The global shortage of semiconductors or chips in the aftermath of the Covid-19 led pandemic has eased as per a report by Crisil. A development that led most automakers to cut down production significantly and postpone the launch of new models or to put them to production through 2020, 2021, 2022 and a good part of 2023 has finally eased to iron out any supply chain disruptions that may be there. 

Expected to address and improve predictive demand forecast, the better availability of chips should enable better production schedules. By FY2025-26, Crisil analysts are of the opinion that demand-supply dynamics should be more balance with additional manufacturing capacities getting commissioned. 

With the chips possessing distinct electrical properties that make them the cornerstone of all electronic equipment and devices, it is the auto industry that has come to use them for a variety of functions as automobiles turn increasingly software driven. While the computer and communication equipment (C&C) segment consumes roughly 63 percent of the chips produced, the auto industry consumes roughly 13 percent of them. The other industrial segments consume about 12 percent. 

With new developments such as autonomous and EVs, the use of semiconductors in automobiles is only slated to rise. With passenger vehicles the recipient of most technological innovations ahead of other segments such as two-wheelers, three-wheelers and commercial vehicles, it should not come as a surprise that they consume about 1,500 chips on average – the highest among all automobile types. 

As more advanced electronic features are incorporated, the use for chips increases. The electric passenger vehicles, for example, use almost twice as many chips as internal combustion engine (ICE) passenger vehicles do. The improving supply and slowing demand for computers and mobile phones is therefore looked upon as a blessing in disguise for automobiles and their manufacturers. 

Anuj Sethi, Senior Director, CRISIL Ratings, mentioned, “The chip shortage faced by Indian passenger vehicle makers is easing, with current availability at 85-90 percent of total requirement. The production loss on account of the chip shortage, which had halved to about 300,000 PVs on-year in fiscal 2023, is estimated to have further declined to under 200,000 PVs by the end of September 2023.”

Most passenger vehicle manufacturers are currently operating at near optimal capacity utilisation due to stronger-than-anticipated demand. New orders to be serviced remains high at about 700,000 units at the end of September 2023. 

The easing of chip shortage should help automakers honour new orders with better prediction and faster production. Global automobile demand, severely impacted by the Covid-19 pandemic, made a strong recovery in the latter part of FY2021-22. It caught automobile manufacturers off guard as they had not placed substantial orders for chips. 

The surge in demand for personal computers, laptops and mobile phones, driven by work from home, virtual learning and remote healthcare services, led to a significant chip procurement challenge for the automakers. 

Geographically, the chip ecosystem is skewed, with western nations dominating chip architecture, design, manufacturing equipment, specialised materials and chemicals. Semiconductor fabs1 on the other hand are concentrated in eastern nations, such as Taiwan and South Korea.

Given the criticality of chips in the defense and aerospace industries, the United States and the European Union have offered incentives of about USD 100 billion for localisation of semiconductor fabs. As a result, many global players are slated to spend about USD 360 billion towards setting up new facilities, which would be operational by 2025 and 2026. 

In the Indian context, demand for chips will continue to increase over the medium term, driven by the gradual rise in EV adoption and growing demand for advanced feature-laden ICE vehicles.

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American component major Tenneco India is no longer just manufacturing for the domestic market; it is transforming into a high-tech global export hub.

Under the leadership of CEO Arvind Chandra, the company is shifting from a ‘local-for-local’ strategy to a sophisticated ‘India for the World’ mandate that integrates Indian engineering into the global automotive lifecycle.

While current exports sit at approximately 6 percent, Tenneco’s future order book reveals a dramatic shift, with exports accounting for 20 percent of projected growth. This strategy leverages not only India’s competitive labour cost, but also high-quality innovations to bolster the margins of Tenneco’s sister divisions in Europe and the US.

"The addressable market just within Tenneco is huge," Chandra explains, noting that at present 70 percent of exports are currently directed to internal Tenneco entities. To support this, the company is earmarking USD 2 million for FY2026 to expand its R&D capabilities, creating a state-of-the-art centre to attract top-tier talent.

"When you become the export hub for the world, you should also become the R&D export hub," says Chandra.

Disrupting Ride Quality

On the domestic front, Tenneco is betting on ‘premiumisation’ in the passenger vehicle segment to disrupt the market. The company’s patented ‘DaVinci DCX’ suspension technology is at the heart of this push, aiming to bridge the gap between vehicle cost and ride comfort.

Chandra is candid about his goal to challenge the status quo of Indian roads: "My aspiration as CEO is to make sure that we completely disrupt the market. Because the comfort in the mass market passenger vehicle segment has been the same for the last 60-70 years".

Tenneco is also insulating itself against the uncertainty of electrification by remaining powertrain agnostic. Whether the market moves toward EVs, which can increase Tenneco's content per vehicle by over 4x for hybrids, the company remains positioned for growth. By ‘wrapping’ themselves around customer needs rather than protecting rigid revenue streams, Tenneco has secured a dominant 52 percent market share in shock absorbers.

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JSW Motors Limited, the electric and new energy vehicle subsidiary of the JSW Group, has entered into a long-term strategic agreement with Dassault Systèmes. The collaboration centres on transforming how the automaker will design, engineer and build its forthcoming models, with the DELMIA: 3DEXPERIENCE platform serving as the foundational digital framework for its entire lineup of new energy vehicles.

A key focus of the initiative is strengthening domestic capabilities. By merging local production expertise with globally recognised technology, the company aims to establish an automotive ecosystem that sets a new benchmark for India. This dual focus is designed to produce vehicles that meet international quality standards while being specifically calibrated for the domestic market, ultimately bolstering local supply chains and industrial resilience.

To advance this vision, the manufacturer is deploying the 3DEXPERIENCE platform to create a unified Product Lifecycle Management environment that spans design, engineering and validation. This effort is complemented by the integration of a sophisticated Manufacturing Execution System on the same platform, which ensures seamless digital continuity and full traceability from initial concept to final assembly.

Through this integrated approach, the partnership solidifies the company’s readiness to deliver competitive, future-ready vehicles. The unified digital infrastructure not only accelerates product development but also reinforces the organisation’s commitment to building a self-reliant, world-class automotive presence in India.

Ranjan Nayak, CEO, JSW Motors Limited, said, “At JSW Motors, we are building a technology-led future mobility ecosystem which is engineered in India and world class. We are delighted to partner with Dassault Systèmes from France to embed its state-of-the-art, digital platform across the vehicle lifecycle, from design to manufacturing at JSW Motors. We are also in advanced discussions with several additional domestic suppliers to further deepen localisation and strengthen India’s automotive supply chain. By leveraging the best global technologies, we aim to accelerate development timelines while enhancing quality.”

Deepak NG, Managing Director – India, Dassault Systèmes, said, “The Indian automotive industry is at a pivotal inflection point, and JSW Motors is well positioned to lead this transformation. Our 3DEXPERIENCE platform will empower JSW Motors to manage the growing complexity of software-defined vehicles while enabling end-to-end integration across their entire value chain, from design and engineering to manufacturing and lifecycle management. By building virtual twins of their products and processes, we will help drive greater innovation, efficiency and agility, ensuring scalability and sustained competitiveness in a rapidly evolving market.”

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Tensor, a Silicon Valley-based artificial intelligence firm, has introduced the Tensor Robocar to the United Kingdom at the 5th annual European AV Summit. The vehicle is the first production-ready Level 4 autonomous car designed for personal ownership.

The Robocar features a dual-mode strategy, allowing for both manual and fully autonomous operation. A key hardware innovation is the world's first foldable steering wheel, co-developed with automotive safety supplier Autoliv.

The vehicle architecture is built for full-stack redundancy to meet regional safety and reliability standards. Tensor's engineering utilises agentic AI and adaptive design to manage complex driving environments. The company has established a technical ecosystem through several strategic partnerships:

• Compute and AI: Collaboration with Arm for power-efficient compute platforms and Nvidia for AI processing.
• Infrastructure: Integration with Oracle for cloud systems.
• Manufacturing and Insurance: Partnerships with VinFast for scalable production and Marsh for insurance frameworks.

The UK appearance follows a global launch announcement in August 2025. The European AV Summit served as a platform to engage with regulators, insurers and city planners regarding the implementation of personal Level 4 ownership.

Tensor plans to commence production this year. Initial commercial availability is targeted for the UAE, EU and US markets.

Jay Xiao, Chief Executive Officer, Tensor, said, "Showcasing Tensor at the European AV Summit offered a vital opportunity to demonstrate a production-ready Level 4 vehicle to the policymakers, insurers and industry partners who shape Europe's AV future. Our purpose-built Robocar is engineered for full-stack redundancy providing a level of safety and reliability that combines agentic AI and adaptive design to meet rigorous regional safety standards. Tensor, showing for the first time in the UK, helped translate our technical evidence into practical pathways for safe, consumer ownership across European cities and soon - globally.

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AVL Mobility Technologies, Inc. has joined forces with Ansible Motion to integrate its AVL VSM software with Ansible Motion’s Driver-in-the-Loop simulators. This combination accelerates virtual development, allowing automotive manufacturers and suppliers to significantly cut down on both the time and expense associated with testing and validation.

The AVL VSM platform serves as a versatile real-time simulation tool capable of modelling individual components, entire systems and full vehicles. It enables engineers to evaluate vehicle dynamics and safety under realistic conditions while considering how various attributes and systems interact. This supports a more cohesive approach to optimising vehicle characteristics early in the design process. When paired with an Ansible Motion simulator, users can conduct virtual test drives to refine chassis dynamics, powertrain behaviour and advanced driver assistance systems.

To demonstrate this integrated solution, AVL has installed an Ansible Motion Theta Seat simulator at its Ann Arbor, Michigan, Technical Centre. This setup allows customers to experience the combined VSM and simulator capability firsthand. The impact is amplified when leveraged alongside AVL’s existing Software-in-the-Loop, Hardware-in-the-Loop and Virtual Test Bed technologies within the facility’s Advanced Mobility & Simulation Lab, enabling a seamless transition from virtual models to further development.

Gary Newton, Vice President – Business Development, AVL, said, "By combining AVL VSM with Ansible Motion Driver-in-the-Loop simulators, manufacturers can move critical decisions to the front of the development cycle, dramatically reducing physical prototypes and test iterations. This tool combination can have an enormous impact on timeline and budget. Imagine validating 70+ track scenarios per day in multiple conditions, surfaces and drive events. The result isn’t incremental improvement; it’s months saved and millions preserved."

Salman Safdar, Business Development Director, Ansible Motion, said, "Through our continuing collaborative efforts with AVL, we’re developing new ways to conduct subjective and objective evaluations of qualified concepts much earlier in the vehicle design cycle. Connecting our simulators seamlessly with a feature-rich simulation environment like AVL VSM elevates the virtual vehicle development process for manufacturers seeking to shorten development times, realise cost savings and reduce environmental impacts."

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