The Cost of Complexity: Increased Reliance on Electronics in Automobiles
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Journal Title
Journal ISSN
Volume Title
School of Business |
Bachelor's thesis
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Author
Date
2022
Department
Major/Subject
Mcode
Degree programme
Tieto- ja palvelujohtaminen
Language
en
Pages
34+11
Series
Abstract
Automobiles have become increasingly complex in the twenty-first century, as their reliance on electronics has increased. Research into this phenomenon has shown that greater complexity tends to lead to higher costs, and the current shortage of electronic components (semiconductors) is a prime example of this. Not surprisingly, car prices have risen significantly as a result of the scarcity of these components since they are necessary for manufacturing automobiles. Therefore, this study aims to analyze the aspects in which electronics have made vehicles more complex, and the materialization of this phenomenon in both current and future costs. In order to address these research objectives, a literature review as well as three interviews with industry professionals were conducted. The findings of this study show that while the integration of electronics has made automobiles more complex, it has not fully increased their costs. For instance, immediately preceding the ongoing semiconductor shortage, vehicle prices became relatively less expensive in contrast to average consumer prices due to competition between manufacturers. Simultaneously, the incorporation of electronics in cars made their repair procedures more complex in turn leading to higher repair costs. Moreover, as electrification continues to spread at a rapid pace, automobiles are expected to have more electronics incorporated into them, increasing their purchasing costs. At the same time, vehicles are expected to become more durable, lowering their repair costs. Therefore, the research suggests that although in theory, greater complexity leads to higher costs, it does not fully materialize in the context of automobiles.Description
Thesis advisor
Tinnilä, MarkkuKeywords
complexity, cost, electronics, automobiles, semiconductor shortage
