by MĂĄire Lane, PhD & Frank Jennings, PhD, Invesco Canada
| Three years ago, we wrote about âyour car in 5 yearsâ time,â but it is already time for an update. Voice commands have been fully integrated into new cars, and theyâre capable of doing much more than the commercials demonstrating âAlexa, start my carâ promised. Making phone calls hands-free in the car seems normal now, and so progress goes â the once fantastic and whimsical ideas becoming commonplace. Â Â Â |
The auto companies are serious about innovation. Research and development (R&D) dollars spent in the auto industry were close to $130 billion USD in 2018, only trailing R&D dollars spent in the Healthcare and Information and Communications Technology sectors.2
We didnât predict the auto slump in the fourth quarter of 2019, but we believe there will be a quick rebound, helped by the pandemic. People will be increasingly relying on their cars for transport, as concerns about exposure to the COVID-19 virus caused the volume of public transport and air travel to fall off a cliff. We expect motor vehicle miles travelled will benefit from these declines.
The pandemic has started a deurbanization trend, as fewer employers may return to requiring workers to be onsite five days a week. As more people have the opportunity to work from anywhere, more are likely to leave cities and commuter towns. The move to areas with fewer public transportation options will encourage more travel by vehicle. So too will the fact that people can combine work and travel more easily because they can now work remotely from any location, even as passengers in a car while travelling to an area theyâre visiting for a getaway.
Millennials are getting married and having kids later than previous generations did.3Â Having more young families living further away from major cities will increase the pace of deurbanization and create more multi-car families.
From âAlexa, start my car,â it is an easy next step to âset the temperature to 70 degrees,â and or having the car automatically program the GPS for the address of an event in your calendar. While all this technology-based convenience does require more interconnectivity, with greater demands for communication between the car and the driverâs smartphone, this level of connection can be facilitated through 5G cellular access.
5G can handle many times more bandwidth than 4G, and that will enable all sorts of tiny devices to connect to the internet and talk to each other. Examples of this may include communicating with personal wearable devices that can detect a driverâs body temperature and set the car temperature to best align with that, or sense when a driver is getting drowsy and lower car temperature to keep them more alert.
5G will allow more users to have high-speed Internet access at the same time, so cars can talk to other cars and to the cloud, while passengers stream their entertainment or work video calls, without any delays in data transmission times.
Some of the examples cited here â like adjusting the carâs internal temperature in response to the driverâs temperature or delivering directions to an event scheduled in someoneâs calendar â requires not just communication between devices, but also quick and local machine intelligence, facilitated by processing semiconductor chips in the car. The technology required is already in cars. For example, with lane departure warning systems, a sensor detects when a car is drifting and sends the information to a central processing unit, which then sends information to the steering and tires to bring the car back into its lane. Adding more functionality adds complexity and increases the need to keep the systems separate and secure. Â
Another innovation example is touchscreens, a tough but lightweight glass that will be used in car windows. Reducing a carâs weight helps save on battery power and also lowers the carâs center of gravity, thereby increasing a carâs ease of handling.
It is easy to understand why people compare new electrified cars to smartphones. Still, there is a huge difference in the power demands of smart phones vs. cars, with the primary purpose of the latter being to move people and cargo â a power-hungry task. While smartphones can be powered by 12-volt batteries, cars will need much higher voltages to power all these new features. While smartphones can be powered by simple 12-volt batteries, the voltage needed to quickly charge powerful car batteries is much higher, and the silicon semiconductor chips that are used in smartphones canât handle this level of voltage or the associated high temperatures. The auto industry is instead looking to use Silicon Carbide (SiC).
SiC is a crystal that is transparent and glittering. Picture a diamond without the branding people behind it. SIC is difficult to make because high temperatures and high pressure are required. As part of our investment process, we get to travel the world to find companies that will benefit from changes such as the ones transforming the auto industry. For example, we have visited companies in Germany and Japan that are making cutting-edge tools to improve the SiC manufacturing process to make it easier than in the past.
We may not have cars traveling through the air, as many futurists imagined, but cars continue to deliver breakthrough technologies that make driving safer, convenient, and more fun. We continue to search for companies that we think can enable investors to benefit from these transformative innovations. Â
This post was first published at the official blog of Invesco Canada.
