Archiv der Kategorie: English

Distorted view of the E-mobility

In August 1888 Bertha Benz made the first cross-country trip from Mannheim to Pforzheim with a fuel-driven car. At the first pit stop of history she got her gasoline (at that time Ligorin) at the city pharmacy of Wiesloch. 1909 the first Germany-wide listing of approx. 2500 gas stations (among other shops drugstores, grocers, and restaurants) was published. One hundred years later the number of German gas stations stabilized at almost 15,000 gas stations after more than twice as many gas stations in the 60s and 70s. With the electrical mobility the departure from the combustion-based individual traffic begins, although in modest steps. Surprisingly our political representatives only see the necessity of investing in bonuses and fiscal privileges with the purchase of electric cars, instead of taking care of creating the basic conditions for the required infrastructure. This distorted view of the E-mobility endangers the change to electrical traffic within the foreseeable future.

Emobilityplugs

Currently approx. 44 million passenger cars (passenger car), 4 million motorcycles and 3 million trucks (TRUCK) are registered in Germany. There should be 1 million by 2020 and 6 million electric vehicles by 2030 on the road. However, this means that by then there are still over 80% of the vehicles with classical combustion engines. How to realize the conversion more quickly was shown by China. In the urban centers the classical gasoline-based two-stroke engines were forbidden. Until 2025 they have to disappear completely. Currently they already have 200 millions electro scooters running. In Germany the context of the electrical mobility is yet not sufficiently considered. The following examples show important core topics.

  • Battery power
    An important pre-requisite for the citizens is the range of the electric vehicles, although they drive only 40 km on average per day. The range is determined by the capacity of the battery. A consumption analysis with more than 240,000 vehicles uncovered in Denmark that the average consumption is about 183 Wh/km (46% more than indicated). Battery capacities reach from 60 to 90 kWh. This is enough for 150 to 450 km. Traffic jams are counter productive in this context, since the more slowly than 50 km/h vehicles drive, the more capacity is needed. The best efficiency was at an outside temperature of 14 degrees Celsius.
  • Charging infrastructure
    The Alpha and Omega is the possibility to charge the battery. On average German drivers drive 80 minutes per day. That means that the car is parking for nearly 23 hours. Sufficient time for charging, if a suitable charging station is available. Private garages can be equipped quickly through personal initiatives. The 1.1 million parking lots in public areas (“On Street”) and the 2.6 million toll parking spaces in non-public areas (“Off Street”) need charging stations, in order to use any downtime. There are many arguments to reuse the existing supply places. Compared with today’s four gasoline pumps at a small gas station, in the future it takes at least 8 charging possibilities due to the duration of the charging procedure. It is a project of public interest to calculate the real costs to create a reasonable charging infrastructure. In any case the appropriate taps cost billions of Euros.
  • Charging interface
    Obviously, we did not learn anything from the times of the format war of the video cassette systems. Instead of agreeing on an interface, different suppliers bet on the fact that their system prevails. And others are waiting to jump on the train of the survivor. Will it be the type-1-plug, the type-2-plug, the Combo plug, the CHAdeMO plug or the Tesla Supercharger? Or will there be further alternatives? Thus, all are facing a chaos of plugs that will have a negative impact on the acceptance.
  • Battery recycling
    The heaviest issue for the electric car is the battery. With a weight of over 300 kg and a lifetime of 15 years the question arises, how the batteries will be disposed in the future. Hopefully the producers will take care, since this would ensure that they develop recyclable batteries. It would be good, if the politicians do not oversleep to take care of a final disposal like they did with the nuclear power.
  • New business models
    Not to forget the current business models of the gas stations. They are today located at traffic-wise ideal locations and operate with different business forms – from gas stations that belong to the oil companies, to franchise, to independent gas stations. Or is this even a completely new market segment for „The three from the charging station “? Will the existing models be extended or do the electricity companies push into the market? Considering the required connectivity to the electricity grid, basic measures are needed that the society must jointly take over, in order to realize a complete coverage all over Germany – and not fail as with the postal services, the telephone network or the train system.

Bottom line: With the distorted view of the electric cars and the subsidization of purchases the government proved that it does not yet understands the new system of the electric mobility. Without the above precautions for an E Mobility platform the past deployment of the tax funds did not foster this change. It would be important to support the manufacturers of good batteries, to ensure a ubiquitous charging infrastructure, the foster of a uniform charging interface, to ensure ecological recycling of the batteries as well as to support new business models for charge vendors. As soon as the responsible persons worry about the platform of the electric mobility, the distorted view of the E-mobility will disappear.

Cooperative Metamorphosis

Henry Ford introduced that assembly-line. He was inspired by Taylorism and also made efforts, to get all levels of value creation under his control. For this purpose his enterprise had temporarily one hundred percent depth of production – plantations for rubber, glass factories, steel plants and power stations for the required energy. The automotive depth of production is on average approx. 20 percent. Thousands of suppliers share three quarters of the value of a car, from simple rotary switch to complicated injection or navigation systems.

Now, for the first time, this decrease of production depth has to be paid for. It took the small supplier’s years, but now they seem to be on eye level with those, who ruled the prices for years with their market power. At VW the production lines stopped, because obviously purchasing gambled away. Are we standing in front of a cooperative metamorphosis between manufacturers and suppliers?

Monopolist

After VW sound the bell for the last transformation, when they hired José Ignacio Lopéz and brought suppliers a new role, VW can not do other than delivering a reorientation concerning the interdependence between manufacturers and suppliers. The stop of Golf production in Wolfsburg that presumably creates for 20,000 employees short-time work is the wake-up call for the entire industry. The following mechanisms burdened the harmonious cooperation over the years.

  • Adjustment of the supplier portfolio
    After the internal improvement efforts and due to the low depth of production, there are not so many opportunities for reducing the expenses. All that remains is reducing the costs for the externally delegated 80 percent. In the absence of monetary incentives, the outside vendors could only be provided a benefit with the privilege of being part of the supplier circle. This means sometimes that they can participate to bid and to receive the traditional title purveyor to the court, as so-called strategic suppliers.
  • New pricing models
    Only the enormous quantities offer a large lever that result in favorable conditions and prices. The huge numbers of items are the incentive for the suppliers. Simultaneously the timely and variant-oriented deliveries require further resources that additionally diminish the yield.
  • Exhausted terms of payment
    The payments are not aligned to the need that the suppliers receive their money quickly, but they are based on the financial reporting dates. Consequently, the supplier carries the expenditure of the financing. This means that we talk about six months of prefinancing in the case of the procurement of material. However, there is no payment after delivery, but manufacturers wait, based on agreed payment targets for over three additional months to eventually pay their dues. The bridging of these time spans has to reproach the supplier – beside the raw materials, the wages and salaries, the storekeeping, the operation of the infrastructure etc.
  • New forms of negotiation
    The personal negotiations in private that were the basis for trusting cooperation, are replaced by formal tender procedures and electronic forms of negotiation. The personal contact is removed from the businesses. This leads to quasi-automatic decisions based on good value for the money and general quality standards without personal impressions.
  • One-sided contract terminations
    In many purchase departments still prevails the illusion to sit at the longer lever, since there are world-wide enormous amounts at suppliers, who seem to be ready to deliver at lower costs. This results quickly in the fact that a supplier, who falls in disgrace, will be eliminated in the blink of an eye.
  • Risk delegation to the suppliers
    The upstream procurement of material and the stand-by resources increase the risk unilaterally to the disadvantage of the suppliers. If a contract expires or the manufacturer terminates a running contract, this can quickly lead to insolvency.

The possibilities to reduce the costs at the expense of the suppliers reached their limits. Also suppliers use outsourcing into country with low-wages. However, considering the narrow margins and the interdependence, new models for cooperation have to be found. The required exchange of information must take place mutually and count on Win-Win. In the future it will be essential that the buyers will be in personal contact with the suppliers, in order to get a local impression and to get in such a way to realistic estimates. The persistent compliance that was introduced particularly in the interest of the shareholders did not prevent abuse by particular people and harms cooperation.

Bottom line: Interaction between manufacturers and suppliers must be brought to a new level of confidence and joint benefit. The distribution of the value creation needs a reorientation in the economy and even for the politicians, who nowadays stand up for VW although they silently sat out the precarious situation of the suppliers for years. At the end of this phase the industry will be empowered, since the current inclination will be balanced out. This metamorphosis will again weld together manufacturers and suppliers, since the one cannot without the others.