Technology driven M&A in the automotive industry - From automobile to autonomous EY Study | October 2018
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Technology driven M&A in the automotive industry From automobile to autonomous EY Study | October 2018
Contents
1. Key messages........................................................................................ 3
2. Context for this study...................................................................... 4
3. Deal development at a glance................................................... 6
4. Technology deals in automotive.............................................. 8
5. OEMs and supplier compared.............................................. 12
6. International M&A.......................................................................... 14
7. Appendix............................................................................................... 16
Methodology & Authors.............................................................................. 22
1 Key messages
1 2 3 4 5
Technology Core Automotive Automotive M&A
M&A technologies OEMs suppliers in Germany
The rapid technological changes Core technologies that drive Automotive OEMs shift their Automotive suppliers remain German companies show a
bring the automotive industry tech-deals evolve around the attention to revenue creation and focused on product innovation particular appetite for technologies
at the verge of a strategic crisis, electrification of Powertrain, use M&A to reinvent themselves and move up the value chain to for Mobility as a Service,
despite record sales. Companies Autonomous Driving capabilities, as Mobility as a Service providers challenge the space typically Connectivity and Autonomous
move to M&A to rapidly adapt their and Connectivity. In particular, with shared vehicle capabilities. occupied by OEMs. The fight Driving capabilities, while
portfolios and proactively react Software Applications play an over the supremacy of core acquisitions for Powertrain
to the changing environment. increasing role in M&A deal technologies in Powertrain and technologies decrease.
activity. Hardware deals revolve Autonomous Driving technologies
As a result, technology driven around Power Electronics intensifies. As a leader in the global
M&A plays an increasing role in and sensors. automotive industry, Germany
the automotive industry, and has more outbound M&A activity
increased by 60% since 2015. Innovative processing and than inbound.
manufacturing technologies
such as 3D Printing play no role
in automotive M&A deals.
Technology driven M&A in the automotive industry From automobile to autonomous | 3
2 Context for this study
As industries are converging, automotive firms turn to M&A to keep pace with
technological change
The automotive industry at the verge of a revolution Technological trends in the automotive industry
The automotive industry is undergoing unprecedented Despite record sales, the automotive industry is at the Digitalization is transforming entire businesses, from
changes on multiple fronts, from socio-political verge of a strategic crisis, with new technologies being internal processes over product capabilities to unexploited
pressure for a low-carbon footprint, over changing introduced every year, and incumbent firms lose value streams. EY has identified three key areas impacted
customer demands from multi-purpose vehicles to ground in core competencies of the future. For the first by technological advances in the automotive industry:
diverse mobility offerings, to radical product time, technological core competencies were not
innovations enabled by breakthroughs in basic developed in-house, but brought in by new entrants 1. Technologies related to processes
technologies previously not available. that lead the way to the digitalization of core (‘Process technologies’):
components. In this environment, M&A becomes a key • New technologies can drive efficiency in the processes
To succeed in this environment, players at every level vehicle to defend the market position in the future. of the company, such as manufacturing processes
of the value chain — from component suppliers to • Key processing technologies in the automotive industry
commercial or light vehicle manufacturers to retailers This study looks at technological driven M&A activity in include Industry 4.0, 3D Printing, Smart Supply Chain
— have to review their product portfolio and adapt to the automotive industry from 2015 to 2017. Management, and Clean Production
the changing needs in the automotive value chain.
2. Technologies impacting the final product
Current situation in the business life cycle (‘Product technologies’):
1 2 3 4 • Technologies that are applicable and planned for the final
Introduction Growth Maturity Decline product of the company, i.e. technologies that are applied
to the vehicles. Such technologies can revolve around
Indicators Indicators
Status Quo2017
• From idea to • Growing market hardware, but are increasingly driven by software
Strategic Crisis
business success
3 • Key product innovations include new Powertrain
• Searching for • Increasing sales
product market • Reducing costs technologies, Connectivity, and Autonomous Driving
fit • Some profits
• Low sales Indicators Indicators Operational Crisis
• High costs • Product offerings • Misaligned strategy 3. Technologies aimed at revenue improvements
3
• No profits fit demand • Introduction of new
(‘Revenue stream technologies’):
• Stable sales technologies
• Cost efficiency • Loss of core • New technologies that are used to generate additional
• Increasing profits competences in the
revenue, in particular by exploiting new sales channels
industry and entry Indicators
of new competitors • Decline in • Revenue improving technologies include E-Commerce
revenueand profits Financial Crisis
• Changing customer 3 for the sale of vehicles and parts, focused dealership
demands/ • Operating loss
introduction of new strategies for electronic vehicles, and new offerings
Sales
customer segments
for Mobility as a Service (MaaS)
Time
4 | Technology driven M&A in the automotive industry From automobile to autonomous
“
The battle for disruptive technologies is red hot.
Established automotive players are fighting for the
lead in key future technologies, worrying that new
entrants from the digital space will inject themselves
between today’s players and their customers.
Upcoming technology leaders will leverage their
capabilities to gain a footing in the industry. M&A is
mission critical for the incumbent players to conquer
and retain that space, protecting current revenues
and opening up new business models.
Dr. Marc Förstemann
EY Partner, GSA Transportation Transaction Advisory Leader
”
Technology driven M&A in the automotive industry From automobile to autonomous | 5
3 Deal development at a glance
Number of technology investments increased by 60% since 2015 —
deal values declined by 38% in the same period
Evolution of Technology Automotive Investments Degree of Investment
Degree of Investment 2015 2016 2017
1,400 100% 93% 100%
∑ 1,238 91%
∑ 1,231 ∑ 1,212 89%
1,200 82 131 Majority
104 33 36 47
Investment
Share of Investment Degree
80% 80%
72%
Number of Investments
69%
Share of Investments
1,000
59%
60% 60% Minority
800 15 25 18
Investment
41%
600 1,149 1,108 1,107 40% 40%
31%
28% Undisclosed/Unknown
400 34 43 66
Deal Value
20% 20%
200 11%
7% 9%
Total 82 104 131
0 0% 0%
2015 2016 2017 2015 2016 2017 2015 2016 2017
Non-tech investments Tech investments Majority Investment (>50% of Shares) Majority Investment (3 Deal development at a glance
In 2017, technology driven deals are centered around powertrain, autonomous
driving and connectivity
Type of Technology
Powertrain
36 (28%) 21 (16%) 140 ∑ 131
Autonomous Driving
16 (12%)
Connectivity 120
∑ 104
Others
100 14
Number of deals
∑ 82
Technology
Mobility as a Service/9 (7%) 80 13
Industry 4.0/8 (6%) 107
driven M&A deals (82%)
60
Sales/4 (3%) 81
32 (24%)
in 2017 67
40
Product Architecture/4 (3%)
Vehicles/3 (2%) 20
After Sales/3 (2%) 2 9 8 (6%)
0
2015 2016 2017
Flying Vehicles/1 (1%)
Process Product Revenue Stream
42 (32%)
∑ 131 Technology driven M&A deals in 2017 Commentary
• In 2017, key technologies targeted via M&A included:
• Powertrain, with 42 deals (32%)
• Autonomous Driving, with 36 deals (28%)
• Connectivity, with 21 deals (16%)
• Other, with 32 deals, including Mobility as a Service technologies for revenue improvement
and Industry 4.0 to increase manufacturing process efficiency
• Product-related technologies are again in the focus of automotive firms:
With 82% of all deals being centered around technologies to optimize the automobile as the
core ‘product’, process-focused technologies as well as technologies to explore and develop
additional revenue streams (e.g. car sharing concepts and applications) account for the
minority of deals with 6% and 12% respectively
Technology driven M&A in the automotive industry From automobile to autonomous | 74 Technology deals in automotive
The number of deals made for product technologies is steadily increasing —
driven by autonomous driving, powertrain and connectivity
Number of deals in Product technologies 1. Powertrain
∑ 27 ∑ 38 ∑ 42
∑ 67 ∑ 81 ∑ 107
120
50 • The steep increase of deals aimed at acquiring
40 3 technologies for electric vehicles in 2016 was followed
2 5 Hybrid technologies
5 3
3 30 2 Fuel economy/emissions by another strong year with 31 deals in 2017
4
8 • Alternative technologies for zero emission powertrains,
2%
100
Fuel cell
+3
20 1
29 31
Electric vehicles like fuel cell technology, is overall small but shows steady
10 18
growth, as companies keep options open
80 1% 5 42
+2 0
2015 2016 2017
5
2
60
38 1
27 2. Connectivity
21
40 ∑ 21 ∑ 14 ∑ 21
1 14
Telecommunications • After a weak year in 2016, deal activity for technologies
25 Software (apps, OS and in relation to Connectivity of vehicles rebounds in 2017
21 4
20 36 20
5 3 cyber sec.) • In particular deals for software applications have
1 20 Smart city increased from just 2 in 2016 to 7 in 2018
15 7
10 6
6 Entertainment • For the first time, technologies connecting vehicles to
0 10 3
2015 2016 2017 6 2 Electrification the Smart City play a role, with a total of 3 deals
5
5
3 5 2 Control systems
Vehicles Connectivity
1 1 1
Product Architecture Big Data
0
2015 2016 2017 Augmented reality
Powertrain Autonomous Driving
Flying Vehicles
3. Autonomous Driving
• Most deals are made for Powertrain related technologies, ∑ 10 ∑ 20 ∑ 36
with Autonomous Driving in the heals, and Connectivity 40 Steering systems • Autonomous Driving has sparked the interest of investors
catching up to 2015 numbers after a drop in 2016 32 Sensors and cameras in 2017, with a staggering total of 36 deals made for
12
24
Semiconductors technologies related to Autonomous Driving, up from
6 Navigation only 10 deals in 2015 and 20 in 2016
16 1 8
6
1 2 Lights • Sensors and cameras lead the way in M&A activity for
8 1 3 5
2 4 2 Control systems Autonomous Driving technology, with 12 deals in 2017
5 3 4
0
2015 2016 2017 Artificial intelligence
8 | Technology driven M&A in the automotive industry From automobile to autonomous4 Technology deals in automotive
Investments targeting revenue improvements are focused on new retail channels
like Mobility as a Service
Number of deals related to Revenue 1. Mobility as a Service
18
12
∑ 10 • The technological portfolio for moving to mobility service
∑9 Vehicles rental
9 2 provider is diverse, with acquisitions made to advance
∑ 16 2
16 1 Taxi service provider rental services, taxi services, shared vehicle services and
%
+14 6
∑4 Shared vehicles
∑ 14 1
7 customer apps
14 +8% 4 3 1 6 Apps
∑ 13
2
• Overall, deals still concentrated on shared vehicle
1
3 0 providers in 2017, with a minor decrease from 7 to 6 deals
12 2015 2016 2017
4 • Somewhat surprisingly, stand-alone deals made for apps
10 aimed at mobility services do not play a significant role in
the move of the automotive industry from manufacturing
8
9 to service providers
4
6 10
4 2. Sales
5
2
3 12 • Investments were made to advance technologies for
1 9
Used vehicles classic distribution channels via retailers, to open new
0
2015 2016 2017
Focused on electric channels in E-Commerce, and in particular to move into
6
∑4 ∑4 vehicles
After Sales 1 ∑3 providing Mobility as a Service
3 1 1 3 E-commerce
Mobility as a Service 2 2
• In 2017, the focus on E-Commerce channels shifted to
1
Sales
0
2015 2016 2017 the sale of used vehicles, with a total of 3 deals
• Investments made into technologies to improve sales 3. After Sales
are steadily increasing
• While 2015 saw an equal distribution between 12 • For After Sales, deals to acquire technologies focus
technologies aimed at vehicle sales, parts sales and the 9 Parts ordering on remote diagnostics for users and technicians.
new channel of mobility services, the focus shifted to 6 ∑5 E-commerce This technology can help in the development of
1 ∑3
deals aimed at providing Mobility as a Service as a new 1 1 Diagnostics autonomous vehicles, for which remote diagnostics
3
channel for sales ∑1 plays a key role for efficient maintenance
3 2
1
0
2015 2016 2017
Technology driven M&A in the automotive industry From automobile to autonomous | 94 Technology deals in automotive
Industry 4.0 dominates the technology driven deals in advancement of
manufacturing and processing techniques
Number of deals in Processing Technologies Main technologies within the Industry 4.0 deals
10 10
∑9
−33%
1 ∑8 ∑8
8 8
1 3% 1
+3
∑6 Robotics
%
6 6
50
1 Electronics
+3
4 Software
IoIT
%
00
4 6 8 4
+2
3 Big Data
∑2 ∑2
2 2 2
1 1
2
1 1 1 1
0 0
2015 2016 2017 2015 2016 2017
Clean production
Smart Supply Chain
Industry 4.0
3D Printing
Commentary
• Overall, investments made to advance processing technologies are still
high with 8 deals, down from 9 in 2016 but up from only 2 in 2015 • The technologies driving the Industry 4.0 related deals are diverse, from Electronics
• The deals are driven by an interest in Industry 4.0 technologies, which hardware, over Software, to Internet of Industrial Things (IoIT), Robotics and Big Data
shows a steady increase since 2015 and is up two deals since 2016 • In 2017, Electronics Hardware played a larger role for Industry 4.0 related deals
• While in 2016 three deals aimed at reducing emissions, smart supply chain for the first time
management and 3D Printing, all deals in 2017 focused on Industry 4.0 • Big Data storage, handling and mining still plays only a minor role, with only 1 deal in
• New manufacturing techniques such as 3D Printing play no role in the 2016 and 0 deals made in 2015 and 2017
technology driven M&A deals in 2017 • Overall, the number of investments made for Industry 4.0 software, in particular
smart control software, decreased from 3 deals to 2 from 2016 to 2017
10 | Technology driven M&A in the automotive industry From automobile to autonomous“
With rapid technological changes in the market,
firms need to review their portfolios and rethink
their business models. While OEMs reinvent
themselves as service providers, suppliers attack
to fight for a leading position as providers of
core future technologies.
Constantin M. Gall
EY Partner, GSA Automotive and Transportation Transaction Advisory Leader
” Technology driven M&A in the automotive industry From automobile to autonomous | 115 OEMs and supplier compared
Automotive suppliers remain focused on product innovation, while OEMs
increasingly shift attention to technologies for revenue creation
Type of Acquirer
100%
• In 2017, automotive suppliers closed 110 technology deals — 5x more investments than
made by OEMs (21 deals)
+31%
110 • After a strong year of 2016 for OEMs, suppliers came back and increased their share of
80% +14%
technology driven M&A activities from 81% to 84% in 2017
Number of Investments
84
74 • Despite the decrease in percentage, OEMs’ deal level remained stable and actually
81% 84%
60%
90% Supplier increased in absolute terms, with 5% growth in number of deals
OEM
40% +5%
+150%
20 21
20%
8
19% 16%
10%
0
2015 2016 2017
Technology Investments per Type of Acquirer
∑ • The majority of deals done by OEMs still reverts around product related technologies,
6% 7
Revenue Stream 7% 6 with 57% in 2017
14% 10 • However, the focus of technology M&A activities steadily shifts towards revenue stream:
Supplier
86% 95
Product 82% 69 Nearly every second deal in 2017 (43%) is linked to future revenue streams (e.g. ‘Mobility as
83% 62 a Service’ or sales technologies). At the same time, product-related investments are
8% 8
Process 11% 9 gradually decreasing from 62% in 2015 to 57% in 2017
3% 2 • Automotive suppliers have an even stronger focus on investments to product-related
43% 9
Revenue Stream 40% 8 technologies, as deals account for 83%, 82% and 86% in years 2015–17
38% 3 • In contrast to OEMs, suppliers invest in process-related technologies: In 2017, 8% of all deals
OEM
57% 12
Product 60% 12 were related to process technologies. In addition, suppliers constantly invest less in revenue
62% 5 stream technologies with a declining share of 14% to 6% of all investments in 2015–17
0% 20% 40% 60% 80% 100%
2017 2016 2015
12 | Technology driven M&A in the automotive industry From automobile to autonomous5 OEMs and supplier compared
OEMs invest in mobility as a service and sales technologies whereas suppliers
lead in investments in powertrain and autonomous driving
Invested Technologies per Acquirer (in % of total OEM/supplier deals, 2017)
50% 1 2 3
40%
35%
29% 29%
30%
19% 19%
20%
14% 15% 14%
10% 7%
4% 5%
3% 3% 3%
0% 0% 0% 0% 1% 0%
0
Industry 4.0 Powertrain Autonomous Connectivity Product Vehicle Flying Vehicles Mobility as a Sales After Sales
Driving Architecture Service
Process Product Revenue Stream
Supplier OEM
Commentary
EY Point of View
• In 2017 technology driven M&A activities, a strong shift in investment and development
focus by both OEMs and suppliers became apparent: • OEMs center their technology driven M&A efforts on exploring new
1 OEMs do not invest in Industry 4.0 technologies, but leave the field to automotive revenue streams by investing in Mobility as a Service and sales-related
suppliers with investments accounting for 7% of total deals technologies instead of focusing on product development, which is at
2 In addition, suppliers attack OEMs in their core fields of product development and the core of their traditional DNA
innovation: Investments in Powertrain and Autonomous Driving technologies represent • Suppliers react quickly and shift their attention to Powertrain and
35% and 29% of all deals Autonomous Driving technologies, filling the investment
3 At the same time, OEMs focus to unlock new revenue streams with 29% and 14% of all gap and thereby attacking OEMs in
investments made in Mobility as a Service and sales-related technologies respectively. their core competencies
However, no M&A activities by OEMs in relation to after-sales technologies were recorded
• Besides, one notable technology investment in flying vehicles by OEMs was made
in 2017 (5%)
Technology driven M&A in the automotive industry From automobile to autonomous | 136 International M&A
In Europe 2017, the most active countries France, United Kingdom and Germany
are net acquirers — South Korea, Israel and USA are net sellers
Top 10 most overall M&A in 2017
(# of deals)
Sold ∑ 5 Bought ∑ 8 Sold ∑ 6 Bought ∑ 10 Sold ∑ 11 Bought ∑ 16 Sold ∑ 31 Bought ∑ 35
Product archit. Auto Driving Connectivity Powertrain Powertrain MaaS Powertrain Powertrain
1 China................................................................... 694 2 deals (40%) 3 deals (38%) 2 deals (33%) 3 deals (30%) 3 deals (27%) 6 deals (38%) 16 deals (52%) 20 deals (57%)
2 United States................................................. 690 Powertrain Connectivity Sales Connectivity MaaS Connectivity Connectivity Connectivity
1 deal (20%) 2 deals (25%) 1 deal (17%) 3 deals (30%) 2 deals (18%) 3 deals (19%) 6 deals (19%) 6 deals (17%)
3 Japan................................................................. 254
After Sales Powertrain Powertrain Auto Driving Connectivity Auto Driving Auto Driving Auto Driving
4 South Korea................................................... 220 1 deal (20%) 1 deal (13%) 1 deal (17%) 2 deals (20%) 2 deals (18%) 3 deals (19%) 4 deals (13%) 4 deals (11%)
5 France................................................................ 202 Auto Driving Product archit. Auto Driving Sales Sales Powertrain Vehicle Vehicle
1 deal (20%) 1 deal (13%) 1 deal (17%) 1 deal (10%) 2 deals (18%) 2 deals (13%) 2 deals (6%) 2 deals (6%)
6 Germany........................................................... 193
MaaS MaaS Industry 4.0 Auto Driving Sales Industry 4.0 Industry 4.0
7 Russian Fed.................................................... 138 1 deal (13%) 1 deal (17%) 1 deal (10%) 1 deal (9%) 1 deal (6%) 2 deals (6%) 1 deal (3%)
8 United Kingdom........................................... 133 Buyer in 62% of deals Buyer in 63% of deals Buyer in 59% of deals Buyer in 53% of deals
9 Unknown........................................................... 129
10 India.................................................................... 102
Sold ∑ 29 Bought ∑ 23
Top 10 technology investments in Auto Driving
9 deals (31%)
Auto Driving
11 deals (48%)
2017 (# of deals) Powertrain Powertrain
8 deals (28%) 6 deals (26%) Sold ∑ 4 Sold ∑ 9 Bought ∑ 8 Sold ∑ 5 Bought ∑ 7
Connectivity Connectivity Auto Driving Auto Driving Auto Driving Auto Driving Auto Driving
1 China...................................................................... 35 4 deals (14%) 2 deals (9%) 3 deals (75%) 5 deals (56%) 5 deals (63%) 2 deals (40%) 4 deals (57%)
2 United States.................................................... 23 MaaS After Sales Seller in all deals Powertrain Powertrain Connectivity Connectivity
3 deals (10%) 2 deals (9%) 3 deals (33%) 2 deals (25%) 2 deals (40%) 2 deals (29%)
3 Germany.............................................................. 16
After Sales Vehicle Connectivity Connectivity Powertrain Powertrain
4 France................................................................... 10 2 deals (7%) 1 deal (4%) 1 deal (11%) 1 deal (13%) 1 deal (27%) 1 deal (14%)
5–6 South Korea......................................................... 8 Seller in 56% of deals Buyer in 53% of deals Buyer in 58% of deals
5–6 United Kingdom................................................. 8
7 Japan....................................................................... 7
8 Sweden.................................................................... 3 Commentary
9–10 Hong Kong............................................................. 2
9–10 South Africa......................................................... 2 • 5 of the top 7 most active nations were net buyers in 2017
9–10 Switzerland........................................................... 2 • German companies sold primarily Powertrain businesses and invested in
9–10 Canada.................................................................... 2 service-oriented and software-based products and solutions
9–10 Unknown................................................................. 2 • As a country, Israel was the most significant net seller, with a distinct
9–10 Italy........................................................................... 2 emphasis on companies related to Autonomous Driving
9–10 Luxembourg......................................................... 2
14 | Technology driven M&A in the automotive industry From automobile to autonomous6 International M&A
In international M&A, Germany is a net acquirer with a strong focus on mobility
as a service providers
# deals Target technology
1 Powertrain
Outbound M&A from Germany to target country in 2017
# deals Target technology
1 Autonomous Driving
# deals Target technology
1 Autonomous Driving
# deals Target technology
1 Mobility as a Service
# deals Target technology
2 Mobility as a Service
# deals Target technology
1 Connectivity
# deals Target technology
1 Mobility as a Service
# deals Target technology
1 Powertrain
Commentary
# Bought ∑ 9 # Sold ∑ 4
• In 2017, Germany was a net acquirer with a total of 9 outbound international
4 Mobility as a Service 2 Powertrain
deals vis-à-vis 4 inbound deals
2 Connectivity 1 Connectivity
2 Autonomous Driving 1 Industry 4.0
• No particular focus region has been identified, as the target countries
1 Powertrain show a wide spread
• The majority of deals target Mobility as a Service technologies, followed
by Connectivity and Autonomous Driving
Technology driven M&A in the automotive industry From automobile to autonomous | 15Appendix 16 | Technology driven M&A in the automotive industry From automobile to autonomous
7 Appendix/Automotive M&A in 2017
A search for Autonomous Driving technology is driving M&A activities in 2017,
as deals for Connectivity technologies rebounds
Number of deals related to Autonomous Driving technologies Number of deals related to Connectivity technologies
50 25
∑ 21 ∑ 21
Telecommunications
Steering systems 40 20 3 (14%)
∑ 36 5
Software
−3
1 (3%)
%
Sensors and cameras
3%
0
+5
(Apps, OS, cyber sec.)
Semiconductors 30 15 ∑ 14 7 (33%)
%
12 (33%)
0
Smart city
+8
6
Navigation
Entertainment
∑ 20 6
Lights 20 6 (17%) 10 3 (14%)
Electrification
8
%
Control systems
00
6 (17%) Control systems 6 2
+1
∑ 10 2 5 (24%)
Artificial intelligence 10
1 5
1 3 5 (14%) Augemented reality
1 5
2
4 2 (6%) 3
2 (10%)
5 4 (11%)
3 1 1 1 (5%)
0 0
2015 2016 2017 2015 2016 2017
Commentary Commentary
• Several technologies drove the increase in M&A activities for Autonomous Driving: • After a weak year in 2016, deal activity for technologies in relation to Connectivity of Vehicles
• Sensors and cameras lead the way in M&A activity for Autonomous Driving technology, rebounds in 2017
with 12 deals in 2017 • In particular deals for software applications have increased from just 2 in 2016 to 7 in 2017
• A new interest in smart lighting systems arose in 2017, as lighting systems develop • New technologies that appeared for the first time in 2017 are:
to become a key technology in support of sensors • Technologies connecting vehicles to the smart city, with a total of 3 deals
• The strongest increase in deals involved semiconductors, from 2 deals recorded • Augmented reality technologies, with 1 deal in 2017
in 2016 to 6 deals in 2017 • Entertainment systems, which were robust through the year 2016, appear stable for 2017
• Navigation systems increased from 3 to 6 deals • General telecommunications technologies decreased from 6 deals in 2016 to just 3 in 2017
• Deals for Artificial Intelligence (A.I.) technology remains stable and robust,
with 4 deals in 2017
Technology driven M&A in the automotive industry From automobile to autonomous | 177 Appendix/Automotive M&A in 2017
Deals aimed at acquiring technologies for electric vehicles surge, as fuel economy
and efficiency of contemporary engines fade out
Number of deals related to Powertrain technologies Number of deals for key Powertrain technologies
50 50
∑ 42
1% 3
40 ∑ 38 +1 40
2 Transmissions
5
1%
5 Power electronics
3 ∑ 31
+4
Hybrid technologies
∑ 29 +7%
30 2 30 Electrification
∑ 27
Fuel economy/emissions
8 12 Cooling
1%
+6
Fuel cell 8
Control systems
20 20 ∑ 18 4
Electric Vehicles 1 1 3
31 2 1 Battery charging
29 6 1
5 2
Battery
10 10
18 5
12
10
5
0 0
2015 2016 2017 2015 2016 2017
Commentary Commentary
• The steep increase of deals aimed at acquiring technologies for Electric • Within the Electronic Vehicle technology sector, two core technologies play a particular role:
Vehicles in 2016 was followed by another strong year with 31 deals in 2017 • Battery technologies are still highly sought after, with 12 deals in 2017
• Alternative technologies for zero emission Powertrains, like Fuel Cell • Power electronics, including Electronic Engines, caught up with Battery technology with
technology, is overall small but shows steady growth, as companies keep equally 12 deals in 2017
options open • Interestingly, acquisitions for Battery Charging infrastructure decreased from 5 in 2016 to
• Deals aimed at Hybrid technologies are still increasing from 2 in 2016 only 2 deals in 2017, despite the move from Hybrid to Electric Vehicles
to 3 in 2017, despite the strong deal-flow associated with Electric Vehicles
technologies
18 | Technology driven M&A in the automotive industry From automobile to autonomous7 Appendix/OEMs and suppliers compared
Automotive suppliers dominate acquisitions of key technologies for powertrain
and autonomous driving and lead in industry 4.0
Invested Technologies — Details (Number of deals, 2017)
∑ 31
30
Automotive Supplier
OEM
20
28
∑ 12
10
∑7
∑6 ∑6 ∑6
∑5 ∑5 12 ∑5
∑4 2 ∑4
∑3 ∑3 4 ∑3 5 ∑3 ∑3 ∑3
∑2 5 ∑2 4 ∑2 ∑2 ∑2
5 3 5 ∑1 ∑1 2 ∑1 1 4 ∑1 ∑1 ∑1 1 ∑1 ∑1 ∑1 ∑1 ∑1 ∑1
3 3 3 3 4 3
1 2 1 2 1 1 2 1 2 1 1 1 1 2 1 2 1 1 1 1 2 1 1
0
Electric vehicles
Fuel cell
Fuel economy/emissions
Hybrid technologies
Control systems
Lights
Navigation
Sensors and cameras
Artifical intelligence
Steering systems
Control systems
Entertainment
Software (apps, OS and cyber sec.)
Shared vehicles
Parts ordering
Taxi services provider
Vehicles
IoIT
Other
Semiconductors
Electrification
Smart city
Telecommunications
Electronics
Robots
Software
Used vehicles
Fuel economy/emissions
Integration of body production
E-commerce
Fuel economy
Integration
Electric vehicles
Diagnostics
Flying
Powertrain Autonomous Driving Connectivity Mobility as a Service Industry 4.0 Sales Product Architecture Vehicles After Sales Vehicles
Commentary
• Investments in Powertrain technologies show a reverse trend: While OEMs have historically • With six out of a total of nine deals centered around Mobility as a Service technologies,
been strong in Powertrain development and production, Automotive Suppliers push ahead OEMs aim to explore new secures of revenue to complement their traditional business:
with 28 (90%) technology investments in 2017 Investments in technologies enabling Shared Vehicles (4 investments, 66%), Taxi Service
• In the race to secure technologies to enable Autonomous Driving, suppliers dominate Providers (1 investment, 100%) or Vehicle Rental (1 investment, 50%) clearly indicate a
across all technologies, most notably in Sensors and Cameras (12 investments, 100%) and changing focus of OEMs moving from product towards service
Control Systems (2 investments, 100%)
• In addition, suppliers strongly lead in the area of Industry 4.0 (8 investments, 100%) and
automotive After Sales (3 investments, 100%) in attempts to secure additional revenue streams
Technology driven M&A in the automotive industry From automobile to autonomous | 197 Appendix/International M&A
European companies lead the way in acquisitions in 2017, followed by Asian
companies. US companies lagging behind
Most overall M&A from OEMs Most technology investments from OEMs Most overall M&A from suppliers Most technology investments from
in 2017 in 2017 in 2017 suppliers in 2017
Rank 2017 Company # Deals in 2017 Rank 2017 Company # Deals in 2017 Rank 2017 Company # Deals in 2017 Rank 2017 Company # Deals in 2017
1 Daimler 8 1 Daimler 6 1 AMA Group 11 Aptiv
1 5
(formerly Delphi)
2 Renault 7 2 Volkswagen Group 3 2 Wuxi Coml Mansion 8
2 Continental 4
3 Volkswagen Group 5 3 Jaguar Landrover 2 3 Sumitomo 7
3 Denso 3
4 Isuzu Motors 4 4 Toyota 2 4 Genuine Parts Co 7
Dongxu Optoel.
5 Hyundai 3 5 Geely (incl. Volvo) 2 5 Michelin 6 4 2
Tech Co
6 Toyota 3 6 BorgWarner 1 6 Continental 6 5 Stoneridge Inc. 2
7 Great Wall 3 7 Nissan 1 Apollo Tourism & Tianjin Motor Dies
7 6 6 2
Leisure Co Ltd
8 Peugeot 3 8 Renault 1
Aptiv (formerly Delphi), 7 Lear 1
Honda, Sanyang, Geely, 9 General Motors 1 Denso, USC, UralATI,
9–10 Jaguar, Landrover, 2 8–10 Zhejiang VIE Science & 5 8 Michelin 1
Nissan, General Motors 10 Peugeot 1
Tech, Micheldever Tyre,
Services 9 Valeo SA 1
10 Webasto 1
Top 5 largest overall transactions in 2017 Top 5 largest technology transactions in 2017
Rank 2017 Acquirer Target Value ($mil) Rank 2017 Acquirer Target Value ($mil)
1 LKQ Corp Stahlgruber Gmbh 2,089 1 Dongxu Optoelectronic Tech Co Shanghai Sunlong Bus Co Ltd 490
2 Genuine Parts Co Alliance Automotive Group SAS 2,000 2 Delphi Automotive PLC nuTonomy Inc 450
3 Key Safety Systems Inc Takata Corp-Business 1,573 3 Shenzhen Fenda Tech Co Ltd Shenzhen Furtunta Tech Co Ltd 419
4 Peugeot SA Adam Opel AG 1,210 4 Porsche Zweite Beteiligung PVT AG 338
5 Pon Holdings BV Accell Group NV 950 5 Aotecar New Energy Tech Co Ltd Jiangsu Highstar Battery 333
20 | Technology driven M&A in the automotive industry From automobile to autonomous7 Appendix/International M&A
The majority of targets for German deals is domestic, with a focus on mobility
as a service technologies
Major target countries for German acquisitions Major investors into Germany Commentary
Target country 2015 2016 2017 Investor country 2015 2016 2017
• Germany is a net buyer, acquiring more foreign companies
Germany 8 6 7 Germany 8 6 7
• The leading target country for German investors is United
USA 2 2 2 France — 1 2
States, only overtaken by the sum of European countries
France 1 1 1 USA 1 2 —
Netherlands 2 — 1 China 1 — 1
• The leading investor in Germany for 2017 is France, while US
UK — 1 1 Switzerland 1 — — companies did not acquire any German targets since 2016
Israel — — 1 South Africa — — 1 • For the first time since 2015, a Chinese company acquired a
Denmark 1 — — Total 11 9 11 German automotive tech-company
Italy — 1 —
Taiwan 1 — —
China — 1 —
U.A.E. — — 1
Norway — — 1
Singapore — — 1
Total 16 12 16
Technologies acquired by German firms Technologies sold by German firms Commentary
• New technologies for Mobility as a Service, Connectivity and
20 Product Architecture 20 Product Architecture
Autonomous Driving are high in demand for German
∑ 16 Smart Supply Chain companies, while acquisitions for traditional technologies like
∑ 15 Sales
1
15 1 15 Vehicle Powertrain or Industry 4.0 are declining
2
∑ 12 Powertrain • Targeted technologies in Germany are still traditional
Sales
6 ∑ 11 ∑ 11 technologies like Powertrain or Industry 4.0, but increasingly
4 6 Mobility as a Service 1 1 Powertrain
10 10
1 ∑9 new technologies like Mobility as a Service or Connectivity
1 3
1 3 Mobility as a Service
3 1 Industry 4.0
4 2
4 Industry 4.0
5 1 3 5
1 Connectivity 4 1 2
1 Connectivity
3 3 3 1 2
2 1 1
0
Autonomous Driving 0
Autonomous Driving
2015 2016 2017 2015 2016 2017
Technology driven M&A in the automotive industry From automobile to autonomous | 217 Methodology & Authors
Methodology Disclaimer Authors
The source used for the data and charts in the study is This study has been prepared by Ernst & Young GmbH Dr. Peter Hertenstein
Thomson ONE and the date range considered was January Wirtschaftsprüfungsgesellschaft (EY) for the purpose of Manager
2015 to December 2017. We have considered all acquisitions in providing the public with information about developments in Transaction Advisory Services
which an automotive firm was either the target or acquirer. The the automotive market. EY points out that the study does not
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revenue streams and technologies for the final product. In comprehensive or complete in the sense of containing all the peter.hertenstein@de.ey.com
total, 3,681 transactions were considered, of which 317 were facts that might be of interest in connection with the
determined to be technology driven and relevant for the study. information described. The study has been prepared with the
We have used the rates from Thomson ONE, and no usual care and diligence required for such studies. Unless
adjustments were done for the purpose of this study. referring to EY itself, the information presented has not been
reviewed by EY with regard to its accuracy or completeness. Christopher Grüne
The information has been gathered by desktop research Manager
(including public sources, disclosed information and Transaction Advisory Services
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to research and deals mentioned. Thus, the accuracy at the
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22 | Technology driven M&A in the automotive industry From automobile to autonomousEY | Assurance | Tax | Transactions | Advisory
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