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Schaeffler CEO on the future of electric vehicles in Asia

Source:Int'l Metalworking News for Asia     Date:2021-10-06
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By: Kathryn Gerardino-Elagio


Schaeffler CEO.jpg

Mr. Dharmesh Arora, APAC CEO

The increasing environmental and sustainability awareness issues accompanied by growing interest among consumers in sustainable vehicles, such as electric vehicles (EVs) have seen the automotive industry moving towards zero emission vehicles and carbon neutral manufacturing.


Global automotive and industrial supplier, Schaeffler has seen rise in demand for e-Mobility and EVs. In light of this, Mr. Dharmesh Arora, APAC CEO, shared with International Metalworking News for Asia his view on Asia Pacific’s (APAC) e-mobility future and how to strengthen EV technology.


Mass-market readiness for EV adoption in APAC

According to an industry report by Bloomberg NEF, passenger EV sales are expected to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 20251 on a global scale.


Dharmesh explained,"Our own forecast predicts a 30:40:30 scenario by 2030 for BEVs, HEVs and ICE engines, respectively. Just a year ago, this forecast looked rather ambitious but now very realistic. While this forecast is very realistic on a global level, we must realise that regional scenarios differ. China and Europe will be the dominant passenger EV markets till 2025. Driven by Europe's vehicle CO2 regulations, and China's fuel economy regulations and the new-energy-vehicle credit system. Policy changes in the U.S. will have limited impact in 2021 but will start to increase adoption in 2022 and beyond, as more compelling local models come to market, particularity in the pick-up truck segment1. Closer home, in the APAC region, we continue to see the intent and advance level interest from various countries."


In Japan, Dharmesh noted that they see an increasing adoption of HEVs on the value proposition in terms of efficiency and environment friendly; while in EVs they start to see the ecosystem development backed by government’s carbon neutral target and subsidy programs. Although choice of EVs stay very limited for now, almost all OEMs announced new EV development programs.


Dharmesh expressed that in spite of the fact that Korea is ahead with quite a few EV models on the market, including a strong adoption for eco-friendly vehicles, backed by policy and subsidies, the entire ecosystem has still a way to go.


India and some countries in South East Asia are also now showing strong intent and policy push, according to him. This has made many OEMs announce new EV development programs; however, current sales and EV options remain largely limited.


"In India, we are seeing a rather keen interest in 2/3W electrification and we expect this trend to continue in terms of new OEM players, models and adoption," Dharmesh added. He further added, "Yes, EV adoption has gained momentum in the last year. But for that to spread wide and deep, more governmental support would be necessary - building publicly accessible EV charging networks and bridging the initial acquisition cost for consumers."


Current perceptions on purchase of EVs

Today, consumers are increasingly aware of the options and available choices that suit their requirement. While volatility of gas prices is a big driver, the topic of climate change is becoming an equally important consideration on how consumers approach electric vehicles now.


Therefore, interest in alternative powertrain technology, such as EV technology continue to expand in most markets as fewer people want traditional internal combustion engines (ICE) in their next vehicle. At the same time, EVs come with their own set of challenges – be it charging infrastructure, range anxiety or lifecycle management. The challenges cannot be solved in the short term, and this certainly opens up avenues for hybrid and even other alternate technologies like Hydrogen or Bio/synthetic fuels.


Dharmesh said, "We are already seeing interest around Hydrogen in a big way in markets like Japan, Korea and India, particularly for commercial vehicle applications. Policy makers are evaluating all possible alternatives to ensure we are able to keep up with the climate change target of less than 2 degrees."


"Consumers want a cost competitive alternative that is clean and efficient, policy makers and OEMs need to come together to solve the infrastructure challenges, and technology suppliers like Schaeffler are ready to support that transition with the right products across the energy chain," he stated.


When asked how prepared OEMs and their dealer outlets are to sell EVs, Dharmesh remarked that OEMs views are aligned with the industry that EVs are the future.


"What’s important is to manage the transition in an effective manner that minimises negative disruptions. There are installed capacities for ICE and employment that needs to be reconfigured and employees need to be re-skilled. The sales and aftersales channels must reconfigure to the new requirements for a less maintenance intensive future. The support infrastructures from gas stations to insurance companies should come to terms of the change. But what about the source of energy? If that is still primarily coming from polluting coal burning power stations, it doesn’t do any good to generate more of it to charge electric cars. These are massive changes, not only from cost and capital perspective but also from the social impact they bring," he declared.


OEMs to component manufacturers are all creating competencies and capacities to develop and deliver EVproducts. But it is also well known that this requires tremendous capital, while not generating positive returns in the short term.


Dharmesh expressed, "If we expect companies to continue investing in these new capabilities, they must have a solid current conventional business that generates enough money for them. This transition must be managed well, if we want to sustain this change to happen."


"And for that we invest in developing electric motors, 2in1 E-axles, 3in1 E-axles, hybridization solutions, power electronics, sensorised components, thermal management systems and so on, all necessary ingredients for E-Mobility. At the same time, we see great value in further optimising ICE with the ultimate goal of reducing the carbon footprint. Delivering complete basket of solutions is very critical," he commented.


EV adoption

According to a report by Moorhouse Consulting, battery costs have decreased by 85% in the last 10 years and if that trend continues throughout the next decade, the costs between EVs and fossil-fuel powered cars will eventually be parity.2


Dharmesh believed that bringing costs down would allow more receptivity for rapid and large-scale EV adoption. Modularity of solutions would help bring down the overall cost of new developments in the entire value chain.


Sustainability and carbon neutrality

The discussion around sustainability is indeed a holistic one considering Life Cycle Assessment (LCA), which extends right from raw material manufacturing to vehicle scrapping after running

through the lifetime.


He observed, "There is not “one solution which fits all and that’s why we see in the short to mid-term regional, a mix in EV adoption. For OEMs who are operating globally, they need to invest in new EV platforms and at the same time also improve their current ICE and hybrids. In the long term, we expect most countries will transit towards renewable energy sources and OEMs working in minimising LCA emission."


Covid19 has changed the way we look at the world. Every decision is looked at through that lens. At the same time, there is a clear trend towards decarbonization. The society has rediscovered the values of health and wellbeing. The negative impact from unsustainable economic activities have received renewed attention. The trend drives quicker technological and business model transformation for industries in many sectors, certainly true for automotive industry.


"In my opinion, there are three things that will make the difference in such a scenario – Agility, Transparency and Sustainability, with the help of Digitalisation. Markets will be more volatile in the future than in the past - agile and flexible supply chains are decisive factors here. Resilience in such volatile environment requires organisations to quickly adapt to the changing environment. It will be all about de-risking the business models without compromising on quality and service level. Virtual ecosystems will play a critical role but the control measures need to spread out into the entire value chain enabling optimised performance. Organisations need to come up with robust business continuity strategies to thrive in the ever-changing market. Part of this strategy is instantaneous access to critical business intelligence data. Cloud technology provides a platform that enables access to data, anytime, anywhere, and from any device," he commented.


Lastly, Dharmesh said, "OEMs and dealers have to work together with governments/authorities units to formulate a better regulatory framework that would welcome a futuristic e-mobility. Strengthening the EV technology to allow capabilities, such as speed-, auto- and self-charging capabilities to take place."


1 https://about.bnef.com/electric-vehicle-outlook/

2 https://solaredition.com/lithium-ion-battery-price-decreased-by-85-during-the-past-decade/


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