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Transformation of Automotive Industry Assessed in Brown Gibbons Lang Report

The automotive industry has entered a period of great transformation, according to the recently released Industrial Insiders report from Brown Gibbons Lang  (BGL). The Report identifies the key drivers underlying the “automotive revolution” that is expected over the coming decade: 1) the use of autonomous vehicles, 2) growing consumer demand for hybrid vehicles, and 3) increased government regulation requiring greater fuel economy.  

The revolution will unfold in a number of ways.  Technologic change will bring opportunities to the innovative companies engaged in the market.  Investment firms will review their portfolios more often to keep up with the move to self-driving vehicles-- bringing new opportunities to capitalize on.  Companies will pursue technology-driven M&A deals across the value chain so they can stay viable in an innovation race.

The BDL Report cites examples of business activities already underway:

First is the pursuit of developers of LIDAR sensors by large companies seeking this critical technology needed to commercialize production of autonomous vehicles.  Ford (Princeton Lightwave), General Motors (Strobe), Aptiv (nuTonomy), and Magna International (Innoviz Technologies) made either acquisitions or investments in this area to remain innovative and competitive.  

Second, the market’s move to hybrid and electric vehicles is prompting strategic acquisitions or investments in a range of technologies such as BorgWarner’s acquisition of Sevcon, a manufacturer of controllers and system components necessary in the manufacture of electrically powered vehicles.  

Third, global CO2 and fuel economy regulations are driving increased demand for lightweight materials.  AK Steel acquired Precision Partners, a company specializing in light weighting and complex metal components.