The Market for Driver Monitoring Systems Is Booming and Automotive Suppliers Are Rushing to Tap into the Opportunities

In early September 2022, HARMAN announced the acquisition of CAARESYS, a company offering radar-based in-cabin respiratory/heart rate monitoring, child presence detection, and passenger localization systems for car Original Equipment Manufacturers (OEMs). Although many carmakers are choosing to fulfill Driver Monitoring System (DMS) and Occupant Monitoring System (OMS) requirements with a single camera in order to save costs, it is well understood that camera-based OMSs have accuracy limitations due to cameras’ inability to see through materials, such as blankets, and a somewhat limited range of view. Although the European New Car Assessment Programme (Euro NCAP) and the U.S. Hot Cars Act do not currently establish minimal accuracy requirements for child presence detection systems and OMSs, less cost-sensitive carmakers with a higher focus on safety and reliability prefer OMS solutions that combine a camera with other sensors, usually radar. Therefore, the acquisition of CAARESYS strengthens HARMAN’s position in high-performance in-cabin sensing.

Nevertheless, HARMAN’s strengths go beyond high accuracy and safety. In the same month, HARMAN introduced Ready Care, the first camera-based DMS to measure the driver’s cognitive load besides traditional functions. Focusing on the intersection between Advanced Driver-Assistance Systems (ADAS) and infotainment objectives, Ready Care deciphers when the driver is mentally distracted and the “type” of distraction (e.g., visual and manual distractions, driving tasks, or mental activities other than driving tasks) to initiate Artificial Intelligence (AI)-based tailored in-cabin vehicle intervention strategies. Interventions include stress-free routing based on real-time stress factors, such as weather and traffic jams, and personalized cabin experiences, including changes in the vehicle’s Heating, Ventilation, and Air Conditioning (HVAC) control, media volume, media content, and seat sensors. For example, through a partnership with Gentherm, Ready Care can use thermophysiology to improve alertness when the driver is distracted or well-being when the driver is stressed.

The CAARESYS acquisition and the Ready Care launch position HARMAN well to serve the two opposite spectrums of the market, meaning carmakers with a higher emphasis on entertainment and convenience and carmakers with a higher focus on safety and reliability. Moreover, radar inputs can potentially enhance the Ready Care capabilities and provide even more sophisticated interior sensing capabilities. Nevertheless, the computing requirements and the sensor costs make the solutions unsuitable for volume vehicle models. Moreover, the required architecture redesign is time-intensive, hence unsuitable for several carmakers that failed to keep up with the changing regulatory environment and are now rushing to deploy solutions with a quick turnaround to meet the regulatory requirements on time.

DMS is a booming market that will experience a jump from 0.2 million shipments in 2022 to almost 30 million in 2025, primarily led by upcoming legislation and industry mandates. That includes the addition of DMS in the Euro NCAP in 2023 and the European Commission’s General Safety Regulation (GSR) that will make DMSs mandatory for all new passenger vehicles by 2024. DMSs are already mandated in some provinces in China and may become a New Car Assessment Program (NCAP) solution in the United States by 2026. Regulatory bodies in Japan are also considering DMS adoption.

Another important market driver is the L2+ trend, which refers to an autonomy level that delivers advanced functionality within the current regulation by retaining the driver’s responsibility. L2+ systems will create a growing opportunity for DMS adoption at the high end of the market because camera-based systems are the most effective means of monitoring driver attention.

The shutting down of Argo AI—backed by Ford and Volkswagen (VW)—is the latest evidence that carmakers are pushing back investments in fully autonomous systems—where profitability is years off—to aggressively pursue the development of L2+ systems. Ford, for example, explicitly said that it is shifting investments from L4 systems developed by Argo AI to developing L2+ and L3 technology internally. Similarly, VW stated that it would refocus efforts on offering its consumers powerful functions at the earliest possible time. L2+ appeals to OEMs because it enables the monetization of self-assist capabilities today—within the current legal framework—and without extraordinary risk exposure/liability and cost addition.

Given the above, all automotive suppliers, including Tier One suppliers, are rushing to develop solutions to tap into this market potential.

Generally, as mandated safety hardware cannot be monetized, OEMs’ ultimate goal is to enable as many monetizable functionalities as possible with the hardware installed in the vehicle. In the case of DMSs, carmakers have different go-to-market options because of the different market drivers and OEM Key Performance Indicators (KPIs).

OEMs with a strong focus on ADAS and autonomy, such as Cadillac and Ford, opt to integrate DMSs into the ADAS/Autonomous Vehicle (AV) domain to offer hands-free driving features for a one-off fee price or in a subscription model, creating new revenue streams. Nevertheless, the computing and sensor requirements of L2+ systems are currently only feasible in premium models, restricting the opportunity for players targeting this type of implementation.

Given the high installation rates of cockpit domain controllers, their increasing computing power, and the improvement of virtualization technologies that enable mixed criticality functions within the same System-on-Chip (SoC), infotainment domains have become the most popular consolidation strategy for DMSs and OMSs. This is due to cost savings, but also the wide range of entertainment functionalities these systems enable, such as in-cabin personalization, biometrics payment, and multimodal Human-Machine Interface (HMI), including gesture and gaze recognition. Therefore, this integration path has the most significant short- to medium-term opportunity. That is why players traditionally focused on infotainment, such as HARMAN, are investing in what was once an exclusive ADAS offering. These companies are taking advantage of their extensive infotainment experience to develop sophisticated in-cabin sensing and multimodal user experiences and increase comfort and well-being.

Carmakers, including mass-market ones, often request that DMS suppliers provide at least two to three levels of features beyond minimal GSR requirements, usually biometrics and in-vehicle payments, to generate new revenue streams. Nevertheless, the implementation of such systems has been slower than expected. This is likely due to the lack of expertise in integrating camera-based systems inside vehicles’ cabins, the complexity of redesigning all vehicle model platforms, and the fact that feature innovation was not made a priority, despite the upcoming mandates.

Foreseeing carmaker’s struggles, Magna recently secured an exclusivity agreement for Seeing Machines’ rearview mirror DMS. The system is the first to solve most of the integrated DMS and OMS implementation issues with a short turnaround and optimal costs. The solution is ideal for minimal GSR requirements and should find significant market acceptance among volume OEMs and OEMs running out of time to develop sophisticated In-Vehicle Infotainment (IVI)-integrated solutions before the legislation kicks in. While the second group of OEMs will likely migrate to integrated systems in the longer run, the Magna and Seeing Machines model follows a similar pattern that allowed Mobileye to achieve 70% of the global ADAS forward-looking camera market a few years ago: easy to integrate, satisfies the mandate requirements, and delivers maximum functions with minimum hardware cost.