Podcast

Green Transformation in the Automotive Industry: “The Clock is Ticking.”

Podcast

May 24, 2022 | Sustainability

Social and political pressure on the automotive industry to finally make a leap forward with regards to green transformation is growing. But established manufacturers – long-time pioneers for other industrial companies in many fields – are still lagging behind in development, as the Staufen study “Green Transformation in the Automotive Industry” shows. Automotive expert Dr. Thomas Buchholz explains why this is the case in an interview with Staufen Consultant Dr. Björn Falk.

Sustainability and green transformation through electromobility are big topics in the automotive industry. German manufacturers are also working hard to make progress here. But so far, they have not been able to close the gap with the pioneers in the industry, explains Dr. Thomas Buchholz: “The signs of the times have been recognized, but it takes a certain amount of time to implement things.”

E-mobility: Automobile manufacturers must step up in the volume segment

As with all innovations, the industry began first in the premium segment, where price levels are better, he said. In the volume segment, i.e. cars in the Golf class and below, the industry and its structures have long struggled to remain competitive. The reason: “In the start-up industry, you can start completely from scratch and develop other concepts,” said Buchholz.

Established manufacturers, on the other hand, used traditional platforms and installed a battery and an electric motor, which was not ideal: “Now models are emerging that have been completely redeveloped as electric vehicles, so that they can then really exploit the advantages.”

**Dr. Thomas Buchholz**
Senior Advisor, STAUFEN.AG

After completing his master’s degree at Yale University, the engineer with a doctorate in engineering held various top management positions at listed automotive suppliers. Among other things, he can look back on 16 years as technical managing director and member of the board of MAHLE GmbH in Germany and Brazil, as well as several years as managing director of TI Automotive GmbH in Heidelberg.

Climate neutrality: The pressure to act in the supply chain is increasing

To the study

The study “Green Transformation in the Automotive Industry” also shows that nine out of ten companies still see a great deal of untapped green potential in themselves, especially with regards to CO₂ reduction. For automotive expert Buchholz, this is one of the major strategic issues for the industry as a whole and the automotive sector in particular: “The automotive industry and suppliers must all become CO₂ neutral at some point.”

While the topic of sustainability and climate protection has already reached the manufacturers, many suppliers still have problems addressing it. But sooner or later, CO₂ neutrality will also have to be achieved in the supply chain. This puts pressure on suppliers to reduce costs and take action.

I can really only recommend that every entrepreneur address their CO₂ footprint and develop a strategy. This cannot be realized overnight. It takes years to achieve the corresponding effects.
Dr. Thomas Buchholz, Senior Advisor, Staufen.AG

Using milestones, suppliers could plausibly demonstrate to manufacturers that they are on the right track and when corresponding targets would be reached.In addition to climate neutrality, recycling and the circular economy are also mega-trends in the automotive industry, he said.

Due to rising raw material prices in the long term, he said, care must be taken right from the start “to develop and design products in such a way that they are also recyclable.” In addition, he said, it is important to follow purity rules: “In recycling, it is extremely important to separate materials really cleanly so there is no contamination.”

Financing: favorable loans only with good CO₂ rating

Nevertheless, there is a conflict of objectives between economy and ecology among many in the industry. Björn Falk wanted to know from his guest what must happen so that the economic viability of certain measures is not called into question.

For Thomas Buchholz, the capital market is creating pressure by making sustainability the new standard for investment. In the long term, it will be difficult to generate orders if a supplier is not CO₂ neutral, he said. Especially in the area of financing: “I know of cases where it was a question of follow-up financing. For these companies, which are exclusively active in the field of combustion engines, there was practically no more financing. You have to be prepared for that. There will be a so-called CO₂ rating, which means that loans will become more expensive if the rating does not look so good. Maybe not today or tomorrow, but: The clock is ticking,” says Thomas Buchholz.

Moderation

Dr. Björn Falk
Industry Manager Mechanical Engineering
STAUFEN.AG

Guest

Dr. Thomas Buchholz
Senior Advisor / Automotive Expert
STAUFEN.AG

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