Simulation technology is playing a key role in the automotive industry, from planning to the manufacturing process. How technology is impacting the various aspects of the industry?
Automobiles nowadays are more about software than hardware. Not only as a product, but their planning, design, development, and manufacturing process too have changed drastically in the last few decades. Instead of physical prototype testing, the OEMs are taking the help of simulation technology to create various possible real-life scenarios to test and validate the vehicles and their functions, parts, technologies, etc.
Automotive simulation technology market was estimated at $1.4 billion in 2018 and is projected to reach $2.9 billion by 2025, at a CAGR of 11.1%.
According to the Computing Technology Industry Association or CompTIA, a leading trade association for the information technology (IT) industry, the global technology industry will reach $5.2 trillion in valuation in 2020. A major part of this growth story is expected to be attributed to automotive simulation technologies.
According to a study, the automotive simulation technology market was estimated at $1.4 billion in 2018 and is projected to reach $2.9 billion by 2025, at a CAGR of 11.1%. Increasing focus on R&D activities and rapid technological changes in the automotive development sector, owing to the changing government norms for vehicle safety, emissions are projected to drive the market.
French software corporation Dassault Systèmes SE is among the Fortune 50 list of the largest software companies in the world that develops software for 3D product design, simulation, manufacturing, and more. Autofintechs spoke to Shree Harsha, India Marketing Director, Dassault Systemes, where he exclusively talks about the various aspects and impacts of the simulation technology and validation implementation in the automotive industry.
Edited excerpts below.
Q. We heard a lot of things about automobile OEMs using simulation technology, but not the suppliers. How do you see the Indian auto component suppliers working towards using simulation technology to achieve efficiency, better quality?
At a very broad level, the auto component sector is the driver of the auto industry ecosystem in India. Roughly, we export worth of around $35-40 billion from India. Primarily, components for engine, crankshaft, axle, sealing, rubber, etc.
So, you can say we broadly categories like engine and engine parts, transmission and steering parts, suspension and brakes, electromeric parts that are the combination of rubber and plastic typically to manage the gaskets. And lastly, the body brackets, which are really the core iron, aluminium, and steel-related components. These include wall components, piston rings, etc.
More than 60-70% of the business for top three Indian automotive suppliers come from exports.
We heavily relied on build to print as the core area for business, because OEMs in India look for cost-cutting. If a design is coming from OEM, you do manufacturing investments. There is no R&D on that particular product. You get tolerance with the product and ship it to the world. So, the ability to use simulation technology was very limited, because, you are primarily manufacturing and the associated design was done by the OEM then.
But now, there is a disruption in the market, because of the China+ 1 strategy. The supply chain market has huge potential. If you look at the top three Indian suppliers, more than 60-70% of the business is actually from exports. Why is that? Many European and American companies, even the Japanese are looking at alternative supply chain strategies. They are looking at India big time.
This is a once-in-a-lifetime opportunity for the Indian automotive supply chain market to add value. If you stuck with the bottom of the value chain, basically build to print rather than doing partnerships with OEMs and developing new innovations. It needs a multitude of skill sets. You can’t rely on traditional manufacturing, mechanical or automotive knowledge. You need electronics, software, sensors, a little bit of IoT. So the skill sets are associated with multiple factors, which are creating a lot of uncertainties for a lot of the automotive supply chains.
Let’s say you get a request to develop rear parking assist technology. They will give you less than 20 days to respond to a Request for Quote (RFQ). You need to work for maybe six months, maybe two years, expecting what sort of demand from those companies in Europe or America may come. You need to invest in R&D, collaborate in material suppliers, collaborate with core applied research companies, and then develop the products.
Virtual tools of virtual simulation and validation are not anymore just good to have, but mandatory to survive and reduce the cost of new product development.
I believe, simulation technology is playing a huge role here today and I can tell you India is one of the growing market and a huge investment from auto suppliers are coming for simulation technology. The domains where these companies are investing include durability, noise and vibration, suspension strength, vehicle dynamics.
If we look at the repair and quality issues coming for vehicles are – axle cracks, engine seizures, gasket or sealing, or crankshaft failure when the load is higher. Why these failures are coming in India? Because the component certainty of functioning for a certain low duration, which is given to OEMs.
More than 40% of the cost of a high-end car is attributed to electronics.
If it is not really tested, in two ways – with all the potential loads possible and on the surprise element, while there is an accident (like a frontal or side-body crash); all the parts might fail. It is a life-and-death situation for the passenger who bought the vehicle with the trust factor that all the components will perform.
I would say, the importance of simulation technology now is growing, given that so much importance coming from the government on the various guidelines, on certifications of new cars. It’s been proven in the west already, even in Japan and South Korea as well. Indian suppliers are gradually embracing it. You can’t escape the fact that these virtual tools of virtual simulation and validation are not anymore good to have, but mandatory and if you want to survive and reduce the cost of new product development.
Q. How do you see the ‘Atmanirbhar Bharat’ campaign and anti-China sentiment in India is impacting the change towards simulation and validation, especially in the supply chain?
Talking about ‘Atmanirbhara Bharat’, if you see the issue associated with chips for many OEMs, in fact, many large OEMs in India warn that if we don’t really secure a supply chain, anything related to the chips and the semiconductors, which go into automotive, you might have production disruption as early as June, July or August. What does it tell? It tells that we are too much import-dependent for some important elements that go into the car.
The supply chain disruption has pushed us back around 3-4 years of our experience in the automotive industry in terms of agility to manage demand, because of the supply chain challenges.
The value of a car is shifting from styling to pressed and forced components towards electronics and software. So, I would rather say more than 40% of the cost of a high-end car is actually attributed to electronics. It means, your ability to test and validate the hardware and software architecture and the electromagnetic and the interferences with the other cars, or even for the matter the electric, connected and shared coming in; the need of the software testing is all the more important.
That is again pointing towards the need for investment. Many OEMs are asking their suppliers to invest in product development as a Plan B for their global supply chain issues. Because of the supply chain disruption, we have gone back abruptly around 3-4 years of our experience in the automotive industry in terms of agility to manage demand, because of the supply chain challenges.
In a high-end car, there are around 15-25 ECUs in it.
I think it’s very imperative that we got to change the way we look at simulation technology and validation and invest more in this particular domain. And this is already happening as we see the market.
Q. Do you believe the modern cars more about software than hardware?
I guess so. If two decades ago, if somebody asked you we need a chip in a car, the answer would be why would they really need it? Let’s say a battery management system or fuel injection system was all about it. If you take a high-end car, which is priced at roughly around Rs 25 lakhs plus, there are 15-25 ECUs in it.
If I have to control steering today, take the adaptive lighting, when I drive the car and move the steering, there is a motor with the headlamps, which steers the headlights towards the direction where the driving is driving. Today, there are very few suppliers that can develop this kind of adaptive lighting.
Take the ADAS, for emergency braking, there are a set of sensors on the bumper, which are constantly taking images and sending signals to the central system and saying that the car might hit somebody. The decision-making is done in split seconds whether the system should apply brakes automatically or not.
We need more software engineers, electronic engineers, and mechatronics engineers to come into the automotive industry to support the long term development and this is the birth of a new domain called model-based systems engineering.
That’s the job of software and electronics that are recognizing and applying the system accordingly. I link this back to some of the centres of excellence we are working with. Because there is a lack of understanding that automotive product development is not only about mechanical or automotive production or engineering. In fact, we need more software engineers, electronic engineers, and mechatronics engineers to come into the automotive industry to support the long term development and this is the birth of a new domain called model-based systems engineering and we are seeing a significant increase in the demand for people with knowledge and know-how on systems engineering.
We are on the cusp of that because we come from aerospace and defence systems, where control systems and other technologies are being applied to automotive systems and software to help the automotive OEMs, to make the automotive software to become much stronger and less prone to surprises to failures.
In Europe, it is mandatory to get a certification called ISO 260, which is a functional safety certification.
In India, it is not visible, but in Europe, there is a mandate that you need to get a certification called ISO 260, which is a functional safety certification. It means OEMs and suppliers have to work together to get a certificate from the body, which really gives you an authority to sell the vehicle, saying that the vehicle has been looked at all possible surprises and taken precautions in product development to sell the vehicle.
Typically, in India, we see passive safety systems, but the active safety systems that can override the system are what I call automotive product development. That’s exactly what the Indian automotive suppliers have an opportunity to go global and look at the export market.
Q. How do you see the mobility startups in India are introducing simulation and cloud technology for their operations?
We have been a little fortunate to work with Tesla, during their very early phase in the 2006-2007 period. Since then, all of the top 20 startups such as Nio, Kanoo, Rimac, Rivian; we are working with them, especially on cloud technology. These startups are using the cloud more than the traditional OEMs because they have realized that gone are the days when you can develop products at one location and one site.
For example, take Nio’s case. There was a team of 200+ people sitting in Shanghai, and there was another team of 300 people sitting in North America in California. They were developing products across two continents. Imagine the situation, where a styling guy sitting in California, the core detail guy sitting in Shanghai, a simulation engineer is sitting in the London lab, and the testing lab is somewhere in Vietnam. They all together are working on a car development across the time zones.
There is no way other than cloud technology, that you can bring all of these people to manage their remote data, visualise their car with AR and VR technology, and work on the product much faster than before, in 18-19 months flat, compared to what used to take 5-10 years by OEMs and suppliers for new product developments. While some large OEMs took 7 years to bring a new product to the market, these startups took 7-8 months, thanks to the cloud technology.
This is all because of COPEX and CAPEX reasons. The startups don’t have the kind of cash, capacity, or muscle power to invest in long-term product development, invest in fuel resources, hardware, and software. This is where cloud technology plays a big role. We provide on-demand services in collaboration with Amazon Web Services. With the kind of benefits we have seen with 3G, 4G, and coming 5G technology, cloud technology too is expected to grow similarly.
Coming to Indian startups, we incubate more than 450 startups, through our startup incubator. We have our own startup incubator is 3D Experience Lab, where we organise hackathons, support free licences sometimes for almost one year or till the period they get venture capital funding. Then we handhold them through the know-how and the knowledge from working with the OEMs to help them leapfrog through the application of technology and come up with the quality product faster.
We had taken some of the Indian suppliers to Las Vegas to Consumer Electronics Show (CES) and have their product visible. We not only provide them the software but also share the know-how and train them through our domain knowledge. We work with these startup incubators so that we can mirror their challenges on our side and support them at our premises with testing and validation equipment as well. We have our own 3D printer, fabrication lab in our R&D centre in Pune. Any of these startups can come and take advantage of these facilities and test the products.
Q. Has the Covid-19 pandemic impacted the auto sector companies investing in R&D, technology implementation? Can you put some light on how has it been for the segment? And also how the revival has been if any?
The gloom the global industry saw last year, nobody knew what’s going to happen. Thanks to the government and private sector, gradually there was an improvement since the end of 2020. With the kind of numbers we have seen in January and February this year, the gradual revival of overall automotive sales, at least in the car and two-wheeler segments. The commercial vehicle segment is yet to catch the pace. There’s a small shift from shared mobility to own personal vehicles, due to the risk associated with Covid and travel.
Almost all sectors looked at cost reduction, as one of the core topics of survival. It’s not luxury anymore, but mandatory. How did the cost reductions happen from the core day-to-day functioning of life? Looking at the inventory and managing it properly, managing supply chain disruptions, managing smooth workflow with a limited workforce, limited capacity and meet the demand, etc.
Around 60-70% of the OEM’s balance sheets go into the material cost for manufacturing.
If you look at the balance sheets of the OEMs, 60-70% of the balance sheet goes into the material cost for manufacturing. The cost comes from raw materials like steel, aluminium and converting them into usable goods. The focus now is on; can we relook at our product portfolio and become modular in terms of what we are taking to the market? Everybpo0dy suddenly started talking about modular vehicles.
Modular architecture can reduce 20-30% parts of a vehicle, resulting in a product cost reduction impact by up to 6-8%.
The power of modular architecture is we can bring a new product based on an existing platform depending on the market requirement. A lot of time, energy, and investment was spent on modularity. It helps one to standardize the parts and reduce the number of parts. On average, if 20-30% of parts of a vehicle can be reduced, it means an impact on product cost by up to 6-8%. That’s a huge amount given what the OEMs spent.
Another point is automation. Gone are the days when people were talking about the necessity of smart manufacturing or Industry 4.0. Now it’s mandatory. If the plant is running and one cannot visit the facility due to lockdown, but he or she needs to know about the quality issues, product issues. Insights like these are mandatory for survival and Covid showed how important it is to have a connected factory, not for automation, not for standardizing with robots, but to make decisions quickly and to have Plan B, C, or sometimes even Plan D to have the manufacturing engine up and running.
Many of the OEMs adopted a combination of all these factors. This is a positive sign for the industry. The scrappage policy might be a green shoot for the industry. Also, people are moving towards mobility with personal vehicles. Business model disruption is another thing that emerged in the industry. Gone are the days when one single-handedly used to do innovations and all. It’s all about collaboration, partnerships, what the customer is willing to pay the money for. Everything will be customer-centric from now onwards for survival.
Q. The economic meltdown and Covid crisis has already hammered the Indian job sector severely. Taking a lesson from the pandemic, the auto OEMs and suppliers are focusing more on technologies like smart manufacturing, AI, machine learning, etc. How do you see these tech-driven solutions bringing a new crisis in the job sector? Is this accelerating the pace of job loss further?
Many countries went through such a situation many years ago. The jobs of the future will not be the same as the jobs of the past. If we see the top 10 Indian engineering service providers, the kind of projects they are working on at the global level. Some of them have bagged global projects worth more than $3 billion during the Covid crisis. Many engineering service providers (ESP) are highly skilled now, because of the potential opportunities of digital disruptions coming at the global level.
If I have to look at the traditional way of looking at jobs, there might be a short-term impact. The government, academia, enterprises have to work collectively to make the future workforce skilled. It is a big task ahead for all of us. We are working on this in three places including Karanataka and Telangana. This is a shift happening across the world in many countries. After all, any challenge is an opportunity as well.
(Also Read: Electric vehicles: How clean is “green”?)
(This is the first part of the interview where Shree Harsha speaks about the simulation and validation technology in the automotive industry. The second part will come soon.)