TGCC21 Global Case Study
TGCC21 Global Case Study
MOBILITY
TIGER GLOBAL
CASE COMPETITION
2021
FINAL GLOBAL CASE STUDY
ARBE executives are interested in potentially selling their radar technology to shared
autonomous vehicles (i.e. “robotaxi” companies.) Specifically, ARBE is evaluating a
partnership with a US-based robotaxi firm.
Your directive is to develop a business plan for ARBE’s sales to a US-based robotaxi
firm. Specifically, you should address the following questions:
1. How can ARBE best position their product to win a contract with the US firm? Please put
together a short pitch (2-3 slides) detailing how ARBE radar technology is differentiated
from competitor products, and why it would be an attractive option for a US robotaxi
firm.
2. How many robotaxis can ARBE supply with their technology? Please create a business
plan for their partnership with the US firm for the next 10 years (2021-2030). Please
specify, in US dollars, both how much revenue your plan can generate, and how much
profit. In this business plan, you might consider addressing:
a. How many radar units—and at what price—can ARBE sell each year?
b. Are there any regulatory considerations to selling to the US? If so, how would these
impact profit margins?
3. As ARBE’s investors and board increase the attention paid to environmental, social, and
governance (“ESG”) metrics along with pure profitability, what are some ways in which
ARBE can minimize their CO2 emissions to mitigate their climate footprint?
Use the material in this pack, as well as any additional research that your team completes, to
create a Google Slide Deck of up to 10 slides, but no longer, detailing your strategy and
recommendations.
Overview of the
Autonomous Vehicles Market
Smart Cars
Sizing up the Sensor Market
Smart cars are increasingly data centers on wheels. They’re covered in electronic
sensors that collect all sorts of complex data outside and inside the vehicle to enable
autonomous driving and a whole lot more. With more drivers switching over to electric
cars equipped with all the latest gadgets, that means a lot more demand for
increasingly complex sensors. We forecast the market for them – which includes
cameras, radars and laser-based LiDAR – to jump from USD7.3bn in 2020 to USD18.9bn
in 2025e and USD41.4bn in 2030e.
It’s also all very much part of the innovation happening all across the semiconductor
industry. The increasing electrification and intelligence of vehicles is bringing about
revolutionary changes in designing and manufacturing cars. And that creates
incremental demand for advanced semiconductors and electronic devices, not just for
car sensors, but also other areas we’ve written on like central processors and power
chips. Looking into the next decade, we expect to see not just the rapid adoption of
smart cars but also other shifts like wearable devices that leverage virtual reality and
augmented reality, more Internet of Things (IoT) devices, and increasingly powerful
semiconductors used in legacy products like smartphones, PCs and servers.
For car sensors, and the subject of this report, we focus on three hardware devices that
will enable autonomous driving (though the software still has to catch up). They do
everything from providing images to a machine vision algorithm for emergency
braking, to running a system that monitors the driver.
Camera sensors. Camera are the most commonly used sensor in a vehicle today and are
mainly used to detect and classify objects, as well as for lane tracking and assist parking.
Over 80% of advanced driver-assistance systems (ADAS) and recognition functions are
applied to cameras, or used as the major solution. While the average car has just 1.7
cameras currently, a few leading smart car manufacturers like Tesla and Nio are already
featuring as much as 8-12 cameras. And it’s not just more cameras but better and more
expensive cameras. They need to have higher resolution, are increasingly used by machines
(known as sensing cameras) and provide technology known as high dynamic range (HDR),
which balances images with a lot of light and dark to present a better quality picture. We
expect the market for camera modules in cars to increase from USD3.5bn in 2020 to
USD8.1bn in 2025e and reach 16.4bn in 2030e.
Radar sensors. Compared to cameras, radars are more reliable in extreme weather as they
can penetrate rain, snow and fog. They are mostly used to help with cruise control,
automatic emergency braking, and pre-crash warnings. Despite being an old technology –
radio waves are emitted, hit an object, and bounce back to the receiver – radars are still
improving their long- range functions and precision by using new frequency bands,
materials, and being better integrated. Less than one radar was in each car in 2019, but we
forecast that to rise. Yole forecasts the auto radar market to increase from USD3.8bn in
2020e to USD13.0bn in 2030e, implying a 13% CAGR and suggesting the content value per
car will increase from USD50 in 2020 to USD96 in 2025e. Beneficiaries: The radar supply
chain is dominated by a range of overseas tier-one suppliers due to their strong presence in
other key components like power management semiconductor chips.
Light detection and ranging (LiDAR). LiDAR is similar to radar but uses laser pulses
instead. It can generate a 3D image of the surrounding environment and is faster. The
technology is changing from mechanical spinning LiDAR, which is prone to vibrations, to
semi-solid and or pure solid-state LiDAR. We estimate long-range detection LiDAR will be
used in vehicles equipped for Level 3 autonomous driving (conditional automation) in
2021e, followed by scalable mid-range and short-range LiDAR adoption from 2025e. We
estimate by 2030e the total addressable market size will increase to USD11.9bn, from
almost nothing today. Beneficiaries: As this technology is still in the early stages of being
widely adopted, the market is crowded with over 100 players, including traditional
automotive tier-one suppliers like Valeo and innovative tech companies like Velodyne,
Luminar and Huawei. We believe in the near term relatively low cost semi-solid state
solutions will win orders but in the long run, the technology will migrate to better
performance pure solid-state solutions.
No one sensor can do everything, as each has pros and cons, so typically data is combined
from different sensors, processed and analyzed via the vehicle’s computing system and its
advanced algorithms. It’s a process known as sensor fusion technology.
Cameras are one of the most commonly used sensors as they can detect objects, but only
at a close range. Radars can detect objects further out and can easily penetrate extreme
weather conditions like fog, rain or snow. Their drawback though is they can’t classify the
object. However, when radars and cameras are used together they can provide cars with
an overall good ability to detect objects all along the road.
There are six levels of driving automation designed by US authorities, from 0 (none) to 5 (fully
autonomous). Currently, most commercially-available vehicles are up to Level 2 which
includes cruise control, lane centering and collision warning. This means autonomous driving
functions mainly perform an assistant role but does not replace the need for a driver. Various
auto OEMs such as Tesla, Xpeng and NIO are making efforts to commercialize Level 2 and 3
while a number of technology companies like Alphabet’s (aka Google) Waymo, China’s Baidu
and Amazon’s Zoox are developing Level 5 robotic vehicles that could be fully autonomous
though their commercialization is still a number of years out (Exhibit 15).
The penetration rate of cars with Level 1 and 2 autonomous driving was around 43% in 2019
and is set to rise. Level 3 and above will gradually be rolled out in the coming years to 6% of
cars in 2025e and 24% in 2030e, according to Magna (see Exhibit 14). While it is not a straight
forward path to reach Level 3 and above - especially as Mobileye (a maker of advanced-driver
assistance systems) has said there’s a large technology gap between Level 2 and Level 3 so
Level 2+ is being used as transitional grade - we believe technology development will keep
pushing the envelope to achieve more advanced autonomous driving.
Regulations and industry standards turning more supportive for sensors. One example
of how changing industry regulations are leading to more demand for sensors is
Europe’s New Car Assessment Program (NCAP), a car safety assessment organization,
that sets industry safety standards for EU members. In its 2025 safety assessment
roadmap (NCAP 2025), it set out a timeline for more ADAS and safety functions that
need to be deployed in vehicles such as autonomous emergency steering and braking,
and driver monitoring.
Radar Overview
Radars are one of the critical sensors that are widely used in ADAS and autonomous
driving. On first glance the technology appears decades old: radars emit radio waves
that hit an object and bounce back to the receiver. And compared to cameras and
LiDAR (similar to radar but uses laser waves; we discuss later in the chapter), radars are
able to detect far away objects with higher precision and in adverse weather conditions
like snow, smog or darkness. Plus, they are relatively cheap. But as we show in this
chapter, radar design is evolving rapidly these days.
Let’s start with the basics. Radio wave data is processed to determine an object’s
distance, speed and direction. By radio frequency, the primary frequency bands today
for automotive radars are 24GHz (for short range) and 77GHz (long range), with 79GHz
emerging as the new spectrum for multimode applications. Pulsed and frequency
modulated continuous wave (FMCW) are the two major types of radio waves used in
radars. Pulsed wave purely depends on the time gap between when the signal is
transmitted and received. But FMCW provides a higher range resolution than pulsed as
the frequency difference is also considered in calculating the radio waves on top of the
time difference. Therefore, FMCW is more suitable for short-range radar while pulsed
waves are mainly for mid to long-range application. In addition, FMCW is also able to
detect the velocity of an object while time-of-flight based methods to detect an
object’s velocity.
Similar to cameras, the number of radars per vehicle is set to grow along with
increasing levels of autonomous driving. For example, long-range radars are needed for
Level 2 (and above) autonomous driving, on top of short and mid-range radars, in order
to detect objects that are over 150m away. This helps with adaptive cruise control (ACC),
automatic emergency braking (AEB), and pre-crash warnings (PCW). Other functions
such as blind spot detections (BSD), cross traffic alerts (CTA), lane change assistant (LCA)
are also enabled by short and mid-range radars.
Waymo’s fifth-generation sensor suite, for instance, comprises 29 cameras and a suite of
radar and lidar — light detection and ranging lasers that create 3D renderings of the
environment. By contrast, a Tesla vehicle has eight cameras, most ADAS-equipped cars
have even fewer, and virtually none today are equipped with LiDAR. But as costs fall
dramatically, carmakers will be able to add new layers of sensors to help cross the
chasm into a Level 4 feature set.
To enable Level 5 autonomous driving, the number of millimeter wave radars is set to
increase to seven, from one to three for Level 1 and 2. According to IDTechEx, global
automotive millimeter wave radar unit sales were 55m in 2019, or 0.6 unit per car, and
will increase to 223m in 2030e, representing a CAGR of 14%. In China, the number of
total millimeter wave radars installed in passenger cars were 8.19m in 2020, including
4.8m forward radars and 3.3m rear radars, according to Shujubang.com. This suggests
0.4 units are installed per car in China.
The 24GHz is the primary frequency product currently with key growth drivers mainly
coming from proliferation of 77GHz and 79GHz frequency radars that are used for short
range detection. Yole forecasts that the automotive radar market size will increase from
USD3.8bn in 2020e to USD9.1bn in 2030e, implying a 19% CAGR and suggesting the
content value per car for radars will increase from USD50 in 2020 to USD100 in 2025e.
Apart from integration, improving the resolution from radar images is also a growing
trend as it enables radars to scan objects with a higher precision. This requires more RF
input and output channels, to scan frames per second and better design for RF channel
isolation.
Also, large antenna arrays (multiple connected antennas) support more precise data
collection and enables advanced signal processing for ADAS. Currently, automotive
radar modules are dominated by overseas tier-one vendors such as Continental, Denso,
Bosch, Hella, Veoneer, Aptiv and Valeo. In terms of component suppliers, they are
dominated by Infineon, NXP, STMicro and UMS.
Key foundry service providers are also mainly from Taiwan and the US while mainland
Chinese companies are generally lagging in RF-related IC design and chip manufacturing
capabilities. Calterah is a Shanghai-based IC design house that specializes in CMOS based
millimeter wave radars for automotive and industrial applications. Its products cover 60GHz
and 77/79G Hz frequency radar SoCs and is capable of providing AiP technologies that help
to simplify the product development cycle.
Opportunities
in Autonomous Driving
An automotive-first development
Autonomous driving is quite expensive majorly for the early adopters of this technology.
The advent of AV ride-sharing concept has ignited the hope for successful
implementation of driverless vehicles as this concept have high feasibility and potential
of amortizing the capital expense over driver vehicles. Adopting AVs for personal use
can be highly unaffordable for majority of the population; hence, this cost factor has
become major restraint for the mass production of AVs. To tackle with this issue, OEMs
and tier-1 suppliers are propagating this concept of integrating shared autonomous
driving technology on roadways. Manufacturers are promoting driverless ride- sharing
as low-cost transit option that has potential to change the transportation system. AV
and ride sharing together provides benefit of viable and cost effective commute. In
addition, reduction in trip length, decrease in fuel consumption, and reduction in traffic
congestion are some of the other cost benefits associated with the implementation of
ride sharing.
On an average, a car spends 95% of its time at rest and around 5.5 million hours
are wasted each year in America due to road congestion. According to research by
Texas University, the mass implementation of ride sharing have potential to reduce up
to 40% cumulative trip length, saving the time and associated cost. Moreover, with the
accelerated growth in ride sharing business, the traffic congesting is expected to be
reduced by 37% and the number of vehicles on the road will decrease by 19%,
according to the researchers at MIT. Ride-sharing is the best solution to this and a
better way to commute. Public organizations along with the stakeholders in this
industry are taking proactive steps to promote ride-sharing and future smart cities.
Automotive giants such as Ford, Tesla, GM, Volvo, Toyota, and Daimler are jointly
venturing with the ride-sharing companies such as Uber and Lyft to acquire a strong
hold in the autonomous vehicle industry by monetizing AV self-driving cars. Navya, a
French manufacturer of autonomous vehicles, has launched 15 seater autonomous
shuttle and are currently in service. Likewise, other manufacturers and start- ups are
pushing themselves towards the practical implementation of AV ride sharing
application.
1
M14 Intelligence, 2018
Strategies vary by manufacturer
The advent of autonomous and connected vehicles is expected to disrupt the entire
automotive ecosystem over next few years. Not only the automotive OEMs such as
Volkswagen, Toyota, Ford, Daimler, Honda, Hyundai, etc., but also the technology
companies such as Google, Baidu, and Apple are dogging driverless technology
opportunities. The development and deployment of autonomous or driverless
technology has been empowered by making substantial advancement in areas of
sensor technology, navigation and control systems. All automotive stakeholders are
accelerating their capabilities in autonomous and semi-autonomous driving
technology by making some strategic moves. From 2015, acquisition/partnership and
investment are the major strategies being followed by many carmakers and technology
providers. Besides, to facilitate the smooth flow of this technology and quickly adapt to
the changing automotive ecosystem, OEMs and Tier1 companies along with the
government organizations are putting innumerable hours of efforts and billions of
dollars in research and development of autonomous vehicles.
Research and development activities depicts company’s pioneering assets and its
future capabilities. Amongst the carmakers, Ford, BMW, GM, Toyota, Nissan and Audi
are the top R&D spenders. Toyota is the highest R&D spender in terms of value, closely
followed by GM; whereas, Tesla accounts for highest R&D investment as percentage of
net sales followed by Audi. Nissan has considerably increased its R&D spending in 2016
as that of 2015. Among Tier 1 automotive suppliers, Bosch is the leader in terms of R&D
spending amount followed by Continental and Delphi. Moreover, Ford, Toyota, and
Volkswagen along with technology1 suppliers such as Nvidia, Samsung, Qualcomm, and
Panasonic, have joined a program – Deep Drive to fund AI and autonomous researches
at
1 the University of California at Berkeley. Furthermore, Foxconn, an electronics
Ford
Ford invested $1 billion in Argo AI, with an aim of developing AI based autonomous
vehicle in next four years. Besides, as a part of $1.2 billion investment in Canadian
operation, the company has established a R&D center in Ottawa for connected and
autonomous vehicle technology
Tesla
Tesla is focusing on strengthening its R&D capabilities by investing more than 10% of its
net sales on R&D activities. The company has increased its R&D spending in 2016 by
16.2% from that of previous year.
General Motors
The company’s R&D expense is primarily dedicated to the development of new
products or services and R&D activities in vehicle emissions control, improved fuel
economy, the safety of drivers and passengers, urban mobility and autonomous
vehicles technology.
1
Shared mobility and other non-private opportunities
Shared mobility is an innovative thought for the individuals to access transportation
services on as-per-need basis. The term encompasses ridesharing, carpooling, on-
demand ride services, versatile business delivery etc. With the increase in urbanization
and thoroughly established edges of shared mobility in environmental, social,
transportation sectors it's a chop-chop developing arcade. In line with research study by
Fraiberger and Sundararajan, New York University, the non- public vehicles stand idle
for 95% of the time and thus its potency with automotive sharing will increase.
Autonomous cars with ride sharing and without the need of a driver will cost a lot less
per mile in the future, compared to today’s privately driven cars. The shared mobility
with autonomous vehicles can drive the price of transportation down and there'll be
less congestion and far less pollution.
With the introduction of autonomous vehicles in the near future, shared mobility is
going to be boosted. The shared mobility will dampen the annual sales of the cars,
however, won't decrease the sales. As a result, major carmakers have struck deals with
leading ridesharing firms, explains the seriousness of the long run in shared mobility. As
per the survey results discharged by the U.S. and Canadian automotive sharing
organizations, 25% of car sharing members sold the cars and quite 25% members
deferred the acquisition of the car. Countless studies show that one car sharing vehicle
replaces concerning nine vehicles. The introduction of autonomous vehicles can shift
the market away from private ownership of vehicles. To dodge from this attainable
market shifts, prominent automakers like Ford, General Motors, Volvo, Toyota,
Volkswagen are teaming up with service suppliers like Uber, Didi, Grab, Lyft and heavily
financing in analysis and development.
Mobility is turning into a services business differentiating itself from the asset-heavy
business. Every single one amongst the prominent companies is realizing that they
cannot sustain alone, they need to finish up having some reasonable partnership with
firms that bring assets to bear so as to be ready to sustain within the dynamic
landscape. Toyota, the second largest automaker in the world is functioning with Uber
and Didi Chuxing to introduce its autonomous vehicles for shared mobility.
In 2017, Lyft took a survey from its customers concerning their transportation habits and
came to a conclusion that 1/4 million of its users within the U.S. got rid of their non-
public vehicles and quite 50% of its users have stopped the usage of their motor
vehicle.
In line with the survey, 40% Lyft rides in the city are shared rides and that is a vital increase
compared to previous years. In June 2017, Lyft opened its own self-driving division to
develop an open self-driving system. It started self-driving technology center in Palo Alto
referred to as the Level 5 Engineering Center for developing autonomous vehicles. Lyft has
already launched autonomous ridesharing vehicles in Boston in partnership with their
technology partner, nuTonomy.
In the next twelve months, the corporate team at Lyft plans to move from development to
deployment of totally autonomous cars for shared mobility.
Google’s former automotive unit Alphabet’s Waymo has been testing autonomous driving
technology for years and is reaching to introduce the totally autonomous vehicles in
Arizona in few months. The French firm, Navya is additionally reaching to introduce its
electrical autonomous vehicles for ride-sharing. Besides, there's a stiff competition
between Uber, Ford, BMW and plenty of others. Baidu, a Chinese internet giant has
recently entered in to the shared mobility and taxi services with automated cars (level 4).
The company has its project “Apollo” which includes partnership with almost 50 leading
companies (OEMs, Tier 1s, and technology providers) and universities across the globe.
Regressive R&D and permission from the regulators has enabled the company to test their
automated vehicles on road and evaluate the user experience.
The World Economic Forum has collaborated with Deloitte on the Seamless Integrated
quality (SIM) system. The thought is to form a group of guiding principles that may
facilitate the assorted components like Ministers of Transport, Automotive firms, Ride-
sharing firms and also the whole transport eco-system to reasonably and directionally
moving with a means that helps to induce a stronger and optimized outcome with an
investment effective integration.
The future of shared mobility with autonomous vehicles is a matter of disruption and
digitalization and that makes their introduction complicated however not inevitable.
Public safety, employability, social and cultural views and government support in different
geographies are all the factors that will have an effect on the potential of autonomy in
shared mobility in turning to reality. M14 Intelligence believes that the ownership of the
shared mobility services for high level of automation (level 4 and level 5) should be with
the OEMs and ride sharing companies and not the fleet owners or the customers, as this
will enable a cumbersome-free driving experience for users in the in-city and on-highway
environment.
During this time of speedy disruption, clearly the full mobility business is going through a
speedy amendment and there's a chance for firms to pursue shaping stratagems, that
with the all given uncertainty will bring an articulating and compelling future road of what
the market or businesses can seem like or what the structure needs to be shaped like.
1
1
ARBE Financial Model
As appendix material for this case study, we have included a ~5-year financial forecast
model from ARBE management. This xls file includes a summary income statement
and cash flow projection based on management’s business plan presented to
prospective investors in March 2021.
In no way are you expected to create output similar to this model, or even use this file,
but you may find it useful as you create your projections.
Please refer to the attached file for further details and remember—your job is to keep
your recommendations clear, concise, and high level. The financial model should
support your work, rather than become 1 the focus of it.
Creating Your Deck
Here are some guidelines and tips regarding how your
Google Slide Deck should be formatted and structured:
The slides will be evaluated out of 40 points and according to the following:
Category Mark
Issue diagnostic
Correct identification of the problem that the
organisation is facing? /10
Analysis of issues
How does the team view scope of the issue after it is
identified - what are the key bottlenecks or sub-issues /10
that contribute to the overall issue?
Metrics/validation
Data, analytics and visuals that confirm and support the
recommendations. /10
Category Mark
Engaging speaking
Does the team have an overall captivating speaking style?
(speech is well integrated with the Google slides; eye /10
contact with the audience; clarity of verbal articulation)
Teamwork
Did all the members of the team contribute equally
throughout their presentation and speech? /10
Q/A performance
How did the team respond to and address the judges'
questions? (supporting responses with data/evidence /10
from their own knowledge and the appendix; focus on
relevant facts; honest acknowledgement if the team did
not know the answer to a question)
BEST OF LUCK!
FUTURE OF
MOBILITY