|Percentage of Global R&D Spending by Industry, 2013. Source: Booz & Company “Global Innovation”; Battelle R&D Magazine; Center for Automotive Research 2012. Click to enlarge.|
A newly-released report by the Center for Automotive Research (CAR) concludes that the automotive industry is not only “high-tech,” it is frequently a leader in technological developments and applications. The report, supported by the Alliance of Automobile Manufacturers, measures the technological nature of today’s auto industry and compares it to other sectors of the economy often viewed as technologically advanced.
The report authors acknowledge the difficulty of defining “high-tech” in an ever-changing economic environment. After reviewing of the works of several researchers and government agencies, CAR developed a working definition to differentiate high-tech industries from other sectors. Broadly, high-tech industries generally have the following characteristics:
Significant research & development expenditures, often above 3% of output;
Significant concentration of technical employees, often with engineers, technicians, scientists, and mathematicians representing 10% or more of the workforce;
Systematic application of scientific and technical knowledge in the design and/or production of goods or services;
Continuous engagement in the design, development, and introduction of new products;
Geographic clusters of educational institutions and research facilities to concentrate critical skills and talents to foster the proliferation of innovation and development of new technologies; and
Engagement in the design, development, and introduction of innovative manufacturing processes.
|“The on-board electronics, computer systems, sensors, and software in today’s vehicles make the automobile one of the more technologically sophisticated pieces of equipment consumers will ever own.”|
—Center for Automotive Research
The report found that the automotive industry spends nearly $100 billion globally on R&D—$18 billion per year in the US alone—or an average of $1,200 for research and development per vehicle. Additionally, the auto industry provides 16% of total worldwide R&D funding for all industries.
Other highlights of the study include:
Large automakers are still among the top companies, worldwide, for R&D spending, despite a trend toward reliance on suppliers. One study surveyed by the CAR group found auto companies make up one-quarter of the top 20 corporate spenders on R&D globally.
Sample of 2012 R&D Spending by Leading US Companies (in millions USD). Source: IRI 2013, CAR. Click to enlarge.
The auto industry spends on average 4% of revenues on R&D—one-third more than the national average of nearly 3%. For larger automotive companies, R&D spending is at an even higher level that typically ranges above the 5% of revenues mark. The auto industry also usually funds a greater share of its R&D activities than do other industries.
Prior to the recession, industry funding for R&D averaged above 98%; government and other sources covered the remainder. With the recovery, government and non-industry research interest in clean energy and connected vehicle technology has spurred new and significant R&D investment by these entities. It is estimated that non-industry funding now supports nearly 10% of total auto industry R&D activities.
One dozen companies dominate automotive R&D spending in the US, collectively accounting for 80% of total R&D spending, or more than $14 billion. These companies include both automakers and Tier 1 parts suppliers. Worldwide, five automakers—Volkswagen, Toyota, General Motors, Honda, and Daimler—are among the top 20 companies for all corporate research and development spending as ranked by Booz’s annual global R&D report.Volkswagen is first, with more than $11 billion in spending.
Estimated R&D Spending (global and US) by Selected Automakers for 2013 (in billions USD). Source: Wards 2011; IRI 2013a; and Center for Automotive Research 2013. Click to enlarge.
Nearly 60,000 people in the US alone are employed in automotive research and development activities. In raw numbers of electrical, industrial, and mechanical engineers, Michigan ranks second only to California. In terms of engineers per 1,000 jobs, Michigan vastly outranks all others. The automotive industry as a whole employs more engineers per 1,000 jobs than other major sectors.
An increasing portion of workers in automotive have associate, bachelor’s, and other advanced degrees. Automotive education programs have been created to provide the industry with a highly-skilled and educated workforce. Within Michigan, Indiana, and Ohio alone, there are more than 350 higher education institutions offering programs related to engineering, designing, producing and maintaining automobiles. In all, these institutions alone offer more than 1,900 distinct degrees pertinent to the auto industry.
The electronics content in modern automobiles has climbed dramatically, enabling the expansion of features that has improved safety, performance, and efficiency. An average vehicle contains around 60 microprocessors to run electric content—four times as many as a decade ago. More than 10 million lines of software code run a typical vehicle’s computer network—more than half the lines of code that reportedly run Boeing’s 787 Dreamliner.
Growth of vehicle electronic content. CAR 2013, adapted from Hellestrand 2005 and Fedewa 2013. Click to enlarge.
Traditionally, 3-5% of all patents granted in the US are awarded to the auto industry, a number that has risen to approximately 5,000 new patents per year. With automated and connected vehicle technologies, innovative materials, new joining methods, advanced powertrains, and alternative fuels, the technological development will further improve driving experiences in the future.
The automotive industry has historically been a major driver for the robotics industry, and continues to develop new ways to implement robotics systems in order to improve manufacturing precision and efficiency. The industry is also rapidly increasing its use of advanced processes and materials, such as new digital engineering and nanotechnologies to improve the design and production of vehicles.
Kim Hill, Debra Menk, Bernard Swiecki, and Joshua Cregger (2014) “Just How High-Tech is the Automotive Industry?”