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Metzler meets Fraunhofer - 3.3.2020

Fraunhofer Interview: “Mobility“

Until now, heavy and expensive batteries, short range and long charging times have weighed on the success of electric cars, buses and commercial vehicles. When it comes to autonomous driving, the gap between theory and practice is still large. Energy turnaround and mobility – how can they be combined? This was the topic of discussion between Prof. Dr. Matthias Klingner, Director of the Fraunhofer Institute for Transportation and Infrastructure Systems IVI, and Jürgen Pieper, Director of Research and Senior Advisor responsible for the German auto sector at Metzler Capital Markets.

Pieper: E-mobility brings a great deal of environmental benefit to our streets. With e-vehicles, driving is practically emission-free, except for subtle signs of wear and tear on the tires. However, the electricity for e-vehicles is not yet generated 100% from renewable sources. Professor Klingner, how do you think an energy turnaround and e-mobility can best be combined?

Klingner: For both, the key technology will not be battery storage systems, but hydrogen technologies in the form of controllable high-performance electrolyzers in the power system, fuel cells in the vehicles and synthetic fuels for combustion motors.

Pieper: So e-mobility is just a transitional technology?

Klingner: About ten years ago, we experienced the euphoria but also the abrupt end to a "hydrogen age". I’m sure a renaissance of hydrogen technologies is imminent. The German government is currently setting the stage for this.

Pieper: But the overall energy performance of a fuel cell car is currently the worst of all drive systems. This is probably the main reason why manufacturers are focusing clearly on e-cars. Tesla positioned itself as an e-mobility player from the outset, and established manufacturers are now following suit – especially Volkswagen. Despite the shift towards electric cars in Volkswagen’s business model, almost half of its R&D funds are still being invested in optimization of conventional drive technologies.

Klingner: I believe decisions like this – to completely restructure the business model – are primarily political in nature and extremely risky in economic terms. For the Chinese market, where demand and consumer behavior are different from Europe and North America, the decision may be appropriate. In the highly industrialized countries of Europe and America, however, there won’t be an e-mobility breakthrough any time soon.

Pieper: If you consider the absolute amounts invested, Volkswagen is taking a particularly great risk. But now more than ever, I think we can say “no risk, no gains” – in other words, waiting it out is probably the greatest risk. The problem with e-mobility is still the batteries: too expensive, too heavy, short range and long charging times.

Klingner: In recent years, advancements in battery research have fallen way short of what had been hoped for, especially considering the immense research investments.

Pieper: In many respects, the e-car still performs significantly worse than the traditional "burner". But there have been major improvements, for example with range almost doubling within four or five years.

Klingner: That said, a battery can still store only a small fraction of the energy in a liter of diesel. Providing a nationwide charging infrastructure for tens of millions of vehicles is one of the core problems of shifting to e-mobility. Expansion of the infrastructure will certainly not end with millions of sockets at the roadside. Our institute is thus currently working on fast-charging technologies that can transfer enough traction power for 400–600 km in just a few minutes. If these technologies gain acceptance in the next few years, our current filling stations will have high-current charging points instead of gas pumps in ten years and more.

Pieper: Many new products and services related to e-cars are also likely to pop up. I therefore believe that the 410,000 jobs that the experts on the "Future of Mobility" platform calculate could be lost in a worst-case scenario due to upheaval in the auto industry is too many. Nonetheless, job loss will be substantial.

Klingner: In connection with the completely exaggerated diesel discussions in Germany, our institute has pointed out this foreseeable development with regard to possible job loss. Now, many non-economic factors have added to the dilemma, such as the trade war, Britain's withdrawal from the European Union or even the current monetary policy. I don’t understand - neither socially nor economically - why Germany offers so little protection for one of its key industrial pillars.

Pieper: The potentially shorter production cycles for cars could also have a positive impact on employment.

Klingner: Furthermore, the International Motor Show IAA is facing a crisis. In “car country Germany”, the IAA no longer enjoys the status and charisma that it had perhaps only a few years ago.

Pieper: At the moment the CES - the Consumer Electronics Show in Las Vegas - is more interesting and cooler, but it doesn't have to stay that way. Everyone has heard the wake-up call by now, including the German Association of the Automotive Industry VDA as the host of the IAA and the trade fair companies as possible organizers. The decline of the IAA is a clear sign of the inertia of the industry after being spoiled by many years of success. And there will certainly be major changes with more and more mobility concepts likely to coexist. Local public transport will play an important role; whether it becomes even more important than it is today can probably not be said in general as this depends on the capacity and willingness of the local authorities or country concerned. Take Deutsche Bahn, for example: whether it really increases in importance - which, in theory, almost everyone agrees with - also depends very much on its own efficiency. The level already achieved is anything but a shining badge of progress.

Klingner: Going forward, there will also be new mobility models with attractive alternatives to the car. Micro-mobility with e-bikes and other innovative vehicle concepts will play just as much a role as digital platforms. Uber and Lyft are good international examples of how to build attractive value chains on new mobility concepts.

Pieper: However, car sharing is a different story. It has recently fallen far short of expectations for most parties involved, especially economically. Owning your own car is probably much more valued than many people like to admit. The infrastructure for new mobility concepts, including autonomous driving, is still very much lacking.

Klingner: Developing communication infrastructure for cooperative and autonomous driving is less complicated than improving charging infrastructure. The 5G mobile wireless standard currently being introduced already provides all the essential technological prerequisites for this. The fact that we have to wait a while longer to experience truly self-driving cars on our roads is another matter.

Pieper: Another question is whether "100% autonomous driving" - or "being driven" - is at all socially desired and desirable. To what extent do we really want to hand our personal autonomy over to programmers? The discussion is just beginning. Six to eight years from now, the industry is likely to have implemented an "autopilot", i.e. level 3 or 4 of autonomous driving.

Klingner: Driverless vehicles must be subject to the highest safety requirements and these are currently far from being met.

Pieper: Issues of data sovereignty and data protection come on top. Mobility data is precious. It’s not yet clear who ultimately holds the power - including the economic power - in these matters. The industry aims to catch up with the data giants in terms of data management. Whether or not it will succeed is very questionable.

Klingner: Data sovereignty is an issue not only for networked vehicles, but also in almost all areas of digital transformation. One of the largest cross-institutional research topics at Fraunhofer Institutes centers around the development of the "International Data Space" where each user is guaranteed full sovereignty over "who does what with his/her data".

Metzler meets Fraunhofer – Prof. Matthias Klinger

In 2005, Prof. Dr. Matthias Klingner became Director of the Fraunhofer Institute for Transportation and Infrastructure Systems IVI in Dresden. Traffic-related R&D at the institute covers a wide range of topics, from vehicle and drive technologies to intelligent transport systems to scheduling, logistics and civil protection. Prior to this, Prof. Klingner was initially Head of the department Transport System Engineering and later headed the department Transport, Energy Systems and Environment. From 1992 to 2000, he was Group Manager of Hybrid Systems. Prof. Klingner holds a doctorate in information engineering from the Dresden University of Technology.

Metzler meets Fraunhofer – Jürgen Pieper

Jürgen Pieper joined Metzler in 1999. In 2017, he became Director of Research and Senior Advisor in our core business area Capital Markets where he is responsible for analyzing the German automobile sector. Prior to that, he was Head of Research for three years and from 2002 to 2014, he was Co-Head of Equity Research. Before joining Metzler, Mr. Pieper worked for 15 years as an analyst with Deutsche Morgan Grenfell where he was designated pan-European transportation analyst and part of the pan-European automotive team. He was also responsible for covering mid caps. Mr. Pieper studied physics in Cologne and Bonn and holds a degree in business administration from the University of Applied Sciences in Bielefeld, Germany.

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