The growing use of electronics in automobiles designs and their dependency on it, has increased the level of complexity of the car-system and created new challenges. But at the same time, it has created new opportunities and the potential to reduce complexity through modularization. This represents a new architectural paradigm for OEMs and suppliers. This thesis suggests an approach to this new era of automobiles designs. It looks at the effect of modularization and the advent of electronics on the supply chain in other industries. It evaluates the risks of value migration in the automotive industry and studies the mechanisms of such migrations through several interviews, financial data research, systems functional decomposition and system dynamics analysis. Electronics, along with software and control algorithms, enable an encapsulation of functionalities by creating higher levels of abstraction. While early vehicles had an all-mechanical interface between operator and actuation, electronics has allowed the separation of the processing of signals coming from the operator, the control/functionality infusion, the transfer of information and the transfer of energy. Thus, what was once integral has now the potential to be modular.
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