VDA Technical Congress 2022: How Do We Successfully Achieve the Drive Transition?

Still, there is a commitment to technological openness – albeit differentiated technological openness. The panel was opened by Daniela Kluckert, Parliamentary State Secretary at the Federal Ministry of Digital Affairs and Transport (BMDV).

She also expressed her concern regarding the Ukraine crisis: Just two weeks ago, the focus was on the joy of inventing and tackling challenges. Today, other issues dominate, and we have been "thrown out of our comfort zone in which we still existed despite Corona," as Kluckert notes.

No invention claims eternal validity

Nevertheless, there are so many technologies in the land of inventors that want to be heard and tested, so that the best ones prevail. And here one should think "out of the box" and see where cost advantages arise today. Kluckert is well aware that today's inventions will not have universal validity forever: accordingly, inventions will be used until something better comes along. That's why electric cars disappeared from the 1910s, as the energy density of fuels remains unmatched to this day. However, they bring disadvantages and the framework conditions cannot be ignored. In addition, the new topic of supply security has now emerged.

This was accompanied by the political discussion of the Fit-for-55 package, which, according to Kluckert, involved intense negotiations. Among the questions was how to best tackle massive investments for fast-charging infrastructure? The fact is: By 2045, Germany must operate in a climate-neutral way. This requires political decisions to set the right framework conditions, not too early and not too late. This demands a lot of finesse, as many path-dependent decisions need to be made. Kluckert then went through energy carriers one by one.

A realistic view of hydrogen: Preferably in airplanes and maritime shipping

She started with gas drives. In this context, biogas is to be preferred as a form of free energy for electricity use. She examined the topic of fuel cells or hydrogen quite pragmatically: Producing hydrogen consumes a lot of energy, but it can be produced worldwide. Kluckert also sees fuel cells or hydrogen more in aviation and shipping. Because here the volume makes the difference: From a certain size, hydrogen becomes economically usable, which the BMDV supports extensively.

Next, she discussed e-fuels derived from hydrogen. She had a conversation with a refinery operator who wants to invest massively in this area. Though conversion costs are high, you end up with a great, storable product that can also supply the existing stock and reduce CO2 emissions: "I am convinced that e-fuels will find their place," Kluckert assured.

There is no 'business as usual'

She concluded that we too must change, and there is no 'business as usual': "Good policy supports all citizens. We must make efficient drives and means of transport even more efficient – and do so even faster." According to Kluckert, the coming decade will also determine the success of the transformation.

The drive of the future has not yet been invented

Matthias Zink, CEO Automotive Technologies at Schaeffler AG, also advocated for technological openness. He explained: "Technological openness is key for Schaeffler because it has always been our stance; currently, we are active in ten sectors." Schaeffler has always had to reinvent itself to some extent and therefore still exists today. They've always worked with aggressive scenarios. The drive of the future? "For me, it hasn't been invented yet," was Zink's clear response.

Regarding the transformation, he advised actively engaging with new market players. This also required modernizing one's own company. A previously traditional company could thus also be very successful with new players. Communication might not always be easy, but at the very least, you get new input and ideas. On this subject, Zink went far out on a limb:

"Personally, I don't believe the steering wheel will still be the right control element in 20 years."

To implement this, Schaeffler has not differentiated between the old and the new world but sees the proven as the foundation and the new. This also includes the combustion engine in the medium term. "We will have to bring Euro 7," he explained, citing the eRocker system or the electric camshaft adjuster – transferring it to industrial robots.

Schaeffler originated from needle bearings – and still develops ball bearings today

Innovation is still possible even in a plain ball bearing. With anti-whip discs and thermal management, there are new approaches. This leads him to battery electric technology: There are huge opportunities for efficiency improvements in the "comfortable temperatures" of battery and drive management. Before the congress, he visited BVV with 140 e-buses.

But Zink also sees great innovation potential in fuel cells. They are currently investing heavily in bipolar plate production in Herzogenaurach, and for industrial complexes like hardening plants in factories, hydrogen is "indispensable." Zink concluded:

"For me, technological openness and focus are not a contradiction."

Therefore, they will continue to produce both individual components and entire systems. He also believes:

"We all need to be willing to change."

He answered a question from the audience about Schaeffler's stance on plug-ins with differentiation:

"Do we support heavy SUVs for long-distance travel: No. However, if plug-in hybrids are operated correctly and the driving profiles fit, then yes."

Another interesting question was about "insourcing" by OEMs: He sees increased insourcing by OEMs, but not to a dramatic extent. One can observe that many OEMs today are dealing with battery and cell manufacturing. There could be some shifts, but according to Zink, less so in mechanics and mechatronics.

CATL starts its battery cell production at the Erfurter Kreuz

Matthias Zentgraf, President for European Business at CATL, was interesting. The company, founded in 2011, was the largest Li-Io battery cell manufacturer for the fifth year in a row, driven by its home market China. By 2030, he expects 37 million electric cars in China, the USA, and Canada, as well as Europe, with a battery demand of at least 1.5 terawatt-hours.

"We are now talking about terafactories." To meet the demand, 70 gigafactories would be needed. CATL currently has 10 production sites; Erfurt is the first plant outside China. During its planning in 2018, there were two large-scale producers in Poland, Hungary, and a smaller factory in the UK. In July 2018, the decision was made in favor of Germany, but now due to energy costs, he would prefer France: There, industrial electricity costs four instead of twenty cents per kilowatt-hour! However, CATL is not the only one coming to Europe: more than 30 gigafactories are now planned. Zentgraf is pleased:

"As recently as 2018, it was said that battery cell production in Europe was not economically feasible."

CATL took over the former Solarworld complex at Erfurter Kreuz and plans to start module assembly in the second half of the year. Very important in China: The canteen! A complex is being built on a greenfield site for this purpose: Module assembling takes place in G1, cell production in G2. Cleanliness is paramount, and they rely on an intelligent manufacturing system. CATL is investing two billion euros in the first step for 14 to 18 GWh. Founder Robin Zeng earned money, among other things, by having 60% of all Apple batteries come from CATL.

Lithium-ion batteries and ideas for the future

For the future, CATL, according to Zentgraf, has many ideas: Fewer components, more energy density, cell to pack, ideally without battery housing. Cooling is also still a topic with potential. CATL is also reducing its CO2 footprint. In China, the battery recovery rate is now over 95%, partly due to the expensive raw materials, which Zentgraf likely referred to vehicle batteries. This is feasible and will also come to Europe.

What are the next steps? Staff needs to be recruited now, initially involving many Chinese know-how carriers in the plant. Then cell production can start in the second half of 2022 with imported materials. A local supplier network then needs to be established.

He answered the question about solid-state technology clearly: It is not yet implementable for mass production. They are working on it in the lab:

"Solid state will come, but it will be the end of this decade or the beginning of the next."

Energy self-sufficiency in Europe? Not likely!

The panel was concluded by Adrian Willig, CEO of en2x, the business association for fuels and energy. He sees entirely new forms of cooperation in the future, citing examples such as a wind turbine manufacturer collaborating with a refinery and a cement factory working with an electrolyzer. He again advocated for alternative fuels to achieve CO2 neutrality in existing systems. Willig still sees a role for fuels in heavy vehicles. He warned that the war in Ukraine will lead to a lasting change in energy supply. The supply structures will also diversify. Nonetheless, he firmly believes:

“We will not become energy self-sufficient!”

In his opinion, energy imports will still be necessary, although they will no longer be fossil fuels. He briefly summarized: 60 percent of mineral oils currently go towards transportation, 20 percent towards heating, and 20 percent are raw products. In transportation, 83 percent is currently used by cars, buses, and trucks, 15 percent by airplanes, and 2 percent by ships. For airplanes and shipping, he agrees with Kluckert that renewable fuels will be needed in the long term. He stressed the need for:

A shift in transportation modes and propulsion systems. By 2030, we will need a 22% share of alternative fuels and must pull out all the stops if we want to be climate-neutral by then:

“It's like with an organ: if you want a good sound, you have to pull all the stops.”

They want to participate in the VDA-required charging summit: gas stations are open 24/7, have covered areas for tenders, and are familiar with payment systems. Ensuring fair competition is important. Hydrogen expansion is also continuing: Jet plans to install around 250 hydrogen filling stations in Germany, Austria, and Denmark by 2025. However, they also need the vehicles. By March 2022, 91 H2 stations had been opened. According to Willig, alternative fuels will be needed to decarbonize the existing fleet. In this regard, he also agrees with Kluckert. He called for energy taxation that is based on CO2 values:

“A CO2-neutral fuel cannot be taxed as high as a fossil fuel. This would also help in creating a business case.”

Regarding Power 2 X, he is bothered by the argument of efficiency losses. This debate misses the point that, where there is a lot of sun and wind available, the fuels can be produced CO2-neutrally. It is also clear to him: Electrification will be dominant.

“But if we want to achieve climate goals, we need additional alternatives.”

What does this mean?

The panel on the future of energy supply was largely in agreement: the entire transport sector will not be able to switch to batteries, and alternative fuels and hydrogen will be needed especially for aviation, maritime transport, and the transition on land including existing vehicles.