Consumer Discretionary / Industrials

Henry Kwon

Thematic (Sector/Industry)

<p>We attended the <em><strong>AI in Automotive Conference</strong></em> hosted by Wards Intelligence and sponsored by Cray in Detroit on April 5.  The panel speakers were from auto supplier R&amp;D with no IR/CFO involvement so IR focus was low, with attendees in the audience mostly comprised of automotive OEMs like Daimler, and other suppliers.  </p><table class="table table-striped"><tbody><tr><td colspan="2"><h2>AI in Automotive Conference (Detroit, MI, Apr 5, 2018): Summary of Topics and Participants</h2></td></tr><tr><td><strong>Topic</strong></td><td style="text-align: center;"><strong>Featured Panel</strong></td></tr><tr><td>AI in Product Development</td><td style="text-align: center;">Bosch, Wards</td></tr><tr><td>AI in Future Factories &amp; Off Highway</td><td style="text-align: center;">Adient, Magna, ZF</td></tr><tr><td>Challenges to AI Implementation</td><td style="text-align: center;">Cray, Mobileye, Wards</td></tr><tr><td>AI in the Cockpit (UX)</td><td style="text-align: center;">Harman, Nuance</td></tr></tbody></table><div class="content-caption">Source: Conference Agenda</div><p><strong>Just because Autonomous Vehicles employ AI that does not make all automotive AI = Autonomous vehicles.  </strong>While autonomous passenger vehicles do take up a significant proportion of the automotive AI space, the field is much broader and more complex than what is typically covered in sell-side auto sector research.  </p><p><strong>Some key takeaways: </strong></p><ul><li>While still in development, Cost of Data on AI in general must come down to make it sensible for OEMs to commercialize and market products such as the AV.  However, the Cost of Data coming down will have to depend on how fast chip makers can achieve higher processing capacity on lower power consumption.</li><li>In the meantime, AI in AVs will draw electrical energy from the battery that is shared with the powertrain, and the smarter the car, the hungrier it will be.  What this means is that the quest to achieve near-zero traffic fatality can inherently clash with current regulations on vehicle emissions and the fuel economy (albeit the U.S. has moved to relax its standards - but other jurisdictions thus far have not).</li><li>Regulations for "Ethics" of AVs in which laws of physics force live/die decision-making on the AV, is non-existent or close to being non-existent in all jurisdictions around the world.  It may come as a surprise to many financial professionals, but since the mandate to develop AVs for development engineers are predicated on safety, it is really the suppliers who are beginning to lobby governments for clarity and uniformity on these issues.  Hence, the discussions on "ethics" and regulations were refreshingly candid at the conference, while such discussions could seem almost taboo in the financial community from what we have seen.</li><li>Off Highway, passenger vehicle UX and factory/Afterservice AI are all areas in which we believe investors should look closely into, and this will often times lead them to outside of the auto sector.  This is because these areas involve professional operators and situations not involving fatalities that largely eliminates the "ethics" question which can potentially cost suppliers billions of dollars in litigation.  We see these areas having the potential to take off faster in the Automotive AI space whereas Level 5 AV seems to be an ideal mission statement but not necessarily a realizable goal by 2030.</li></ul>

We attended the AI in Automotive Conference hosted by Wards Intelligence and sponsored by Cray in Detroit on April 5.  The panel speakers were from auto supplier R&amp;D with no IR/CFO involvement so IR focus was low, with attendees in the audience mostly comprised of automotive OEMs like Daimler, and other suppliers.  AI in Automotive Conference (Detroit, MI, Apr 5, 2018): Summary of Topics and ParticipantsTopicFeatured PanelAI in Product DevelopmentBosch, WardsAI in Future Factories &amp; Off HighwayAdient, Magna, ZFChallenges to AI ImplementationCray, Mobileye, WardsAI in the Cockpit (UX)Harman, NuanceSource: Conference AgendaJust because Autonomous Vehicles employ AI that does not make all automotive AI = Autonomous vehicles.  While autonomous passenger vehicles do take up a significant proportion of the automotive AI space, the field is much broader and more complex than what is typically covered in sell-side auto sector research.  Some key takeaways: While still in development, Cost of Data on AI in general must come down to make it sensible for OEMs to commercialize and market products such as the AV.  However, the Cost of Data coming down will have to depend on how fast chip makers can achieve higher processing capacity on lower power consumption.In the meantime, AI in AVs will draw electrical energy from the battery that is shared with the powertrain, and the smarter the car, the hungrier it will be.  What this means is that the quest to achieve near-zero traffic fatality can inherently clash with current regulations on vehicle emissions and the fuel economy (albeit the U.S. has moved to relax its standards - but other jurisdictions thus far have not).Regulations for "Ethics" of AVs in which laws of physics force live/die decision-making on the AV, is non-existent or close to being non-existent in all jurisdictions around the world.  It may come as a surprise to many financial professionals, but since the mandate to develop AVs for development engineers are predicated on safety, it is really the suppliers who are beginning to lobby governments for clarity and uniformity on these issues.  Hence, the discussions on "ethics" and regulations were refreshingly candid at the conference, while such discussions could seem almost taboo in the financial community from what we have seen.Off Highway, passenger vehicle UX and factory/Afterservice AI are all areas in which we believe investors should look closely into, and this will often times lead them to outside of the auto sector.  This is because these areas involve professional operators and situations not involving fatalities that largely eliminates the "ethics" question which can potentially cost suppliers billions of dollars in litigation.  We see these areas having the potential to take off faster in the Automotive AI space whereas Level 5 AV seems to be an ideal mission statement but not necessarily a realizable goal by 2030.

Notes from Detroit: The AI in Automotive Conference - The Suppliers' Perspective

Canada

Magna International Inc. retails auto parts. The Company offers body exteriors, chassis structures, transmissions, lighting, seating, and fuel systems. Magna International serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Magna International (MG CN)

Notes from Detroit: The AI in Automotive Conference - The Suppliers' Perspective

We attended the AI in Automotive Conference hosted by Wards Intelligence and sponsored by Cray in Detroit on April 5. The panel speakers were from...

Henry Kwon

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)