Alphabet Road to sustainability: Exciting panel discussion
Sustainability is currently a hot topic, but it does not make business easier for mobility and sustainability managers. In addition to the "Total Costs of Ownership" of the fleets, which should ideally continue to decrease, it would also be nice if the CO2 footprint could ideally be reduced to zero. Alphabet has developed many building blocks to accompany customers on their individual path to sustainability. The complexity of the topic was also illustrated by a discussion led by Uwe Hildinger, CEO of Alphabet, with Volker Buttermann, Vice President and Head of Indirect Procurement at Infineon Technologies as a customer, Thomas Becker, Head of Sustainability & Mobility, BMW Group as a vehicle manufacturer, and Kurt-Christian Scheel, Managing Director of Politics & Society at VDA from the association's perspective. The moderator, Martin Kloss, led the discussion in a refreshing manner.
Alphabet has had the eMobility solution AlphaElectric in its program since 2013, guiding customers through the entire process of e-mobility. The introduction of the expanded consulting offering shows how this is becoming increasingly complex, allowing users to receive individual advice on reducing CO2 emissions and creating the appropriate eCar policy. Becker from BMW points out that the company has been operating an environmental management system since 1973, which has recently gained significant momentum and complexity, extending "from the ore mine to the scrap press." He emphasizes that the change is primarily driven by fleets, as the average "fleet" in Germany is almost eleven years old. The Paris Climate Agreement currently increases the pressure, and VDA spokesperson Scheel also demands: "Climate-neutral traffic must be possible by 2050!"
Climate Neutrality: Customers ask about fleets during contract awards
Becker clearly sees the issue of environmental friendliness and CO2 neutrality as a competitive advantage from the perspective of car manufacturers. Not a day went by at the IAA Mobility where BMW wasn't asked how they would achieve their goals and how they could prove CO2 neutrality. They want to meet this demand. Hildinger agrees, saying that the topic of "fleet" often brings the HR department to the table to attract good employees who increasingly ask how they can be sustainably mobile. He observes a shift, especially among the younger generation, which is confirmed by Buttermann as a customer. Furthermore, Infineon's customers also probe how the chip manufacturer intends to achieve its CO2 goals. According to Buttermann, they are often not even allowed to participate in tenders without green electricity. Scheel from VDA also notes that climate change topics have now deeply penetrated society.
Becker from BMW picks up here again, mentioning the role of CSR (Corporate Social Responsibility) officers. At BMW, these officers are specifically asked about new construction projects or sourcing initiatives: "Does the country fare better with BMW than without?" This leads directly into the supply chain discussion, which ultimately ends with the fleets, as Hildinger knows. This is why the topic of "fleet" is becoming increasingly complex, with the sales department needing different modes of transport compared to the board and service employees. Consequently, consulting is taking on an increasingly larger and more important role: "Sustainability is more relevant than ever," Hildinger explains. Buttermann, as a fleet user, also feels that the time pressure to maintain a livable planet is increasing.
Every German citizen emits an average of two tons of CO2 per year
Becker from BMW provides some numbers: In 2019, an average BMW car generated around 50 tons of CO2 over its lifetime. About 10 tons of this came from the manufacturing of parts, one ton from the assembly, and the remaining almost 40 tons from operation. This footprint rises to 20 tons for electric vehicles, mainly due to the battery production, which absolutely must be avoided because an electric vehicle is only more environmentally friendly on the road if it ideally runs on CO2-neutral green electricity instead of grey electricity. To avoid these 20 tons from the start, BMW is taking significant countermeasures, aiming to reduce the CO2 footprint in the supply chain and production to eight tons by 2030. Becker sees great potential here, especially in battery cell production and aluminum and steel manufacturing, where BMW aims for much higher recycling rates in the future.
At Infineon, Buttermann says they are driving the development of increasingly efficient semiconductors to achieve the same energy output with less energy consumption. This is externally audited, in this case by KPMG. Infineon plans to be the first climate-neutral semiconductor manufacturer by 2030. By 2025, they aim for a 70 percent reduction, including converting all Infineon sites to green electricity by 2025. The car policy should also be correspondingly adjusted by 2030. BMW has similar but realistic plans: By 2030, Becker expects 50 percent of their vehicles to be electric, equating to ten million units. They are also continuing to develop combustion engines and plug-in hybrids and keeping the option for fuel cells open, which can be particularly useful in trailer operations with the X5 and X7. By 2030, BMW aims to reduce CO2 emissions on the road and in the supply chain by up to 40 percent. Scheel also continues to emphasize VDA's openness to all technologies.
To simplify things for the customer, Alphabet has incorporated all relevant functions into the Alpha-Guide app, eliminating the need for plastic cards and "paper clutter" for fleets. It's important that digital solutions are customizable and easily integrated into existing corporate structures. It’s also crucial to align the needs of drivers and fleet managers, as well as economic and ecological concerns. Due to the increasing complexity of the variables, detailed consulting is becoming more important. This led to the creation of the consulting branch, which Hildinger initially never thought companies would pay for: Depending on the scope, such meetings quickly add up to three to four hours.
Very important: Digital convenience
According to Hildinger, 25 percent of the Alphabet fleet now has a plug, and customers are increasingly asking about further optimization potential. The depth and complexity of the questions are also increasing, including infrastructure and connectivity issues. "The networking is increasing," Hildinger explains, noting that some mobility managers even want to quickly retrieve a report at 10 PM. It is often the small details like fuel and charging cards, insurance cards, or billing and payment specifics that can be pleasantly digitized.
On the topic of connectivity, Becker from BMW refers to a project with the largest power provider in California, focusing on sector coupling and renewable energy, and avoiding overloading the sensitive US power grid. This means BMW customers get rewarded with lower rates if they charge their cars when overall demand is low, such as at night when cars are mostly parked. This could be further expanded with bidirectional charging.
BMW also collaborated with the University of Rotterdam to ensure that its plug-in hybrids automatically switch to electric mode when nearing city centers, ensuring local emission-free driving. The gamification aspect is very important in fleets, where users can enter playful competition, for example, to achieve the most purely electric kilometers or the lowest consumption. According to Hildinger, ease of use and clear comprehensibility are always important, which also applies to reporting, bringing him back to the keyword "convenience" for mobility managers and users.
Buttermann from Infineon even allows himself to question whether individually assigned vehicles are always necessary, as this could also reduce fleet sizes, just as offices are being converted to open spaces with desk booking – alternating with home office. He advocates for large holistic approaches, well aware that not everyone can or wants to immediately follow suit. To track this and create further incentives, reliable data is also needed. And so, the car policy could be changed, for example, so that incentives are no longer given for all CO2-saving cars, but only for purely electric models, which can also be achieved by quickly lowering the CO2 limit of the fleet. Those who do not want to sacrifice driving pleasure will very quickly end up with a PHEV or an electric car. And still achieve 400 to 600 kilometers of range in SUVs or larger sedans. Accompanying the increased complexity, Hildinger notes that there is also a "great seriousness" in the inquiries, with customers requesting very targeted consultations.
Commercial registrations in the German market are among the drivers
All the discussants unanimously agreed in the end: The change has long been initiated – with an incredible energy that must be utilized together. Buttermann noted, "I believe the tipping point has already been reached." At least at Infineon, where in August 2021 more than 50 percent of the fleet was electrified for the first time, with a continuing upward trend. Becker from BMW also indicates that the numbers are "clear" and points out that the German market and commercial registrations are driving the change. Host Hildinger concludes the discussion by stating, "Sustainability will be central – and it is irreversible!" Nothing more can be added to that.
What does this mean?
It is often argued that industry and politics show great hesitation regarding sustainability and climate change – in practice, the participants in this discussion are at least moving forward with seven-league boots.
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