Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?

I have worked in an executive capacity at a leading global automotive OEM for 25 years. My professional experience covers several areas, including corporate strategy, strategic portfolio development, e-transformation, sustainability, CO2 fleet steering, product marketing, and sales. My professional experience encompasses pursuing business strategies in various global markets, including Europe, China, India, North America, South Africa, and South America.

Presently, I own a consulting firm specialising in business and human resources consultancy within the automotive sector.

Q2. How might geopolitical shifts and raw material supply constraints redefine competitive advantages in sustainable vehicle production?

The three main regions – the USA, the EU, and China – are becoming more isolated from each other, a process that is known as "decoupling".
The extraction and processing of critical minerals for electric vehicles (e.g. batteries) is also geographically concentrated, with China leading the way in processing the most critical minerals. This has already been identified as a worrying issue by the West.

Here are some ways to reduce the risks mentioned above:

• The establishment of alternative/resilient supply chains. Instead of "single global sourcing", it is better to use "multiple regional sourcing". This will increase resilience with regard to raw materials, supply chains, and external shocks
• Reducing reliance on primary raw materials by enhancing circular economy frameworks and implementing closed-loop processes, especially for battery recycling
• The overarching objective is to reduce reliance on primary materials and primary energy consumption, thereby also reducing the carbon footprint
• Increasing the proportion of renewable raw materials for car interiors and exterior parts
• Replacing petroleum-based materials, especially plastic, and increasing the proportion of recycled materials
• Diversifying battery chemistry has the potential to enhance supply chain resilience by utilising materials that are both more abundant and geographically more widespread. The performance and safety advantages of these new battery types have the potential to result in cost-effective, smaller, and lighter batteries. This, in turn, could positively influence the carbon footprint. Examples include lithium iron phosphate (LFP) batteries and sodium-ion batteries, as well as solid-state batteries

Q3. What untapped market segments or geographies hold hidden potential for the rapid adoption of sustainable mobility solutions?

The Asia-Pacific region, notably India, is of particular interest. There is significant potential for the provision of compact, affordable EVs for use in megacities, in combination with regenerative power. In highly populated areas, there is a significant presence of educated and wealthy individuals who are more receptive to new sustainable technologies. Government policies and industry plans are aiming for EV sales to account for 30% of the passenger car market by 2030.

Another interesting development is underway in Brazil. Electric vehicle sales surged in the latest year, driven mainly by the increased market share of plug-in hybrids. The latest figures show that electric vehicles account for a 6% market share. Nearly two-thirds of these are plug-in hybrids. Chinese brands like BYD and Great Wall are dominating the market by far and are further investing heavily in the local production of electric vehicles. Some forecasts predict a market share for EV & PHEV up to 60% by 2030, driven mainly by PHEV. The widespread availability of ethanol fuels (produced almost climate-neutral by hydropower) and the common technology of flex-fuel in the ICEs make this the perfect opportunity for appropriate, local, tailored, climate-friendly, and customer-friendly solutions.

In certain regions, such as Europe and the USA, numerous start-ups are developing autonomous, sustainable, and electric mobility solutions. These include minibuses, which are designed for public and private passenger transport in urban areas. Should these projects prove successful on a wide scale, they have the potential to alleviate congestion in megacities and reduce the carbon footprint per capita and per distance travelled.

Q4. How do consumer preferences for sustainable vehicles influence product development and brand positioning strategies in different global markets?

A review of the three major regions – the EU, the USA, and China – clearly demonstrates that environmental awareness has evolved significantly over the last decades and is most advanced in the EU. The primary drivers of this change were the stringent environmental policies of the European Commission and its member states, as well as a shift in the mindset of customers who are more educated and well-informed. All the major OEMs have committed to a sustainability pledge to help mitigate climate change, in line with the goals of the Paris Climate Conference. A competition was initiated among leading automotive brands to determine which would achieve climate neutrality first and which would become the first EV-only company. In light of the ongoing crisis in the European automotive industry, the stringency of some of these pledges may have been somewhat compromised. However, it is crucial to emphasize that sustainability remains a fundamental aspect of brand development and brand perception.

It is generally accepted that customers in the US are less environmentally aware than their European counterparts. However, regional differences are evident. For example, in California, state policies and the presence of wealthy consumers with a strong environmental ethos have stimulated demand for sustainable vehicles. This has previously resulted in considerable interest in the Toyota Prius and has further fueled the more recent hype surrounding Tesla.

There is a general reluctance to pay a premium price for more sustainable cars. It is clear that younger customers have higher environmental expectations. It is also vital to avoid social controversies within the supply chain, for example, in the mining of cobalt and lithium.
Sustainability strategy could become a key differentiating factor and competitive advantage, especially for OEMs in Europe.

Q5. What are the most impactful product innovations that drive measurable CO2 reductions?

The transition from vehicles with Internal Combustion Engines (ICE) to electrified cars represents the most significant opportunity for reducing CO2 emissions. 

Batteries are pivotal to the transition away from fossil fuels and the acceleration of the energy transition. Electric vehicles (EV), plug-in-hybrids (PHEV), full and mild hybrids, and even range extenders are very efficient and cost-effective solutions for reducing the carbon footprint of passenger cars. And EV will be further optimized by smaller and lighter batteries with increased performance in terms of charging time and mileage, and also by improved thermal management.

In the future, there will be further developments in the field of ICE, including engine downsizing and turbocharging, as well as the adoption of modern automatic transmissions, such as dual-clutch transmissions. Reducing overall weight and enhancing aerodynamics are, of course, well-known methods of improving the carbon footprint of cars.

There has been some ongoing discussion about the benefits of using hydrogen as an energy source for passenger cars, mainly in the form of fuel cells. The restricted field test, conducted by BMW, Toyota, and Hyundai with limited fleets, produced unsatisfactory results. Furthermore, unresolved issues with the general strategy and inherent disadvantages have led to the conclusion that OEMs are no longer pursuing this path in the passenger car segment. It is still an option for commercial and heavy-duty vehicles.

Q6. What emerging materials and manufacturing processes are revolutionizing vehicle weight reduction without compromising safety?

Mega casting refers to the production of large die-cast components from a single casting. In mega casting, a large number of parts (50-100) are replaced by a single, large casting. High CO2 savings compared to car bodies consisting of several individual components, thanks to the elimination of individual production and welding steps, as well as inductive melting and the use of renewable electricity. The component is often made of aluminum instead of steel. At the same time, ensuring high recycling rates in the process can increase CO2 savings compared to conventional steel manufacturing processes by up to 70%. The process has so far been used by Tesla (introduced with the Model Y) and by Volvo to manufacture entire assemblies (front and rear ends). Other OEMs, such as Volkswagen and Toyota, have also presented studies on this topic.

For EV

• Closed-loop supply chains for battery materials with recycling rates exceeding 90% - recycling of lithium, cobalt, and nickel for reuse in new cells
• Smaller, more affordable EVs are made available to a broader range of customers
• Battery chemistry diversification

Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?

• What long-term sustainability strategy are you pursuing?
• How are environmental considerations incorporated into your daily decision-making process?
• In what manner do teams participate at all levels, and how can they contribute to finding sustainable solutions?
• What operational measures (KPIs, decision-making processes, etc.) do you use to ensure the optimum balance between economic and environmental sustainability?
• What additional customer value do you generate as a result?
• What are the implications for your market positioning and your competitive advantage?
• What additional business opportunities arise from that, and how can they be capitalized upon?