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Morningstar | Gentex Ramps Up Its R&D For Active Safety and Autonomous Vehicles

Gentex creates auto-dimming rear- and side-view mirrors that use electrochromic technology. These mirrors automatically darken to eliminate headlight glare for drivers and have many other applications. With over 1,400 patents worldwide, some valid through 2043, and a dominant 92% market share, up from 77% in 2003, Gentex has a narrow economic moat it should be able to protect for a long time.The growth prospects for auto-dimming mirrors look strong. Gentex estimates that in 2017, about 30% of all cars had interior auto-dimming mirrors, and about 12% had at least one exterior auto-dimming mirror. Demand remains healthy with annual revenue growth often exceeding industry vehicle production growth. Growth will come from increased vehicle penetration as more original-equipment manufacturers make the safety benefit of auto-dimming technology available and as Gentex's research leads to new, advanced-feature mirrors that ultimately become standard products.SmartBeam, which automatically turns a vehicle's brights on or off and can also allow brights to be on continuously, is sold mostly in Europe, but its safety benefits could expand if U.S. regulators change current rules as proposed in October 2018. Research has found that drivers use their brights optimally only about 25% of the time. In May 2012, Gentex announced a long-awaited lane-departure system. Active safety is a very fast-growing field, so more camera products are likely to show up on other vehicle programs. A recent example is the full display mirror, which the driver can toggle between a normal auto-dimming mirror and a display image while driving at high speed. Other growth areas include biometrics in mirrors, which we see having application in autonomous ride hailing, and universal toll payments.Over the long term, Gentex's technology also could be brought to more airplane windows. The company (in conjunction with PPG Aerospace) supplies auto-dimming passenger windows for the Boeing 787 and 777X and could eventually expand to more firms. The September 2013 purchase of HomeLink from Johnson Controls is another expansion outside the mirror. It also is targeting RFID parking barriers in Asia with HomeLink.