THE AUTOMOTIVE INDUSTRY IN ISRAEL

 
THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE AUTOMOTIVE
   INDUSTRY
   IN ISRAEL
THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE AUTOMOTIVE INDUSTRY IN ISRAEL
TABLE OF CONTENTS
Defining the Automotive Industry                                   5

Segmentation of the Automotive Industry                            6

The Global Automotive Industry                                     8

Global Trends in the Automotive Industry                          10

The Automotive Industry in Israel                                 14

Segments                                                          14

Israeli smart transportation and alternative fuels developments   15

Selected Israeli Companies                                        20

Footnotes                                                         30

                                                                       2016 | 3
THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE AUTOMOTIVE INDUSTRY IN ISRAEL
DEFINING THE AUTOMOTIVE INDUSTRY

      Traditionally, the automotive industry includes
      all the activities related to the manufacture
      of light- and heavy-weight vehicles, including
      the production of parts (such as motors and
      chassis), systems and technical units, but not
      including tires, batteries and fuel.1 A broader
      definition includes the manufacturing industries,
      as well as wholesale, retail (of vehicles, parts,
      tires, and associated products), and repair
      and maintenance services.2 Recently, with the
      increased global interest in smart transportation
      and alternative fuels, these areas are often
      included in automotive industry reviews and
                       analyses as well.

                                                          2016 | 5
THE AUTOMOTIVE INDUSTRY IN ISRAEL
SEGMENTATION OF THE
AUTOMOTIVE INDUSTRY

The automotive industry is often segmented                for Tier 2 suppliers, such as steel sheets or
based on tiers. Automotive assembly is                    heating services.
considered the starting point, while all other
                                                       5. Tier 4 – Tier 4 suppliers provide basic raw
activities are described as "upstream" or
                                                          materials such as iron and glass to Tier 3
"downstream" from assembly, based on their                suppliers. This tier is often included in the
chronological position before or after assembly           Tier 3 category.
on the value chain. This segmentation includes
                                                       6. Downstream activities – Companies that
the following3:
                                                          are downstream on the value chain from
1. Original Equipment Manufacturers (OEMs) –              OEMs and engage in the sale and distribution
   Companies that manufacture or assemble                 of automobiles, and the provision of
   the final product. Automobiles that are                maintenance and repair services.
   manufactured under a certain brand name
                                                       Certain companies may supply products for
   may include parts manufactured by multiple
                                                       multiple tiers, depending on the companies
   suppliers (e.g., tires, motor, brakes, etc.), but
                                                       for which they manufacture their products,
   only the company that assembles the final
                                                       leading to their inclusion under two different
   product is considered an OEM.
                                                       categories simultaneously (see illustration 1).
2. Tier 1 – Tier 1 suppliers manufacture
   components used for final automotive
   assembly. These suppliers work with OEMs
   in order to manufacture parts (internal
   or external) as needed. These parts can
   be divided into two categories – Original
   Equipment (OE), which is sold to the OEM
   to be part of an entire automobile; and
   Aftermarket/Secondary Market products,
   which are either spare parts or accessories.

3. Tier 2 – Tier 2 suppliers manufacture value-
   adding parts for Tier 1 suppliers for the minor
   sub-assembly phase.

4. Tier 3 – Tier 3 suppliers provide more simple
   engineered materials or special services

6 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE AUTOMOTIVE INDUSTRY IN ISRAEL
vehicles in the vicinity, and help drivers
The automotive industry is often                                  safely and efficiently operate their vehicles.
segmented based on tiers. Automotive                              The companies in these fields specialize
assembly is considered the starting point,                        in communication between vehicles,
while all other activities are described                          communication between vehicles and
as "upstream" or "downstream" from                                infrastructure, information security, voice
                                                                  commands, optical systems, biometric
assembly, based on their chronological
                                                                  identification, and more.
position before or after assembly on
the value chain.                                                2. Improving and streamlining production
                                                                  processes – Companies that supply
                                                                  components and software for the
In addition to this segmentation, there are other
                                                                  automotive industry, which are designed
advanced industries that focus on innovation,
                                                                  for the companies and factories themselves
software and streamlining production.4
                                                                  and not for the automobiles that they
1. Electronics, software, innovation and driver                   manufacture. These include assembly line
    assistance – Companies that specialize                        monitoring software, information security
    in developing hardware and software                           for communications between manufacturers
    components that integrate vehicles into                       and sub-suppliers, analysis systems for big
    an advanced technological environment,                        data obtained from the use of vehicles, sales
    enabling them to communicate with other                       information and more.

Illustration 1 – Segmentation of activities by tier and field

                                                                                                              7
THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE GLOBAL AUTOMOTIVE INDUSTRY

Background and                                      of investment in a variety of other industries.6
                                                    Similarly, each position in the automotive
economic importance                                 industry generates five additional jobs in
The automotive industry and automotive culture      related industries. Therefore, an estimated 9
have reached every corner of the globe over
                                                    million workers are employed in the automotive
the last century, and have significantly shaped
                                                    industry worldwide, while nearly 50 million are
economic development. The global automotive
                                                    employed in jobs that are indirectly related
industry now employs tens of millions of people
in many different countries worldwide, and          to the automotive industry (manufacturing,
the demand for additional vehicles is growing       services, etc.).7
constantly. The automotive industry is constantly
changing and experiencing technological,
regulatory and consumer developments.5
                                                    The automotive industry and automotive
The automotive industry generally spills over
                                                    culture have reached every corner of
to other industries (such as metals, chemicals,     the globe over the last century, and
textiles, etc.), which results in an estimated      have significantly shaped economic
triple multiplier effect: each dollar invested in
                                                    development.
the automotive industry generates three dollars

8 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
THE AUTOMOTIVE INDUSTRY IN ISRAEL
The global automotive market was valued         China has been the largest market since 2009
at approximately $846 billion as of 2015,       and its lead over the United States is growing.
representing growth of 4% compared to the
previous year. Though accelerated growth was
seen in North America and Europe, it was not
                                                Each position in the automotive industry
enough to offset the deepening issues facing
                                                generates five additional jobs in related
emerging markets such as Brazil and Russia.     industries.
Growth projections for 2016 for the market
are in the 5% range, depending heavily on       Production in 2015 hit an all-time record of 90
the macroeconomic conditions in the 4 major     million vehicles8, and is expected to cross the
markets (China, US, EU and Japan), which        100-million vehicle threshold (for passenger
together account for 75% of global car sales.   and commercial vehicles) by 2018.9

                                                                                             9
THE AUTOMOTIVE INDUSTRY IN ISRAEL
GLOBAL TRENDS
IN THE AUTOMOTIVE INDUSTRY

Pollution reduction                                According to the US Energy Administration,
                                                   reducing vehicle weight by 10% can reduce
and green vehicles                                 fuel consumption by 6%–8%. However,
This trend is evident both in regulatory changes   the use of alternative materials for vehicle
in various countries, and in technological         production is limited by safety, reliability,
developments. From the regulatory perspective,     comfort, cost and performance constraints,
automotive standards have become more rigid,       which are dictated by the regulator and
and requirements to meet fuel consumption and      by consumers. This creates the need to
pollutant emission targets have been introduced    develop alternative materials that can
(e.g., Euro6 in Europe and CAFE in the US).   10
                                                   replace iron and steel (the standard iron
From the technological perspective, this trend     and steel alloys comprise 45% of the weight
includes the following:                            in average vehicles). For example, materials
1. Reducing vehicle weight – The use of            such as magnesium and carbon fibers can
   alternative materials to manufacture certain    potentially reduce the weight of certain
   automotive parts, in order to lower vehicle     vehicle parts by up to 75%.11 As such, in
   weight, reduce fuel consumption, and limit      recent years there have been significant
   pollutant emissions. Heavy vehicles require     attempts to lower the weight of new vehicle
   a great deal of energy to accelerate, thus      models, in order to reduce fuel consumption
   increasing fuel consumption while driving.      and pollutant emissions.12

10 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
Several Israeli companies are currently in       In Israel, the Israel Fuel Choices Initiative at the
  advanced stages of manufacturing vehicle         Prime Minister's Office has signed agreements
  components, using plastic, aluminum, various     with Fiat-Chrysler, Iveco and Magneti Marelli to
  alloys (e.g., magnesium and zinc), and more.
  The demand for these products is constantly
  increasing, due to the ongoing necessity
  of reducing vehicle weight, reducing fuel
  consumption and minimizing pollutant
  emissions. These companies include Raval,
  Tadir-Gan, MPE, Omen Hatzor and Arkal.

2. Alternative propulsion systems – The
  use of different types of motors and fuels,
  which can replace the traditional polluting
  propulsion systems that operate on diesel
  and petrol. Highly pollutant propulsion
  systems and new rigid regulations led
  various automakers to develop alternative
  propulsion systems that use fuels other than
                                                   develop natural gas-based fuels, which may
  diesel and petrol. These systems include
  electric ignition, the use of natural gas and    be the basis for international cooperation

  liquid hydrogen, and more. Vehicles that use     (see Israeli smart transportation and fuel

  propulsion systems of this kind have been        developments chapter).
  manufactured in the past and some are
  currently in use on a relatively wide scale.     Information
  However, the existing solutions suffer from
  several significant disadvantages compared
                                                   technology in vehicles
  to the traditional propulsion system, such as    Additional technological developments,
  high cost, storage difficulties, short driving   particularly in communications and software
  range and lack of infrastructure. Work is        technology, have resulted in the increasing
  underway to develop a propulsion system          integration of sophisticated components in
  with advantages over oil-based ignition that     vehicles. These developments are designed
  overcome these disadvantages.     13
                                                   to improve driving safety, enable vehicles to

                                                                                                     11
GLOBAL TRENDS IN THE AUTOMOTIVE INDUSTRY

communicate with other nearby devices, support     lane, or of their likelihood of colliding
advanced analyses, and more. Trends in this        with another object, parking assistance,
field include:                                     traffic light identification, and more.

1. Driver-assistance systems – Road                There are other systems that improve the
   accidents are a major cause of death in         human-machine interface and attempt
   industrialized countries, and the risk of       to help drivers perform certain functions
   vehicle collisions increases significantly      without taking their eyes off of the road
   when the driver's attention is distracted       or hands off of the steering wheel. These
   from the road for even two seconds – and        interfaces are based on voice commands, eye
   even while the driver is watching the           movement detection, and pop-up displays.
   road but is concentrating on other things.      Systems of this kind are supported by the
   Driver-assistance systems that incorporate      regulators, and some (the more veteran
   features such as sensors, cameras and           systems) have become a mandatory part
   warning devices alert the driver to potential   of safety regulations in the automotive
   threats on the road and facilitate certain      market. Thus, in 2009, the EU required that
   driving functions. These include systems        Electronic Stabilization Programs (ESP) be
   that alert drivers of deviations from their     installed in all vehicles, and that advanced

12 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
emergency braking systems and deviation            and infrastructure will require modification of
  alerts be installed in heavy vehicles.      14
                                                     the infrastructure itself. This is a complex and
  Israeli companies such as Mobileye,                costly process, which will require suitable
  VocalZoom, Redbend and Guardian Optical            funding.15
  Technologies are developing advanced
                                                   3. Information security – In accordance with
  products designed to assist drivers and
                                                     the communications and software trends
  reduce the risk of road accidents. Their
  products use automation (e.g., detecting           described above, a growing number of
  possible collisions), enhanced connectivity        automotive systems are based on software
  and voice commands. These products                 and on communication between various
  enable drivers to operate the vehicle and          components. Alongside the advantages of
  its accessories without removing their hands       these new developments, new risks are being
  from the steering wheel or their eyes from         presented by these systems, which leave
  the road, and even provide an additional           vehicles vulnerable to hostile penetration.16
  layer of protection against collisions (using      These risks have triggered great interest in
  prior detection techniques).                       developing information security systems
2. Smart transportation – Integrating                for vehicles, and have even resulted in
  software and advanced communication                government intervention. The US National
  capabilities in vehicles in order to connect       Highway Traffic Safety Administration
  multiple vehicles, infrastructure and external     (NHTSA) published safety guidelines for
  devices. This communication helps reduce           2016, urging automakers to work together
  road collisions, plan an optimal route, detect
                                                     in developing information security systems
  changing traffic lights, and even warns the
                                                     for vehicles. In addition, Fiat-Chrysler was
  driver of dangerous vehicles in the vicinity.
                                                     forced to develop a software update for
  Related technological perspectives are
                                                     1.4 million vehicles in July 2015, due to
  still being developed, as are the regulatory
                                                     the suspected high vulnerability of these
  aspects of these developments. For example,
  opening additional communication channels          vehicles to breaches and unauthorized
  for the vehicle to use to communicate with         control. Large automakers such as Volvo,
  its environment can also increase the risk         Mercedes, Ford and General Motors (GM)
  of malicious breaches of the system. In            have already undertaken to comply with
  addition, communication between vehicles           the NHTSA guidelines.17

                                                                                                  13
THE AUTOMOTIVE INDUSTRY IN ISRAEL
Segments
The Israeli market consists of both veteran              include forging, high-pressure ink injection,
companies that specialize in vehicle assembly            metal injection, coating and reinforcement,
and Tier 1, 2 and 3 supply, engaging in traditional      rubber injection, etc.
and advanced manufacturing processes, and
companies that specialize in innovation,
advanced technologies and facilitation of
                                                      The Israeli market consists of both
automotive manufacturing processes.                   veteran companies that specialize
                                                      in vehicle assembly, and companies
Vehicle assembly (OEM) and Tier                       that specialize in innovation, advanced
1, 2 and 3 supply                                     technologies and facilitation of
1. There are several manufacturers in Israel          automotive manufacturing processes.
   that assemble the final automotive product.
   These include buses, military vehicles and
   others (trailers, containers, fire-extinguishing
                                                      Advanced technologies
   vehicles, vehicle conversion).
                                                      (electronics, software, innovation
                                                      and driverassistance systems)
2. Tier 1 aftermarket suppliers: Over 60
                                                      Many Israeli companies develop aftermarket
   Israeli companies manufacture aftermarket
                                                      systems and technological innovations related
   products for the automotive industry. These
                                                      to driving and the automotive market. These
   include spare parts and accessories such as
                                                      companies design, manufacture and supply
   batteries, ventilation and airconditioning
                                                      diverse products including safety and driving
   systems, fleet management systems, air
                                                      assistance systems, tracking technologies,
   brake diaphragms, electric starters and
                                                      navigation and control systems, sensors, inter-
   alternators, seals, thermostats, gears, gear
                                                      vehicle connectivity, cyber protection, voice
   pumps, bearings and motor valves, filters
                                                      recognition and more.
   and more.

3. Tier 1 OE suppliers: Over 50 Israeli companies     Manufacturing processes
   supply components to OEMs and Tier 1               to improve and streamline
   suppliers worldwide, using advanced                manufacturing
   technologies to manufacture various types of       Over twenty Israeli companies supply services
   high-quality components that are tailored to       and products that facilitate production processes
   their customers' needs. These technologies         for OEMs and suppliers in the various tiers. These

14 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
products and services include manufacturing          it shorter, safer and cleaner. In most cases,
control software, monitoring and assessment          the concept of smart transportation includes
solutions, corrosion-preventing packaging            Intelligent Transport Systems (ITS) that use
products, advanced tools for metal work,             advanced technologies to achieve these goals.
software solutions for supply chain management,      The definition of this new and developing field
3D printing solutions for accelerated prototype      is not constant and is based on a variety of
design and production, and automatic welding         approaches (e.g., use of technology, activities
solutions.                                           performed by the system, goals of the system,
                                                     and the design approach).

Israeli smart
transportation and                                   Smart transportation is the use of
alternative fuels                                    different types of technology to
developments                                         streamline travel, by making it shorter,
                                                     safer and cleaner.
Smart transportation
Smart transportation is the use of different types
                                                     Israeli smart transportation companies have
of technology to streamline travel, by making
                                                     become world-renowned for their achievements
                                                     in this field. These companies develop products
                                                     based on software innovation and cutting-edge
                                                     technologies, like products developed for the
                                                     automotive industry.

                                                     Smart transportation is a rapidly growing field
                                                     in Israel, with the establishment of many new
                                                     companies in recent years. These companies
                                                     are tightening connections with large global
                                                     corporations (such as IBM and General Motors)
                                                     and are quickly building their reputation in the
                                                     global smart transportation market. The most
                                                     noted example is Waze, which was acquired

                                                                                                  15
THE AUTOMOTIVE INDUSTRY IN ISRAEL

by Google. Following in its footsteps, many       meetings with market leaders and investors,
other companies in the field are growing and      and more.
establishing international partnerships.          The companies that have joined the community
Israel is heading at high speed toward a          include Elbit, Rafael, Phinergy, IAI, Mobileye,
promising future in the field. One example        and international companies such as IBM and
is the establishment of the EcoMotion             General Motors.18 When the community was
community, which encourages and initiates         founded in 2013, there were approximately
activities related to smart transportation. The   70 Israeli startup companies developing smart
community was founded in cooperation with         transportation innovations. As of mid-2016,
the Alternative Fuels Administration and other    this number has jumped to over 300 startup
organizations, including the Israeli Innovation   companies.19
Authority, Ministry of Science, United Israel
Appeal and NGOs, as well as leading figures       Smart transportation is a rapidly growing
in the commercial and academic sectors. The
                                                  field in Israel, with the establishment of
community organizes conferences, professional
                                                  many new companies in recent years.
workshops, introduction to new technologies,

16 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
The Smart Transportation Accelerator                 benefits, government investments, grants and
was established in order to encourage                more.22 Since the inception of the incentive
smart transportation and alternative fuel            program in 2013, it has supported over 300
entrepreneurs. The accelerator operates as part      companies, and the number of research groups
of the Center for Innovation in Transportation at    has reached 190. The government also promotes
Tel Aviv University, and it receives approximately
NIS 1 million in annual funding. The program
offers four-month development cycles for
five initiatives at a time. During their time in
the accelerator, the entrepreneurs receive
approximately NIS 100 thousand, as well as
business advice and support from automotive,
technology and business development experts.20

Alternative fuels
Recent years have shown a significant increase
in the development of fuel alternatives that
are more efficient and less pollutant than the
common oil-based fuels (diesel and petrol).

The Israel Fuel Choices Initiative was launched
in 2011, and included the establishment of a         research and commercial cooperation with
dedicated administration in the Prime Minister's     various countries (US, Canada, Japan and various
Office. The administration is responsible for        European countries), and with large international
promoting the development and integration            corporations.23 As mentioned before, the
of fuel alternatives for transportation, in          administration has signed cooperation
order to reduce Israel's dependency on oil           agreements for the development of natural
for both security and sustainability reasons.
                                                     gas-based fuels with Fiat-Chrysler, Iveco and
The objective of this initiative is to reduce oil
                                                     Magneti Marelli.24
usage for transportation in Israel by 30% by
2020 and by 60% by 2025.21

The administration promotes the use of
alternative fuels in various ways, including tax

                                                                                                   17
THE AUTOMOTIVE INDUSTRY IN ISRAEL

Israeli Industry                                      other countries and regions, such as the EU,
                                                      US, Mercosur (countries in Latin America),
Highlights                                            EFTA (Iceland, Lichtenstein, Norway and
                                                      Switzerland), Turkey, Mexico, Jordan and
1. Innovation, software leadership,                   Egypt.28
   advanced technologies – The Israeli
                                                    4. Experience and working relationships –
   industry is known worldwide for its ability
                                                      There are many local manufacturers that
   to develop new, cutting-edge solutions
                                                      have supplied components and parts to
   for existing and emerging global needs.
                                                      large international corporations for decades.
   Consequently, many companies, such as
                                                      These long-standing business relationships
   General Motors and Daimler have R&D
                                                      have built confidence and close cooperation
   centers in Israel. GM’s has been active for
                                                      with international companies, and are an
   the last nine years, and in 2016 the company
                                                      important consideration when selecting
   even announced its expected expansion.25
                                                      suppliers and ordering parts.
   In addition, other companies such as Ford
   have permanent scouting offices in Israel,
   which seek relevant developments.26
   Other companies send representatives to
   conferences and make other visits to Israel
   for this purpose.27

2. Full product support – The various
   manufacturing companies in Israel support
   product development cycles from the initial
   design phase to final production. This is a
   significant capability, with unique advantages
   over the low cost mass production that is
   available in other markets.

3. Geographic location – Israel is conveniently
   located between the Far East and western
   European markets. In addition, Israel has
   signed free trade agreements that facilitate
   commercial activity between it and many

18 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
19
SELECTED ISRAELI COMPANIES

Advanced                                                   and it employed 1230 people worldwide.34
                                                           Raval manufactures several advanced products,
manufacturing                                              such as fuel tank venting systems with unique
                                                           innovative features, which can control and
                                                           reduce pollutant emissions from fuel. In addition,
                                                           the company continues to research and develop
Raval                                                      new and advanced venting systems.

The company develops and manufactures
                                                           Arkal Automotive
parts and mechanical and electromechanical
assemblies and sub-assemblies using plastic                Arkal develops solutions for replacing metal
injection (including parts that are reinforced with        structural components in vehicles with plastic
glass fibers) for the global automotive industry.29        parts. This reduces weight and requires less
This is a unique field, with only four companies           assembly work, thus lowering production costs.35
worldwide, as of 2015.30 The company is a Tier             The company is a Tier 1, 2 and 3 supplier for
1 and 2 supplier for automakers and large-scale            companies such as Mercedes, Volkswagen,
suppliers. The company was founded in 1994                 Fiat and others.36 It was founded in 1997 as a
and has since opened factories in Luxembourg,              subsidiary of Arkal Plastic Industries, which was
Germany, Canada, China and the US.31                       founded in 1963.37 In 2010, the company was

In May 2015, Raval received orders for parts               acquired by Raval.38 Arkal has manufacturing

worth over €103 million from Volkswagen and                sites in Israel, Germany, Spain, US, Poland,
Daimler Benz, as well as from Tier 1 suppliers             France, Canada and China.39
that work with Fiat, Honda and BMW.32 In 2015,             The company employs 200 people.40 As of
the company's total master agreement for                   2014, Arkal exported products valued at NIS
2015-2030 was valued at over €1.1 billion ,           33
                                                           288 million.41 The innovative skill developed at
                                                           Arkal for injection of thermoplastic, glass-filled
                                                           materials into molds has enabled the company
                                                           to manufacture strong plastic components
                                                           for leading automotive companies. These
                                                           components are adaptable and capable of
                                                           encompassing several small metal parts that
Plastic automotive components manufactured by Raval        were originally installed separately into a single

20 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
plastic component.42 In addition, Arkal and       products include unique advanced cooling
General Motors Europe have registered several     systems and thermostats with innovative
joint patents.
             43                                   features that help improve fuel consumption
                                                  and motor performance.49 As a result, MotoRad
                                                  was one of the first companies to supply its
                                                  customers with patent-protected electronic
                                                  thermostat technology. In addition, the company
MotoRad
                                                  continues research and development in order
The company manufactures a variety of             to supply new and more advanced products.50
products for global automotive companies,
including thermostats, pressure covers for
radiators, pressure covers for fuel tanks,
and more.44 The company is a Tier 1 and 2
supplier for large automotive companies and
suppliers, and manufactures parts for the         [Thermostat manufactured by MotoRad]

secondary market as well. Its customers include
companies such as Porsche, SAAB, General
Motors, Jaguar, Land Rover and Audi.45 It was
originally founded in 1958 as a small tool        Tadir-Gan Group
and die factory named Fishman Engineering,        The group owns two factories in Israel – Ortal
and later began to manufacture thermostats        and TadirGan. Tadir-Gan manufactures parts
for the automotive industry. Over the years,      using aluminum casting technology, while Ortal
branches of the company were established in       manufactures magnesium and zinc alloys using
North America, Germany and Mexico. In 2010,
                                     46
                                                  high-pressure diecasting technology.51 The
the Tene Investment Fund acquired majority        company is a Tier 1 and 2 supplier for large
ownership (66%) and in 2015, Fortissimo Capital   companies such as General Motors, Volkswagen,
acquired full ownership of the company.      47
                                                  BMW, and more. It was founded in 1993 and
In 2015, the company employed 250 people.         went public on the Tel Aviv Stock Exchange in
In 2014, the company recorded revenue             2004. In 2006, it acquired the Ortal factory,
of $65 million and operating profits before       and in 2013, it acquired factories in Germany
interest, taxes, depreciation, and amortization   and Poland that manufacture automotive parts
(EBITDA) of $25 million.   48
                                The company’s     using die-cast technology. The FIMI Investment

                                                                                              21
SELECTED ISRAELI COMPANIES

Fund holds 63% of the company’s shares             The company supplies standard and customized
since 2011. Tadir-Gan has approximately 629        thermoplastic materials that incorporate glass
employees in Israel, Germany and Poland. Its       fibers, glass beads and mineral fillers. The
cumulative orders are valued at $1 billion (as     compounds are fire-resistant, damage resistant,
of December 2015). Tadir-Gan specializes in        heat and radiation stabilized, and can be
manufacturing automotive components using          modified and customized.57
unique aluminum and magnesium alloys that
replace the iron and steel parts traditionally
used in the automotive industry. This reduces
the weight of the vehicles, conserves fuel and
                                                   MPE (Metalplast Engineering)
reduces pollutant emissions.52
                                                   The company develops unique parts that
                                                   integrate plastic and metal.58 The company
                                                   serves customers in various industries, including
                                                   the automotive industry, with customized
                                                   solutions, from the planning and design phase
[Upper oil pan manufactured by Tadir-Gan]
                                                   to manufacturing and supply.59 The company
                                                   is a Tier 1 and 2 supplier for large automotive
Polyram
                                                   companies, such as BMW, Volkswagen, Peugeot,
Polyram develops, manufactures and distributes     and others.60 It was founded in 1999 as a
plastic raw materials and thermoplastic            subsidiary of two long-standing companies
compounds for various industries, including the    – Shiran Engineering (founded in 1986) and
automotive industry.53 The company is a Tier 1     Rimoni Industries (founded in 1954).61 In 2015,
and 2 supplier for large automotive companies      the group (Rimoni, Shiran, MPE and subsidiaries)
and suppliers54, including Opel and BMW.55 Its     employed 345 people and had revenues of
plant was founded in 1986 by families that live    NIS 112 million.62 The company manufactures
in Ram On, an agricultural village. In 2015, 65%   high-quality precision plastic components,
of the company’s shares were acquired by FIMI      using sophisticated injection technology
Investment Fund.                                   and advanced manufacturing processes. The
As of 2015, the plant employs 159 workers. In      manufacturing process includes product
2014, company revenue was NIS 416 million          injection, plastic products that incorporate metal
and net profits totaled NIS 41 million.     56
                                                   parts, printing on the product itself, and products

22 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
consisting of multiple injected components.63      competed against 35,000 companies around
The company's development team and engineers       the world and won the Excellent Supplier award
often participate in advanced research, in order   from Bosch, the giant German corporation.70
to implement new, cutting-edge technologies
for the company's products.64

                                                   [Front cover manufactured by Omen Casting Group]

Omen Casting Group                                 Spectronix
The company manufactures and supplies parts        Spectronix develops and markets innovative
made of aluminum and brass alloys using high       products for flame and gas detection for
pressure die casting technologies, primarily for   civilian and military customers. Its products
the automotive industry. The company develops      include industrial flame, gas and fuel fume
multiple products, including components for        detection systems for civilian facilities (e.g.,
gears, engines, steering systems and braking       factories) and vehicles, as well as explosion
systems. The company is a Tier 1 and 2 supplier
        65                                         suppression systems for military vehicles.71
for large companies such as Mercedes, Fiat,        The company's primary military customers
Volkswagen, Jaguar and more.66 The plant was       are AMEREX, distribution companies, large
founded in 1946 in Kibbutz Hatzor and began        manufacturers of armored fighting vehicles
to manufacture for the automotive industry         (AFVs), and the defense ministries and armies
in 1997. In 2006, 28% of company holdings          of various countries worldwide. Most trade
were acquired by the Tene Investment Fund.         relations between the group and its customers
Later, manufacturing plants were established       are longterm ones.72 The company was founded
in Portugal, Russia and North America.67 As        in 1967 and began to supply fire detection
of 2014, the company employs 238 workers.          and extinguishing systems for IDF military
Revenue in 2013 was NIS 154.7 million.68 The       vehicles in 1974. It went public in 1982, and
company supplies customized products, from         in 1992 it began to manufacture systems for
the development phase to production. It uses       the civil industry as well. In 2008, the company
advanced technologies to supply products with      started to supply systems for foreign militaries
complex designs, which are tailored specifically   (NATO, US). In 2015 it was acquired by the
for the customer’s needs.    69
                                  The company      Emerson corporation, which committed to

                                                                                                      23
SELECTED ISRAELI COMPANIES

continue employing at least 159 employees           is called EyeQ and it can detect whether the
at the Spectronix factory in Sderot, for 12 years   driver is inside the lane or has swerved, assess
after signing the agreement.    73
                                     In 2014 the    the distance between the car and the one in
company employed 183 employees. In 2014,
                                       74
                                                    front of it (triggering an alert if the vehicles are
the company’s revenue from military sales was       too close), and more.77 Large companies, such
approximately $10.3 million.75 The company          as Volvo, BMW, General Motors, Hyundai, and
develops advanced products with innovative          others, have chosen to integrate this technology
features for the unique niche of military-use       into their vehicles, and systems are sold to the
vehicles. The products must meet high standards,    secondary market as well.78 The company was
which vary from one military organization or        founded in 1999, and in 2014 it completed the
country to another. In addition, the company
                                                    largest stock market offering in Israeli history
is constantly developing new products. One
                                                    until that time, valued at $5.3 billion.79 In 2015,
example is a series of containers for rapid
                                                    the company employed 542 people and had
dispersal of fire-extinguishing powder, which
                                                    revenues of $241 million.80 Mobileye’s concept
are operated by a gas propellant/generator used
                                                    of integrated hardware and software systems
to extinguish fuel fires in seconds.76
                                                    is an innovative concept in the automotive
                                                    market. The company won several prestigious
Advanced technologies –                             international awards, including the International
electronics, software,                              Fleet Safety Award 2011, Red Herring Top

innovation, and driver-                             100 Innovators, and Frost & Sullivan 2006
                                                    Entrepreneurial Company of the Year in the
assistance systems                                  automotive category.81

Mobileye
Mobileye develops and manufactures advanced
driver assistance aftermarket products for
vehicles, such as road collision prevention
systems that are based on cameras with artificial
visual capabilities. The company's product          Mobileye accident prevention system

24 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
iFLYTEK company).83 VocalZoom was founded in
                                                   2009. In 2010, it began to operate from the Iris
VocalZoom                                          incubator run by Maayan Ventures, and between
The company develops an electro-optic              2012 and 2014, the company raised additional
microphone designed to improve voice               investments from large corporations such as
recognition in devices, in order to support        3M.84 As of 2014, the company employs 15
voice control in noisy environments. This          people.85 In its most recent funding round, the
technology has several purposes, one of the        company raised $7.3 million, and it is currently
most important of which is to enable a driver to   valued at approximately NIS 62 million.86 The
give voice commands while driving a vehicle.82     company is working with chip manufacturers
VocalZoom’s development measures vibrations        for Audi and with auto manufacturers in order
on the speaker's facial skin at a precision rate   to develop the interface.87
of hundreds of nanometers, using safe laser
rays. The system analyzes these vibrations
and generates data about speech timing and
frequency, while distinguishing between the
voice of the speaker and background noises.
The optic microphone improves performance
of the voice recognition engine in the vehicle,
and supports features such as navigation, a
calendar, contact person searches, and more.
The information from the sensor is combined        VocalZoom microphone noise filtering technology allows the
                                                   system to focus on the driver's voice.
with information from the microphone, and it
neutralizes background noises in order to obtain
identification rates of 80%-90% accuracy.
The system is located on the rear-view mirror
                                                   Argus Cyber Security
in the vehicle or on the dashboard (in cases
where there is cooperation with the auto           The company helps vehicle manufacturers and
manufacturer). VocalZoom markets its product       secondary suppliers of intervehicle connectivity
to the secondary market and to other companies     devices to protect connected vehicles from
that manufacture speakers and similar products     infiltration. Information security is critical for
for the secondary market (e.g., the Chinese        modern vehicles, which use over 50 different

                                                                                                         25
SELECTED ISRAELI COMPANIES

computers to control their systems. There are
currently no mechanical operations in a vehicle
that are not controlled or monitored by software.
In addition, the number of possibilities for a
vehicle to communicate with external devices
                                                      Guardian Optical Technologies
(e.g., smartphones), Internet, infrastructure and
other vehicles is constantly growing. These are       The company develops tiny precision sensor
all potential breach points that carry the risk       systems designed for installation in the vehicle.
                                                      These systems can intelligently identify people
of external parties taking control of the car or
                                                      in the vehicle for several purposes: to send an
using it contrary to the driver's intentions.88 The
                                                      alert if a child is left alone in the vehicle, to
company develops products for automobile
                                                      send an alert in case of a break-in, intelligent
manufacturers (OEMs) and Tier 1 suppliers, as
                                                      activation of airbags in case of a car accident,
well as for component manufacturers for the
                                                      etc.93 The company has signed its first deals
secondary market. One of the largest investors
                                                      with Tier 1 suppliers, including Delphi, Bosch,
in the company is Magna International, a
                                                      JCI and others.94 The company was founded
Canadian corporation that is the second-largest
                                                      in 201495, and is a startup with less than 10
secondary Tier 1 supplier for the automotive          employees.96 By the end of 2016, the company
industry in the world and the largest in North        is expected to sell approximately 100,000
America. The company was founded in 2013
         89
                                                      units to Tier 1 suppliers, in deals valued at
and completed its first round of investments          $1.5 million.97 The sensors developed by the
in 2014. Its development center is located in         company are designed to replace the pressure
Israel, and the company has additional offices        sensors in the seats, seatbelt sensors, and
in the US, Germany and Japan. As of 2015,
                                   90
                                                      standard driving cameras, as these sensors can
the company employs 20 people.91 During that          detect the location, physical size and position
same year, the company raised $26 million in          of each passenger in the vehicle. The optic
investments from Magna International and              sensors developed by the company are based on
other investors.92                                    patent-protected technology, which detects the
                                                      presence of a person even without a direct line
                                                      of vision. The depth sensors identify movement
                                                      of objects, and a special algorithm classifies
                                                      movements that are typical of human beings,

26 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
animals and other objects. The sensor detects      After its acquisition by Herman, the company is
even the slightest movement, and can therefore     expected to continue to act as an independent
detect babies left in the vehicle with extremely   division within the Herman Corporation. From
high accuracy rates.      98
                                                   its initial investments until its sale for $200
                                                   million, Redbend received $35-$40 million in
                                                   investment financing.102

Redbend
Redbend is a leader in the management of
                                                   MobiWize
firmware, applications and software for mobile
devices, connected devices and automotive          The company’s software product generates
systems. The company enables efficient             information for automotive systems based
management of over-the-air software updates        on road conditions, in order to help conserve
for automotive entertainment and information       fuel and offer other potential benefits.103 Its
systems, while guaranteeing the protection         software uses data collected from various
and reliability of critical systems. 99 The        sources, including crowd sourcing, sensors,
company provides holistic, secure management       vehicle computers, special driver-vehicle-road
capabilities for software-based automotive         layers, and more. The mapping system offers
systems, as well as for automakers (OEMs) and      a wide range of opportunities for streamlining
Tier 1 suppliers.   100
                          Redbend was founded in   automotive systems and fuel consumption,
1999, and in 2001 the company changed its          improving driving performance, reporting excess
business focus and began to develop software       weight on trucks, reducing pollutant emissions,
for the remote management of mobile devices        increasing driving safety, and many other
such as tablets and smartphones. In 2010,          possibilities.104 The company was founded in
the company expanded its business to the           2011 and employs 25–50 people.105 It markets
automotive industry. In 2015, Redbend was          its product to the secondary market – both to
acquired by Herman, a US corporation that          private vehicle owners and to fleet managers.106
manufactures entertainment and information
systems for vehicles.101 As of 2015, the company
employed 240 employees, mostly in Israel.

                                                                                                27
SELECTED ISRAELI COMPANIES

Smart transportation                                  can then be transferred to control centers for
                                                      various purposes, including traffic management,
                                                      research, traffic light operations, time-to-
                                                      destination analyses, and more. This unique
                                                      location system is capable of monitoring all
Waze                                                  significant incidents on the road within minutes,

The company has developed one of the most             and of providing information that is equivalent
popular navigation applications in the world.         to high-density installation of sensors on the
The application is supported by smartphones,          road. The information is provided to the driver
tablets and vehicle systems, and enables drivers      in text format, a voice message and an accurate
to navigate the roads while receiving updates on      map. The company employs 15-20 people.108
traffic congestion, traffic police, road accidents,
and more. This information is collected by other
application users who input information. The
company was founded in 2009, and over the             Hi Park
course of several years it raised $67 million
                                                      The company was founded in 2013 and has
from various funds and investors. Waze was
                                                      developed a community application for mobile
acquired by Google in 2013 for $1.1 billion.107
                                                      phones (operated by placing the phone in the
                                                      car windshield) that detects and maps available
                                                      parking spaces while driving. This innovative
                                                      application identifies available parking spaces
Cellint                                               via a camera, cross-checks the information
The company was founded in 2004 and                   with prior mapping data in order to determine
provides information on traffic congestion, using     whether the parking space is legal, and uploads
information collected from anonymous mobile           the information to a central database that can
phones. The company's unique, patent-protected        be accessed by additional users. This application
location system anonymously monitors all              can save time and hassle for its users, while
active mobile phones and detects their exact          they search for a space to park on city streets.
location on the road or on a street once every        As of 2014, the company employed 8 people.
30 seconds, on average. This information is           The application was tested by taxi drivers in
analyzed using big data processing methods, and       Tel Aviv and will soon be publicly available.109

28 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
29
FOOTNOTES

1    ZEW, an independent, non-profit economic research center          26   Online Automotive News magazine, August 2015.
     in Germany.
                                                                       27   Jerusalem Post, January 2016.
2    United States Department of Labor.
                                                                       28   Interview with Uri Pachter, Director of the International
3    ZEW, an independent, non-profit economic research center in            Projects Department at the Export Institute, February 2016;
     Germany; Houston Chronicle; Document published in 2010                 Trade agreements from the Ministry of Economy website.
     by the US International Trade Administration, page 6.
                                                                       29   Review of Israel's automotive industry (2015), Israel Export
4    Israel Export Institute review of the Israeli automotive               Institute.
     industry, 2015.
                                                                       30   Company presentation for the capital market.
5     McKinsey report on the global automotive industry – The
     Road to 2020 and Beyond, page 3.                                  31   Company website; Article in The Marker, August 2014.

6    OECD review of the global automotive industry, 2013, page 7.      32   Article in The Marker, May 2015.

7    Website of the International Organization of Motor Vehicle        33   Company financial report for the third quarter of 2015, page 8.
     Manufacturers (OICA).                                             34   Company presentation for the capital market.
8    http://www.oica.net/category/production-statistics/2015-          35   Review of Israel's automotive industry (2015), Israel Export
     statistics/
                                                                            Institute.
9    http://www.strategyand.pwc.com/perspectives/2016-auto-
                                                                       36   Article in Calcalist, April 2011; Appeared in Bizportal, May
     industry-trends; http://www.eulerhermes.com/mediacenter/
                                                                            2015.
     Lists/mediacenter-documents/Automotive-Global-Report.pdf
                                                                       37   Article in Calcalist, April 2011.
10   Analysis of trends in the automotive industry from OECD-
     Observer; Euro6 standards from the website of the European        38   Article in The Marker, December 2013.
     Commission; CAFE standard from the US National Highway
     Traffic Safety Administration (NHTSA).                            39   Company website.

11   Publication by the US Energy Administration.                      40   Company website.

12   McKinsey report on reducing vehicle weight.                       41   Globes ranking website.

13   Published in MotorTrend, an online automotive magazine.           42   Review of Israel's automotive industry (2015), Israel Export
                                                                            Institute.
14   Published on the Avent website; Published on the EU website.
                                                                       43   Packer Steel website (former company owner).
15   Published on the Digital Trends website and on the US
     government website.                                               44   Review of Israel's automotive industry (2015), Israel Export
                                                                            Institute.
16   Various publications on the Security Innovation website.
                                                                       45   Review of Israel's automotive industry (2015), Israel Export
17   Published on the Mordor Intelligence website.                          Institute; Company website.
18   YNET, November 2013.                                              46   Company website.
19   Publication on the Israeli Innovation Institute website.          47   Calcalist, September 2015.
20   Published on the Tel Aviv University website in October 2014.     48   Calcalist, July 2015.
21   Online pamphlet published by the Israel Fuel Choices Initiative   49   Company website.
     Administration of the Prime Minister's Office; Times of Israel,
     February 2015.                                                    50   Company website.

22   Online pamphlet published by the Israel Fuel Choices Initiative   51   Review of Israel's automotive industry (2015), Israel Export
     Administration of the Prime Minister's Office.                         Institute.

23   Jerusalem Post, September 2015.                                   52   Company presentation for the capital market, December 2014.

24   Times of Israel, February 2015.                                   53   Company website; Article in Calcalist, April 2015.

25   Online New Tech magazine, February 2016.                          54   Export Institute website.

30 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
55   Publication in Bizportal.                                       85   Maayan Ventures financial report for 2014, page 29.

56   Article in Calcalist, April 2015.                               86   Maayan Ventures financial report for 2014, page 21, 23.

57   Company website.                                                87   Maayan Ventures financial report for 2014, page 28; Chiportal
                                                                          website, April 2015.
58   Review of Israel's automotive industry (2015), Israel Export
     Institute.                                                      88   Company website; Review of Israel's automotive industry
                                                                          (2015), Israel Export Institute; Article in Walla, March 2015.
59   Company profile on EPICOS.
                                                                     89   Company website; Article in The Marker, September 2015.
60   Company profile at the Export Institute.
                                                                     90   Company website; Article in The Marker, September 2015.
61   Company website.
                                                                     91   Article in Walla, March 2015.
62   Rimoni Industries report for 2012.
                                                                     92   Article in The Marker, September 2015.
63   Rimoni Industries report for 2012.
                                                                     93   Company website; Review of Israel's automotive industry
64   Company website.                                                     (2015), Israel Export Institute; Publication on the Ministry of
65   Review of Israel's automotive industry (2015), Israel Export         Economy website, May 2015.
     Institute; Article in Calcalist, August 2014.                   94   Company presentation.
66   Article in Calcalist, August 2014.                              95   Company LinkedIn profile.
67   Company website.                                                96   Company LinkedIn profile.
68   Article in Calcalist, August 2014.                              97   Company presentation.
69   Company profile at the Export Institute.                        98   Company LinkedIn profile.
70   Article in NRG, August 2015.                                    99   Review of Israel's automotive industry (2015), Israel Export
71   2014 annual report, page 4; Appeared in Chiportal, June 2015.        Institute.

72   2014 annual report, pages 37-38.                                100 Company website.

73   Appeared in Chiportal, June 2015; OS-Capital website,           101 Article in Globes, January 2015.
     November 2010; ListofCompanies website.                         102 Article in Globes, January 2015.
74   2014 annual report.                                             103 Review of Israel's automotive industry (2015), Israel Export
75   2014 annual report, page 39.                                        Institute.

76   2014 annual report, page 36.                                    104 Company website; Document by the Export Institute on smart
                                                                         transportation; company website page.
77   Company website; Review of Israel's automotive industry
     (2015), Israel Export Institute.                                105 Company LinkedIn profile.

78   Company website.                                                106 Company website.

79   Article in The Marker, August 2014.                             107 Article in Globes, June 2013; Article in Globes, March 2016.

80   Mobileye 2015 annual report.                                    108 Article in YNET, February 2011; Information about the
                                                                         company from the website of the Innovation Conference for
81   Company website.                                                    Smart Cities held in The Hague in February 2016; Company
                                                                         LinkedIn profile.
82   Company website; Review of Israel's automotive industry
     (2015), Israel Export Institute; Article in The Marker,         109 Article in Globes, July 2015; Article in Calcalist, September
     November 2012.                                                      2014; The Car online magazine, April 2015.
83   Company website; Report by the venture capital fund that
     operates the incubator for the Israel Securities Authority.

84   Maayan Ventures financial report for 2014, page 27; ; Article
     in The Marker, November 2012.

                                                                                                                                     31
The Foreign Investments and
Industrial Cooperation Authority
Phone: +9722-6662410
Email: InvestInIsrael@economy.gov.il

The information included in this guide is relevant for December 2016. The content included is intended
to provide only a general outline of the subjects covered and it is necessary that specific professional
advice be sought before any action is taken.

32 | THE AUTOMOTIVE INDUSTRY IN ISRAEL
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