Takata high-tails it to­ward driver­less cars

The em­bat­tled parts maker seeks a fu­ture in au­ton­o­mous car gear The com­pany is con­sid­er­ing “how to keep their chips in the game”

Bloomberg Businessweek (Europe) - - Contents - −Craig Trudell, with Yuki Hagi­wara

One might think that an auto parts com­pany whose main prod­uct is at the cen­ter of a 19-mil­lion-ve­hi­cle re­call in­volv­ing a dozen car­mak­ers would have its hands full. But Takata, the Ja­panese maker of air bags that killed nine mo­torists and in­jured about 100 more, is turn­ing to­ward the bur­geon­ing field of driver­less cars—a mar­ket that may be worth $42 bil­lion an­nu­ally by 2025, es­ti­mates Bos­ton Con­sult­ing Group.

Au­ton­o­mous ve­hi­cles pose a threat to Takata and other auto safety sup­pli­ers be­cause such cars could even­tu­ally ren­der steer­ing wheels ob­so­lete, and sharply de­creas­ing crashes would un­der­mine the need for seat belts and air bags. Those three prod­ucts ac­count for 86 per­cent of Takata’s sales. Nev­er­the­less, says Kirk Mor­ris, vice pres­i­dent for engi­neer­ing, Takata has signed up au­tomak­ers to buy its safety prod­ucts for au­ton­o­mous cars start­ing late this year. “The whole in­dus­try is try­ing to grap­ple with how to keep their chips in the game and a seat at the ta­ble,” says Scott Upham, founder of Valient Mar­ket Re­search. “Takata is try­ing to take their core ca­pa­bil­i­ties and plug them into the new re­al­ity, which is au­ton­o­mous driv­ing.”

Takata’s de­vel­op­ment of au­ton­o­mous driv­ing sys­tems started years ago and hasn’t been af­fected by the air bag cri­sis, Mor­ris says. “Th­ese tech­nolo­gies will be nec­es­sary in ev­ery semi­au­tonomous or au­ton­o­mous ve­hi­cle,” he says. “In­no­va­tion drives our busi­ness. We want to con­tinue be­ing an in­no­va­tor.”

In pri­vate ses­sions with cus­tomers at the 2016 Con­sumer Elec­tron­ics Show in Las Vegas in early Jan­uary, Takata demon­strated a mon­i­tor­ing sys­tem that uses a cam­era and spe­cial lights to track the gaze and head move­ment of a per­son be­hind the wheel. Car­mak­ers want such sys­tems to en­sure that

driv­ers—still re­quired by cur­rent law to have their hands on the wheel of a sen­sor-con­trolled ve­hi­cle—pay at­ten­tion and can re­take con­trol of an au­ton­o­mous car if needed, Mor­ris says.

“The holy grail is fully au­ton­o­mous, and then there are steps where the driver is still in the loop,” says Ja­son Lis­se­man, a Takata engi­neer­ing di­rec­tor. “We’re try­ing to keep the driver in the loop.” One Takata prod­uct is an LED bar em­bed­ded in the top of the steer­ing wheel, which could warn the driver of a po­ten­tial col­li­sion or com­mu­ni­cate when it’s OK to let go of or re­take the wheel from the au­ton­o­mous sys­tem. An­other sen­sor sys­tem can de­tect whether the driver is touch­ing the steer­ing wheel.

One au­tomaker has a con­tract with Takata to put the cam­era-based mon­i­tor­ing sys­tem into pro­duc­tion next year in about 10,000 ve­hi­cles, says Mor­ris, who de­clined to name the cus­tomer. The cost of the sys­tem to man­u­fac­tur­ers, which could range from about $100 to $400 per ve­hi­cle, will drop as pro­duc­tion in­creases. Sev­eral car­mak­ers will use the steer­ing wheel sen­sor sys­tem be­gin­ning in late 2016, with a to­tal vol­ume of about 60,000 ve­hi­cles in the first year, he says. The light bar’s de­but is sched­uled for 2017.

Still, the air bag fail­ures could stall the driver­less-gear push. “It may be dif­fi­cult for Takata to win or­ders from car­mak­ers for new-model parts in bid­ding af­ter los­ing their trust,” says Takahiro Kusakari, a fund man­ager at Sawakami As­set Man­age­ment, once one of Takata’s big­gest share­hold­ers. And Takata, which re­cently cut its an­nual profit forecast by 75 per­cent for the fis­cal year end­ing in April, says it’s still un­able to es­ti­mate its full re­call costs. “Takata will have to pay one-time losses from their op­er­at­ing profit, pay the cost for the class-ac­tion law­suits, and then it may not have much for re­search and de­vel­op­ment,” Kusakari says. “So af­ter this tur­moil is gone, Takata’s prod­ucts may not be com­pet­i­tive any­more and be­hind the other tech­nolo­gies.”

The bot­tom line Takata, whose faulty air bags spurred the re­call of about 19 mil­lion ve­hi­cles, is plow­ing ahead with gear for driver­less cars.

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