Vol. 21, No. 8◆◆ www.hansenreport.com October 2008 New BMW 7 Series Telematics Makes Progress Loaded with New After all these years, is telematics fi- over $300 according to iSuppli. And nally about to take off? “Well, nothing in many cell phones have navigation capa- Electronics the car industry ‘takes off,’” said Russ bility. “PNDs are just beginning to take a Shields, Chairman of Ygomi LLC and bite out of the prices for embedded navi- By many measures, the 2009 BMW 7 founder of Connexis, a telematics service gation systems,” said Phil Magney, who Series sets a new high water mark for provider with strong relationships with runs iSuppli’s automotive practice. iSuppli automotive electronics. Ready for delivery European carmakers. “Telematics is creep- recently acquired Telematics Research in November, this remarkable new vehicle ing up. You’ll see in 2010, 2011 and 2012 Group, which Mr. Magney founded. boasts four world premieres: It’s the [telematics] features added to navigation “The challenge for OEMs, if they want world’s first production application of systems. It’s happening in fits and starts to keep these navigation profits, is to add Autosar software architecture. It’s the first with some companies doing better than features that both match what the exist- time a carmaker has provided unrestricted others.” ing handhelds do and do something access to the Internet. The 7 Series is the OnStar, GM’s in-house telematics ser- more,” explained Mr. Shields. “Honda’s first vehicle to keep track of and display vice provider with more than 4 million InterNavi Premium Club is the model. It the current speed limit to the driver. And subscribers, was launched in 1995 and is has features like dangerous road condi- it’s the first time a night vision system has still by far the world’s largest TSP. Over tions notification, which you only get if been offered that graphically highlights the years, other players such as ATX, you buy the navigation system with your where the pedestrians are on the video WirelessCar and Connexis have emerged, Honda.” Available in Japan, InterNavi monitor and warns the driver if he is at and Honda, Toyota and Nissan each subscribers also get automatic map up- risk of hitting them. have TSPs operating in Japan, but none dates, information about preferred park- More than ever, vehicles are made dis- have as many subscribers as OnStar. ing, traffic predictions and much more. tinctive by means of software, and the Carmakers, especially luxury car- According to the IT research and con- new 7 Series has five-and-a-half times makers, make a great deal of money with sulting firm Gartner Inc., global sales of more software than the 7 Series that pre- embedded navigation systems and are telematics boxes, the devices installed in ceded it—one gigabyte compared with worried about what the availability of in- vehicles that enable data communications 180 megabytes. And despite the prolifera- expensive personal navigation devices and between the vehicle and the outside tion of software code, BMW expects that navigation-equipped smart phones and world, will grow very quickly: from 14 warranty expenses related to electronics PDAs is doing to their market. The multi- million units in 2008 to 57 million in will be comparable to the old 7 Series. media package for the Mercedes C Class 2012. “But most of those boxes will be “To handle one gigabyte of software is priced at $2,980. It includes a Harman very simple devices with very limited code you have to control everything,” said Kardon audio system with 6-disc CD safety and security functionality,” said Elmar Frickenstein, senior vice president changer, but the most expensive part of Gartner’s automotive practice leader, electric/electronics and driver environ- the system is COMAND, a voice con- Thilo Koslowski. Included in the forecast ment at BMW Group. “You have to con- trolled, HDD navigation system. For com- are devices to implement Europe’s eCall trol the processes, you have to control the parison, the average price of PNDs is just initiative, which will probably mandate supply chain, you have to put [in place] that all vehicles sold in Europe come with Worldwide Sales of Telematics new methods and tools. We use model- the ability to transmit location informa- Connectivity Modules (Units) based software development. We deployed tion to emergency services in the event of a new strategy for model-in-the-loop test- 2008 to 2012 CAGR: 42% a crash. ing, software-in-the-loop testing and 57 million Also included in Gartner’s forecast is hardware-in-the-loop testing. So not only the Ford Sync solution. In November do we test components and subsystems but 2008 Ford will launch its safety applica- we also test the whole car.” tion called 911 Assist, which uses the With what BMW calls its Labcar customer’s Bluetooth-equipped portable (laboratory car) it can test all the software 14 million device to call a local 911 operator should and the electronics systems and sub- an airbag-deploying accident occur. How- systems together. A year and a half before 2008 2012 ever, Sync will not supply location infor- the start of production, Mr. Frickenstein Data: Gartner Inc. mation; that will come from the phone’s Turn to BMW, page 8 Turn to Telematics, page 3 Li-Ion Battery Maker A123 Registers for IPO Lithium-ion (Li-ion) battery developer Nickel metal hydride (NiMH) batter- with on advanced development con- A123 Systems of Watertown, Massachu- ies are used in nearly all hybrid vehicles tracts—either Compact Power Inc. or setts, will soon go public. Its prospectus today, including the Toyota Prius, but ac- Continental Automotive Systems—once filed in August with the U.S. Securities cording to A123, NiMH batteries “lack the final evaluation is complete. and Exchange Commission provides in- the energy density to make them practical Continental’s battery pack uses battery sights into the company, its technology for many PHEV and EV applications.” cells co-developed by GM and A123; and its most significant target battery mar- Lithium-ion batteries have been used Compact Power uses cells from its parent ket—advanced batteries for hybrid elec- commercially since the early 1990s in company, LG Chem, of Korea. Continen- tric vehicles (HEVs), plug-in hybrids small portable electronics applications tal will also supply the lithium-ion battery (PHEVs) and electric vehicles (EVs). Hy- such as cell phones and laptop computers. pack for Mercedes’ S400 BlueHybrid, but brid electric vehicles use significantly They have higher energy densities than the cells for that program will come from more electrical and electronics parts than lead-acid or NiMH batteries and can be Johnson Controls-Saft. In June 2008, do nonhybrid vehicles and represent one made smaller and lighter. Until recently, Continental acquired 16% ownership in a of our industry’s most promising growth lithium-ion technology was not widely Japanese developer of Li-ion cells, Enax. segments. used beyond small portable devices due to A123 currently offers six different limitations on the power, safety and life of lithium-ion batteries with attributes that A123 Systems Thumbnail Li-ion batteries. vary according to the application. It is Headquarters: 321 Arsenal Street, Watertown, The A123 prospectus states: “Battery already in pilot production on a cylindri- MA 02472 USA; phone: 617-778-5700 systems such as those being developed for cal 3.6 Ah battery that has a high power- 2007 Revenue: $41.3 million HEV, PHEV and EV powertrains require to-energy ratio suitable for hybrid R&D: $13.2 million not only higher levels of power and/or vehicles. And it is in prototype produc- Net Cash (Used) in Operating Activities: energy, but also the ability to function tion on 7.7 Ah and 9.5 Ah cylindrical ($11.2 million) over a wide range of temperatures and a batteries, which could serve either in hy- Stockholders’ Deficit: $70.7 million as of longer calendar life. For example, portable brid or plug-in hybrid vehicles by varying March 31, 2008 electronic devices only require about 300 material formulations and coating tech- Products: Nanophosphate lithium-ion batteries to 400 recharge cycles and a calendar life niques. The company is also producing and systems Major Customer: 71% of A123’s sales since of about three years, whereas typical ve- prototypes of space-saving rectangular its inception have been to Black & Decker. hicle applications require several hundred batteries suitable for extended range elec- ◆ Key Automotive Customer: General Motors thousand shallow recharge cycles for HEV tric vehicles and PHEVs. and A123 are jointly developing battery cells for applications and several thousand deep GM’s E-Flex PHEV program, which includes cycles for PHEV and EV applications, the Volt. with a calendar life of approximately 10 Employees: 1,100 of whom 150 are in R&D years.” Manufacturing Space: 400,000 square feet, A123’s newest Li-ion battery is based © 2008 Paul Hansen Associates, 150 mostly in China on proprietary nanophosphate chemistry Pinehurst Rd., Portsmouth, NH 03801, Major Investors: Alliance Bernstein, CMEA originally developed at the Massachusetts USA. Telephone: 603-431-5859. Fax: 603- Ventures, FA Technology Ventures, General Institute of Technology and exclusively 431-5791. Email: [email protected]. Electric, MIT, Motorola, North Bridge Venture licensed to A123. A123 was founded in All rights reserved. Materials may not be Partners, OnPoint, Proctor and Gamble, 2001 by Yet-Ming Chiang, Gilbert Riley, Qualcomm, Sequoia Capital and YankeeTek reproduced in any form without written Jr. and Ric Fulop to commercialize new permission. Carmakers around the world are battery technology developed at MIT. quickly ramping up production of hybrid The company has joint development The Hansen Report on Automotive Electron- and electric vehicles.