latest 5G-enabled TCUs in 2021. Furthermore, it managed to associate with the likes of VW and Maruti Suzuki in recent years.”
Madhok added, “On the other hand, LG’s market share is declining due to its heavy dependence on GM, which has reached a saturation point in terms of TCU penetration.”
The Smart Automotive report also differentiates the embedded TCUs based on cellular connectivity. Looking from the connectivity perspective, Research Vice-President Peter Richardson said, “5G penetration is on the rise and TCU suppliers have already started to sign contracts with their respective customers (automakers) to supply 5G-enabled TCUs. Continental will lead here too. It has already won contracts to supply 5G TCUs to two European car manufactures. Continental will be followed by LG and Harman. GM’s recent bullish sentiment towards complete electrification of its vehicles and aggressive plans for employing 5G technology will benefit LG to expand its 5G portfolio. Falling prices of 5G TCUs will enable their adoption in mid-price cars, with automakers like GM, Ford, and VW leading 5G connectivity by 2025.”
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are experts in the high-tech industry with an average tenure of 13 years.
Like the past few years, automotive players used the 2021 edition of the Consumer Electronics Show (CES), organized from January 11 to 14, to showcase new technologies, launch products and announce partnerships. This year’s CES, which went all-digital due to the COVID-19 pandemic, was majorly focussed on electric vehicles (EVs), 5G connectivity, digital cockpit, artificial intelligence (AI) and autonomous vehicles (AVs). Moreover, COVID-19 has failed to dent the OEMs’ (original equipment manufacturers’) plans.
Here are Counterpoint analysts’ top 10 automotive announcements from this year’s CES:
1. Mercedes-Benz unveils a 56-inch ‘Hyperscreen’
As the cars are becoming smart, the need for a bigger screen is increasing for communicating and checking all the real-time vehicle data. Moreover, this 56-inch OLED Hyperscreen provides various functions like infotainment and personalized display. The screen is supported by eight CPU cores, 24GB RAM and 46.4GB/sec RAM bandwidth which helps reduce screen response times. In the era of the digital cockpit, MBUX (Mercedes-Benz User Experience) will slowly become the backbone of Mercedes-Benz vehicles, making the car more intelligent.
2. GM reveals an ambitious EV plan and a flying car concept
With the concept of flying Cadillac eVTOL, GM has joined the race for capturing the flying car market with other automakers like Hyundai, Toyota and FCA Group. Flying car testing projects have just started around the world and we will have to wait till after 2025 to get a good perspective on the topic.
GM launched BrightDrop, a new business unit for commercial EVs, aiming to build a first-to-last-mile EV ecosystem for logistics companies. This concept is not new, but there is huge potential for this market. GM may face stiff competition from other players working in this segment, like BYD, Rivian and Workhorse Group.
After a poor performance in the past few years, GM is repositioning itself and just changed its logo to reflect its EV focus. The company is spending $27 billion on EVs and AVs, targeting to launch 30 EV models by 2025. GM is also working on a battery technology called Ultium. These moves show GM’s seriousness towards its electrification goal and signal its strong comeback in the automotive market.
Panasonic unveiled an AR-based HUD which utilizes PRISM (positioning, reflection, intuitive, zonal UX and mission control) process to provide accurate situational awareness. A 3D imaging radar captures full 180° forward vision up to 90 metres while the 4K resolution provides a crystal-clear video of highways. Eye-tracking technology and AI-driven positioning accuracy are the key features of this HUD, which is expected to enter the market in 2024.
4. Mobileye showcases plan for AV rollout
As a part of its plan to commercialize AVs, Intel subsidiary Mobileye is expanding its testing of AV fleets to Shanghai, Paris, Tokyo and New York (pending regulatory approval) after a successful run in Tel Aviv, Munich and Detroit. Mobileye is also working on new Lidar silicon chips (SoC), which are expected to enter the market by 2025. This SoC can simplify computing and reduce cost by a significant amount.
5. Here Technologies brings a new mapping-as-a-service offering and 3D city models for vehicles
Here Technologies introduced a unique mapping-as-a-service offering where enterprises will be able to create their own maps. EV players can personalize their route maps through this service to reduce the range anxiety problem among stakeholders.
Here also launched 3D city models for vehicles while announcing a partnership with Leia and Continental to bring cutting-edge experience to automotive players. 3D maps with AR/VR applications will increase accuracy in location mapping, will be more engaging and help in taking better decisions while driving.
6. Harman redefines in-car experience in the 5G era
Harman is aiming to put a gaming console, a recording studio, or even a concert hall experience into the vehicle to provide the best user experience. High-resolution OLED or QLED displays, 5G enabled TCU and TBOT, Harman’s audio technology and advanced haptics will come together to give the user an immersive experience.
Harman is also offering a creator studio experience inside a car. Automatic background noise cancellation, virtual assistant, user-friendly video set-up, interactive lighting and publishing tools are leveraged here to create content even while driving.
With the help of 5G, premium audio quality, cloud service and partnerships with concert organisers, Harman is bringing live concerts to the car. More partnerships are expected with content creators, service providers, app developers, OEMs and module players to improve the experience.
7. Gentex reveals full display rearview smart mirror
Gentex demonstrated an LCD-based industry-leading Full Display Mirror (FDM) with the bimodal functionality of acting as a mirror and display. FDM is a rearview mirror which can capture surroundings with better angle and stream on display. It can be easily integrated with a camera monitoring system (CMS). In the smart mirror mode, it can record video, which helps in avoiding accidents and in finding the reason for an accident in case it happens. FDM is still a key feature for premium vehicles. However, with the rising awareness of advanced driver-assistance systems (ADAS), we will witness more penetration of FDM into mid-priced vehicles.
Gentex also exhibited a dimmable glass system, HomeLink car connectivity, Integrated Toll Module (ITM), an in-cabin sensing unit, and a smart lighting system. HomeLink is an embedded connectivity solution for vehicles which can perform functions like door lock, garage door opening, security, smart outlets, smart lighting and appliances. A vehicle integrated ITM helps users manage toll bills through a single solution, thus reducing traffic and improving efficiency in toll management. It has already entered partnerships with automakers and technology service providers for creating innovative solutions for customers. Gentex, one of the leading connectivity providers to automakers, is trying to bring a new concept to the digital cockpit and the coming autonomous age.
8. NXP announces BlueBox 3.0 AHPC development platform
NXP announced a new BlueBox 3.0 Automotive High-Performance Compute (AHPC) development platform which supports Level 2+ autonomous driving. NXP’s Layerscape LX2160A processor helps improve processing performance two times the previous generation of the platform while the S32G processor provides secured vehicle networking. As automakers will incrementally reach the full AV stage, this platform will help find near-term applications in Level 2+ and Level 3 automated vehicles. Since this platform is flexible and scalable, it can be updated with rising levels of autonomy.
9. Magna firms up EV and AV plan with a series of strategic pacts
Magna launched the LED-based Mezzo Panel for the Fisker ADAS panel. Mezzo Panel is a micro-LED and sensor-based polycarbonate panel which can be integrated into a vehicle body without affecting body aesthetics. Magna is also working on the Magna Vision Panel which is set to be showcased at the 2022 CES. Magna and Fisker are collaborating on building unique ADAS features and EV-sharing platforms.
LG Electronics and Magna have created a joint venture to concentrate on the electric powertrain market. In the CES last year, Sony surprised us by unveiling an EV prototype, Vision-S. In this year’s CES, Sony showed new videos of the Vision-S. Magna is one of the major partners for the Vision-S.
10. John Deere showcases VR technology for tractors
John Deere highlighted seed planting with the help of virtual reality (VR), AI and a camera system. A VR-based tractor will help improve precision during planting and work seamlessly in different environments. With the rising applications of 5G and IoT in the agricultural field, John Deere is attending the CES for the past few years. Besides showcasing major products and services in the passenger and commercial vehicle segments, the CES is also becoming a stage for unveiling products for small segments of the automotive industry, like farm equipment.
In Q2 2020, 4 out of 5 connected cars were using 4G LTE connectivity in Europe.
69 million new connected cars will be added in Europe during 2020-2025.
London, San Diego, Buenos Aires, New Delhi, Hong Kong, Beijing, Seoul – November 20, 2020
Europe connected car shipments, which have been increasing rapidly during the last five years, are expected to grow at a CAGR of 12% with a total of 69 million units to be added during 2020-2025, according to the latest research from Counterpoint’s Smart Automotive service. The connected car data here refers to only passenger cars with embedded connectivity. The vast majority of connected cars will continue to have a 4G-enabled Telematics Control Unit (TCU) by 2025. But with 5G network deployment maturing, the share of 4G will start declining after 2022.
Commenting on the adoption of advanced connectivity in cars across the region, Research Associate Fahad Siddiqui said, “Europe market witnessed a decline of 41% YoY in Q2 2020 due to the impact of COVID-19. Germany was at the forefront in terms of connected car shipments, followed by France and the UK. The implementation of eCall regulation in the EU to reduce the response time for car accidents has led to a significant growth of embedded TCUs in the region during the last few years.”
Research Vice-President Peter Richardson added, “Top three automotive groups – Volkswagen, PSA and Renault Nissan Alliance – account for almost half of the connected car shipments in Europe, primarily because they have been leading the passenger car sales in the region. For instance, Volkswagen’s Golf and Tiguan are the best-selling cars in Germany and PSA’s Peugeot 208 and Citroen C3 are among the top three bestsellers in France. Moreover, luxury automakers like Daimler and BMW have been actively providing connectivity in their cars much before the eCall mandate was put in place.”
The Smart Automotive report also covers the type of cellular connectivity used by a connected car. Looking from the connectivity perspective, Senior Analyst Aman Madhok said, “In Q2 2020, 4G LTE was the primary choice for connectivity, representing four out of five connected cars shipped during the quarter. However, 2G/3G connectivity is still prevalent in some parts of developing Europe, with original equipment manufacturers (OEMs) just complying with the basic eCall mandate. 5G development continues to gain traction in Europe with leading automakers conducting C-V2X trials. By 2025, one out of five connected cars sold in the region will be 5G compatible.”
The comprehensive and in-depth ‘Global Connected Car Tracker 2020’ is now available for purchase at report.counterpointresearch.com. Feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our latest research and insights, or for press enquiries.
Background:
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are experts in the high-tech industry with an average tenure of 13 years.
Half of all cars shipped in 2020 will be connected.
US and China together accounted for two-thirds of all connected car shipments in Q2 2020.
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – November 11, 2020
The global connected car market is expected to double in the next five years with more than 270 million of such cars to be shipped during 2020-2025, according to the latest research from Counterpoint’s Smart Automotive service. The data only represents the global passenger car shipments with embedded connectivity and does not include connectivity via smartphone.
Commenting on the findings, Senior Analyst Aman Madhok said, “The market declined by 18% YoY in Q2 2020 with connected car shipments reaching close to seven million units during the period. The penetration of connectivity in cars continues to increase, and 2020 will see half of all cars sold worldwide having embedded connectivity in them.
Discussing the impact of COVID-19 on the market, Madhok added, “The shipments declined by 5% when compared to Q1 2020 due to the subdued passenger car sales following the COVID-19 pandemic, even though rebounding car sales in China helped in market recovery to some extent.”
Commenting on the findings from the connectivity perspective, Research Associate Fahad Siddique said, “Automakers continue to adopt the latest technology, with 4G LTE-based connected cars accounting for almost 88% of all shipments in Q2 2020. 5G connected cars will enter mass production next year. By 2025, one out of every five connected cars will have 5G embedded connectivity. China and the US will together account for the majority of 5G connected cars sold in the next five years.”
Discussing the key trends, Research Director Peter Richardson said, “While the E-call regulation has been driving connected car shipments in Europe, increasing cockpit digitization coupled with customer preference for connected services is driving the growth in the US and China. Both the countries together accounted for close to two-thirds of connected car shipments in Q2 2020. Automakers too are promoting connected services to attract buyers and earn additional revenue through subscriptions.”
Talking about how mainstream brands are now adopting connectivity, Peter added, “A few years back, luxury cars like Mercedes Benz and BMW accounted for most of the embedded-connectivity cars sold, along with some mainstream brands like GM. But now more mainstream brands, like Volkswagen and Toyota, have started to take connectivity seriously, giving a huge push to connected car shipments.”
The comprehensive and in-depth ‘Global Connected Car Tracker 2020’ is now available for purchase at report.counterpointresearch.com. Feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our latest research and insights, or for press enquiries.
BONUS! Podcast: Over 50% of Cars Sold Globally in 2020 will be Connected
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