Is the car industry bold enough to invest in electromobility?

Rudolf Simon

The high cost of lithium ion batteries is a major deterrent for the viability of EVs. In this Automotive IQ exclusive, we interviewed Dr. Rudolf Simon, Technology Manager Automotive & Batteries, with M+W Group to discuss strategies for overcoming existing hurdles to batteries applications in eMobility.

"It is expected that there will be no more than 10 to 20 major suppliers worldwide. Currently we have 30 or 40 more or less successful suppliers for the automotive industry but this will change."

Full Interview

Automotive IQ: What is your background and what is your current role in M+W Group?

Rudolf Simon: I’m a mechanical engineer and I did my PhD in airflow mechanics. My role at M+W, after several years in R&D, managing Innovation and Factory Automation, is now as a technology manager. It’s a kind of CTO for a certain industry and I’m covering the battery manufacturing industry as one of the industries our company is focusing on.

Automotive IQ: In your opinion, what are the most important factors currently holding back large-scale productions of lithium-ion batteries for vehicles?

R.S.: This is a good question. I would say there are two reasons. One is that currently the eMobility applications of batteries are not economically viable for long range. Secondly, the dynamics in the development and the maturation of the industry is very high and so far the motivation to step in now is very low, because everybody expects major changes in the near future, so they have a conservative attitude so far.

On the economic side, electro-mobility is still not self-sustaining, since the batteries are too expensive and the lifetime, charging time and safety still need to be improved. I think the focus will be on the cost of batteries, the specific cost per kilowatt-hour stored energy, which means the manufacturing cost of the battery or the energy density or a combination of both. This is still far from an economic solution. What we expect in the next few years is a major cost per kilowatt-hour decrease because of new materials, which provide better energy density, because of manufacturing scaling effects and experience in the near future, which will push the cost down. In certain applications, although this is still niche market, the economic situation is better in high-frequent use cars. For example, delivery cars, buses, garbage collection trucks that are used like 12 hours per day, going short distances with permanent stop and go. The electric powertrain is ideally suited to this.

Automotive IQ: But they would stay in a very localized area?

R.S.: Localized area, not for long distances, certainly. They can go back to the depot and then recharge or switch the battery and start again. Even today, it pays off. You have an expensive battery but you save a lot of fuel and you have no noise, no pollution in the cities, this helps a lot and the utilization of the battery is very high. You use it 200% per day. If I were driving with my private electric car then I would use maybe 20% per day in average, because I don’t drive it to the end. 20% - that means a factor of 10 in terms of utilization. This is already economically viable today.

Automotive IQ: Interesting, I’ve never heard anyone make the point quite like that. It makes a really good case for using it in the localized area like on buses, on construction equipment and things like that.

R.S.: All this is high-frequency use, the turnover must go on in the battery. If a battery is in use for half an hour and then sits for 23 hours per day, this is not wise to do. You tie up a lot of capital in your car and it’s not used and so other applications are better for this. There are a lot of developments going on in this industry which are not considered as hip. A garbage truck is not attractive to make a nice story about it. But it’s real. It’s business.

Automotive IQ: It is utility vehicles that can easily utilize this then?

R.S.: This is a kind of niche market. It is certainly not a small market, but it’s covered by the current battery makers and suppliers. There’s no shortage in batteries and so far there’s no big demand to be covered. On the other side, what I mentioned earlier, this dynamic phase where we are now, it’s not a mature industry or mature technology for the lithium-ion battery and so there might be a lot of changes. On the material side, the manufacturing processes have some technology developments and there are a lot of developments on the way. It might not be just evolutionary but revolutionary. For example, if the lithium air or lithium sulfur becomes industrialized, that could be a real jump. The investors in the car suppliers and car industries are reluctant. They are doing a lot of research and development, pilot applications and analyses, preparing their facilities and training their people to be ready for this, for the breakthrough but there are not yet many players that say, okay that’s the technology, we’ll now invest a few hundred million Euros for a factory or in this technology. They are still too unsecure.

Automotive IQ: And this gets into the more conservative mindset that you mentioned earlier?

R.S.: Yes, definitely. The car industry is generally conservative. Certainly, several innovative start-ups are doing provocative steps, creating high attention for their company and solutions, but the question is whether they can survive with these ideas. The big guys like General Motors, Volkswagen, and Toyota etc. want to be well prepared for this move and will make big investments in this area, but with a certain delay.

Automotive IQ: In your opinion, what would some of the strategies be that could be adopted in order to make battery manufacturing larger scale at lower cost in order to more fully reach the passenger car segment rather than just remaining in the niche market that it is today?

R.S.: There is an existing technology that works, but it may not be advanced enough to survive in the long run.. If you look at some of the carmakers they are successfully implementing a few electric cars but many hybrid cars, which are much more efficient already. Hybrids don’t have 20 kilowatt-hours batteries, they have only a few kilowatt-hour batteries, but it’s small, saves a lot of energy and makes the car more attractive. There are still concerns for the full EV market because of the cost and weight.
There is a technology that can be used already but it might not be sustainable, you will have to be prepared for changes. Our recommendation is to design a factory in a way that you can replace certain process areas with new technologies, with newly developed or emerging products. There are certain processes which won’t change significantly anyway, such as the formation and test area, that will be the same hardware, whatever material you use. So you can use maybe 80% of the factory for the next technology, maybe another 20 or 30% will have to be replaced in your factory later, but you can already step into the market and can gain market share and can grow and develop with the market technology-wise.

But your question is: what can be done to encourage or convince people to be ready for this step. If you look at the growing fuel prices and environmental standards and on the other side declining battery prices, I think that this will result to big demands certainly for the mid- and long-term, let’s say 2 to 4 years. This is the range in which we expect major growth. These mid-term expectations should be reason and motivation enough to step in now, because you need to be prepared, you need to train your people, you need to gain experience with the technology, with the processes and to build up facilities on the manufacturing side. It takes time to introduce a new product. This needs a minimum of 2 years. As a result, to be a player in 3 or 4 years you need to step in this year or next year.

Automotive IQ: If you could start from scratch, what would your ideal battery manufacturing facility include? What kind of production facilities would you include if you had it to yourself create a factory that you think would last for the long term that would make your company profitable and be on the cutting edge?

R.S.: Let me start from the other end. Currently, most of the major carmakers don't invest in lithium-ion cell manufacturing but battery pack assembly only. They buy the cells from the few big players worldwide, the Samsung, SK, Panasonic/Sanyo, Johnson Controls and so on. They agree with the cell suppliers to ship the cells to Europe or somewhere and then they do the battery pack assembly and the customization for the car, like a BMW or even Volkswagen does currently. Daimler is the only one with their own cell manufacturing in Europe. This is done currently, because battery pack manufacturing facilities will be sustainable with no major technology dependence. There are some adjustments, some new components but these factories are very flexible anyway. But most of the suppliers are still reluctant to invest in full-scope Lithium-ion cell manufacturing.
It is expected that there will be no more than 10 to 20 major suppliers worldwide. Currently we have 30 or 40 more or less successful suppliers for the automotive industry but this will change.

Automotive IQ: Are they consolidating?

: Yes, and to be one of the ten major players that are really the ones that will survive as profitable businesses, they will need this introduction time which has started already.

Automotive IQ: This is the 3 - 4 year scope you mentioned?

R.S.: Yes. The next 12 months with major resources and investments will be big in this area. To be ready for it, not to produce in volume in 18 months, that is not necessary. There is enough supply here to grow into this demand phase.

Automotive IQ: My last question is more of a marketing one related to the recent Boeing scandal in the airline industry. In light of that, how do you think this will affect the electric vehicle industry and what steps could be taken to improve the public image of batteries?

R.S.: Let me put it in a simple way: As an engineer my gut feeling is that this problem can be handled with technical solutions, either electronic control systems, better segmentation inside the battery, by safeguarding, or extinguishing techniques. It can be handled with suitable measures. There will be some restrictions, there will be some cost for this but the consequences will be controlled.
It happened, unfortunately, it was not handled very well and so far it’s caused a multi-million image loss and everybody is talking about it. I was at the trade fair Battery Japan in Tokyo last week and everybody talked about this case. On the other hand, it has made lithium-ion batteries more prominent now and maybe that can help in the long run. It may take some time and how you cope with this is important. I think the Dreamliners, Boeing, and their suppliers should write stories and reports about the countermeasures and solutions.

Automotive IQ: Well, it does make a good story.

R.S.: I don’t want to complain about the attention directed at this case. It helps to promote, even if it’s negative it gets people talking about it and if there’s a solution then everybody says, "I’ve heard of this solution."

Automotive IQ: That’s true. It really put Li batteries on the world stage. It provided one heck of a platform, didn’t it?

R.S.: Actually, yes.


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IQPC Gesellschaft für Management Konferenzen mbH
Adresse: Friedrichstrasse 94, 10117 Berlin
Telefonnummer: 030 20913 -274
Fax: 49 (0) 30 20 913 240
Email Adresse:
Registereintragungen: Amtsgericht Charlottenburg HRB 76720
Umsatzsteuer- Indentifikationsnummer DE210454451
Geschäftsführung: Silke Klaudat, Richard A. Worden, Michael R. Worden