All right. I think it is time to kick off. Welcome to you all, to Autoliv and Veoneer Investor Day 2018. My name is Anders Trapp. I am Head of IR, and I will kick off today's events. As always, first we have the safe harbor statement, which is an integrated part of today's presentations, all of today's presentations, and the question and answer sessions. Today, we will mention some non-U.S. GAAP measures, and a reconciliation to U.S. GAAP can be found in our annual reports, quarterly reports, and the press release that was out today. The broad agenda for today is, of course, that we are going to have management from Autoliv and Veoneer that will give presentations. Between now and lunchtime at 11:40 A.M., it is Autoliv, and after lunch from 12:30 P.M. to 3:30 P.M., there will be presentations by Veoneer.
I should also remind you that we have a beautiful app that you can download where apps are downloaded, where you will find all the relevant information from this day's presentations and the agenda. You can download the presentations under each agenda item. The detailed agenda for the Autoliv part of the presentations is as follows. We have the strategic direction by Mikael Bratt, who is the incoming President and CEO of Autoliv. We have Jordi Lombarte, incoming CTO, that will talk you through our innovation for profitable growth. Mikael will come back, and talk to you about the operational excellence and how that is part of our DNA. Mats Backman, Chief Financial Officer, will give the financial directions for the new Autoliv. We will have a Q&A with the three speakers, and then Mikael will give a conclusion and closing remarks.
Now, to the reason why we are here today, actually. As you know, of course, we are intending to list the electronic segment under the name of Veoneer. Here is the agenda, basically, what happens between now and until the first day of trading, which is planned for July 2nd this year. As you know, it is going to be listed on both NYSE and Stockholm. Before we go over to the Autoliv part of the presentations, we will have a few words from someone who has been part of the Autoliv journey for quite some time. He is the Chairman and President and CEO of Autoliv, and soon to be President and CEO of Veoneer as well, Mr. Jan Carlson.
Thank you very much, Anders. Of course, I would also like to welcome all of you to this very exciting investor day here in Stockholm. Also, a very warm welcome to all of you following us over the webcast. I am very proud to see Autoliv being ready to spin out Veoneer as a company of its own. It is one great company, very, very soon becoming two great companies. Autoliv, we have a 65-year history characterized by several important factors: innovation, entrepreneurship, quality, saving lives, and partnership. All of these matters have made it possible to be where we are today. We are now ready for the next step in our journey, and this is following, actually, the listing of Autoliv back in 1994, where we were spun out of Electrolux.
We had a merger with Morton ASP in 1997 that made us the undisputed leader in passive safety. This acquisition or this merger was a milestone for us being worldwide successful. Several acquisitions in Autoliv and partnerships in electronics over the last 15, 20 years has positioned us as a leader also in electronics. We will now, from here and onwards, address two distinct different markets as two different companies. Each company here, Autoliv and Veoneer, will have strong attributes for individual success. When we look to Autoliv, global market leadership, superior quality and execution and technology excellence, and also industry-leading cash generation, are characteristics that we all know as strong trademarks of Autoliv. Veoneer is a new company, but will be from the start, the world's biggest pure play in its field.
It will have an exceptional growth opportunity, and it will be a long-term value creator. A company in a phenomenal growth market. In short, we are creating two great companies. Autoliv, a market leader driven by saving lives, and Veoneer, a new expert partner to the industry driven by creating trust. I'm very proud to be a part of Autoliv and have been a part of Autoliv and what we have built together. I'm also equally proud now to be a part of Veoneer and creating Veoneer, the next chapter in Autoliv story. I'm also equally proud to present our incoming CEO, Mikael Bratt. Please join me on stage. Mikael, you have been with us now here in Autoliv for two years as President of Passive Safety. During this relatively short period of time, you have played a key role in shaping our future plans.
Now it's time for me to hand over the steering wheel of Autoliv to you and to see you drive execution, continue to drive execution towards our target in 2020, and also beyond that for future success. Very good luck, Mikael.
Thank you very much, Jan. Thank you. Thank you. Also, a very warm welcome from me. I'm really excited about the opportunity to talk to you about Autoliv going forward post-spin. Before we get into the details in the presentation here, I just would like to show a short film to all of you what we are all about.
It all happens in a fraction of a second, that unfortunate moment that can change lives forever. It doesn't have to. At Autoliv, our vision is to save more lives and create value for our stakeholders. We don't live in a virtual world. The way we innovate sets us apart. We don't focus simply on crash testing. We spend a tremendous amount of time researching, developing, and engineering robust solutions for life's real safety problems. By better understanding accidents and the effect on vehicle occupants, we are able to develop the world's best airbags, seat belts, and steering wheel systems that operate in milliseconds in any crash scenario. Our products don't get a second chance. There can't be any margin for error. We know that when it's someone's loved ones at stake, nothing is more important than their safety.
Autoliv began its work in automotive safety in Sweden in the 1950s. Today we are the worldwide leader, producing 12 life-saving products every second of every day. We have on average more than three airbags or seat belts in every vehicle produced. Our customers trust that our world-class focus on quality, innovation, and continuous improvement makes our products more robust and reliable than our competitors. Our innovation capabilities makes us ideally positioned for the new era of electric and autonomous vehicles. With our focused strategy, operational flexibility, and dedicated team, we will continue to lead the world in the development and production of innovative safety systems. Innovative in the way we protect people. Innovative in the way we serve our customers. Innovative in the way we create value.
It makes me really proud to see this movie as it captures our vision in a very strong way, I believe. The next slide I will show you here really describes what real-life safety is all about. The driver of this car, Caroline, living in California, U.S., was driving down the highway when she was hit by a drunk driver on the rear right-hand side, so hard that the car went off the road, rolled over down an embankment four and a half meters down before it stopped against a tree. 15 years ago, that accident would have been fatal. Luckily, Caroline was driving a modern car with the latest technology in passive safety installed in that car. She escaped the accident with just a few bruises and stitches.
We are really proud to have been the ones that provided these passive safety products into this car. That's really what makes the people in our organization energizing themselves every day in our facilities around the world, to save more lives. We get this kind of evidence, I would say daily from end consumers that have experienced our products, and we see that it makes a difference. We have come a long way since Autoliv started in 1953 in terms of saving more lives. There is still a lot of work to be done. In 2017, 1.3 million people were killed in traffic accidents around the world.
If we keep the same situation as today, meaning the safety standards that we have in the car fleet, not adding more content per vehicle, don't further enhance our product and so on, the prediction from the World Health Organization is that by 2030 we will have around 2.4 million people killed annually. Therefore, the target from the World Health Organization is to reduce it from 2017's level with 50%. We are going to be an integrated part in that journey going forward. On top of this, of course, we also have a large number of people being injured in accidents with not only human suffering, but also big impacts on the economy in the respective countries. We have definitely millions of reasons to continue to drive passive safety development together with our customers going forward.
Also in the future cars, we see a big need for passive safety products. The new interiors and the new seating layouts will require, I would say, more challenging, but also more opportunities from our side to provide these components. Jordi will, in his section, talk more about what that means for us. During the morning here, we will present the new Autoliv post-spin. That is based on our product families, the steering wheels, the seat belts, and the airbags. Then also we will talk a little bit about adjacent opportunities going forward. My wish and what we hope here as a team is that when you leave our presentation here this morning is that the takeaway from this presentation is that you will feel our focus on delivering the 2020 targets.
It is also that we are operating in a long-term sustainable growth market, and that we have the tools to maintain the position we have gained over the last couple of years. As Anders mentioned here, I will come back after the breaks here and talk a little bit more about operation excellence. That is also a vital part of our journey going forward. Therefore it's important to spend a little bit of time on that, as operational excellence is truly a part of our DNA. I'm really excited about this opportunity and moving forward with Autoliv, and I know my team is as well. We have, I would say, a clear path for our journey going forward. We have gained a new market position here over the last couple of years.
We moved from 37% in 2014 in new order intake, then between 2015 and 2017, we have seen that growing to around 50%. The focus now is to take this growth and turn it into a profitable growth going forward through a clear execution plan. That is what we will spend a large portion of today's presentation on. We will come back in greater detail later on. Let me already here establish and confirm our targets for 2020 that we communicated in the Capital Markets Day in September. To start with, we are talking about more than $ 10 billion in revenues by 2020, meaning that we have healed the effect as a group from the spin of Veoneer. So we are back at the same size, so more than $ 10 billion in 2020.
We're also reconfirming the EBIT targets of around 13% in adjusted operating margin by 2020. That is coming through the leverage of the increased volumes, our operational excellence work, and I would say the overall improvement work that we are doing here in all parts of the company. Also, a prudent view on our balance sheet. We have around one times net debt EBITDA over time. Mats will come back in the financial section later on and give you more color to these financial targets. We want already here to confirm them. I think we have a solid platform from which we now can leverage. This platform have been built over a number of years under Jan's leadership here.
This platform, I just would like to take you through in some greater detail what we mean when we say we have a very solid platform. I would like to divide it into six, you could say cornerstones, in order to describe the platform here. Firstly, the very strong global position we have, a clear market leader. We have also, I would say, a clear growth route going forward here. We have a number of opportunities that we will also take you through later on in the presentation here on how we are planning to take these opportunities on. Technology excellence, I think Jan already told you the rich history of Autoliv and what we have accomplished in terms of world's first. Superior quality and execution strength, operational excellence is a part of our DNA. Quality focus.
We have also an experienced and very knowledgeable workforce in all our global sites, from our plants to our R&D centers, et cetera. Also a strong cash flow generation, that also provides us the freedom to really capture these opportunities here. These six cornerstones will be found in the different presentations throughout the morning. Of course, the technology excellence will be covered by Jordi in his section, and the cash flow generation and the financial strength through Mats' presentation later on here. Just a snapshot on what is Autoliv post-spin looking like. I will not take you through all the details here, but I would like to summarize it as a clear market leader with a revenue of more than SEK 8 billion, with a broad, strong product portfolio, with the capabilities to further drive innovation into the future here.
Providing, I would say, an even broader and stronger product portfolio with new customer opportunities. That's the starting point when we go into the third quarter here as a standalone entity covering the passive safety area. The market leadership is illustrated on this slide. We have 38% of the world market in our part of the industry. Clear number one. We also here take into consideration the last couple of months development in the industry. As you can see, we are still number one, even considering that consolidation. We also expect as a result of the last year's order intake here that this difference will grow even further in our benefit here as we move into the realization of these new orders. You can also see that we have the market leadership within the different product families that we have here.
Close to 50% of the side airbags, 30% plus in the steering wheels, seat belts just under 40%, and frontal airbags, 30%. I would say strong position in all the different areas. This market position is also built by a diverse portfolio. If we start with the geographic coverage, you can see roughly one third in Europe, one third in Americas, and one third in Asia. I think one other good news here is also that we see that we have a large portion of business in the growth markets, meaning Asia here, with China and rest of Asia as big growth opportunities going forward. Looking at the customer base, we are present with all major OEMs, and I would say good distribution between the different OEMs.
Also with the recent order intakes, we see also that we have had bigger successes with some of the OEMs here that you find in the mid-single-digit percentage here. Over time, it will be even more balanced as we go forward here. This balanced portfolio has been built over a long time period here with a strategy to be very close to our customers. As you can see here, I would say we are probably the most localized company in our part of the industry here. With local presence in all the regions, the tech centers very close to our OEM’s engineering centers. Being local with our customers here, of course, builds trust, but also builds capability to further drive development together here.
Through this global footprint, I would say we have become the supplier of choice when it comes to global platforms where we have resources to meet up with that. This is the team that will be part of the journey going forward and will make this strategy happen. It’s a team with a wealth of experience, more than 20 years in automotive industry on average, and more than 15 years of Autoliv experience on average here. It ranges from strategic to very operational experience here. A team well equipped for meeting the future, and I’m really proud and happy to be part of the team going forward here. The spin in itself provides a number of opportunities for Autoliv.
Of course, as a company then solely focused on our part of the business, we will be able to be much more focused throughout the value chain as we move forward. Of course, also getting the means to reinvest in more profitable growth avenues as we see within the passive safety area. We have also the possibility to take other operational decisions more independently, and I would say building on the rich culture of operational excellence and cost consciousness from the legacy in Autoliv. A lot of exciting opportunities when it comes to the strategic direction for Autoliv as we move forward. As I mentioned already, we see a number of growth avenues as we move forward into the new phase here.
Based on that platform we briefly talked about, the new opportunities that the spin provides for Autoliv, and with the skills and competence within the total team in Autoliv, we see that we can create a sustainable growth for the years to come here, and a profitable, sustainable growth. Let's take a quick look on the overall picture when it comes to these growth avenues. I just want to stress the fact that the near-term priorities here is of course focus number one, which means that it's to fight hard to maintain our market position as the global leader in the industry. It is also to continue to grow with the industry, the overall automotive production growth, and with the content per vehicle increases that we see going forward.
Looking a little bit more mid-term to, I would say, long-term, we see also that advanced and integrated solutions into the future cars provide some opportunities for us, as well as expansion into adjacent verticals and also, I would say, potentially then expansion into other end markets as we move forward. Let's quickly go through them one by one. As already mentioned, we have had a strong new order intake share the last couple of years here, and also this year have started in a very good way, at healthy levels for 2018 year to date. This is now translating into our turnover, and we have, of course, an 18-36 months delay between when the order is taken until it's actually hitting our top line.
With this program timing, we see here that we are moving towards the $ 10 billion turnover by 2020, giving then an 8% CAGR over this time period. That's, of course, one of the reasons we also feel comfortable to reiterate the target. The focus here now is, of course, to turn this awarded business into profitable growth. For that, we have a very clear plan, an execution plan to make that happen. Of course, it is to firstly manage the new order intake we have received here. It starts with the preparation in the engineering area, in the purchasing area to prepare the start of production in a good way and meeting the customer's timelines here. A diligent preparation for start of production. Secondly, in our plants, making sure that we are ready to ramp up in the pace that the customer is expecting.
I think already in September on the Capital Markets Day, we mentioned here that we have managed to expand our production capacity within the brick and mortars that we have. A good job there from the whole organization to really capture this opportunity in a good way and get leverage on our plant footprint. Secondly, flawless execution. I would say full delivery on quality, delivery, and cost in the daily business here. That is to execute our daily operation with operational excellence. Here we absolutely need to be best in class as quality, delivery, and cost is true customer commitment for us. Also continue to build on the customer focus we have had over the years with the local presence, the close collaboration with our customers here, and especially coming down to the new requirements that we see in the future here.
Customer-centric approach in daily operation as well as future opportunities. To build this sustainable growth going forward here, I would say we need to be in the forefront of innovation. That's something you will see in Jordi's presentation later on here, that it's integrated part of our execution plan going forward. Clear path forward here. I also want to give some data points here in terms of our customer focus and also our opportunities going forward. Building on our absolute focus to make sure that we maintain our market position here, and healthy levels of new order intake in the years to come here. What you see on this slide here is that we have grouped our customers by country of origin. Where the company OEM comes from is really what has categorized it, not where they are operating.
Of course, Ford is classified as an American, Nissan as a Japanese, and so on. The point being here that we see that we have a very good development in all the different regions with one exception, Korea. Otherwise, we see that we are growing in relation to all the OEMs in the market here. What we're especially proud of here is what you see in Japan, where we have a market leader position in Japan, despite the fact that we have a large number of competitors in Japan. Just pushing the point here that we are really local where we are operating. As you can see also in China, which is the expected strong growth market, we also see a good trend here with our local Chinese OEM.
I would say we have a good starting position for further growth in China with the setup we have today. Still, of course, more work to be done there. Another point is that we see that our underlying market is growing. Our total addressable market is coming from SEK 21 billion in 2017 up to SEK 26 billion in 2025. Giving a 3% CAGR growth over this time period to be compared to the light vehicle production growth of 2%. Also here you see that we have LVP plus 1% in the addressable market development here. As I mentioned before, we have come a long way in terms of saving lives since 1953. I would say especially Sweden here as one example, have definitely come a long way in this time period.
You can see here where we, Sweden are, and also the Western markets are compared to the Asian market here. Lot of hard work over a long time period is paying off. Still, also in the Western world, I would say there is work to be done. There is a clear zero vision in some of these country in terms of road fatalities. We as in Autoliv is, I would say, working very closely with our colleagues in the industry, associations, customers, et cetera, in addressing this further. I would say million reasons to continue to focus on this as a society and for us as a company.
These countries that I just mentioned where they are behind in terms of bringing the road fatalities down is also in a situation where we expect over years to come an economic growth that will make it possible for them also to require more when it comes to passive safety components. Together with the different NCAP associations, where they are not only looking at ratings, et cetera, but they are also educating end customers around road safety. Road safety is also driving the demand going forward here. Looking at the Western worlds again here, even though they are a little bit ahead, you can see in the last 17 years here, how big that journey has been. Just from 2001 to 2018, the content per vehicle have grown by almost 50% in Europe and more than 50% in North America.
We can just imagine what that would mean when you translate it into these emerging markets going forward. When it comes to ratings and regulations, Autoliv has been engaged in this for many, many years. I'm really proud when I see what our engineering community and research departments are capable to do, and also how they are well-regarded in the industry for the work that we are doing in this area. Innovation here, of course, also is a very important part for how the ratings and regulations is playing out over time. We have two examples here, but just to mention one, is the far-side airbag. I think we presented it to the market around 10 years ago, as a result of our innovation work. You see here now in Europe, it will be a part of the ratings from 2020.
Of course, the innovation work, the discussions and interactions between the different players in the industry have resulted in this conclusion that it should be a part of the rating. Same goes with regulations here. The different stars you see here is things that has been decided to be included in the ratings. This was just one example. We also see that when Europe is launching a new feature or a new requirement, it normally comes into the other regions within the next couple of years. Europe is a little bit leading in this area here. On the regulation side, we see U.S. also coming here with new requirements when it comes to their oblique tests with a special setup for a special angle on the accident. They have new frontal airbag requirement as a result of that.
I think you will see real examples of that later on in the presentation. Another data point driving content per vehicle is the difference between the premium and the non-premium vehicles. We see that, no surprise, premium vehicles has a much higher content than non-premiums today. Premium vehicles is increasing more in percentage than non-premium. You have a growth within the premium segment itself. You also have a trend where you see the premiums are being caught up, or they're catched up by the non-premiums as they move forward here. What we see here is that the difference is shrinking over next coming years. Two different dynamics driving content per vehicle going forward. How is all this now then translated into our top line? I think we already talked about the 2020 numbers being reconfirmed.
We can also say here that we have close to 100% of this turnover booked in our orders. What we just described here will give us at least LVP plus 1 more %, when we look at the LVP and content per vehicle. One potential additional growth avenue is what I mentioned around the new and advanced interior solutions and also integrated solutions. You see some examples here. The requirements that will come on our type of products will increase the level of sophistication into our products. We need to think new. We need to look at new solutions, and you can see here, for example, adaptive steering wheel positions, completely new set of requirement. The whole human-machine interface requirements that we expect to see going forward. The pre-crash airbags, et cetera.
A lot of exciting stuff, I would say, within the product development area going forward, which also gives additional business opportunities here. Lastly, just mentioning the fifth and the sixth growth avenue here, which I would say is potential in the sense that It's really maybe early to talk about it here, but the reason why I wanted to show it for you today here is that we are looking what could be opportunities beyond the growth that we see here now with the LVP and the content per vehicle. One area is, of course, to see how can we utilize our current products, but with new markets. I think there are a number of interesting areas that we will explore going forward here.
Also, as a next step of that is, of course, where can we use our engineering technology and our manufacturing technology to apply it on new products and potentially new markets. This is, of course, much further out in time. The first step here in adjacent would be to see where can we use our products into new usage. When we say product here, it's not only the product families on the highest level, meaning seat belts and airbags and so on, because we are producing a number of components going into these systems where there could be also alternative use. It's really to capitalize on what we already have. I don't really want to spend too much time on this, but it's just to tell you that we are looking at this in a very small team to see what could be done here.
By that, let me just summarize this first introduction of today's presentations by saying that we feel good about the fact that we have a strong and solid platform from which we now could continue to build Autoliv into the future. We know what to do, and we know how to do it, that will be our focus here. Let me now hand over to Jordi Lombarte, our incoming CTO. I hope you will feel his passion for our products. He has been with the company for a long time, and he knows everything about our components. Please join me on stage here, Jordi. Welcome.
Thank you. Good morning to everybody. I would like to share with you all the excitement that we see in the future and in regards to automotive safety. First step I want to share with you is that we believe that there is too many people killed on the roads today. We believe that our innovation path can contribute to reduce this number of fatalities and also to create value for our shareholders. We believe also that the road to the autonomous driving and these market trends that we all see in the industry are creating new opportunities. You will see that this will probably end with a new generation of safety products that are needed to satisfy the needs of autonomous cars.
Finally, our philosophy, our DNA, our approach to real life safety, I think is a good platform to cope and to take benefit of these market opportunities that the world is generating. You can see in that picture that when a real crash happens, it tends to be chaotic, randomly. Maybe you hit a tree and then you hit the second impact. Our approach is really to save lives in real life situations. Of course, when we need to try to see how good are our products, we need to end with tests, and the test is a parameter that needs to be repetitive. This also creates a situation where the big difference, in my opinion, between Autoliv and potentially other, is that we see the test as a verification, not as a target. We don't develop our systems just to meet the specifications.
We develop systems that can save lives in real world. This has implications because it means that our product needs to be robust. They need to work in a wider range than what we have in a specific test. This translates, for example, in decisions like our propellant for our products. We choose Guanidine because we thought it was a better product and robust and fitting with our philosophy. This approach has been proven through the years, bringing new technology in the market. You see a long track record here of innovation that we brought in the industry, I would like to see more boxes coming in. Be aware that what I'm presenting today just has the purpose to illustrate things. Of course, we have some new designs that I'm not going to show here.
We need to protect that from our competition at this point of time, for sure. Interesting thing is when we find that there is a new solution or a new proposal that can save lives, that can protect more people, we tend to partner with key customers. We share this vision of protecting life with some key customers. This is also part of our DNA. We don't do innovations just for the sake of doing. We need to see if this is real, if this is in real fields, and if the feedback from the customers is positive. This is also a pattern that you will see from now in the future, this kind of partnership with customers that have the same interest and the same motivation that we do. Just at a glance, the biggest mainstream of our product includes airbags.
An airbag, you see the bag, but there is a lot of technology behind an airbag. There's a huge technology on inflators, is technology on initiators, on gas generators, and textiles. In any one of these areas, we consider that we are experts and leading the market probably in technology. Airbags, market share, 30% in the frontal, 48% on the side. With the market share, with the order intake that you have seen, you can expect this 30% on the frontals to grow significantly. This segment is SEK 4.3 billion on revenue, and we produce 153 million units per year. When we talk about seat belts, again, don't know how much do you know about seat belts, but we tend to see only the webbing when we put our belt on it. Behind the webbing, there is pretensioners.
A pretensioner is a device with a pyrotechnic thing on it that basically when the car crashes, before you start moving in respect to the seat, it ignites and tightens your belt that you couple with the seat to protect you better during the crash. Another technology is pre-pretensioners. Pre-pretensioner is basically a retractor with an electrical motor that when the car, and this is very interesting for the autonomous driving, the car is gonna know when there is a potential impact. Before even the car start crashing, when the system detects that there is a risky situation, you can activate that motor and couple your body with the seat and actually provide further protection here. Of course, we have buckles and all kind of elements here. 2017 market share about 39%, SEK 2.8 billion on revenue, and again, 150 million seat belt sets that we produce every year.
Steering wheels. What can I say about the steering wheels? Be aware that this is the part that everybody touches when sitting in a car. In this technology, we are experts on all kind of mechanicals because it's basically is in a structure that needs to support an airbag, but also all kind of switches, nice materials, because this is the way that you can feel the quality in the car really soon. On top of this, we all like to have all the controls of the car or as many of them in the steering wheel. Actually, for the future, it's also really important because in the road to autonomous driving, it will be situations where you can drive autonomous, but other times you need to hold the steering wheel.
This is the best thing to interface with the customer to know if the driver is in control of the car. Market share 31%. Again, this is also growing a lot these days with the order intake that we have. It's $1 billion revenue, and we produce about 18 million units. I just want to provide an example on our approach to innovation here. I said real life safety. This is a good example. Our research teams, they try to understand why people are dying in some car accidents, and trying to understand in which segments we see the biggest impact of this, the number, and the probability of having an accident. This show that our studies show, our research teams conclude that more than 20% of people who dies in car accidents were pedestrians.
In between other products, we got the idea that. Before going the idea, we even did more research, and we concluded that when the car crashes to a pedestrian, the highest probability of injury comes from the impact of the head to the hood. The hood of the car is metal, is rigid, and this creates a humongous amount of acceleration in the brain of the pedestrian. We came with the idea, what if, in a pre-crash situation, we open the hood like 15, 20 centimeters, and we create that distance to absorb energy, kind of a spring thing. Is when we came with the idea of a pop-up hood to create that thing. We shared that with some customers, and they loved the idea because we have customers that are very well interested as we do on saving lives.
We went together first to introduce that into the market. In parallel, we verified the benefit of this product. Of course, when we saw the benefit, we promoted that to the authorities, to the NCAP organizations, where they share with us the same interest on saving more lives. Something that was an idea, it came up now, what we call pedestrian protection, is mandatory in Europe. As we said before, Europe seems to be a trending leader on safety. This now is cascading to the other divisions. With the message here is that we can invent and shape the future also for our industry because we have the capacity of research on that. What are the focus areas that drive today our innovation? First big block, autonomous driving. I will summarize why. You have seen all these pictures with nice comfort.
These are all the benefits of the autonomous driving, that you can be reading your newspaper in comfort positions. There is only one thing that needs to happen, is that these new seat positions are safe. If they are not safe, our customers cannot sell these positions as a selling point of the autonomous driving and all the beauties that come with this. Second big focus area for innovation, electrification. Electrification per se, why? First, batteries, no engine, low noise. Some of our typical mechanisms have elements that move and create noise. Second thing, weight. Weight reduction has been always a challenge, but even more with electric cars. Because the range distance that they can drive with batteries is elongating if there is less mass to move. This creates also opportunities.
You know the batteries, small batteries with a humongous amount of energy on them, so they are organizing modules. Here we have some products based on our traditional technology with initiators that we can cut really quick and isolate some modules of these batteries. This is an area also very interesting. Another important area on our focus is adaptivity to age and size of the car, of occupants. With autonomous driving also, this will soon include speed and severity of the crash. Our systems will be more adaptative than today. Then there is another bracket where we put the rest, but here is where we talk about pedestrian protection. We are also investigating the cyclists. We call cycling these kind of accidents.
Basically, you will be amazed, just in Germany, I think we got the data that more than 100 people killed by opening the door and just crashing there. Being a bit more in detail, I just want to show you in the bottom part of this element, a frontal crash. A frontal crash with our current products, you can see that the behavior of the person who is restrained is very natural. It was designed for that. When you want to have a salon where you can rotate the seat, the second image is just to pretend to show that a seatbelt is not enough to protect that person in this angle. It means that we need to provide new solution for that.
Another thing that you can see is when we have these salon types, to protect that with airbags, we need bigger airbags, which you may think, oh, it's the same. It's just a bit bigger textile and that's it. Well, not really. The traditional technology to inflate an airbag is basically through an inflator. We initiate a combustion of some propellants and this create gas, and this gas inflates the airbag. Imagine what happen in a car where the airbag, it's going to fill 40% of the volume available in the car. If inside of the car you create gas to inflate that size, practically you are going to inflate the car or you are going to pop the windows or something. This has to be a different technology.
Basically, what we need to do is to take the air around the car and put it in the back. We are working in this kind of concepts today. The road to autonomous driving. I just try to scale here to give you an idea on what we are doing today already. The race to small and lighter products has been always. Pedestrian, cyclist protection, we are already there. There is new NCAPs coming. The one that we show in the left, this is a solution that Autoliv has developed for the oblique view in the U.S. This is just a simple airbag. Basically, in a oblique view, the biggest problem we have is the rotation of the brain. If you create a big rotation on your head, the brain can be damaged.
This is a solution that we have developed that was done in the U.S., by the way, because it inspire in baseball, that basically, you send the ball, this holds and holds. It's like catching the ball, you avoid rotation. This is simple, I can tell you that we were competing against other solutions with two, three through inflators, very complex solutions, and we have been able, with our knowledge, to provide a solution that by concept is really competitive. You will see, today we're already working on rear seat, in rear seat safety, airbags in the rear seat. They will come up from places where today there is no airbags there. The steering wheels, this is today already where you see that we like to have all the functionalities. The speed control, the radio controls. This is there.
When we go towards autonomous driving, we can expect to see more adaptive systems, more retractors that can adapt. As I said before, more electrical pretensioning. We can see more HMI things on the steering wheel, like hands-on detection. The car needs to know if you are in control or not of the car. Just touching the steering wheel seems to be one of the most reliable ways. Of course, it will be situations on level 4 where in some areas the car can drive autonomously, but outside of this context, you may need to have somebody driving the car. We can see more steering wheels that they are there when you need them, and they disappear when you do not need them. We talk about folding, camouflage, whatever. These are areas that we are studying here.
The last one, I already mentioned the different positions, but the important thing I just showed the Life C ell concept, is these kind of systems that we are looking together with some key partners on the seat industry. How can we make the protection of the passenger in the domain of the seat? Because then it is much easier to integrate that to a car without considering the surroundings. When we go to the electrification of cars, electric cars, I would like you to hear this. I do not know if you know about the seat belt. To block, basically today, the locking of the system is done with a ball. It's like holding a ball, that when it vibrates and the ball moves, locks the retractor.
That's why sometimes when you drive a car and you are in a corner, you cannot extract your webbing, or when you are in a parking ramp, you also cannot extract because this ball is there, but this ball moves. What I try to simulate here is that today, this noise is not perceived because there is an engine that makes this boost. In an electric car, the engine is not there anymore. These sounds that today are not a big problem, it is becoming a problem. Let's listen again. I can tell you, our customers don't like this noise. They don't. We have developed some mechanical solutions that tend to improve this thing. The fact that now we have a car with high level of energy, we are already dreaming in fully electrical retractors. That basically, by definition, there is no noise on those retractors.
In parallel, we talk about the weight reduction. I just put on the screen some evidence on how it's possible to reduce the weight and the space in a car. Normally, reduction of weight, reduction of size, and reduction of cost needs to be together to be competitive. These are three good examples. The first one, maybe the one that I will comment more is the pre-pretensioner. It is the integration of a retractor, electrical motor, and a little ECU to control this. First generation, this looks more like a Christmas tree than really a seat belt product. We did the second one and the third one, that is not in the picture because we are working on them. You can expect the same level of mass reduction and packaging reduction.
This is when it goes to products that we are developing, then it's how we integrate, how we develop application process, how we cope with systems. This is a good example because this is a typical example from a steering wheel, where the customer comes to you with a list of requirements, an estimated weight of the thing with a very specification on the vibration. Because the vibration is how the user perceive the quality of the car. We have methods here that we take what the customer wants. We go through our processes and virtual tools, et cetera. This is an example, and this is real, that product that came to us with a target of 60, 50 grams in the armature. We were able to achieve all the design targets from the customer, reducing more than 10% of the weight of this.
This is also something that is vital for Autoliv to keep our competitivity, to be able to fight to the competition here. I said that our products need to be adapted to the size of the occupant. This is the same seat. Think in a rear seat where one day you can seat your child, and the next day, grandpa in the next seat. Sometimes different size. This is just an example to show that, for example, with a small occupant, we may need small load on the belt. We don't want to injure that lady. We don't need more force than this. When we want to restrain a bigger size occupant, we want to go to another level. This is a product that already exists. It's called an adaptive load limiter.
I just want to highlight that because the trend to the future is not having 2 levels. Maybe we will have infinite number of levels, because if we know the speed of the crash, we know the severity, the system can trigger what's the appropriate load to protect that guy. How this thing is gonna impact our products? Just to give you a short idea. Airbags. You will see more airbags like the one in the top. Basically, airbags that are fully integrated on a seat, actually, they protect the passenger not only for the frontal, side, it's basically deploying from the seat and fully integrated there. We will see more rear seat airbags. Not only rear seats, it's for the saloon type of configurations. We will see more of this.
Because of the adaptivity inside of an airbag, even if you don't see, there is little valves. Sometimes we want to inflate the big bag, sometimes only a portion of it, sometimes only the upper portion. It depends on the size of the occupant. We will see more adaptive vents or gadgets inside of airbags. Seat belts. I already said a little bit about adaptive retractors, new layouts for seat belts or other solutions that protect electrical pretensioning. In the steering wheels, too many touch switches, it's gonna be there. Obvious here, the look nice parts like new materials, sexy materials, sometimes sportive look like to see carbon fibers, while classic looks like to see wood. All these things need to work together with sensors, heat maps, hands-on detection. It will be more driver alert features also, on the steering wheel.
The foldable and camouflage and intermittent-use steering wheels, let's say it that way. Just that you know, one thing is what we are doing to create the next generation of products. One of the biggest portion of our engineering efforts are to introduce these products in real cars, and this is what we call application engineering. Here we are also under the Engineering 4.0, doing great initiatives in my opinion. The first one as an example, is basically the traditional way to create a product is to start from a drawing. We make components. We believe that in the future, with some clicks in a computer, we will be able to make a configuration of a new product. Just with little add value of engineers, we can go with this. We do a lot of covers and a lot of elements on our traditional business.
Covers for airbags is our traditional business. The interface with that cover, with the rigid parts, is quite often the same. We have already tools that we are developing that basically we only need to concentrate on the final shape, on the added value, on what makes a difference. The rest is going to be there. If I may make just a quick example on a very practical thing and very simple, any seatbelt that we sell today, anybody sells a seatbelt, needs to have a label like your clothes. In this one it says the number of the homologation, the certificate number, blah blah blah. Today, every single label has a drawing. A drawing takes three, four hours to do it. Today, we have a system that we are finalizing right now that we even don't need a drawing.
We just need to push a button in operations with a part number that we are producing and automatically printing the label. This saves a lot of money. Our target here is that we are doing this to save time to market and also engineering efforts. Another good thing is all the tools behind that. This is a real example, I'm proud to show that because when we do steering wheels today, we can basically design virtually that steering wheel almost 100% on a virtual system. We can analyze frequencies. We can analyze strength. When we have this, we can simulate how this thing is going to be produced because it's really sensitive to process, to the point that we can modify the process for optimum conditions. Finally, we can verify that with virtual testing.
Just to give you an idea, five years ago, the average number of iterations that we had to do in a steering wheel was five to seven easily. Today it's one or two maximum. This is also a huge improvement in our efficiencies. Bear with me in these pictures. Do you know what is the theme that brings all these real crashes together? Is that in all of these, people walk without injuries. This is what motivates us to continue with our innovation path on how can we save more lives. As I said at the beginning, there's still too many people dying on car accidents that we believe that we can help. Our vision is to save more lives and create more value. I think that this is the energy that fuels our teams and our passion to continue in this path. That's all.
Thank you.
Yes. Thank you, Jordi. That was, I think, very interesting to see how we're working with innovation and continuously trying to improve both the products and the efficiency in how we come to our new innovations. With that, it is actually time for the first break of the day, coffee break, and it's served just outside here. Please be back here for the continuation of the presentations by Mikael and Mats by 10:30. Thank you.
You [Foreign language]? Okay. We all back? Excellent. Welcome back to the last section of the Autoliv presentations. I hope you enjoyed the coffee break. Let's go back to operational excellence. Operational excellence is something that is really close to my heart and burning a lot of in terms of driving operational excellence in our daily operations. We talked about the clear execution plan earlier on here, where we had the four components in order to drive the future profitable growth going forward here. The intention now is to talk about the flawless execution. As I mentioned, it's all about full delivery on QDC and to drive operational excellence in everything we do. Just as you, we are well aware of the challenges in our industry, but we also have the means to meet these challenges through the Autoliv strengths and opportunities.
For example, we are in a dynamic, competitive environment with continuing price pressure. There, of course, to have the leading production system, superior scale, and a strong business momentum is the key to meet these challenges. Therefore, we need to always lean forward, looking at the challenges and making sure that we are agile and fast to improve our strengths and opportunities. The key here is to never be satisfied on where we are and where we are performing. Always become a little bit better tomorrow than what we were today. For that, we have a number of tools within Autoliv, and methods. Here is, of course, the Autoliv Production System, one key element in that.
Here we have also upgraded the Autoliv, or updated, maybe I should say, the Autoliv Production System during the last 12 months here. I will come back to that later on here. Another area is the Q5. You heard us talk about that in the past also here with the zero defect mindset in driving quality inside a company. We have One Product One Process, and global approach to secure the robustness of our products. Of course, innovation, as you already talked about here before, to make sure that we are always leaning forward here. What you see on the left-hand side of this slide is, I would say, a real working document. However, the dots representing our sites is just for illustration.
It's not the exact places where they are in reality, but just to show how we are working inside the company in terms of judging, and driving the improvement of our respective sites. Here comes the updated APS tool in also where we have connected, let's call it the lean maturity on the left-hand side, the tools and methods with the pure performance, and to link them together to make sure that it's not only continuous improvement for the sake of it, but it's really continuous improvement to drive QDC in our performance. Here we have plants, but we also have tech centers as we move forward here, and other functions inside the company to always make sure that we move up in the scale here to reach the gold and platinum levels.
The ambition here is to have all our plants and sites within that part of the graph, because that's where you really need to be in order to be world-class. The point here is that it's not a static measurement. It's, of course, also subject for continuous improvements to always drive world-class. Also improving and updating the wanted position here as we also move up in scale. It's a moving target all the time here to sharpen our minds and our means. Quality comes first. We are in an industry where our products always need to work when they are needed. That's, of course, extremely important for us, but quality in everything we do is also top priority to be a world-class company. In 2010, we launched the Q5 initiative, which was really driving quality in all dimensions.
We are addressing products, we are addressing processes, we are addressing people, and we are addressing behaviors. Here it's really a question of making sure that it starts with me as an individual inside the company, where I need to think Q5, I need to speak Q5, I need to feel Q5, I need to do Q5. That is applicable for all the people in the organization. Regardless of where you are in the organization, you have a role to play when it comes to driving quality. We are really working throughout the whole value chain here, and both upstreams and downstreams, where in the products, securing that we are producing, in our R&D centers, the drawings and the details around the product. It's robust. Robust to manufacture, robust to use, and that we also get it optimized and designed for manufacturing here.
It comes to the supplier management side. It's to have flawless components being bought, making sure that our suppliers lives up to the standard we are putting on ourselves. It's in our manufacturing areas, flawless production. If we have issues, we need to have a good verification system here, so we can verify our products to conformity here. A waterproof value chain to secure zero defects on our products here. As I said, we have been working on this since 2010. The middle graph here, you see that it is paying off. We have reduced the non-conformity events by 61% since 2011. Here, I would say it is also very sharp measurements here. It's not parts per million or anything like that. It's really all cases are measured here as one case.
Regardless of the size or the magnitude of the issue, it's registered as an issue or an event. Very, I would say, tough measurements here. We also see that it's paying off in terms of recalls. With the market leader position with 38% of the market share, we just have 2% of the recalls, but it's still 2% to units too much. It should be zero there, and that's what we're working on to achieve. Here's a real-life example of what I would say is a hero inside our organization. It's a person that really lives the Q5. Her name is Naime, an operator in our Turkish plant, and she is managing, in her process, what we call height adjuster rails. You'll see the examples here.
She discovered just by being very focused on what she's doing, that there were 31 gram weight difference between one component and another. Not just let the production go. She raises her hand, stops the production, then we take measures, going into more detailed measurements of the components, we could then stop the production, get the right equipment, the right components in, by that avoided a recall. These are the examples we are celebrating internally and really shows good example of living the Q5, meaning taking responsibility for your part in the value chain and not hesitating to raise your hand if there is an issue. I believe in September when we had the Capital Markets Day there, we also showed another example from Poland.
It's really to promote this behavior inside the company that will make the difference for us and is making the difference in our daily operations. Just a few results around what we are driving when it comes to the overall operation excellence journey. Here, I would say in those examples and in these activities, we are capturing all elements of the QDC here. The zero defect approach is also a way to drive quality. The spin of that is also that we see that we get significant reduction when it come to cost in waste and scrap. Also, I would say productivity. What this means is really that we drive and measure our lines, how long they can drive or produce uninterrupted for any reasons connected to not following our production standards.
Even if an operator have a component that is dropped on the floor, it doesn't really impact the quality or the production speed, but it's part of the process that should not be there. It's measured as a defect in our measurement on running in a flawless way day after day here. The example here that we have one site machine line here running in 16 days without any flaws, includes all those minor things as well. We are really raising the bar on our different production cells and production lines inside the company. As of today, we have 17% of all lines have achieved this zero defect target, and we have not yet rolled it out on all of them.
We have a pretty good momentum here, and we have just been running this for, I would say two years here now in a sharp way. Good potential in all dimensions here. We also have a new manufacturing system in place, the Leading2Lean cloud solution. Also giving good visibility in our effectiveness in our different plants. By that, we also see an increased operating availability of 5% in 2017. Good progress there. This means that we have full visibility of all our production lines globally from basically one site here. Target condition is there to drive then our, I would say, continuous improvement journey. It's the definition of each process or each function in a world-class situation where we can go today. It's not a futuristic description on how we would like it to function.
It's actually something we could achieve today, and then we drive towards these levels of performance. It's a very effective way to set the target for our different parts of the organization here, and also subject for continuous improvements here. Another area is where we are looking at getting more connection around the logistic setup. We have something we call One Network. We have a lot of the logistics responsibility delegated into the division and to the local plants. That will, of course, continue. What we are providing here is better visibility and clarity when it comes to how to more effectively utilizing our global flows. You can see on the left-hand side that it has been a lot of bilateral solutions between a supplier and the respective plant.
Now we cluster it as a company, and by that getting the volume scale to hit the bottom line in a better way here. Also we see actually the capital tied up potential in this also. Double effect there. 1P1P is one of the methods and tools we described earlier here, which is really the same product should have the same process globally here. Here is the effort to minimize the variance we have, and also to get the robustness in our products here. We have been working with this since 2013, so a number of years. This of course takes time because it means that the next opportunity to really move in the right direction is when we have new engineering efforts being put into new programs. It's a stringent process here to get to common parts.
We have, in this example here with the retractor frames, gone from 32 parts down to two standard parts. At the same time, then being able to improve the robustness in the product here. I think we have definitely a lot of potential in continuing this journey here. Here you see some data points as a result of the operational excellence efforts, where we are driving down the number of suppliers. We have seen a reduction in non-conforming materials. As I said, we don't take into considering the volume increases like you do in parts per million. So here we have reduced non-conforming materials with 42%. At the same time, the volume has significantly increased in the last couple of years. Good effect there. On the productivity side, 32% since 2011 here as a result of all of these initiatives here. Good effect here.
Lastly, before I hand over to Mats here, the intention here was just to describe the width of activities that is being put into this area here. We are also looking forward into the different potentials that the Manufacturing 4.0 or Industry 4.0 provides for the manufacturing side inside Autoliv here, where we can see benefits with digitalization, connectivity, and optimization. I think we have an approach to this where we definitely don't drive this for the sake of Manufacturing 4.0. It's really to see how this can contribute to our continuous improvement journey by selecting relevant pieces here. I think we have a very clear path going forward in this area, and I'm really excited about the opportunity, especially within optimization, where I think we will see good effects coming through in a reasonable timeframe here.
I think you all know also that we are a company with a lot of manual activities that will be benefiting from optimization in terms of, once again, driving quality and cost efficiency in the future here. Really excited about that, and more to come when it comes to operational excellence for sure here. With that, I would like to invite Mats to the stage and take you through the financial direction. Please welcome Mats.
Thank you, Mikael. To start with the financial direction for Autoliv in the new context now, or after the spin of Veoneer. Before I'm getting into that one, I would like to return to the Capital Markets Day back in September when we talked about our targets and long-term ambitions. We talked about the more than $10 billion when it comes to top line in 2020. We talked about the adjusted operating margin of 13% in 2020. We talked about the long-term ambition to have at least a growth that is LVP plus 1%, and a long-term ambition to have an adjusted operating margin, at least in line with the target for 2020, the 13%. For the balance sheet, we said that we are targeting a net debt to EBITDA of one times, and to be within the range of 0.5 times-1.5 times.
We are today confirming all the targets and ambitions that we presented at the Capital Markets Day in September. Talking about creating long-term value for shareholders, we identified four key areas when it comes to creating long-term value. The first two ones that you can see here is very much related to profitable growth and the higher order intake we have had over the last couple of years. That is on a very strong foundation within Autoliv and a strong heritage when it comes to the cash flow generation focus, as well as shareholder returns, and also a strong balance sheet with a prudent leverage policy as well. Looking into the first area, the visible near-term growth and sustainable long-term growth.
You have already seen this picture a couple of times, I will repeat it again because it's so important when it comes to the near-term opportunities we have then. In 2015, we saw a step up when it comes to the order intake. We went from a global market share when it comes to order intake of 37% up to 50%. That continued into 2016 into 2017. We have seen the same development in the beginning of 2018 as well. With a lead time of between 18 and 36 months, this means that this will realize in a top-line growth now in 2018. That you have seen when it comes to the guidance and what we have communicated when it comes to passive safety for 2018 with an organic growth of more than 10%.
Also important to see when it comes to the target 2020 of more than $10 billion, almost all of it is already in the order stock, it's booked. To summarize, that will give us a CAGR from 2017 to 2020 of about 8%. Moving into the long-term ambition when it comes to growth, starting off with the light vehicle production forecast from IHS, which is the base for our ambition. They are forecasting a CAGR from 2017 to 2025 of close to 2%. About 40% of the unit growth is driven by China, 25% by India, really highlighting how important emerging markets will be going forward. Looking on the mature markets, we can see increases when it comes to Western Europe. We can see increases in North America, where the forecast indicates increases in Western Europe and North America. However, offset by declines in Japan and South Korea.
Looking into the Autoliv specific ambitions, we have the light vehicle production as a base for the growth assumption. On top of that, we can see big opportunities when it comes to content per vehicle growth as well. We have identified four key areas when it comes to that kind of growth in terms of content. The safety evolution in emerging markets, it's very clear when you saw Mikael's picture with the road fatalities in some countries that are huge opportunities when it comes to saving more lives in emerging markets. We have increasing safety standards, I think a great example is the Chinese NCAP that will be effective in the later part of 2019, which will increase the safety content in vehicles as well.
We have the premium car trend with a relatively higher growth for premium cars, which also increases the content per vehicle. Last but not least, the future mobility trends. Both Jordi and Mikael talked about that, and we can see great opportunities when it comes to the new configurations in the new AD world, so to speak. All in all, this is giving our long-term ambition when it comes to growing at least light vehicle production plus 1%. Looking into the second area when it comes to the profitability improvements and over the cycle flexibility. Starting with the profitability improvement opportunities. We talked about the 13% when it comes to the adjusted operating margin in 2020. However, what we also need to understand is the base where we are starting from.
If we recalculate 2017, starting with the reported segment result for passive safety of 10.2%, adding on top of that non-GAAP adjustments when it comes to antitrust and capacity alignment, and also on top of that adjustment for accounting going from a segment to a standalone business, we have a starting point of 11% in adjusted operating margin, which gave us a margin expansion from 2017 to 2020 of about 200 basis points. We can see that margin expansion coming from mainly three areas. First of all, utilizing our existing footprint for growth. This is a great example from Japan, where we have a plant for airbag production, where we're actually doubling the output within existing footprint. 100% volume increases over five years, but we're only investing in 26% more production lines and no changes to footprint.
Higher volume in existing facilities will give leverage, a better fixed cost absorption. Looking into the second area, and this is also very important looking on the leverage from now to 2020. We will start to see leverage on the RD&E side as well. As we have communicated earlier, we have spent quite a lot when it comes to investing in application engineering driven by the higher order intake. This is something that will level out now, and we will see the benefits from order intake translating into sales, and we'll see the growth. Hence, a leverage also from the RD&E when that will start materialize and declining in relation to sales.
Last but not least, Mikael gave a couple of examples when it comes to all the ongoing efficiency improvements we have within Autoliv with 1P1P, and we have the example here of a 32% productivity improvement in terms of direct labor. What you also need to remember, in our business, there are some negatives as well. Everything is not contributing to margin expansion. We have an annual price erosion of between 2%-4%. We have cost inflation, we need to have underlying efficiency improvements constantly in order just to mitigate the negatives we can see in our business. Moving into the flexibility we have built into the system. In our business, it's not the question of if we will see a downturn, it's when. It is cyclical. We need to be prepared to meet the downturn if we see one.
Mikael also talked about this one when it comes to our diversified sales streams, I think that is important that we have a very well-balanced geographical footprint with basically one-third in Asia, one-third in Europe, and one-third in Americas. It is also important to realize that we have a well-diversified customer base as well. We are not dependent on one or two or three single OEMs. We are represented at all global OEMs. Secondly, we believe that we have a flexible employee structure as well. About 80% of our total workforce we have in best cost countries. Looking on the three biggest countries, with Mexico, Romania, and China, they represent about 50% of the total workforce. We believe that we have flexibility, opportunities built into our structure when it comes to mitigating downturn, if we see it from an employee point of view.
Last but not least, the working capital side of things. It is extremely important to have strict control of working capital, especially looking on inventories, because if you are hitting a downturn with high inventories, then you will go through a de-stocking, which will hit your absorption as well. Have good inventory controls. That is important. We have the target when it comes to operating working capital to be below 10%, and we have been between 5.5% and 8% over the last 10 years. We are there, and we will continue to be there. Moving into the cash flow side and the cash flow generation, also looking a little bit at the shareholder returns. I think this is also important to realize that we have a slightly different underlying cash flow in the new structure after the spin.
What you can see here is a comparison of Autoliv in the old structure and Autoliv in the new structure. Looking at 2017, we have a cash conversion of about 70% in the new structure in Autoliv, a return on capital employed of about 24% in the new structure to be compared with 19%. We have incremental higher underlying cash flow in the new setup, and we have higher returns. What is also important to realize when you're looking at the cash flow of the last couple of years is the higher level of capital expenditures that we have had, naturally driven by the higher order intake, where we are investing for the new launches in terms of production lines and so forth.
If you go back a couple of years in the Autoliv history, you will find capital expenditures on the level of between 4%-5% in relation to sales. We have been, for the last couple of years, on the level of between 5%-6% when it comes to capital expenditures, and that is what we are expecting for 2018 as well, as we are in the mid of the big launches now with a higher market share. What we will or what we are expecting to see is our CapEx start normalizing in 2019 towards the historical levels when it comes to capital expenditures between 4%-5%, but still for 2018, a higher level than you have seen historically within Autoliv. The underlying stronger cash flow is, of course, extremely important when it comes to the shareholder returns.
This slide is just to illustrate how much we have returned to shareholders over the last decade. It's a total of SEK 3 billion returned to shareholders in buybacks and dividends. Looking into the last area when it comes to a strong balance sheet and a prudent leverage policy. As I said, we are keeping the target when it comes to net debt to EBITDA of 1 times. With the cash injection into Veoneer of $ 1 billion, we are forecasting to increase our net debt to EBITDA up to 1.5 times by the time of the spin. However, with the strong underlying cash flow, we are expecting to be back on target level again during 2019.
This is excluding any discrete items. As most of you can remember, we have a pretty big EU antitrust investigation ongoing out there, that is excluding any discrete items. We were also very happy when we saw the press release from Standard & Poor's yesterday, where they confirmed our A-minus rating, and it was actually changing the outlook from negative to stable, driven by a slightly lower cash injection into Veoneer than we originally said in the first press release. We are basically back on the same level as before announcing the spin when it comes to our credit rating. Just lastly, to summarize the four different areas, looking on the near term and the long-term growth. Near term, driven by the higher order intake we have seen and what we already have in the order stock.
Long term, very much driven by the LVP, but also the opportunities when it comes to content. Profitability improvement, very much related to what we have in the order book, to have the flawless execution that Mikael talked about in order to get the leverage from the volume and to reach our target of 13% in 2020. When it comes to mitigating a downturn or meeting a downturn, we think we have very good tools in place to do that. When it comes to the cash flow generation, we have a strong underlying cash flow, as I showed, and that's just looking on the incremental difference to the old structure. We actually have a higher underlying cash flow. Last but not least, we are committed to the strong investment grade.
The balance sheet is very important for us, and especially as we are in a cyclical business like we are in. With that, I think I hand back to Anders.
Thank you, Mats. We are now going to set the stage for the question and answer session. I guess it will take one or two minutes. Before that, the Q&A session will be, of course, questions from you, the audience here in the room. There is also opportunity to type questions in the online webcast that is ongoing. We will have Mikael, Mats, and Jordi on stage here. I ask you to state your question in the microphones that we will provide and state your name and your affiliation or organization. Please limit your question to one at a time so everyone has the chance to ask questions, and then you can come back with follow-up questions. I think actually we should be ready to do the Q&A. If I ask Jordi and Mikael and Mats back on stage. Okay, Hampus, you are the closest one.
Hampus Engellau, Handelsbanken. I have a question on how will the collaboration be between Autoliv and Veoneer when it comes to restraints control in terms of designing in sensors, et cetera? Could you talk a little bit about that? Maybe I am foreshadowing something that we will talk in the afternoon about, but anyway, that is my question.
No, I think it is pretty straightforward. After the separation here, we will be two companies with an arm length distance. Today we are basically buying then the ECU components from the electronics. We will have an agreement with them to continue to do that. We are also free to go anywhere else to look for that component if we would like to or if we see more competitiveness from another place. They will be as any other supplier, so to speak, from our side. Of course, there is opportunities. That is the starting point. Of course, going forward here with everything we have talked about here, we will see with our close relationship we have today what we can do more or potentially do more as two separate companies can do together here. It is very limited relationship at the starting point.
Will you need to change the design of your product to use another supplier?
We will have the own capability on the engineering side to drive this development. Maybe, Jordi, you could add a little bit to what it requires and so forth.
As you have seen, some of the path on our development in passive safety includes mechatronics integration and maybe small ECUs for the hands-on detection. We will have the knowledge, we will subcontract that production to other parties, with Veoneer as a potential good partner for us to do that. No, there is no restriction in our way that we design these things to link ourself to only one option at this point of time.
Thank you.
Agnieszka Wydelek, mBank. I have a question on your capital structure. You basically keep the target for net debt to EBITDA the same as you had for Autoliv as a group, in spite of the fact that Veoneer, which is cash losing and a bit more risky asset, is now disappearing. What's the reason for that? A follow-up also. You expect the net debt to EBITDA to fall by only 0.5 times until the end of 2019, meaning that in the next six quarters you expect only limiting your debt by half of the EBITDA. What's the reason behind these kind of conservative expectations for the cash flow generation? Thank you.
When it comes to normalization of net debt to EBITDA, I said during 2019, it's not necessarily the end of 2019, to state that one. When it comes to the target and the 1 times net debt to EBITDA, I think it's also important to realize on exactly where we are right now. We will increase our net debt quite a bit with the capital injection into Veoneer. We will fund, if not the whole $1 billion, we will have some from cash on hand as well when it comes to the cash injection of maybe 70/30 in terms of the split between new funding and cash at hand. We also have, like I said, when it comes to discrete items, still the EU investigation ongoing out there that will have a material impact on our financials.
I think in that environment and looking short, mid-term, I think it is prudent to keep what we have until we have stabilized everything.
Thank you.
Björn, Danske Bank. A question on airbags and the more deeper integration with the seatings looking ahead. How are you attacking that? Are you starting to cooperate with the seat developers, or how should we look upon that?
Yes, we need partners in that. We have talked about the relationship we have with Adient. We have a number of projects running in parallel where we're looking at different solution for the future cars here. I don't know, I think right now it's too early to give an example what we are doing together here. We have a very close collaboration and we have a joint steering committee. We'll see how we will bring the solutions to the market. I think there you can see that coming primarily through the respective sales channels. We will not be able to talk more about any details around that yet.
It's partnership that is the main way forward.
In those cases, yes.
Yeah. Cool.
Erik Karlsson from Industrial Equity Partners. Would be interested to hear what the sentiment is among the OEMs now that you've been running higher market shares for over three years in terms of order intake. Is there any sense that they are concerned about that in the longer term, and they would like a more balanced, competitive situation? Are they quite happy with you with having such a big share of the market? Thank you.
I think, as I mentioned before here, we have started a year on a healthy level when it comes to new order intake. We don't really see any new dynamics in the market here. Of course, we need to always make sure that we are the best choice, and that's why we need to continue to fight when it comes to our continuous improvement journey and around quality as well here. Never lean back here. We are continuing to drive and protect the position we have in the market, and no changes in the dynamics as we see.
Maybe as a quick follow-up, for 2018, would you expect a similar dynamic as 2017, more or less?
I don't want to do a pre-action for the full year in this, so far so good. It's started well.
Thank you.
Morning. Victoria Greer from Morgan Stanley. Coming back to the order intake question and related onto the long-term margin expectation. Last September at the Capital Markets Day, you talked about ending at 2020 at about 45% market share, implying that you go back to 40%, probably from 2018 onwards. Is that still the right way to think about it? I know you don't want to commit, but if it's 40% that you're winning at right now or if it's 50% is pretty material. Also, if it is closer to 40% right now, 45% for 2020, why does the margin continue at this rebased higher level? To 2020, it's clear that you've got a lot of operational leverage on the higher order intake base, that's clear.
Why does it remain at 13% after that and not revert back to more of the sort of 11% levels that you've done over the long term?
Yeah. I think, first of all, we are confirming the targets when it comes to the top line and the EBIT for 2020. I don't think there is any reason to start to talk about what's beyond 2020 at this point in time. It's very clear target and not very far away. That's our focus right now. In terms of market share, we're not guiding or having any targets on the market share as such here. It's really the new order intake that translates into a stronger market share than what we have today. We'll see where that will be in relation to the overall market. That's as far as we go when it comes to targets, yeah.
On the margin?
Yeah, as I said, we have 13% for 2020 as the target, speculating where it will be beyond that, I think we need to focus on the 2020 before we start to talk about any guidance or new targets or indications or whatever you call it beyond that. It's the 2020 we are talking about there.
Thanks.
Thank you. Kai Mueller from Bank of America Merrill Lynch. Following up from Victoria's question, actually. When you look at the competitive environment, obviously Takata being sort of rescued and cases driving that change, have you seen OEMs being more aggressive, not only on allocating the orders, but also trying to push the prices down again?
We don't see any real changes in the dynamics in the marketplace compared to a couple of months ago or so. It's basically the same as we have seen in the past. No changes there.
If you think about, obviously, you showed the increased content in terms of units of airbags being put into the car and the big growth rates you expect in terms of the actual revenue per car. Is there a theme, though, that OEMs give you extra orders, extra units, but want to get a discount on the whole product portfolio so that your sales increase but your margin per unit goes down?
I think same there. The dynamics in terms of negotiating the prices varies between the OEMs. I think we don't see any changes in that dynamics as a result of increasing content. We have been on an increasing content per vehicle journey for quite some time, and as you saw from one of the slides, we have significant increases, I would say, since 2001 in Americas and in Europe. That will continue, but I don't see any changes from what we see today.
Thank you.
Olof Serne from ABG. Just a question on capital allocation. As a part in the big Autoliv with Veoneer, a lot of the focus, I guess, on acquisitions was on the Veoneer side. Are there anything that you will look at now, adjacent areas, types of growth paths that you haven't considered before, which could require acquisitions?
As I said, the focus is absolutely on delivering on all new orders that we have received. I think that is priority number one, two, and three. Of course, we need to have a more long-term perspective as well, and that's why I showed the adjacent potential opportunities there. Yes, there you could potentially see some M&A opportunities, but that's nothing we are looking at today or tomorrow. That's really long-term opportunities. On the M&A front, I would say it could be bolt-on opportunities that comes to us, but that's nothing we are looking for or driving or anything like that. I would say the M&A front is in the back burner from that perspective. Yeah. New questioner here.
Hi, John Anander from Nordea Asset Management. I'm coming back to your top-line target for 2020. I look at the market share gains that you have done, the normal lead time in order to delivery, and I think also that you have mentioned that around 20% of the market is negotiable every year, more or less, which ends me ending up quite significantly above $11 billion and not $1 0 billion. That you start delivering that out this year. I'm just wondering if it's a timing uncertainty that is sort of the reason for your cautiousness, because I think that no matter how you slice and dice it, you should be able to deliver quite significantly above your target.
We said above $ 10 billion and not $10 billion, but-
I know, but above SEK 11 billion is another
There is some room there. Of course, there is a lot of things in play when you look at the top line 3 years out in terms of dynamics in the LVP, et cetera. I think we feel comfortable with the more than 10%, but you have done the calculations, and you would say also that when you look at the new order intake, it is not like it is staggered when it comes in. You could have orders won today that will be beyond 2020 also. You have to take that into consideration. Of course, that is a part of the, let's say, prudence when it comes to looking at the top line in 2020.
Agnieszka, Nordea. A follow-up from me. Can you confirm your growth target for 2018 of above 10% organic growth? Also, how should we think about the trajectory of that growth, given that Q1 was somewhat weaker? Thank you.
First of all, the more than 10%, that was what we communicated when we released the report. We do not have any kind of updates to that. That was what we released when we had the earnings release. Yes, as we said when we released the first quarter, the real growth and launches and the wave, that will start kicking in in the second quarter and throughout the year.
Thanks.
I think that we could take one question from the webcast. It is from David Lim, who wants us to, again, bucket the operating margin improvement up until 2020. The RD&E, the utilization, and the efficiency improvement, is it 60, 70 basis points each, or is it a different distribution? From David Lim. What is important is the A, B in this one. If you take C, that is related to the kind of operational efficiencies and the operational excellence that Mikael talked about, and that is always ongoing. What is new right now, that is the first two ones. The first two ones will stand for the majority of the margin improvement. I would not like to go into kind of specific numbers, but it is the two first ones. The utilization of the footprint, higher volumes in existing facilities, and the RD&E leverage, those are the two most important ones. Any follow-up questions?
I think you've done a good job. There's no more questions. Crystal clear. I think with that, we end the Q&A session. I leave the floor and the stage for Mikael for concluding remarks.
Okay. Let me thank you all for joining us here today. It has been a pleasure to talk to you about Autoliv post-spin. As I said, I hope the takeaway from this morning here is, first and foremost, our focus and passion to continue to develop this company from the basis that has been built over a number of years. We have a very strong platform from which we now could leverage. The spin in itself provides a number of opportunities to drive then a profitable growth going forward. We are operating in an addressable market that is growing with size, but I would say also with innovation and sophistication when it comes to our products.
Altogether, I think we have the tools, we know what to do, we know how to do it, our operational focus will be in the forefront for the next coming years here. Once again, thank you very much. Looking forward to interacting with all of you in the future here. Next checkpoint will be then the Q2 earnings that will take place on the 27th of July. Then we intend also to invite you all to Capital Markets Day sometime during 2019. Of course, we will come back with more details around that when the time comes. Thank you very much. Enjoy the rest of the day.
Okay. Then it goes straightforward.
Right. The line on the floor is how far you can go before you get out of the projection.
On my face.
Yeah
if I come any farther.
Yeah.
Okay.
These spotlights are also adapted for that.
Does that mean I shouldn't go past this? Because normally I am sort of.
Stay.
Right.
You better stay.
All right. Okay. I should also I'm wondering-
You're wondering?
About the water, because it's blocking the view to the speaker notes. If I can just move it here.
I think you can.
It will be nice to have up here, but it blocks exactly. If I'm standing here, I can't see the speaker notes. Okay. All right.
Ola's going to speak as well, and he will pull it down.
Yeah. We don't need to be on this side of it.
No
We have this view.
Yeah.
Okay. Good.
What is this?
Now this is muted? No, it's not muted.
You're on.
Is it still muted? No.
No.
When I push the mute button, it doesn't.
It doesn't mute. Mute is not working.
Mute doesn't mute.
No, we have to turn it off.
Okay
a lot of speakers are muted, and then we can't.
Right. Yeah, understand. I can't turn it off from here.
From here.
Okay. between now and then.
We're on here.
They will.
You'll take it back off. Okay.
Is there seals or? Yeah.
[Foreign language] Det blir jättebra. Tack. Jag kommer att säga så här när jag lämnar scenen till Erik. Då går jag därifrån och börjar prata lite långsamt i mitten och det är där vi du ska gå upp. Därifrån och så möts vi i mitten. Vi skakar hand och sen tar vi över. Du går efter mig. Sen säger du när du är klar. Jag lämnar scen till Ola. Det är exakt samma sak med mig. Men tänk på att det är lite kortare avstånd där till den kanske. Du måste vara lite långsammare för att hangla där. Sen går du och släpper dig. Sen Ola. Han lämnar ordet till Thomas. Sen går vi upp du och jag.
Okej.
[Foreign language] Bra. Okeð.
[Foreign language] Ja, nu kör vi.
Go with the flow.
[Foreign language] Ja. Det är. Sen får jag inte stå kvar. Jag blir ombedd av en av de rättfärdiga där bak. Jag frågar Eva då. Entusiastisk, glädjande. Jag har inga problem med allt jag sett och känt för. What a trophy. Kan vi komma och se bin här? Nej. Det gör vi. Ska jag gå och leta efter honom? Ska du inte New York efter det? Ska du inte till New York? När kommer du? Okej. Ja, morgon kan du inte göra.
Lördag.
[Foreign language] Jag måste säkra att jag kommer in. Det kanske jag kan fula.
[Foreign language] Vad sa du?
[Foreign language] Ja, jag har inte haft några problem med att fara upp och sköta bort. Man vet aldrig i New York. Jag har inte fått det här. Nej, jag har köpt det. Jag har bara ställplats. Jag har ingen last. Vanligtvis har jag inga problem. Det var jättemycket problem runt hela världen. Men jag har inte haft något. Jag tror jag kom in ute i landet ofta. Men New York inte är fortförväntat. Då flaggas systemet. Detroit. Jag slår inte kund men jag går till och med. Du vet när man går på de här kåkerna så säger den gå där. Då brukar jag gå i amerikansk gräns när jag går. Men det här är. Jag vill bara säkra upp det. Det är inget problem att ändå exa i New York. Jag vet inte vem det här är. Det är Mattias, tror jag. Är det här Linn? Han sitter där.
[Foreign language] Mattias, är det här Linn? Nej, är det Nina? Ja. Vi ska göra en av de här. Välkommen. Välkommen. Då är det dags för oss att starta upp det. Okej, om vi säger att vi tar detection-delen då det är bara för oss andra och andra som är ute på expedition. Då har vi bärsida.
Welcome back, after what I hope was a nice lunch. We have now changed ourselves into Veoneer. Quick change. Welcome to those of you in the room. Welcome to the webcast teleconference. We are Veoneer. As you know, we are the new kid on the block, but we are, as I think we'll show, a very experienced kid. My name is Thomas Jönsson. I'll be working in communications and investor relations for Veoneer moving forward. I just want to mention to this audience that also for investor relations, I'll be working together with Ray Pekar, who many of you know, and who might be in the room or very near the room. Yes. Moving into the program. This is the safe harbor statement. As you all know, this is an integral part of all the presentations, including the Q&As that are about to follow.
Let me take you to the program. We will start with a welcome. That's what I'm doing now, hopefully to everybody's pleasure. Then we will listen to Jan Carlson, who will talk about creating a trusted leader in mobility, really outlining the corporate strategy. Of course, now Jan steps in as the President and CEO of Veoneer. We will then listen to our market and sales outlook presented by Art Blanchford, who is the Executive Vice President for Sales and Product Planning in Veoneer moving forward. After that, operations and technology, where Johan Löfvenholm, who's Chief Operating Officer, will take us through an overview. Then we will do it slightly differently, maybe, than from a normal Investor Day, where we will deep dive into three specific areas.
We thought it important to look at some of the key areas that we think will drive growth, where we think that there are a lot of competitive discussion as well. We will look at the areas of vision, software, and then also our long-term research focus. After that, short break, Mathias Hermansson, who as you know, was appointed CFO of Veoneer back in January, new to the company, new to our industry, will talk about value creation and our financial strategy moving forward. We'll move into a Q&A. That's our program. I hope you will enjoy it. Let's see if I can do this now. We are Veoneer, new company, new company name. I hope all of you will say it many times over the years to come. Right? It's easy. It's Veoneer.
For those of us who are not native English, I have noticed that actually sometimes this goes a little bit wrong. Now I'll do this once, and then I promise I'll never do it again. It is V-O-NEER. Three syllables. Let's do it again. V-O-NEER. We are Veoneer. All right. I came through that.
Thank you, Thomas. Yes, this is really fun and exciting. Can you hear me? Good. I'm not sure the mic is working, but okay. Right. Very good. It is exciting to be here, it is actually extremely exciting for me personally to stand here and to be a part of a newborn company. I have been with Autoliv, as you know, for many years, now to have this opportunity to launch a new company in such an interesting space is extremely exciting. I would like to welcome you all here, all of you, of course, here in the room here in Stockholm. I would like to welcome everyone also on the webcast. All of you, extremely welcome to this afternoon. I'm proud to be here today, as I said. Before we go into the real presentation, I would like to show you a short little movie.
Okay. We are waiting because we have some problems with the loudspeaker system here in the room in Stockholm. For all of you here on the webcast, just bear with us for a short moment. As you know, it's all about reliability. We know how it is when it's not working properly. Now, this is only loudspeakers in the presentation room. Maybe we should Oh, look at this. Hey, it's working. I hope everyone on the webcast can hear us also well. Now we are up and running here with the loudspeaker systems in Stockholm. Let's move on and have a brief look on our introductory movie.
I trust my senses.
We want to feel free and defy expectations.
I trust the world around me, and I believe in the moments to come.
I fall for big ideas, and I suppose they fall for me, too.
Beware of changing road conditions.
I trust in collaboration.
I'm freed by my choices. I feel at peace on the open road.
I believe in deep learning, in looking at life from a new perspective.
I have faith in my possibilities, and horses. I trust that we are safe.
Setting course with our eyes. I trust my dreams.
It's all about trust. I do. I trust.
Taking control of the car.
Our purpose in Veoneer is just to create trust in mobility. A new, unique technology company is created with a strong heritage and DNA of safety and saving lives, delivering quality and robustness, and also sharp edge in state-of-the-art technologies for future mobility. As we move forward in today's environment, as you will see in our equity story here today, we are well-prepared and committed to not only have the trust of our OEMs, but equally important also gain the trust from the greater society and the consumers who actually is experiencing our products every day. As illustrated here on this page, the blue bars is the baseline addressable market. This opportunity that we presented to you in the CMD in 2017. Since then, we have also started to update our scope of the total addressable market to include additional products beyond our previous definition.
More specifically here, these product opportunities include driver monitoring system, digital mapping, and connectivity systems. These active safety market opportunities would increase our overall addressable market by roughly $6 billion in 2025. Our overall addressable market would then grow to around SEK 50 billion in 2025, corresponding to a cumulative average growth rate of 12%. If we look into some details here, we can see active safety is the main driver of market growth. As alluded to on the previous slide, the 2025 market size would increase to around SEK 30 billion from around SEK 25 billion, as we communicated on the last CMD. This increase is mainly due to this product scope that I just mentioned here and that we are evaluating, but also somewhat coming from increased penetration of vehicles with ADAS and autonomous drive features.
That is due to a growing customer demand and increasing regulatory and rating requirements. As a consequence here on this page, we would see an average growth rate of active safety market to approximately 25% through 2025. Two of the more important drivers for the market and content per vehicle are vision and radar, where we, by 2022, estimate approximately 50% of the vehicles will have a forward-looking camera, and roughly around 20% of the vehicles will have five radars. We estimate the content per vehicle in 2025 to be between $225 and $275. That is up due to the wider addressable market, but also, as I mentioned, through quicker adoption of cameras and radars, and other technologies like lidar. Another important factor is, of course, as always, the regulatory and mandated requirements.
As some of you may have seen already a couple of weeks ago, the European Commission proposed a new mandate for new vehicle safety systems and features. This mandate is aimed to be introduced in the beginning of next decade, some 2021 or 2022, and it would include certain features and functions to be mandated in all new vehicles for consumer purchase. Assuming that this proposed timing is approved, it could drive faster adoption of the systems, as mentioned on the slide, and that is actually faster than the NCAP rating in such case would bring. Since our last CMD, we have continued to deliver results, and that will keep us on track towards our target. We can report here a record order intake over the last 12 months. We have a level 3 system awarded from Geely, including Zenuity software.
We have two major vision contracts, and we have a driver monitoring contract win. In addition, we have made complementary acquisitions in lidar, which is the Fotonic acquisition, and we have added approximately 500 software engineers. Due to new and robust product portfolio, our order intake nearly quadrupled over the last two years. Our new orders range from individual component orders, singular products, to complete systems. Our strong momentum continues as last 12-month order intake of $1.1 billion is 48% above the prior 12 months. The last 12-month order volume corresponds to a lifetime value of between $5 billion and $6 billion. Of this $1.1 billion, more than $600 million is coming from active safety, and that same number for 2017 was $450 million. This slide shows the progress with our customer base.
During 2016 and 2017, we made significant improvements, increasing the number of customers where we are on the bid list, or technically approved, or awarded business. This progress was based upon new product portfolio that we launched in the beginning of 2016. This is how the same page looked like nine months later. The changes here are marked in red, as you can see, we have continued to make significant progress. Five more customers on the bid list, four more customers where we are technically qualified, and two new customers awarded business to us. First business awards in lidar, driver monitoring, RoadScape, and in software features. Significant progress over nine months. We also showed this page on the last CMD. This is significant start of productions and orders awarded between first half 2016 and September 2017.
Updating this page to where we are today, you can see that we have added more than 10 important orders since September last year. We have SOPs in new product areas. We have additional launches in all other product areas, and also here, a significant progress over the last nine months. Our active safety consumer base has doubled, and those we were engaged in active pursuit with has increased five times between 2013 and today. We estimate that our current market share in active safety today is around 15%. As you can see from this slide, it is not only in active safety we are making good progress. It is also in the other product areas. In restraint control, we have increased with 40% since 2013, and this is making us the market leader in this product area, with a market share of roughly 25%.
In brake control, the effect of forming a joint venture has been significant. In 2013, the number reflect the situation for Nissin Kogyo only. Today you can see that we have a significant improvement to eight customers on the bid list, technically qualified, or business awarded from. Our products are widely installed, which is an important factor. In active safety, we have more than 175 models installed. We are heading towards over 260 models in 2022. Over the years, we have delivered around four million cameras and more than 30 million radar units. This is along with over 750 million control units and crash sensors. A great track record of delivering robust, reliable technology, meeting automotive grade. Another set of achievements for us that makes Veoneer so well-positioned is our infrastructure and portfolio IP.
We have a very strong IP portfolio in the form of approximately 500 product families directly related to the scope of ADAS, autonomous drive, and safety electronics. In total, we have around 100 vehicles between Veoneer and Zenuity that are collecting data for ADAS and autonomous drive applications. We have collected more than 15 petabytes of data. Zenuity is collecting approximately 16 terabytes of data per car and per day for each day of driving. If we now look to the situation today, we said in the beginning that it is all about trust. For some time, we have seen an ongoing race in the autonomous drive area between tech companies, tier ones, OEMs, on how to demonstrate an even higher capability and more features of autonomous drive. Unfortunately, though, we are seeing consumer confidence in self-driving technology being reduced.
That is probably in light of the accidents and the events that we have seen tragically happening over the last quarters. To be able to gain this trust, the industry needs now to focus and produce systems that is maximizing reliability, robustness, and reliability towards traditional automotive-grade solutions, rather than maximizing number of features. That is exactly the purpose of Veoneer: creating trust in mobility. Our insight is that in the complex new reality, our customers need an expert partner working in new ways. Our core strategy is to deliver innovative solutions you can trust. We will execute this strategy through our core pillars: flawless execution, customer-centric collaboration, and human-centric innovation. This is the core of Veoneer. It is through relentless execution, we will make Veoneer's strategy a reality.
Our core pillars are supporting our strategy that is already a part of Veoneer's DNA from the start. Strong execution has given us the number one position in quality. Our technology is, in almost all cases, developed together with customers in collaboration with customers throughout the world. Our future innovation focus on the Learning Intelligent Vehicle is oriented towards human-machine interaction. Veoneer is in a perfect position to be the trusted expert partner for future mobility. We believe we are the world's biggest pure play in our domain, building on automotive-grade heritage in our DNA for development and scalable manufacturing to meet the highest safety standards with increasingly optimized cost on one hand. Further developing state-of-the-art technology in our sensor systems and advanced software on the other hand.
This is how we're bringing the best of the automotive ecosystem together with the tech world to create this unique position as the trusted expert partner for future mobility. Our current offering bundles quite often hardware and software, where software is coming more or less subsidized, embedded in the hardware. With more investments in software and the higher level of automation, there will be an increasing separation between hardware and software. This is driven by hardware being increasingly more powerful and more centralized. Other reasons are that an increased number of features, new business models will enable where revenue can come from either being paid for sending or receiving data. Upgrades and over-the-air possibilities will also support a separation of software revenue being bundled into the hardware. Here we have an illustration of Veoneer and Zenuity business model and revenue model.
The business model starts with Veoneer addressing the entire OEM market except Volvo. Veoneer provides an integrated system and customer application to the vehicle OEMs. Zenuity supplies ADAS and autonomous drive software and hardware agnostics to Veoneer. The revenue model Veoneer controls the pricing to the vehicle OEMs. This includes software from Zenuity, hardware, and hardware-related software, and service from Veoneer. The business model also builds on that Zenuity charges Veoneer a fee per unit for software and different features. Zenuity is charging Volvo a fee per unit on the same terms. To become an integrator of future autonomous drive technologies, you need an entire ecosystem in place and access to wide variety of knowledge. Veoneer has developed an ecosystem of strategic partnerships to complement our own capabilities. This will enable us to be a system integrator and capitalize on cutting-edge technologies without investing in everything ourselves.
Within Veoneer, we will always make sure that we have a state-of-the-art technology at our core to be an attractive contributor to future collaborations. Higher level of autonomy requires also substantially more sensors. In level 1, the driver assistance case here to the left on this page, is a lower single-digit number of sensors. This is growing to more than 15 sensors in level 3 and more than 25 sensors in level 4 and level 5. The estimate value for these sensors is growing from approximately SEK 100 to SEK 500 for level 1 to somewhere between SEK 4,000 or up to SEK 10,000 for the higher cases, level 4 and level 5. This number is an approximate number because we don't really know yet how the ultimate production cost will turn out to be. This is in early stage and is an early estimation.
It points to that there is a big market potential for Veoneer when there is an increasing number of vehicles that will go to level 3 and beyond. On this page, we have summarized our core competence strength that will enable us to be this trusted expert partner. Our people and their dedication to quality and robustness, our proven track record of innovation, a world-class ecosystem which includes several partners, and a global footprint. Starting with the people, engineering is a key differentiator for Veoneer. Our people here represents 3,700 in engineering, which is roughly doubling over the last two years. 65% of all people in the engineering are software-oriented and focused on software as a whole over the company. In addition, we have around 500 people focused on software in Zenuity. We have 600 people focused only on vision.
We believe an attractive company because we are a leader in one of the most interesting domains currently out there. This autonomous drive space is, of course, drawing a lot of attention because it gives you an opportunity to work with the latest technology in a dynamic environment. It also means something for mankind as a whole. It is a meaningful exercise we are doing because we are ultimately saving lives and contributing to society at large. We have a proven ability to commercialize world's first. Development and technology is not something that is new. We have a long history in this case. We started in 1980s with airbag controllers, and we have seen an accelerating pace over the last number of years in commercializing world's first in electronics.
In the last decade, we started the architectural change of safety electronics by merging the inertia measurement unit into our airbag controller. Earlier this decade, we launched the world's first autonomous emergency braking based on vision only with BMW and based on radar only with Mercedes. We have a fantastic starting point with our global organization. It's represented in 13 countries. We have nine manufacturing sites, and we have 17 tech centers. In addition, our strong customer base and footprint of 22 OEMs drove our sales in 2017 to $2.3 billion. In total, we have a global workforce of 7,600 associates. Approximately 50% of those are in the engineering side. Close to a third of the 7,600 is in software engineering. We serve all leading OEMs already globally, and we have an increasing balance across our customers, with Honda and Daimler as the largest customers today.
We have a stable split over the different regions, with a significant exposure also to the expanding market and emerging markets, in particular in China. Our targets remain unchanged since our CMD in 2017. Based upon our evaluation, as I mentioned earlier, for a wider accessible market, we have updated the long-term ambition for active safety. We have updated this for 2025 from around $4 billion to more than $4 billion. We see a double-digit growth with a significant margin improvement over the upcoming years. Our targets for 2020, we expect a $3 billion revenue, out of which more than $1 billion is coming from active safety. Our 2022 target, we expect a $4 billion revenue with roughly around $2 billion coming from active safety.
As I said, our ambition revenue for 2025 in total is more than $ 6 billion. Now out of that, more than SEK 4 billion is coming from active safety. Just wanted to summarize the key investment highlights for Veoneer. Why to invest in Veoneer? Well, first of all, we have an exceptional technology and exceptional growth opportunity. A strong double-digit growth over the upcoming years, where content per vehicle in active safety by 2025 is expected to be five times what we see today. We are a technology company dedicated to safety, advanced driver assistance, and autonomous driving. Our active safety products is currently installed, as I mentioned, in 175 models. We have a heritage of shipping high-quality products over many, many years. This will enable us to safeguard reliability and robustness of our products going forward. We have a proven track record and heritage in the automotive safety.
We have now a record annualized order intake of SEK 1.1 billion over the 12 months, up 48%, whereof SEK 600 million of this SEK 1.1 billion over the last 12 months is coming from active safety. Lastly, we are focusing to create long-term value for our stakeholders. Our 7,600 associates support a long-term focus on quality, reliability, and to create a double-digit operating margin for the long term. With that, I would like to take the opportunity to introduce Art on stage. Art, very welcome up. You are going to present to us the sales part of this. Art, Executive Vice President in Sales and Product Planning. Thank you.
Thank you very much. Thank you very much, Jan. For those of you who don't know me, like Jan said, Art Blanchford. I've also been with Autoliv for a very long time, even a little bit longer than Jan, and been in many areas. Been in operation, sales, engineering, program management in all three regions of the company. I have to say, it's very exciting to be now in charge of the sales and marketing product planning for this big startup company that we have. This is a very, very exciting opportunity. Thanks for the opportunity to be here today. I'm going to share a little bit about our market outlook and our sales outlook. A little bit more detail than what you have seen so far from Jan. Taking a first look at the overall market, we're already in a very exciting market.
2017, it's already a SEK 20 billion market. As Jan said, it's expected to grow to approaching SEK 50 billion if we consider the new product areas and the new mandates that are coming now. We'll be approaching a SEK 50 billion addressable market by 2025, which represents a 12% compounded annual growth rate over that period. Considering that light vehicle is only 2%, that's quite an exciting place to be inside of the vehicle market. Today, we are already among the leaders in active safety and the clear leader in restraints controls. While we're not the market share leader in brake systems, we are leading in the advanced technology of new brake systems where all the growth is, which you'll see in a minute.
I think as a whole, we're in a very exciting position in a very exciting market. As we said, most of the growth is in active safety, as you can see here, growing from SEK 5 billion last year to approaching SEK 30 billion with this additional market upside by 2025. That makes a compounded growth rate of 25% over that business planning period. A lot of that growth, as Jan had mentioned, is in these new technology areas that are not fully understood yet, but are coming faster than we have thought that they would come. What are the main drivers for this active safety market? It's really coming from growing customer, and here, when I say customer, it's customer and consumer demand. It's not just our OEM customers, but the consumers themselves.
Increased demand for safety and convenience, brand differentiation between the OEMs, really increasing regulation and/or safety ratings. Even if it's not regulation, the safety ratings drive consumer buy, and that's increasing those ratings and the content. Clearly, more long-term, this race toward achieving fully autonomous vehicles. All right? That will drive a lot in the long term. Let's look in a little bit more detail on each one of these. Clearly, both customer and consumer demand, you see Mercedes-Benz advertising that they can drive better than you can. Right? And in some cases, that's probably true. All right? Better than I can. There's a lot of other ones being driven. Lane keeping, convenience feature for lane keeping.
Cadillac has just introduced this Super Cruise, which is really the first, unlike Tesla's prototype, really the first system that can drive hands-free in a safe way, also with driver monitoring systems. Blind spot, which Veoneer has a huge take rate in the radars. As you saw, the 30 million sensors of radars that we've supplied, which is blind spot, is becoming more and more standard and demanded by consumers. I want to give one other example here. It's not just the regulation, I mean, that's pulling this. In 2017, in North America, there's 20 OEMs that sell cars in North America. In 2017, they all signed up to this MoU to make autonomous emergency braking standard by 2022. That's without regulation. That's being driven by consumers and by our customers. That's pretty fantastic on its own.
On top of that, many of them have already committed to doing it earlier than 2022. For example, every new Toyota launch now in North America already today, as of September last year, is having 100% AEB penetration. There's other features consumers are driving, like automated headlamps and active cruise control as well, that are being driven by consumers. There's major trends both in regulation, but also from customers and consumers. Next, we talk about regulation and safety ratings as a whole. I know this slide is a little bit busy, but if you look here, each one of these features is in the roadmap for Euro NCAP safety ratings. Not so long in the future. All right? It's 2018 through latest 2024. This is separate than what Jan was talking about with the mandates that could be requiring things to be 100%.
Each of these, including driver monitoring and connectivity, V2X, various features with AEB, if they become part of NCAP, which is now expected, this will drive take rates also very quickly, because it is proven that a five-star safety rating is really a purchase decision driver for consumers. These would be necessary in Europe and in fast followers like China, or maybe even leapfroggers like China, to have these in all of those cars to get the five-star rating. I give one example here, just thinking about AEB take rates. Last year, it was 10%. By 2025, using various technologies, but by 2025, we estimate it be greater than 70% of cars in the whole world will have AEB. The third area, looking at full autonomy. As we come toward full autonomy, how does that drive take rates?
As Jan mentioned, there is a few sensors in a level 1 car, up to 25 sensors over in a level 4 or 5 car, which drives a tremendous amount of content and sales opportunity per vehicle. Even if this is a long way out, here at level 3, which is coming now, there is over 15 sensors. As Jan also said, it is not clear what the actual cost of those will be as we get them fully industrialized, but it is a great upside in the longer term to continue the growth of this company as we go forward. Looking at some of those take rates in a little bit more detail. As you can see, forward-looking cameras, we have a 34-point or a 3x increase in take rates from 2017 just to 2022.
If you break down the radars a little bit more in detail, we have these long-range frontal radars, mostly here in Europe, the mid-range, which are used in other areas also for AEB, and then side and rear corner radars. Again, you see anywhere from a two to three and a half times increase in penetration rate over the next few years. All right? This is being driven by the things that we talked about on the last few slides. ADAS controllers, one of the fastest-growing areas, as we need more and more computation power. Today, we are only seeing about a 3% take rate. By 2022, again, 4x that at a 13% take rate for these super brains that are going to be running the ADAS controls centrally as we go forward with active safety.
I want to talk a little bit about restraints control systems. Some people say, "Oh, this is not quite as an exciting market," and in some ways it is not, but it is absolutely foundational and key for the success of Veoneer. The market is stable, right? We have the slow LVP growth, we have normal cost reductions in the automotive industry, that makes the market about flat. There is also some offset as we start to combine ADAS controllers into a safety domain controller, both with RCS and active safety coming together, and together with event data recorders, black boxes, if you will. That is keeping the market about flat. Really, to me, this is absolutely key because it is the leadership here.
As Jan Carlson talked about the trust that we've developed and the ability to make technology automotive-grade, that trust comes from the history of the 750 million RCS units that we have in the field, with the lowest recall rate out there. This is what makes it possible for the OEMs to trust us right now to bring the advanced technology into the car. Let's talk a little bit about brakes. Again, this is where we have the smallest market share in our brake control systems. If you look at the market as a whole, it's a 3% growth. It's roughly doubling the LVP over this period. More than all of the growth is in next-generation or advanced braking systems.
These are braking systems that improve fuel economy, reduce manufacturing cost, reduce repair cost, are good for electronic vehicles, regenerative braking, electrical vehicles, and this is something that we're starting already here in 2020. This part of the market, which is more than all of the growth, we have the best technology. It's a subset of the market. It's not that we're going to be the overall market share leader here anytime soon, but in this growth part of the market, we are in a very good position. If you look at the-- you saw this slide in Jan Carlson's, but I'm going to take another minute on it.
If you look at what we have done, because this is really the hard work of being ready to take advantage of this market, is what have we done to make ourselves ready to be able to take the orders, ready to be the trusted partner for mobility with our customers? From 2013 until today, in active safety, we had five customers with booked orders in 2013, and we have 10 customers today. Even that, we were only in discussion. We were only on the bid list, the first step of taking new orders, with only two more customers at that time. Since then, we have the 10 that we have orders with. We have six where we are technically qualified, an additional three where we're on the bid list in active safety.
Overall, almost an increase of twofold from where we were in 2013 and starting to approach the full customer base. When we talk about full customer base, it's 27 customers here that make 97% of the vehicles in the world that we deal with. We have one, some of those grouped together for some of the smaller Chinese OEMs, but 27 of these and 19 of them, we are in active discussions to becoming their trusted partner in active safety. This is a huge step forward. In restraints control, one of the things that's very interesting about restraints control, Jan Carlson mentioned we have 25% market share. With the customers we've been in for a long time, we have approximately 50% market share, but we really needed to grow our customer base. That's what we've done in the last few years.
We've gone from 17 customers to 20, as we start to grow those customers' market shares, we're going to continue to extend our lead in restraints control market share. We have 4 other customers we're actively in discussion with right now to bring on. This is also a very big growth and a very strong foundation to grow from. We know once we're in customers, because of our proven track record, then we grow to a significant market share in those customers. Then, as Jan Carlson mentioned in brakes, too, it's amazing coming from 1 plus 1 in 2013 and now to 8 customers on the brakes side that we're dealing with and 4 that are booked. I think we've really made tremendous progress. You can see that in this chart. It's just another way of looking at it.
From 2013 until where we are today. As Jan Carlson mentioned, even very strong continued acceleration in this customer progress since the Capital Market Days in September in Frankfurt, which many of you were at. This is very strong progress, and this is something that I measure with my team every 2 weeks. What's our focus? What's the strategy customers? What's the next steps we need to have? What are the next boxes we need to be filled? How are we going after those in order to build the road that we can drive down to get the orders that you have seen coming in?
Speaking of those orders, that's also been a pretty good story because the work has been done by the guys you're going to hear from a little bit later in the technology side to give us the ability to increase our order intake in the last 2 years by 3 and a half times. Even in the last 12 months compared to the previous 12 months, which obviously includes half of this nice step, we still have a 50% increase in the last 12 months in the number of orders that we have in. If we look at some of these that are specifically interesting to me, getting our first mono vision order with a new global OEM just this quarter. First major driver monitoring system order with a major global OEM.
First level 3 system, the first one awarded in China comes to be in here, I'll talk about that more in a minute. Right. Another large vision order in Asia. First lidar order last fall. Last summer, a repeat large radar order from a repeat customer. Our RCS also, we just got the latest generation, we call it the SC3. Latest generation just sourced this quarter. Then a big point to me on brakes is we got our second major order from one of our new OEMs on brakes, showing a trust in the execution there. I want to talk a minute about what it takes to compete and win for level 3 systems, this is really interesting.
The process is two years to work through the requirements with the customer. I know this is the Geely order that we won in China, and I have heard some of you say, "Oh, but it's a captured customer," because they are somehow owners of Volvo and we're a joint venture with Zenuity. I can tell you from the sales process, it's not a captured customer. There was five guys in there, narrowed to three. We fought like hell with those three, and what it came down to was being able to demonstrate the capability and the trust, the way of working with the customer different than the other guys, that they could believe we could execute this. It was just awarded in the first quarter of this year, and it was so tough fight that we did not win all the sensors.
We're responsible for the whole system, and we have a lot of the sensors, but we didn't win all the sensors. It's a great example of how our customer-centric focus is allowing us to win orders. If we look at the overall picture here, it is a very exciting market to be in. There is no doubt. Specifically, it's a very exciting time for this company. We have the platform, we have the technology, we have the runway, as you can see, we have been executing on those orders to capture the growth in this very exciting market. With that, we're going to turn it over to Johan and his team to talk about that technology that's enabling us to win in the marketplace. With that, I welcome up Johan Löfvenholm, our CEO, or, sorry, Johan, COO. Thank you very much.
Very excited to be here in front of you again, now in the shape of the COO of Veoneer. Without reliable and robust solutions, we tend to not trust technology. When there's no trust in technology, there will be no self-driving cars in the future. Now, as a tech company, Veoneer has a very unique position to take on that challenge. We have a heritage from our Autoliv DNA, which has taken us through generating innovations, saving lives in both active safety and passive safety for many years. We are delivering two and a half million products, automotive-grade units weekly to our customers around the world. We do so on time, we do it with a relentless focus on delivering zero defects.
This doesn't come for free, it comes from many years of blood, sweat, and tears, of hard work, improving our production capabilities through the Autoliv Production System, driving Q5 mentality and the quest towards zero defects through Q5. That is what takes us into the position where we can take on the challenge and driving the trust in the right direction. One proof point which has already been shown is to the right in this picture, where you see that we are below 1% of the involved parties in automotive recalls in safety electronics since 2010. You should compare that percentage towards the applicable market share over this time, which is somewhere between 20% and 25%. We have created this footprint to serve our customers in the best way.
Through our nine plants, we deliver product, and we like to be close to our customers when we engineer our products in our 17 tech centers. We develop the products together in collaboration with our customers, and it's an important factor, not only through speed, but also through the effectiveness of our development, that we do it together and close in the local customer. Another benefit of this footprint is that we follow the talent. As we grow and as we take on all of the new business that Art just explained, we need the very best people, and we need to attract them where they are. We follow the talent in our footprint. That is one of the success factors where we were able to attract and onboard around 1,000 engineers last year. Five years ago, we sat down, and we created the pyramid. You've seen this before.
We set it out as a vision on what does it take, what are the requirements to build the capabilities to be the long-term strategic partner, full system partner for active safety towards autonomous driving. Today, we look at this pyramid being a full stack of capabilities. Veoneer can offer all of this either directly or through our partners or joint ventures. Looking at our product portfolio, we usually show it this way. You can see our three different product lines here in the shape and form of the restraint control systems with our airbag controllers and our crash sensors. You see our active safety products on the picture here with all of the different sensor technologies. You see them with the ADAS controller. Our brake systems are also on the map here. Actuation and control.
I like this picture, but I'll show you a picture that I like even more. I'd like to introduce a new way of looking at the three product lines and how our products fit together to deliver even more value when you bring them together in a system approach, and what we mean when we talk about the system integrator. You still see our different product lines here to the right, and I'll start showing them really from how we take in signals into the vehicle and how we process the signals and how we actuate from that. What different roles do our product play in that world? Starting from the sensor side, you will see that already here we have both components and sensors from the restraint control systems in our pressure and G-based crash sensors.
Of course, also all of the different technologies in active safety sensing. Another point of this is also to see that still at this day, there's a lot of software embedded in this sensor system, and we try to illustrate that with the shady part of the puzzle pieces here. Now, this is, of course, an important part of bringing the information into the system. When we do that in the second step, we call it either decision-making or vehicle control and connectivity. What happens is from sensor fusion into decision-making and vehicle control, now we have the capabilities. The full Zenuity software story, and we'll hear a little bit more of that in a while. Also in this part, you will see that our restraint controllers and brake controllers are also making work in this part of the vehicle.
Finally going to the actuation part. Of course, one of the most important actuators when we talk about safety is brakes. This is the natural place for our brake systems. This is the what. By having people who understand how to use these pieces of the puzzle, we can deliver value as system integrators. The how is another important factor here, and the how is really the difference when you build a trust with the driver or the passenger of the vehicle. How we expose the technology to you. That can be done in many different ways. You can do it in a good way, you can do it in a not so good way. If you do it in the efficient way, that's when you build the trust in the human machine interface.
Now we're coming to a really exciting part of this presentation because now I get to spend even more time on technology. We will take a little bit of a deep dive into three very important areas, the vision area, the software stack area with Zenuity, and the research area, specifically on human system interface. To do that, I have asked for some help. With me today, I have Salah Hadi, who is our Director for Vision Systems. I have Erik Kohling, who is from Zenuity, the Technology Advisor. I have Ola Boström, who is our Vice President for Research and Patents. If I can ask Salah to come up on stage and start the first technology presentation. Thank you.
Okay. I'm Salah Hadi. I am Director of Vision Systems at Veoneer. I have met some of you before. I'm really excited to be here today and present our product roadmaps, our technology in terms of vision technologies, what we are doing at the moment, and we are planning to do for the future. I will also take the opportunity to thank everybody that are helping me with developing this. This is a lot of hard work and many people are involved into the development of these systems. Our vision systems. Yes, we have been developing vision systems since early 2000. We have been doing night vision. We are trying to do DMS. We have also done mono vision, stereo vision. I will start with our second generation cameras that launched 2016 on the E-Class.
The system, together with other sensors in the car, was an award-winning system by auto motor und sport for being the best active safety in the category safety. The system can do traffic jam assist, ACC, lane keep assist at high speed. It's world first, by the way. We can control the high beam, matrix beams. We can detect traffic signs, oncoming traffic, cross traffic, a lot of things that was deployed on the system. The stereo camera is a key contributor in that system. The stereo camera probably is involved in almost all functions, at least the forward-looking ones, by itself or through fusion. It was a lot of hard work together with our customer. Here is one example where we closely collaborated to get to this great system here in the market. We deployed our third generation camera this year on a new A-Class.
This camera is a monocular camera, is a single-camera system that has all function content in it. We can do lane detection, traffic sign, high beam, object detection, road boundaries, pedestrians, cyclists, et cetera. The system is also capable on doing a mono only AEB. We have demonstrated that to the customer. On this car is a fuse system. Okay. Most of our time at the moment we spend on our fourth generation cameras. This is to target the NCAP requirements for 2020. At the same time as adding more value for our stereo camera to do more in terms of autonomous driving. Our fourth generation camera has currently about five OEMs confirmed SOPs. We went from one or two, now to five. We are really busy making sure that we do the right things now at the moment.
In the meantime, also, we're starting development on our fifth generation camera system. I will touch base on that later on in my presentation. Okay. From the fourth generation camera system, I'm going to show you some highlights about our vision technology. Of course, we are doing conventional classification. We are doing conventional computer vision algorithms. We are also capable of doing Structure from Motion, all of these vision components that many people can do. The key is how to utilize them to make sense out of this complete toolkit in order for us to provide a reliable vision system on the market. For that, we have many cars driving on the road. We have an infrastructure on how test validate. We run all our software through hardware sitting in our servers to make sure quality and reliability is there. There's a key point here.
It's very easy in a vision system to go from zero to 80% performance. You can get that off the internet today. Get from 80%-90% is hard. 90%-95% is very hard. 95% to almost 100%, that is extremely hard. I don't want to say a bad word here. That requires focus, right people, right tools, and also being able to understand, if I have a problem with a use case here that I can fix tomorrow, what will that use case do in the rest of my data set? Are you with me? You need to always look at the overall picture, not only on the single problems. To keep that in mind, I will go through this once more. This is a static image, just to illustrate that in our stereo camera, we have two left-right image.
Currently, they are color image. From this left-right image, we generate a stereo image, a depth image. From the depth image, we can then create something called occupancy grid. An occupancy grid is something that we apply our algorithms from the information we have and categorize the image in front of us in terms of size and distance and height. That give us even more clues where to focus our view in the image to be able to detect relevant objects. So you can see there's a heat map or please take an extra look map or something like this. The 3D point cloud image here, this is an image instantaneously generated by the stereo camera and applying our techniques on it. You can look at this image, it's similar to a lidar image. It's very rich in information.
Using this and this, we can at the same time detect objects very robustly without applying a lot of classification methods, without applying a lot of deep learning. Deep learning we do then on top of this. The combination of these two give us a very good and reliable object detection. This is just an overlay of this image over this image. I'm going to run a movie now. If I stop it here, there's an object over there, and this object is 20 by 20 centimeter size. It's to illustrate a tire rim, which is one of the toughest cases at the moment for autonomous driving, to be able to identify tire rim on front of the car.
We can see cars, we can see pedestrians, we can see a lot of things at the moment, but some of these general objects are very tough, and it's commonly You can see it. I saw it the other day actually on a Swedish highway, which was, I was surprised. It was interesting. You can look at the heat image. Please take an extra look image. You can see the tire, very visible, easy for us to detect. You can see it in the 3D point cloud image, and now it's overlaid. By taking this amount of information from the left-right i mage, generate another level with the 3D, generate more clues, more clues, more clues, makes it easier for us to detect even tough objects in the image. This is where our strength is. We've been doing this for a long time.
We have a lot of experts working on this and also doing our best to find even more objects. I will run the movie once more. You can keep your eyes on this. The color map here, this is the object again. Here is no classification applied and nothing like that at the moment. It's just pure left-right image and using the geometry between the two to generate this. This is not lidar, this is stereo camera. You can see the sign. You can see it easily here. Or the computer will recognize it easily here. Okay, my next example is applying similar technology. This is again, no classification applied. It's just pure stereo vision. We can segment the scene. General object detection, I will say this. The color is about distance. You can see these objects are detected very well.
Even with very tough scenarios like this, our computer vision algorithms in the stereo's case is very good and robust. Therefore, we can say we can utilize the stereo camera for forward-looking for autonomous driving. It's just another camera. The processing power is there. Use our technology to support other sensors to be able to drive the car reliable. Okay. Finally, I want to end with this slide. Please remember everything. There is a quiz at the end of this. This is our roadmap. This is what we work on. Okay. I spoke about our second generation. The third generation camera uses conventional, I would say, computer vision classification techniques. We will deploy deep learning already in our fourth generation. Deep learning, in this case, will focus mainly on object detection and road boundary.
Instead of this here we use to train the classifiers to recognize objects. In this we are training the classifiers to identify pieces of pixels, not objects. We will then put more context into this to make it an object. Okay. This help us very much with road boundaries, part of NCAP that have been detected unmarked lanes. We have done very good job here. Free spaces are needed for autonomous driving and also too when the car comes to stop, you want something to tell you it's free, you can drive. Traffic light is a tricky one, to be honest, but we are working on it. The traffic lights are not so easy because they're not the same everywhere in the world.
For the stereo camera, we will go to our second generation object detection, as I told you before, partly also to detect small objects relevant for highly autonomous driving. In the Gen5, we will deploy deep learning in almost all our algorithms. From that we will do this semantic segmentation of the scene that we will be used then also to deploy functions that we develop, Zenuity develop or supply objects to a third party who want to develop their own functions. With that said, I think I covered most of the topics. I will welcome now Erik to the stage to complete the picture, I would say. Welcome, Erik.
A very good afternoon. I am at Zenuity. Zenuity is now exactly one year old, during the last year we have been able to build an amazing automotive software company. We are around 500 people around the world. We're building a complete software stack for active safety systems and self-driving cars. In all fairness, we didn't start at zero. Our starting point was software, computer vision software, and IP that you can find in top of the line Daimler vehicles and world leading ADAS features that you find in modern Volvos. Not only the software and IP, but also many of the key developers that actually developed those software pieces, they were at the foundation of Zenuity. We had a great start for a great journey. From a product perspective, we think that the journey will look a little bit like this.
We will start in 2019 with the first complete stack of software for ADAS, active safety systems, where we will take, let's say, everything that you find in this modern vehicle, and we will put on new functionality. New functionality, for example, meeting NCAP requirements in 2018 and onwards, new driver support features, and also we will use connectivity much more than we've used before, because we think that cars of the future will almost always be connected, either for over the air updates, but also for sharing information between cars. Of course, this platform will launch in 2019, but then we will continue to update the content, and we will grow functionality on that. We are also entering the era of self-driving cars, unsupervised autonomous driving.
Knowing exactly what the volumes will be and when it will take off, to what extent the self-driving is still very difficult to predict. There's a lot of uncertainties in legislation, in customer acceptance, still a lot of open questions. Exactly predicting these volumes is very difficult. By building a software stack that you can scale from ADAS to AD and back again is something that we believe is very powerful. We are building software for allowing the car to drive itself, but we don't have to wait until that software stack allows you to drive from any A to any B at any point in time. No, what we do is we build it, and as soon as we have a certain scope for it, we can spin it off as a feature.
We believe that in 2020 we have an L3 feature where a car can drive unsupervised in a traffic jam. This functionality will grow, the software stack will grow over time, and then we remove from only a traffic jam to highway driving, on-ramp-to-off-ramp, automated valet parking. Later we can extend it into urban areas and further down the road, we will have, maybe you call it robotaxi capability, where you can go from almost any A to almost any B. This is a journey that I think will take many, many years. By doing it this way, we can build a business and at the same time as we develop our technology. One of the key things when we design this is scalability.
When you are an OEM and you're building a vehicle platform that needs this kind of technology, you build a vehicle platform that will have probably different vehicles, and each vehicle will have a different subset of this functionality. If you want to cater for such a platform, you have to make sure that your software platform is scalable. We put a lot of thinking in how do we make this scalable in a good way. This is to illustrate a little bit how we think about this. We believe that a large portion of the volume or maybe the entry level of an active safety system will probably be a mono camera, because that is what NCAP is requiring. A mono camera fulfilling the AEB requirements, lane departure warnings, et cetera, but probably also some form of connectivity.
When we have just a camera and we can capture those pictures and we can probe data from cameras, we can build real-time maps. Having these cars out on the road in relatively large volumes will enable us to build real-time maps that ADAS features can use, but also in the longer term future that self-driving cars can use. This is a very important principle, and we call it Zenuity's Connected Road View that allows for localization of ADAS features or self-driving cars. Camera thereby is an important part. This would be the entry level, either with an ADAS ECU or without. That's different for the different OEMs. Then you want to scale that software. You want to scale it to a premium ADAS package.
here you see you can add front-looking radar, corner radars, driver monitoring systems, it will be different for different OEMs. The same software will be extended without us having to redo the computer vision software that's only in the camera. I think in many cases, we have to be capable of interfacing with hardware sensors from other OEMs. We as Zenuity, of course, we like working with Veoneer, and we use a lot of Veoneer components when we develop our software stack, but OEMs will have components from many different suppliers, and we need to be capable to interface with them. Here we would have a typical premium ADAS software package. We want to go to traffic jam pilot L3.
What we do there is that we think we have to add a lidar, and the two pluses indicate we have to have more computational power in both the ECU itself and in the camera. We're moving to a stereo camera here. Without having to redo the other features, we can offer traffic jam pilot. Furthermore, if we want to go really to a highway pilot where we need 360-degree perception, a lot of computational power, we add even more sensors, and we scale up the software stack. For an OEM, this is really attractive because this is the way to get a software stack that you can cater for your entire vehicle platform. You don't have to redo for every vehicle, for every term level. This scales in a much more natural way.
Just as a side note, here you see different boxes, of course, an OEM can choose to bake the software all in one box. Our software is scalable and can be, of course, deployed or ported to different ECUs in this way. We think that scalability is really key for catering for OEM platforms. As said, we are moving into the era of unsupervised autonomous driving. I think that autonomous driving is all about safety. When you leave driving to the car, I think that this car needs to be significantly safer than the average human driver. I think that is something that you not maybe always directly feel when you are in demonstrator. A lot of people are capable of demonstrating a self-driving car, and I think it's relatively easy to build a demonstrator and get the feeling, wow, it works.
This car is driving itself through intersections and traffic lights and et cetera. It's not building the demonstrator that's challenging. It is building a product that is safe that is really challenging. I think it has to be significantly safer than the average human driver. When you think about that, in the U.S., it's almost 40,000 people a year get killed in traffic. It's terrible numbers. It's a really high amount of people that get killed in traffic. You can say, okay, but average human driver is maybe not so good. Despite that, the average human driver is driving 148 million kilometers in between fatalities. In that sense, the fatality frequency is, despite everything, relatively low. If you want to beat that number, you have to be really, really good. Safety is at the core.
If you are not very, very safe, much safer than the average human driver, I don't think you have a good product for a self-driving car. We have Autoliv, Veoneer/Volvo cars as our parents. Safety is really in our genes. When we design our software stack, safety is at the core of what we do. Very simply said, what we do is we define safety goals. We try to describe as good as we can what the safety goal is, and we try to quantify it. What are acceptable numbers of colliding with a car in front of you or leaving the road or driving into the ditch? We quantify that, we define safety goals, then we break them down.
We have the knowledge from computer vision sensors all the way to decision-making and vehicle control, we use that knowledge to break down these requirements and say, okay, sensing has to fulfill this. Decision-making has to fulfill that. Vehicle control has to fulfill that, all the way maybe to even the button in which you activate your autopilot, because also there you can make mistakes. We design software for all these components or requirements that we put on other parts of the car. By doing that, we get a very good grip on what actually safety is. Then at the same time, as said, we are a modern software company. We believe strongly in agility and modern software techniques.
For us, finding the optimal balance between developing software in an agile way and developing robust and safe solution is at the core of Zenuity, that is the way we work, that's the way we're organized, I strongly believe that that is the key to success. Safety is very important, within all these constraints, of course, we're working with high tech and a lot of state-of-the-art methods to make sure that the car can drive itself. One of the key things that we work with is, of course, deep learning. We apply deep learning as will be shown here on computer vision, we also apply it on lidar, we apply it on sensor fusion. We also do research in using deep learning techniques for decision-making.
Here, kind of an illustration of what happens when you not only have a forward-looking camera, when you have surround looking cameras. Having multiple cameras on a car, deep learning techniques executed on a very powerful computer, it will allow us to give a very good understanding of what's happening around us in traffic. This is important because in this case, we're just driving one lane, when you want to do lane changes or you have to do an emergency stop on the shoulder, you really have to understand what's happening around you. Where am I and where am I heading? In all this, safety is key because when you see an object here, you have to be really sure that you see the object.
If you are uncertain, we still want the algorithms to report the object, because in case of uncertainty for a self-driving car, you will have to slow down because accidents are not accepted. It's about perception, but it's also about decision-making. Again, in decision-making, you have to plan your path, and you do not have to overestimate your capabilities when you are driving. We develop perception software, decision-making software, vehicle control software, and in the end, we are building this into a complete package, into a demonstrator vehicle. Here's one example. This is fast-forward, we do not really drive this fast, of one of our cars driving on one of the roads around Gothenburg. You can see the car is changing lanes automatically. It's planning its route. It's doing everything autonomously. This is our development for unsupervised automation.
As always, there's a safety driver there paying attention, having their hands to the steering wheel. That's the way you test. I can say, this is not our best test driver, but he's doing okay. Key to this is combine speed and agility, but at the same time, be aware of safety, be aware of the robustness requirements. We are finding the right balance between the two, and I think that's the key to success. For you to remember, at Zenuity, we can deliver a complete software stack from sensing to actuation. We have the knowledge from perception to vehicle control. Our starting point was world-leading ADAS technology, and we are continuously enhancing this with state-of-the-art methods, including deep learning, AI, reinforcement learning, et cetera.
Scalability is making this really attractive to the OEMs, because we can offer everything from cost-efficient solutions for a standard solution, all the way to self-driving car technology. Thank you. Ola Boström.
Thank you. Good afternoon. Now, let's talk about some long-term research. I'm Vice President of Research and Patents, and I will talk today about a huge challenge and how we believe is the best way to tackle it. On top of that, I will give you two examples that can be helpful. I will start with some numbers. Today, we have 3 billion people out there that can afford, that is actually have access to vehicles. The sad consequence of this mobility, that by the way, is one of the reasons why they can afford. The sad consequence of that is 1.4 million traffic deaths annually. Half of those 1.4 million is outside the car. On a different scale, very sad, so far, hope it's not will be more, there's one traffic fatality this year thanks to a self-driving car.
That is sort of the basic fact. Let's start there. Let's go now 2 decades in front of us, 2040. What is happening with these 3 billion people that can afford, that have access to vehicles? It will double. This is a clear global trend, people getting better and better, and the consumer base will basically double. What will the impact be on traffic fatalities? As we heard today, there's no way that we can increase this number of 1.4. Actually, that must be taken down. We can see that. That's a sort of imperative global trend of safety, of mandate, of regulations, of policies, et cetera. This number just must go down. I will talk about that, how we think that is possible. The number of robots killing people on public roads must go away. That's for sure. How is this possible?
How do we double the number of end consumer of vehicles, at the same time slashing the number of fatalities? How do we do that? I think it's easy now in this world of automotive industry to get lost here and focus too much on robotics and forget the humans behind. The technology in the first hand should be of benefit for the humans. We have to understand that part as well. We believe, Veoneer believes, that the key here to make this possible, to double the consumer base and take away the sad consequence of mobility, is to take a human-centric approach, where the human and the machine has a joint cognitive system.
If I, in the vehicle, look at to the left, the car looks to the right and knows I'm looking to the left. Shared control. If the car realizes there's a truck coming and knows that I can't see it, the car can slam the brake. If I, as a driver, see something which the car, for some reason, doesn't understand, I can slam the brake. That's the shared control. To enable this, the car and the humans, the vehicles and humans must trust each other. That is a key, and that trust goes two ways. I'm not referring to under-trust, where basically you switch off your lane departure warning, or you don't pay the extra package of safety. It's there. You trust the car, you don't switch it off. I'm not referring to over-trust, and we see this a lot in the media.
Even we see even drivers climbing into the back seat while driving, right? That's happening right now. That's over-trusting. No, I'm referring to true trust. This sort of approach and why I'm saying that, this is not second guessing. This is based on facts. This is the hard, the blood, sweat, and tears in terms of research. We base it on crash statistics from all over the world. We base it on field test. I'll give you one example. We run a fleet of cars together with MIT, Super Cruise, as Art mentioned, is one of our favorites, Teslas, Volvos, Jaguars. By now we have 400,000 miles driven. We have 10,000 of transitions from the driver to the vehicle that we can understand. We have all these sort of measurements on the drivers and the car meanwhile. We also have a research platform.
We not only got from Autoliv, a pile of cash and the CEO, we also got the Autoliv car, the Learning Intelligent Vehicle. We launched it two years ago at CES. This is an upgraded version. We don't only use this platform as a research platform. It's also a, what we call a fail fast workshop, where we can try out different technologies and see if they fly. I will give you two examples. One from a university, where we work together with university, and one way we work together with startups. We work with university and startups in Europe, in Asia, in U.S. What I'm going to show you now is just examples. I start with this. This is with MIT. What you see is the cognitive load of a driver while driving.
Let me explain why we want to have the load and how we can measure this. Basically, we have put the camera in the face of people that are either verbalizing or not verbalizing. What do I mean with that? If I'm engaged in a dialogue, I can see if the other person is thinking of what to say. I don't know actually how that works, but that's the way we people communicate, or most of us people communicate. We put the camera in front of the people. We tell the computer, this is a person verbalizing, thinking of what to say. This is a person which is not engaged in this dialogue. Guess what? With AI, we have an algorithm. This is sort of the outcome. Why do we need this cognitive load?
We need it because we don't believe that in the long run, we can have the stupid assistant systems where you ask the car or the Alexa something, which is the same question every day, right? Instead, we have this dialogue. The reason why we need a dialogue is to create a trust. I go to the next example, which is where we work with a startup. In this case, same thing, we have a camera in front of people. They are either scared to death or because of a scary ADAS system, for example, or they are relaxed or even happy. The reason why we need these emotions measured is because, again, to create trust, to have dialogue, to understand, if the ADAS work, ADAS or AD is good enough and so forth.
This technology is not coming from automotive, it comes from optimizing commercials. This was used to sort of make, in this case, Coca-Cola advertisement, make people smile. Right? It's very effective to use this technology in front of people and realize if they smile or not, and then you find the right commercial. We take this technology, and we adopt it for automotive context. To conclude here, we have an exciting journey ahead of us. I've been part of Autoliv for 23-odd years, this is the most exciting time of my working life. This sort of huge challenge I was talking about, double as much end consumers, extremely outrageous expectations of safety. We believe how to do this.
We have a scientific bet that we must take a human-centric approach and use the technology we saw from Eric and Salah and Art and Jan was talking about, and Johan. It's all about trust. That's my concluding words, and I give the word to Johan. Thank you. I will make an attempt here to make a short summary of what you have seen over the last 40 minutes.
We have a statement here, and we like to speak with data. I really hope that what we've been able to share with you here the last four sections gave you a lot of that. Also creating some trust in this room. We have a proven quality track record producing automotive-grade products. We have a proven vision technology, and we're on track for highly autonomous driving. We have a complete and scalable software solution from perception to vehicle control. By creating trust, we can make a future journey not only safe and sound, but an enjoyable user experience. Thank you. Now I will ask Thomas to come up here and lead a short Q&A session.
Thank you, Johan. We thought that, given that we have actually a unique competence in the room, we have the long Q&A in the end, of course, but we thought we spend 10, 15 minutes with this group and give you the opportunity to ask questions on this technology, what we've just heard, because I would really urge you to take the opportunity. It's actually kind of unique to have you in the same room. I've never seen it before. If you have questions, please go ahead and ask the first one. Yeah, lot of quick drawers here, but Hampus was fast as always.
Hampus Engellau, Handelsbanken. I have a question on Veoneer and Zenuity, of course. If Veoneer is developing the object identification software and we are going to start merging these software into few chips and place them on the ADAS. At some point, you will take all raw data into the ECU and use a computer processing unit, and we will use decision-making software. At some point, wouldn't it make sense to put Zenuity and Veoneer into one company?
I think that sounds like a question for Johan, to start with, at least.
Yeah, I think I can start with the question, then I will hand over to Erik, actually, so you can prepare yourself for the technical part of it. We are not discussing how we shape companies today. We have a very fruitful 50/50 joint venture together with Volvo, which is building on a very strong design principle, really, that we started out with. Which is really that we have two companies, Veoneer and Volvo, depending on Zenuity. That is a very strong way of managing that going forward.
Maybe Erik from the technology side.
Well, the way we work today is that the computer vision that is part of the camera, that is very much developed by Salah and his team, we use the output interface from that. Then that interface, it's developing over time. Traditionally, it was objects, now it will maybe live in more raw data. I do agree that over time, there is a trend to more centralized compute. Exactly when and how that will fall in place, we do not know. Of course, that's why we are cooperating to understand when in time is the right place where you fuse everything into one box. That will happen. That doesn't mean that the other part will immediately disappear.
The two systems, I think, will live over time because the car platforms will be so very different. They have low-end vehicles and high-end vehicles, thereby you will need both for quite some while.
Can I do one more question for Salah? I noticed that you were showing that there will be 4-8-megapixel cameras. My question is, what's the usability on the database that you have recorded with a 1.4-megapixel camera when you start merging into 4 and 8 megapixels?
Yeah. Okay. You can look at usability in different ways. One is that what you trained the algorithm to do. Now we are shifting actually from 1,250 degrees to 1,700 degrees, the amount of training to get to a good level is much shorter. We experienced from going from generation 2 to generation 4, I think the same will happen also to generation 5. The other thing that is not only field of view related is use case. Experience that we have accumulated over time for which events that are use cases are difficult. This we will take into account very quickly, this is, I will say, accumulated knowhow we have acquired over, I would say, 10, 12 years. There will be a lot of reusability, I think the major of it is about our knowhow.
Thank you.
Mattias Ledunger , Praktikertjänst Pension Trust . Salah, you mentioned a situation where you're trying to get the machine to read environmental signals that are actually a machine trying to tell humans something, the traffic light. How much will the environment develop to talk to the machine in a machine-readable way? How will that help you?
Okay. It's also with traffic signs and lanes and also traffic lights.
Yeah.
Right. Cars are cars, even though there are small cars in Japan and big cars in the U.S. The key for our computer vision algorithms is, first of all, understand that this is a sign and be able to translate what it means. These are two steps we're trying to work on. Detecting it is one thing, but then translating is another thing. Of course, having the infrastructure talk to our sensors is much better, I cannot speak about by when and how this will take place.
I'm basically talking about replacing that technology that you're using now. Basically sending that information, perhaps could be transferred, the sign, all of that.
I think I truly don't understand. Is it an infrastructure to-
I'll charge your base.
It's okay. Whatever makes the system trustful and safe, it's good. I don't understand the question. Sorry.
No, the question is, could the information be conveyed in another way, to-
Sure
the car?
Sure.
Is that happening?
If I may.
Yeah.
I think it's been happening through a map, right?
Yeah.
Traffic signs, lanes, amount of lanes, curvature, you can read from a map as well. If you want to have a car that you can really trust and we can build safety upon, I'd rather trust what you actually see with our own sensors and our own system than rely on communication or rely on a map, because it's very difficult to guarantee that communication is always available, it's always correct, and the same thing with a map. How can you make sure that it's always correct? It's useful, but I don't think it's good enough. You still need to have the sensors in the car because that are the parts that you can really rely upon.
You build in redundancy.
Yeah.
We use this today. For instance, traffic signs, we read the map first, and then we try to fuse it with our camera signal. You have examples, for instance, when you have a sign at 70 kph on an off-ramp, when you have a sign at 110, which sign do you fuse with your own sign? Because that also has to do with lane assignment. This information is good for redundancy, for sure.
Okay.
All right. We take the next. Second row. Again. Wave a little bit harder if you're in the back, because it's a bit hard for him to see if there's someone in the back. Please wave.
Thank you. Eric Korang, ESP. I had a sensor question on the use of thermal imaging. I guess most of the focus is, and also what you've shown today has been on lidar, radar, and vision, and not so much on thermal imaging, where I guess your night vision system is quite good. I saw somewhere at the Uber accident, they used the data and put sort of thermal sensing over it, they could have seen the pedestrian five seconds or something before the accident happened, which I guess is eons of time, more or less. Do you see any tendencies that there's more focus on also thermal sensing?
I guess you, Johan or Salah or both.
Yes. We are now developing our fourth generation. They gave me very short time to do vision. I can do it in hours. We focus on the vision stuff. We are actually deploying our fourth generation camera systems, thermal imagers, with an OEM that's dear to us. We believe that we have the technology and it can be used in automated safety cars. We are now in the phase together also with the need to installing these cameras on cars to look at what use cases these cameras are relevant.
When we narrow this down, we have the technology, we can just use it.
As a follow-up is on the cost side, as they've been pretty pricey so far, are you able to bring down the cost of those type of sensors in the same way as we see on other type of sensors?
Yes, it's the same with everything else. The more we can buy or the more we can use of it, the cheaper the sensors will become. We have good price break points on this topic. First camera was very expensive as well. The mono camera was very camera. Now they come down the price.
I guess it's worth saying then that the starting point, of course, is a much higher price point.
Sure
The path is the same, but the starting point is much higher, of course. Worth pointing out that in this night vision market, it's a small market today, but we are market leader.
Yeah.
Okay. Can we move on, please, back on the row five or six there, Katarina.
Hello. Thanks for the great presentation. Just a quick question on the software side, I guess. Cruise, the GM business, I think they've suggested that they're going to try and start running a taxi type service in San Francisco from early next year. Who knows if that happens or not? Just wondering about self-driving software itself or autonomy. I don't know how you'd classify that, if it's the traffic system. I think that they were talking about speed restrictions there as well, 60 km or less. Are you involved in something similar in any way, anywhere in the world?
Do you have any fears that to the extent that a system like that was to start in, say, San Francisco and morph to different cities, that they would accumulate a lot of miles and that there might be, I don't know, the first mover advantage and one system will dominate, given its demonstrated already, reliability and safety. Is there anything to that or am I just very misguided?
Eric, please.
Our focus is on automation of privately owned vehicles that sometimes can be driven manually or sometimes are driven autonomously. That is our, as I tried to explain, our strategy, because then we can spin off AD software to ADAS features depending on how the market evolves. Currently, we're not involved in robot taxi development because if you do a robot taxi, then you have nothing until you solve the really difficult problems. Our strategy is a little bit different there. Over time, we will get there. I'm not so concerned that there's one that will take it all, because I actually think that if you have an ADAS fleet, connected ADAS fleet with ADAR sensors that can collect data, then you have a much better foundation to collect data about traffic, and thereby on that fleet, you can then build smaller portions of self-driving car technology.
I think we approaching it in a different way than the robot taxi companies do.
Okay, thank you. We'll take the final two questions. Over on my right, your left, Annika, please.
Hi, [Olof Johansson] for [TP Fund]. Just a question on human behavior. When you drive a car, you will be very careful about running into something. Will your car be extremely slow going from point A to B because you have to yield for everyone else? How do you cope with those issues?
Yeah. Can I answer? Feel free to speak.
I love that question. If you just do it like a single entity here, a car behaving like this in the context of everyone cars not doing it will be very strange. You need a certain amount of cars, we're not talking about 50% or maybe it's even enough with 5% or 10%, that will lead the way. These cars, yes, they will go slower sometimes. I think in terms of the traffic congestion problem we have in all major cities around the world, what will come out of this is you will see that you will be going faster. Even if you go slower, we go faster from A to B. You need a certain penetration, and you need the leadership of these type of vehicles.
Okay, final question. Yeah, we move on.
Thank you. Eric Aasum from Industrial Equity Partners. Generally, when you develop together with customers, are they keen to take a full package and do everything with one supplier, or are they more thinking to take different bits from different suppliers?
Maybe you one question. Yeah.
Yeah. I think we see a full spectrum of that. We sometimes relate it to the à la carte menu or the full system. It, of course, depends not only on the OEM capability but also the strategy of the OEM on where they want to put their focus. That is coming back to why it's very important for us to be able to have the full system partner and the full pyramid available, because then we can cater to all of those OEMs. It's a mix.
No clear trend which is winning in terms of strategy among the OEMs?
No, I think the strategy is not changing, but the technologies and the choices between that is rapidly changing. I think the main part where you have certain OEMs who choose features to really be the unique selling points for the vehicle, they will clearly keep on to that own development. If you go to a more mass market and a quick follower, then you have a different. The subject of what you are keeping inside might change, but I think the general strategy that you will have this mix, I believe, will continue.
All right.
Thank you.
Thank you. Very good questions, thank you to the panel. We will now move into a 15-minute break. We're about five minutes late from the original program, we will meet back at 14:30. Thank you very much. Let's get started within 30 seconds. Can you please close the doors? I would like to welcome you all back to the room and welcome those viewing on the webcast, which I understand is at least more than 100 people as well. We're now in for the final session of the day. We will start by talking about value creation by our Chief Financial Officer, Mathias Hermansson, we will end with a panel with the main speakers where you have opportunities to ask questions for about 30 minutes before concluding remarks by our CEO, Jan Carlson. With that, I leave the stage to Mathias.
Mathias, please.
All right. Thanks everyone for being patient and staying the whole day. Hope you find the day as exciting as I've done. My name is Mathias. I think I know most of you actually from my previous life. I used to hang out with not so smart people. Everyone keeps saying that they're very excited today. I think that's an understatement from my perspective. I'm truly honored, actually, to be part of a company like this with so many brilliant people. It is exciting for real for me. Just before I start actually the actual presentation, just to highlight a little bit for you that there will be a lot of trading back and forth in something called issued shares in the ordinary shares in the U.S.
For those of you who don't know anything about it, just go to the Autoliv webpage, and you can read a little bit more of that, because there will be a little bit of trading already from middle of June in the U.S. Just so you're aware of that. Let's see if this
It's the other one.
Thank you. You heard a lot about this fantastic market opportunity. That's part of the reason why I found this story so exciting and compelling to me was looking at this great market opportunity. More than 25% compounded average growth rate in active safety over the coming years. It's probably almost unheard of in a scale industry like this. What I will try to do here in this presentation, I will try to guide you through a little bit how everything you heard today, how that actually translate into those targets we set out for ourselves, the 2020 and the 2022, particularly. Going through that in terms of order intake versus revenues and how that translates.
Talking a little bit about the other target we have, going from actually heavy investments this year and how that translates into profits, 0%-5% profit in the first instance in 2020, and how that path is going to happen. Finally, I think we have, of course, as Ola said, not only got a CEO and the lead car, we also got some money on the way. I will try also to explain a little bit the thinking around that and what we will use that liquidity for. Hopefully you will find also that after this day, you feel as comfortable as we are that we are on track to deliver these targets that we have set for ourselves. One of our strength, except for all the things that you heard today, of course, is our exposure to growth markets.
As you can see here in 2017, around 36% of our revenues came from the Asian market, and half of that, 18% came from the Chinese market. This is something that separates us probably a lot from some of our peers or what you may think of as peers. The Chinese LVP, the production growth in China over the last few years is going to outpace the overall market with two times factor. Obviously this is something that is exciting for us as well, that we are in that structural position that very few others are. At the same time, we can also see this regulatory tailwind that sweeps through the industry right now, it also coming quickly towards China. China is a very important market, and Asia is a very important region for us as well.
That's why we're also very happy that the wins that we have, we have a strong position in the wins with the Geely order, for example, is a testament to our strong position there. The other strong key structural growth driver is the active safety. Combining the geographic exposure and the active safety puts us in a sweet spot, I think, that no other company in this industry has. That's something good to bear with you when we look at the overall long-term growth. If you slice this a little bit differently in terms of sales, some people will get the question quite often that you're a one company active safety or one customer active safety company. If you look at 2017, there's some justification for that question, obviously.
If you look at everything, the hard work and everything that the sales team and the product team have done over the years, if you look our expectations when we draw this line out to 2022, the largest customer we expect will only account for 20%. That also means that all these other customers, which are mainly new, they like our products, high quality and a competitive price point. I think this is also just a proof point, as Johan mentioned, that what we have been doing ever since 2015 has really been paying off, and we see that continuing into the future. One of the things that is different, particularly for me coming from the media industry, where there's two weeks left in the quarter, you can still actually sell more. This industry is slightly different.
Artie doesn't believe me when I say that we can discount a little bit more maybe if you're unsold inventory, then you can make a difference. If you're not a full-on automotive expert probably, you think a little bit about what happened to the order intake and how long does it take before you get revenues and profits and so on. I'll just try to explain a little bit to you, I'll lead you through this slide, obviously. There are two points I'll try to make here. One is the financials, as I said, from the order intake, all the way to when we actually stop getting revenues and profits from that order.
The other point is, I think you heard a little bit today as well, when we define order value, it's something different than maybe some of our peers in the market claim as order value. If we take the first point, if we sell and get order value that we claim is order value of $1 billion U.S. dollars, it normally takes around two to four years. Depending on that timeframe, which, depending on maybe the type of product, but mainly also depending on which customer it is that we deal with, it takes between two and four years before we actually start production, start off production, and when we start getting revenues. What is interesting to really understand is it's in this period here, those years, where we incur quite a lot of engineering costs.
That's the application work we're doing together with our customers, developing further the products, making them robust, and everything that you heard today. We're making investments in that customer, in that sale upfront, over the P&L. That's important to remember. Probably year three, as an average we took, we start getting revenues coming in from that order. As you can see here, obviously, it's not 100% upfront first year. It's a ramp-up of that order, slowly fading out in the outer years. Normally we get revenues between four and six years in this period. Some products shorter and some longer, obviously.
If you take this into consideration and see how the order intake has been over the last few years, you can see that we are in a heavy engineering investment period right now on the back of the last two years, steep increase in the order values. The other point, just to be clear as well, is that the $1 billion, $1.1 in this case, order value we took in over the last 12 months, that is actually lifetime order value of five times that, roughly. Or here, on average, five times. Lifetime is different than the order values you see us reporting. That also means, actually, when you look at the accumulated order book we have, the total order book that is not yet delivered or invoiced, we are actually above $11 billion U.S. dollars.
dollar right now that we have in front of us to deliver and to invoice, I guess, as well. That's a good thing to remember. Let me summarize this a little bit to see where are we then, and how do we actually move this forward. You recognize the picture a little bit from before, but the 1.1 LTM order intake translates into $5.5 billion revenues only for the last 12 months of orders, and the equivalent number for the active safety piece is $2.5 billion. This then needs to be translated, obviously, into the 2020 and 2022 revenue targets. We're happy to say as well, of course, if you look in the total revenue side, that we are nearly booked for the 2020 overall revenue target. We are close to 70% when it comes to the 2022 target.
We feel very comfortable with the overall targets here. What we're really excited about and really happy about is that we're already fully booked, or not fully booked, we're booked for the 2020 active safety revenue target. That's really something that we're really proud of. Obviously, the bow is we continue to aim higher, and you saw that in the long-term ambition that we slightly changed as well. For 2022, we're also close to 70% of that revenue target booked already. Clearly, this is something that we feel comfortable with. This is the revenue side. Of course, they're all interlinked, revenues and cost, and particularly, as I said, engineering costs. I will just tell you a little bit more how much money we are actually investing now then. We're investing both, as you heard, in products and also in software development.
Over the last two years, we have, slicing it a little bit different than you heard today, employed more than 1,000 software engineers in Veoneer, then you add around 500 then in Zenuity over the last year as well, then we're up to 1,500 software engineers. You can clearly see where our focus goes in the future. Last year, over 20% of revenues were invested in combined RD&E and CapEx. For those of you, just to explain, RD&E is basically research, long-term research represented by Ola. D, development, product development, you could argue represented a bit by Salah. Then, of course, the engineering, which is what I said, the application engineering, we'll do an implementation of the products. I think this is obviously, this is deliberate thing.
It's part of the plan. I will come back to it a little bit later. It's also what we're using the capitalization for, of course, because this is a fairly cash intense upfront business that you have when you scale a business. If I drill down a little bit more just into the RD&E bucket, just so you see a little bit more granular where we actually spend that money. We can say that we will spend a little bit less than half in research and development, as opposed to this engineering part. That's going right into the core of our future generation of products, taking us from the generations you heard today to future generations of sensors and software around that.
A little bit more than half becomes the engineering piece, and obviously this is not only a cost for us, but it is also a competitive advantage, we think, where we actually work together with our customers to actually develop the products much better. We actually get benefit from that engineering work that we can bring back also to the product development of our future product. So overall, obviously, the aim is to be able to scale with fewer man-hours going into the product development, scale that to be able to sell to more and more customers over time. If you look a little bit different on the RD&E, slicing it different, again, around half of that RD&E spend is actually going into the products of vision. Salah has got a big budget. And radar, which are the core active safety products right now that we have.
If you take active safety as a whole, I think we have roughly two-thirds of the whole RD&E bucket is going into active safety. Clearly, we have a lot of focus in that area. This is coming from a structural perspective, how we look upon that. If you look into a little bit more this year, just to remind you that we already, earlier this year, updated and indicated that we will spend another roughly SEK 70 million in RD&E this year compared to last year. So good to remember. The priorities are exactly in the same fields and areas that I just mentioned. It is also worth remembering now when we have our friends from Zenuity here as well that the Zenuity RD&E spend, or actually it is really only development spend right now, is not part of our consolidated number.
That is accounted for as an equity participation, just so you bear that in mind. If you look at CapEx, and the reason why we have both adding them together and call them investment is really that we think about them largely in the same way from a strategic perspective. It is the priority of where we put the CapEx money or capital allocation, if you want to use that word. But obviously, just to be crystal clear as well, we do not capitalize any of our RD&E spend. This is just purely flowing through the P&L, whereas the CapEx obviously goes into the balance sheet. If we look at the CapEx, I think one thing that will be a little bit new right now, we have been running at around 5% CapEx to sales in 2017.
This number will go up in 2018 to high single digit, just to be clear, and to remember that as well. The main part of that increase right now goes into actually increasing the capacity to fulfill all these orders that we have taken in. We see a steep increase in orders, obviously in deliveries, and the main part of that obviously goes into that. But if you look at all the tech centers we have with the engineering and the software development centers, we are also consolidating them a little bit around the world. For example, building completely new office in Detroit, in the Detroit area, Southfield. We are also building new buildings and relocating in, for example, in Germany, in Munich, around the Munich area.
The third part, which is also driving quite significant CapEx, is we're building a completely new factory to cater for this new big brake system order we won, and we announced towards the end of last year. This is the new generation brake systems that we discussed, and we're actually building a completely new factory for that in Ohio. That's. If you look a little bit further down the road when it comes to CapEx, I think there is no reason really for that CapEx level to be sustained that high. You should assume that will come down to more mid-single digit normalized historical levels, particularly then obviously when the ramp-up of revenues are coming in. Just to be clear on that.
Overall, I think the point we're trying to make here is that the investments that we both do in RD&E and also in CapEx is really targeted to the areas where we think we're going to get the most bang for the buck in the future, mainly in the areas I just mentioned around active safety. Having said that, I think this is obviously all part of the plan and the target settings. How do we then get from, in 2018, a very heavy investment year, into the profitability target in 2020? Just to give you a little bit of simplified overview around it, I think we will see a material growth in absolute gross profit throughout this period. Particularly if you look at the historical order intake, the growth will be particularly dominating in 2020.
We don't really give any indications of forecast or guidance around gross profit margins in itself, but it's probably not difficult to see that the principles of high operating leverage and increased volumes obviously applies here in the active safety and Veoneer area as well, as you're so familiar with from other industries. Obviously, if you take a little longer horizon, the software sales, the high-margin software sales that Jan talked about a little bit earlier, obviously that will have an impact on gross margins, but that will not probably be in the 2020 timeframe, rather quite a few years down the road. That's really what we are excited about as well, when you extend this line. For 2020, this is what you probably should expect. I mentioned the increase in RD&E this year.
I think moving forward, you shouldn't expect the RD&E to go up much more. Rather the other way around. I think they usually expect to come down in percentage of revenues. Even if we don't really see gross RD&E costs come down materially in absolute terms, which I think will probably not happen, it should not really grow any more materially either in terms of absolute across up until 2020. If you add on also that we have more and more engineering income, i.e., the OEMs actually help us fund our engineering work to a larger extent, then obviously we get a good benefit from that in the overall net RD&E in percentage of revenues. On SG&A, not to spend too much time on that, I think we will incur a little bit extra cost for being a public company than what you've seen before.
That will take up the SG&A in percentage of revenues a little bit in 2018. There is no reason for you to believe that that should increase further in absolute terms really from that level onwards. Rather, hopefully we can squeeze some efficiency out of this over the course of the next few years. I think, if you net out all of this, what I just told you about, we are on track as well. If you believe in it, obviously, and we do, we are on track to deliver between 0%-5% operating margin in 2020. That is just the first starting point. This is really at the core of what we are going to use the capitalization, the starting net cash for.
If I go in a little bit more to the thinking behind $1 billion, which is, you are in Sweden, $1 billion does not sound that high. When you translate into Swedish krona and look at how many companies that actually has a market cap of more than $1 billion, you get quite humble when you see that big amount of money. It's really not that complicated. It's basically RD&Es and engineers, it's the CapEx I just talked about, and it's Zenuity. Those are the really big buckets of money we are actually investing into. The vast majority of that $1 billion is in the organic investments that we already have in our operating plan that we have right now. On top of that, obviously, there is not the entire one, we have a buffer for some uncertainty. You never know what's going to happen.
We believe that fundamentally, it's very important for us to have a solid foundation to stand on once we become our own company, because we believe that the execution will be so important here over the next coming years. Everything else that we can take out that can derail that is obviously good. There are also some potential here as well for inorganic growth. This is not included in any of our targets or any of our plans. Just to give you a little bit of highlights around how we think around M&A. You remember Autoliv itself, and I haven't been around for that long, I think four months or something. There's quite a few people who's been around for quite a few more years.
The whole foundation of the success of Autoliv, at least when I look at on it's relentless execution, it's M&A. That's what really built Autoliv to be a successful company. I don't think you see Veoneer as being materially different than that over time. You heard that throughout the day. One thing what we haven't discussed much is the M&A piece of it. I think what you can see here that even the electronics part of Veoneer now has been active in the M&A space over the last few years. If you just look at the last year, 2017, it's kind of representative with all these dotted lines. You can see also that we have carefully considered whether we do M&A or whether we do collaborations.
I think that's important for you to remember as well, that this is not to just buy everything you can and hope for the best. This is a careful evaluation of what do we need, where in the portfolio does it add? Does it add to our stronger, robust system of active safety or ADAS features? Does this add something that we don't have today just by building stronger and stronger integrated offering? If you look at some of these examples from last year, I think you heard and you know that we acquired lidar capabilities with the Fotonic Asset deal we made. We did strategic collaborations on both driver monitoring system, but also on the Velodyne lidar, helping them to commercialize them, and industrialize them into the market. Obviously, Zenuity, you're very familiar with.
All of these different pieces have a specific strategy to target what they will fulfill in the overall path to a stronger integrated solution. I think we sometimes, or I have at least got some questions around would you ever consider using your shares to acquire companies? I think what it's obviously a valid question. I think the principle is obvious. That was one of the reasons, I think, why Veoneer was spun off, so we would have a currency if we needed. Just to be crystal clear, I think every acquisition would have to stand on its own merits. I think in a case like that would be something that we would obviously very carefully evaluate in that case. We have some money, obviously, for M&A in that $1 billion bucket already as it is.
Just to sum up a little bit what you've seen this afternoon. I think we are obviously on track to deliver the revenues. Hopefully, you've seen this, we are also on track to deliver profitability towards 2020, which is the first instance. We also think we have a very strong financial foundation right now out of the gates, trying to tackle all these not easy challenges, but very exciting challenges moving towards the next few years. To round off this, when you talk about long-term value creation, you normally you're a margin-optimizing cash flow company or you're a growth company. Here really we can see that we will be pretty much both. We will have a double-digit long-term revenue growth, we believe, and we will also have a double-digit margin outlook, that is our absolute belief. I think that's everything from me.
I hope you are as excited as I am, you will be on board at least for as long as I'm on board in this journey, that's going to be quite long time, hopefully.
All right. Thank you very much, Mathias. Why don't you stay on stage? We will move into a Q&A panel here. We will get a few nice tables, and we will ask our main speakers back up on stage. Jan, Johan, and Art, why don't you join us on stage, and we will kick off a Q&A session here. Give them a couple of seconds to rearrange, get on stage, get mics, and by that, let's see. I think we should be fine to kick it off. We have the first question here on the third row. Sorry. Get you. Thank you.
Hello, Victoria Greer from Morgan Stanley. Can I please ask about long-term CapEx expectations, both for Veoneer and potentially for Zenuity as well? As you said, as you move into the build phase for 2018, that probably moves from 4.5%, 5% to high single digit. Should we think about it staying at that high single digit level? Short term as you build to this big ramp-up in sales, should we expect it to rise from there? Also, might you need to contribute anything into Zenuity in terms of cash in order to have the same effect there, depending on the Zenuity orders?
I think, is this on or Yeah.
I believe so.
When it comes to CapEx, I think we will see a temporary rise in percentage of revenues 2018 and 2019 probably at once now, then around 2020 when revenue starts to grow quite dramatically towards the target, then you're going to see that coming down over the years. Then we expect roughly right now around mid-single-digit CapEx levels. I think when it comes to Zenuity, I don't think we have that much CapEx in there. We invested around SEK 70 million, our share of investment into Zenuity itself, to keep them running, because we invest in quite a lot in that development. You shouldn't expect too much money into CapEx in Zenuity itself, I think, but from our point of perspective.
Thank you. Yeah. Second row here, right below me. Thank you.
Christer Magnergard from DNB. Question on the 2022, would you say that 70% of the book is covered already? Given the 2-4-year lag from order to delivery, when do you need those, the final 30% to be really have a full order book?
I think that goes to you, Art.
We are making progress, and we have that modeled out. To give one example, there are some customers that you can still book and have in production in one year. You have until one year before to get that done, but we have that modeled out and we're well on track to that. In general, we want to have it done two years in advance. For 2022, we want to have it done by the end of 2019, in general.
All right. We take Hampus here in the middle of the second row, and then you can move back there so the second microphone can go to the back in the middle. Yeah.
Hampus Engellau, Handelsbanken. The cash you're taking on in Veoneer, $1 billion, was changed from SEK 1.2 to begin with. Was that from you defining your need of cash, or was it from Autoliv saying, "We need to keep some cash to keep our credit rating"?
Jan or Mathias, who took it? Yeah.
I can take that. We're talking about up to SEK 1.2 billion. This is actually related to what we think we need in terms of our business plan. It's also a little bit more complicated because if you overcapitalize the company in sending it out, you may run into issues with the tax-free spin. If the company is sent out with too much cash, there might be question marks around that. That is a second-level question related to this, that it was more, what do we really need and what we think is the appropriate amount of cash, and we ended up with $1 billion.
Can I ask one more question on M&A? Could you maybe discuss a little bit, you've created a big base of collaborations and your own developed product, if we look at these stairs of collaborations and your products. Could you maybe indicate what type of areas could be of interest that is like in the twilight between what you're doing now and what could be doing tomorrow?
Yeah. Maybe I can start a little bit. One of the key areas is in technologies. Where we see opportunities and where we see needs of strengthening our pyramid in different ways, that is one area where we constantly look for opportunities in the M&A. I guess another area which we would also look at is strengthening a particular geographical part of our business.
Thank you.
Okay, we move to the back of the room. Yeah, we have the microphone there.
Yes. [Thomas Brownie from Dazzard]. Could you specify what factors will drive you closer to the 0% or the 5% EBIT margin in 2020, especially given the fact that revenue seems to be covered by orders already? Is this external factors? Is it internal factors? Thank you.
Well, first and foremost, a lot of the margins is related to the investment we're doing in engineering, and even higher order intake would drive margins to the lower end of the range because of increased application engineering. This is not a new story. We try to explain that here at Veoneer. We have seen it many years in Autoliv, and application engineering, as a consequence of a higher order intake, is having a short-term effect on the operating margin. I think also Mathias showed here that the order intake, you have a delay, and you have a lag of two to four years, which is causing us this effect on being on negative operating margin initially here in the Veoneer side.
Okay, we move to the third row over there. Thank you.
Eric Carlson from Industrial Equity Partners. We remember from the old Autoliv, if we call it that predictability in margins in a certain order is pretty high. It wasn't often that a certain order deviated a lot to the positive or negative. What about at Veoneer? When you deliver something, how often does margins, actually versus estimated margins, significantly deviate? Just trying to understand when you guide on margins for the future, how certain are you?
I maybe will start this. I maybe shouldn't for a sales guy, but one thing to remember is that this is a much more volatile market than Autoliv, right? The take rates are changing much faster. There's many things, engineering's a much higher rate. It is, in general, I'm not going to mention about margins or predictability of our margins, but the market is much higher volatility. That's what makes it also much more exciting maybe, it's also much higher volatility than what we had in Autoliv, which is steady industrial market for the last while, anyway.
I think I would like to add something to this comes from our heritage in electronic control units. We are not new in this game. Remember that we have been in this game for decades. We have produced, as I mentioned now for, I don't know how many times, hundreds of millions of units in restraint electronics. When we go into production of active safety products, we know how to do this. We know how to manage the machine. We know how to manage manufacturing. From that aspect, it's really not something new. What Art is talking about, there is a volatility in the type of orders, we are familiar with this thing, that is making Veoneer a good company already from the start, from that aspect.
Thank you.
Okay, we move to the second row here, please.
Mattias Ledunger , Praktikertjänst. Maybe I have a different slant to the same kind of question. Basically, I thought maybe to you, Art. These are new products, new services, or new functionalities. Price discovery, how do you price? You have to search for the benefit of the added feature, right? Price off of that. I guess you are the one around the table that can screw things up with those zero to fives.
He'll screw those up, yeah.
Thanks. I appreciate that.
The other way around.
Of course.
You want to work here?
One thing, again, to remember that for 2020, the book is done, right? We're not really discussing pricing for 2020 right now. For the future, it is somewhat of a challenge, right? Of course, you start from what we call a value-selling perspective. What is the value that this brings to the market? There's this other little piece called competition, that you also have to play with. It is, as I said earlier, the pricing is, it's much bigger gaps between regions and customers and technologies and niches that you're in. Of course, it's all of our job and my job specifically, to make sure we maximize the value of that for Veoneer.
Does the client have an idea first?
Of course.
Is it from you or from the?
The client always, in our business, the client always has an idea first.
Sometimes it's a good idea, and sometimes it's a bad idea, and we have to work with them. They always have very clear targets. They have very efficient purchasing organizations. That's what automotive does, and they have for a long time. They're very big orders with a lot of people paying a lot of attention to them. There's some more volatility, as I said, in that as well than there is in the traditional Autoliv business. It's more diverse, I would say, as well. It's more divergent right now. That will also change as take rates come, and you see the number of competitors come in the space and the amount of money that's being spent from all kinds of different companies in the space, that will converge. Right now it is a little bit divergent, and it makes an interesting challenge.
Good luck.
Also to add a little bit to what Art is saying, this is a changing environment. To remember that software is to a high extent bundled into this hardware today, and this will change. Because of the features being enabled, because of the product that we develop, you will see software coming out of the hardware. Hardware being more centralized, more general purpose, and that will also cause the pricing model to be different going forward. Then as Veoneer, we have to look into subscription model, licensing model, or getting paid by the picture, or getting paid by driven mile, et cetera. We have to get used to this, not because that we want it, or because of that we want it. We don't know that. I think also here, the OEMs, they are quite used to what Art is saying.
They're used to push supply base. Supply base is going to look different. It's going to all be different in 5, 10 years from now, and we have to be ahead of the curve again, as Veoneer. Thank you.
All right, thanks. Maybe you, I think we had a fifth row question now, then you move that to the third row. No, you can move it straight back, that microphone, to Björn Enarson. Yeah. Meanwhile, fifth row, ask your question. Thank you.
Hi there.
We have to get it done. Please.
Thanks for taking my questions. Cyprien Young from Bernstein. I was hoping. Excuse me. I was hoping you could help me understand the rationale for changing your segmental reporting structure. You used to report the three segments under electronics. It now looks like you've embedded active safety in with restraint controls. Why have you done this? Is that correct in the SEC filing?
Yes.
Yeah, I guess.
Go ahead.
No, I think there's really two things. One is there is a huge overlap in the businesses when it comes to the way we run it, and the way we sell it when it comes to centralized domains. It makes sense for us to look upon it together. The second part is that obviously that we think that the benefit of having. Let me put it the other way around. We are looking at it from a deep perspective on the different segment levels. Active safety together with restraint controllers are measured internally on the two different levels that you talk about. However, right now we decided to do it in one package. Yeah.
Is there any scope in future that we might get to see the operating performance of Active safety?
Over time, I think what we also should remember there is obviously a competitive element to this as well. We are quite unique in a pure play, largely pure play, safety electronics business. Over time, maybe when things move forward, then we may consider doing it more in freeways or even more maybe.
Okay, thanks. Could I just ask one more question on your cash flow projections? When do you expect to become cash flow positive?
I think, as you know, the target for consolidated EBIT positive is in 2020. When you have to consider the CapEx that we discussed and also investments into Zenuity. Taking that into consideration, we think that overall cash flow positive for the overall business around one to two years after 2020.
Okay. Thank you.
All right. Thank you. Björn, maybe you hand the microphone to Agnieszka afterwards.
Okay.
Perfect.
I think actually you answered my question with you don't know really, because it was asked previously, but it was on pricing, as OEMs enables different features and price for them, in different ways. That impacts you, I guess. That's what you said, but you don't know how that pricing model will look like. Okay. I throw in a second question, this real life safety, when will we see more of that in Euro NCAP kind of test where we would be a match between mono vision, stereo vision or whatever applications?
First of all, I think I'll take one more stab at the pricing question, actually.
Better.
We might not have the exact, I don't think anybody has the complete answer to how the pricing model will look like. I think our bet is to have the solution and the value that we can put a price on in the future. If you look at what we just presented here through Erik and Zenuity, if you have a software stack where you can actually get a value to the OEM, you are sitting on the value, right? You have the opportunity to drive the pricing. I think that is our simplistic approach to that. We have to be open-minded, I know that the sales team is really working on this to look at new variations. If you don't have the stuff that people want, it doesn't matter, right? That's one part of it.
Going to the NCAP, we've seen it. We see it constantly how this moves. If you look back to the '90s even, it has been taking a stepwise implementation into more and more ratings closer and closer to real life safety. I think the 2018 upgrades now where you see it becomes more in a pedestrian sensing, you see in 2020 it is also sharpened. That will drive to be able to get a four or five-star rating. We are not looking at the first level ADAS picture that Eric showed before. You will not be able to make that with a single system. You will have to add multiple sensors to be able to do that. Of course, at the core of that, if you have a camera with two lenses, well, then you have a better starting point as well.
Okay. Thank you.
Thank you.
Yeah.
Agnieszka Vilela, Nordea. I wonder what kind of performance metrics that you will consider important for your business. Will you be focusing more on, say, order intake or R&D to sales when you just look how you perform? In connection to that, will you be guiding for sales growth and EBIT margin, just like Autoliv did?
Looking on the performance metrics, as we will have several KPIs. Of course, the performance on quality and delivery and customer satisfaction will be extremely important for us in the beginning to gain traction and show the customers that standing alone on our own feet, we are as good as we have always been within Autoliv. That is one thing. When it comes to financial performance, order intake is clearly a very important measurable for us. Of course, other financial measures in terms of performance and profits, et cetera, are also equally important, too. We'll come back to that. Order intake, following the market growth and having the good traction that we have shown here on order intake is an important part. Coming back to the guidance, we will come back to that and see how we will guide the company.
We have not yet determined on what level we will guide the company yet and how it will look like. Autoliv have had, over the years, a certain rhythm in guiding quarterly on organic sales and EBIT margin. We may have other matrices that are more important for us to leave to all of you here. We have traditionally in Autoliv shared a lot of information on a granular level. We are of the same heritage, let's discuss that a little bit later.
Okay, thank you. We had next question in the back of the room.
Kai Mueller, Bank of America Merrill Lynch. Two if I may. The first one, on your orders, if you look at your profile and the orders you're taking, if we talk about level 3 in the future, are you really pushing out the other competitors that are currently delivering level 2 projects to those same customers? Are these just new companies you are suddenly getting more exposure to? You've shown us obviously your wealth of more customers you are actually allowed to bid for. Secondly, what is really then the determinant why they choose you or should choose you versus the others? Is it the product? Is it the price? Is it the delivery schedules that you can achieve? What is the delta between those two? Maybe just to add a last one, on your collaborations, you included some lidar, for example, with Velodyne.
Most of these are non-exclusive agreements. How are you the value add to those big businesses in the long run?
I will start on that. There is a lot of questions inside that question. I think that counted six. I will start with the first one as far as are we winning in existing customers that have level 3 systems. In general, the customers that have level 3 systems today have their own level 3 systems. We are staying in those games. We are, as you know very well, working with Daimler in a long way, in a very good partnership there, we are working with other customers that have their own level 3 systems as a part, as a supplier to a part of that system. I think we are holding our own there. I would not say we are losing or winning in a significant way.
What is changing is that there are other customers, Johan mentioned, too, is the fast followers that now do not have the capability to do a level 3 system on their own. Now they are starting to see they also need to have one. There, I would say we are also winning. Our competitors are also winning some, we are also winning some. It is a different set of OEMs with a different set of requirements. I do not think one is displacing the other per se like that. I think how we are winning in those situations is, in the end, it is actually not so much a price differentiator. It is about who they trust can actually execute this system. Sometimes they do not know a whole lot. They are new to this too, right? It is really, do they trust our management?
Do they have a history of working with us, where we have delivered what we have said we would deliver? Do we have the right type of customer-centric collaboration that they want to work with us? There has been OEMs that I have talked to that mention the, just to put it in varied terms everyone understands, the Apple type of suppliers and the Android type of suppliers. All right. Most customers want to work with somebody that is open and that they can see, and they can work together and really have a true collaboration with. I think that is also driving. Some of those customers that maybe want to have a different type of system, maybe we will not be their customer.
I think that's a big driving point is, do they trust our ability to make automotive-grade, to make quality based on our history, and do they trust our way of working with them, our customer-centric delivery? As far as looking on these collaborations and the value we bring, that's a really interesting one, and it's actually the same answer. If we look at Velodyne, which is a non-exclusive agreement that we signed, the OEMs asked that question, too, in the beginning. Some months in, we have orders now with a fair amount of value in between us because they see that we can deliver an automotive-grade product that they could not get directly from a technology house, and they could not get themselves even.
That our experience in this space and the expert systems that we have for not just industrialization, that's clear as well, and quality, but also on the application engineering side, to be able to bring something into automotive-grade, we have that trust and that history. They see that value because when they can't get parts otherwise that work for them, then there's a lot of value for someone in between that can bring those to them. The whole way that we want to manage those non-exclusive agreements, the reason we did non-exclusive agreements is we didn't want to get tied up in long discussions. We wanted to move forward and make business. The value comes from the relationship with the OEM. The OEM is the one that gives the order.
If we have the relationship with the OEM, if we have the trust in the customer, then we think that we can prevail even in non-exclusive. We not just think, we see it in the daily life in the last six months.
All right. Thank you. I think that was a complete answer. Hans, we first third row again, then we move to the back on this side.
Just on the order intake versus sales, how come you don't book SEK 5 billion of orders for expected SEK 5 billion of sales? What's the difference there? How much can the sales and orders then deviate from the 5x multiple you suggested?
I'm not really sure how to answer that.
The reason we do is the history. We just talk about annual order intake.
Right.
We just take an average annual order intake. It's just history, the way we've done it.
Okay.
We've always done it like that, we may change that over time. As of now, we are booking it on an annual basis. What is the order giving on an annual basis, not on a lifetime basis.
Understood. Thank you.
Okay.
All right. Back of the room, I think you had microphone.
You have the history.
I thought there was some deep level question.
Chris O'Gorman from Mizuho. You've obviously come from a business that historically has held a very strong external credit rating, and you confirmed obviously yesterday that S&P, you're maintaining that as A minus. Have you engaged with S&P at all now you're on the VNE side? Or if not, how do you perceive yourselves, investment grade or seeking to be-
Solid starting position, net cash over time, we have to see it. That's quite far in the future. As you probably know as well, we have said that don't expect any dividend in the short and midterm.
All right. Yeah, please.
Yeah. Thank you. Hi, Julian Radlinger of UBS. If we can get back to the order intake for one question. I was just wondering, for the revenues to 2020, what assumptions are you making on volume, and on take rates, since a lot of your product portfolio is quite dependent on the take rates that you are going to have at the end of the day? Do you just take what the OEMs give you? Do you take IHS numbers for volume? I know you have some experience in take rates. Some call on that would be great. Thank you.
Yeah. I think it's a really good question. You obviously know the industry well because there's a lot of data input you can take there, and the two main inputs that we take is the OEM's input and IHS. IHS is really good on vehicle volumes as a whole. They're not so good on take rates, especially in some of the disparate markets. We also have looked at SA, we've looked at Bain studies, Goldman Sachs. We've looked at a lot of things, now we have a product planning team that works for me that on a full-time basis is studying all the time, what are the latest updates and what do we think is shifting?
I would say for 2020, it's largely OEM numbers because we've seen what they're doing, we've seen what they're running today, we see what the take rates are in the market today, and we can more or less extrapolate those to 2020. Beyond 2020, it's much more in this segment of vehicle, in this market, with this type of regulation, and what we're seeing from all these other studies, this is what we feel a take rate will be for these components. Through 2020, it's fairly solid. We see maybe some pressure to the upside as the consumers continue to ask for more, the take rates may come up a little bit. For 2020, it's largely based on OEMs with IHS and our own experience, and pretty solid, I would say, for 2020.
All right. Thank you. We have about four minutes left, one to two questions, depending on how long they are, and the answers. We move to the gentleman standing up in the back of the room here, please.
Thank you. Victor Lindeburg from Carnegie. Simple question. Reading your SEC filing and looking at the JV with Nissin, I think this spin-off will now be considered a change of control event, and they had not given consent as of the filing of this report last week. Can you just update us if they have, as of today, or when you expect them to approve or disagree, and what effect this may have on the listing, if any?
As far as I know, they have not given us the approval as of today. We are in a dialogue with them, we would hope and expect that to happen, that they will give us their consent. This is a custom in Japan. It sometimes takes longer time, it's more process-oriented and a little bit more complicated. If for whatever reason that would not happen, which I don't think is the case, but if it would for whatever reason, there are clauses in the JV how to regulate that, going one or the other way. Let's not go into there until we find out if there is a no, which I don't think is the case. That will not have a stop on the spin.
Okay, thanks. Final easy question for you to answer, I think, Mathias, on margins by division. You say 0%-5% margin on group level. Can you elaborate on what margins you anticipate for the different divisions, brake systems, and the electronics division, if there should be any difference?
No, we haven't been that granular yet, this is partly what we consider as well over time in the disclosures.
All right. Thanks.
All right, we move further. Final question. Yep, please.
Hi, Erik Paulsson, Pareto Securities. Regarding connectivity now, everything around that, how do you see your internal development regarding cybersecurity, regarding theft, terror threat, and even kidnapping, et cetera? Do you do any internal development there?
I can start, perhaps.
Sure.
Well, first of all, going through history in our RCS, there is already a part of that that has been around for many years. At the core development of our controllers, this is already an aspect. That aspect is, of course, growing now in scope as we go forward. There are a lot of new players that are specializing on this, for sure. I think the main answer is that for any future generation of controller, this is already part of the specification. That's the first part of the answer. To look at new solutions and new services, perhaps, around this area. We're doing this in our tech scouting findings, and we're also looking at it as part of the Zenuity software stack to see how you intermingle it into the full decision-making software stack.
Okay. Thank you.
Actually, only two days ago, we were part of demonstrating geofencing here in Stockholm as part of a broader initiative together with Ericsson and so on. We have concrete activities ongoing on the research side.
Yeah.
Okay. Thank you very much. Thanks to our panelists. I will ask Jan to stay and the rest of you to leave. Thank you very much. Also, thank you for participating to both Autoliv and Veoneer Investor Day today here in Stockholm, and for those of you watching via web or listening via telephone conference. This is the last you see of me today as well. We will keep you regularly updated, and of course, you know where to find us if there are further questions. We are only one month away for the planned spin, with July 2nd as the first trading date. Quite exciting time for us. With that, of course, I leave the last word to Jan. Jan, please.
Thank you, Thomas. Yes, this is a great day for Autoliv. It is a great day for Veoneer. We are making one great company, two great companies. To start with that, I would just say that I hope you enjoyed the presentation this morning looking on the future prospects for Autoliv. We have been talking this afternoon about Veoneer. Autoliv has a great future in many aspects. A great team, a great market presence, a great order book, and also great ideas of how to expand their business. It is a solid business that has a lot of potential going forward, also looking into areas maybe outside what they are doing today. I hope you enjoyed that. For me, taking us into the next part, this afternoon here, again, I hope you have first and foremost seen the people that are presenting here.
This is only a few of the competence level of that what we have here in Veoneer. This is a people company as it is in Autoliv. Autoliv is also a people company. This is another people company. We have an enormous competence and resources here to take us into the future. We have a growth opportunity and a market here that is SEK 50 billion potentially waiting for us out there to get traction on. To be able to do that, we have to have a convincing proposition, and that is all developed by the people. We are on track to deliver on our targets. I hope you have seen, and we have been demonstrating this morning, that with an order intake that is all-time high over the last 12 months, over $ 1 billion, we are well on track to deliver on our targets for 2020 and 2022.
I hope we have visualized that during this afternoon in our presentations. We have more than $600 million out of this $1.1 billion coming from the fastest growing part of our business in active safety. Again, here, we have the market growing, we are on track with our order intake, and we have the competence. What is the unique thing? I like to repeat it again. We have the history of delivering safety. We have the history of delivering hundreds of millions of units with the lowest defect rate and the lowest recall rate in this industry. We have built up the highest level of technologies on the tech side. Bringing these two important parts together creates this fantastic and unique position. At the end of the day, technology is a good thing.
Having a good demonstrator is quite nice, and it is new, and media and markets and us, we like to showcase this. When all of us is sitting in the vehicle, and when all of us is driving in good road conditions or bad road conditions, what we want most, first and foremost, is to get there safe and sound, and probably with as little distraction as possible. That is a product you can trust. That is our purpose. That is why we are here to do. Again, I look forward to this journey. I look forward to be a part of this. I look very much forward to see Veoneer go into trading in a month timeframe. From there to grow into a further prosperous future. With that, I would like to thank you all here. Thank all the presenters.
Great job, great preparations, good job in illustrating our vision and our ideas. Thank all the participants here in Stockholm, and thank you all over the webcast for joining us today. I look forward to staying in touch with all of you. Thank you very much.