Redeye10 Nov 2021 09:43
Redeye
In the last week, we have seen positive development regarding the rollout of DMS in both Europe and the USA.
Europe – 75-80% DMS take rate to be expected in Europe from late 2023/2024
For Europe, we see positive, though still a little fuzzy news. In an updated e-book, Smart Eye said that “Thanks to Euro NCAP, Driver Monitoring (DMS) will practically be a requirement for new car models launched on the European market by 2023”. While it’s still not official whether this means in the beginning or end of 2023, it’s still earlier than 2024 which we had anticipated. The full assessment protocol is expected to be published by the end of 2021. By then, we will know the exact implementation date.
Euro NCAP, the European New Car Assessment Programme, is the association that provides safety ratings for different car models. In order to get a five-star rating, a car needs to fulfill certain requirements, of which one will be DMS. In our understanding, the maximum number of points will be 18 (compared to 16 right now), of which DMS will give a car model 2 points. The safety rating is then decided from the percentage of the maximum number of points that a car model gets. As of now, we don’t know the exact limits for each level.
Most car manufacturers want all their models to have five stars. 14/64 (79%) of models in 2019, 10/12 (83%) out of 12 models in 2020, and 15/21 (71%) of models in 2021 achieved a five-star rating (source). This points towards a five-star rating being almost a must for car manufacturers to be relevant for buyers. This points towards a 75-80% DMS take rate in Europe slightly after the introduction of Euro NCAP 2023. However, we think this high take rate will wait until 2024. Nevertheless, it is likely to accelerate take rate in Europe already in 2023.
USA – 100% DMS take rate from 2026 or 2027
Last Friday, a Bipartisan infrastructure bill was passed by the House of Representatives in the USA. This bill included the SAFE Act, which includes mandatory DMS. The bipartisan infrastructure bill demands “Drunk Driving Prevention Tech” and includes DMS to be required in all new cars.
The bill directs the National Highway Traffic Safety Administration (NHTSA) to initiate a rulemaking process and set the final standard within three years for impaired driving safety equipment on all new vehicles. Inside the bill, it is the “SAFE Act” that requires Driver Monitoring Systems (DMS) to detect distracted driving.
This bill is equivalent to EU’s General Safety Regulation, which means that penetration will be 100%, i.e. all new cars will have to involve DMS. We believe US NCAP/NHTSA will include a gradual ramp-up during a few years preceding the full transition. OEMs are then given two to three years to implement the safety standard. According to some sources, the NHTSA will require 2026-2027, although this is still just speculation.
Reiterating valuation – but we see room for a positive surprise
As of now, we reiterate o
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