Bosch, ZF, others jockey for fast-growing part the future can't do without

In a future where cars and trucks will rely increasingly on seeing in the dark, making drivers comfortable and sensing danger, there is a new hot commodity: sensors.

Lots of them.

The market for sensors is expected to explode in the coming decade, outpacing forecasts for global auto production and racing to keep up with the rollout of electronic components, such as night vision and hands-free steering systems.

Why? Because the new innovations in electronic gadgetry do not require one new sensor — they need several of them.

"If you start looking into the car where the sensors are hidden, it's amazing, really. The number of applications is going through the roof," said Frank Findeis, vice president for automotive sensors at German semiconductor maker Infineon, which along with Robert Bosch is one of the top two suppliers for the automotive semiconductors that are the "brain" of modern sensors.

"If you go into an entry-class car, you probably end up with 20 to 50 sensors that use semiconductors," Findeis said. "If you go to a high-end car, you easily end up with 100."

This bonanza-in-progress is not lost on the world's largest auto parts companies. Tier 1 titans such as Bosch, Continental, Valeo and ZF Friedrichshafen view electronic sensors as no less lucrative a car part than light dimmers, transmission gears or parking brakes.

"We expect sensors to become more and more relevant in all areas of the vehicle," said Thomas Irawan, senior vice president of the driver assistance systems business unit at Bosch. "Specifically in the ADAS area, we have been seeing increasing installation rates for years."

Bosch has sold more than 700 million sensors for driver-assistance systems in recent years, Irawan said, and it has doubled its sales in the area in the past three years, although he would not provide figures.

A recent study by Roland Berger found the overall bill for the electronics in a midsize premium car with an internal combustion engine was $3,185 in 2019. By 2025, that cost will rise to $7,030 for a comparable battery-electric car.

A significant chunk of that increase — about $413 per vehicle — will be just for the sensors to facilitate the radar, lidar and camera components to support driving assistance, the consultancy said.

Safety regulations are one of two key drivers in the growing sensor market. Bosch's multicamera parking system combines four cameras and relies on ultrasonic sensors to create a 360-degree representation.

"On the one side, we have customer demand for more comfort, which leads to more advanced driver assistance systems as standard equipment," Irawan said. "On the other side, we have legal requirements ... that are really pushing the safety functions in the vehicle."

It can be difficult to measure the size of the sensor market because nearly every supplier considers it from a different angle, according to their strengths. All agree that the sector will continue to grow strongly for the next decade in most, but not all, areas, because the automotive megatrends — electrification, automation, mobility as a service — are not possible without sensors.

Guillaume Devauchelle, head of innovation at the French supplier Valeo, estimates that the current global market for sensors is in the range of $11.8 billion to $14.2 billion a year. But that figure that will rise to $41 billion to $47 billion a year by 2030.

Valeo, a company with roots in thermal components, lights, windshield wipers and transmissions, derived a fifth of its global automotive sales of $18 billion in 2019 from sensors.

Valeo started in the sensor market in the early 1990s, supplying ultrasonic sensors for optional parking alerts on the BMW 7 Series. Now the supplier sells 100 million sensors a year, Devauchelle said, including those in systems for remote parking.
"At the beginning it was only rear sensing, with four sensors, and the take rate was very low," he said. "Now to achieve the complete story for automatic parking maneuvers, super-premium cars can be equipped with 25 sensors," he said, including cameras producing images that are stitched together to form what he described as a cocoon around the car.

It's not all big growth ahead, McKinsey forecasts. As the industry shifts to electric powertrains, not surprisingly, the need for internal combustion powertrain sensors will decline globally — but just barely. Those applications, including, for example, sensors to detect camshaft positioning, will fall by 1 percent by 2030, according to McKinsey.

Almost everywhere else, it will be steady annual growth, the consultancy concluded.

Body sensors, which monitor whether a door or charging port is open, or detect rainfall for automated wiping systems, will grow by 5 percent annually as automakers add more such features.

Driving assistance and automated driving sensors will drive growth for the overall sector, with demand for lidar, radar and cameras growing by 12 percent annually, and sensors for functions such as airbags and tire pressure by 6 percent annually.

Even chassis sensors, representing a mature market for functions such as braking, steering and suspension, will grow at an annual rate of 4 percent because of their importance for driving assistance and automated driving.