At the 2017 Frankfurt IAA Calum MacRae met with Michel Forissier, R&D director of Valeo’s powertrain systems business group to discuss all things powertrain, particularly the increasing electrification of the global industry.
just-auto: What is the primary focus of Valeo’s powertrain research at the moment?
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Michel Forissier: The primary focus is really to move from the traditional combustion engine to full electric drive in the next ten years. We are at the middle point of a revolution in powertrain. There’s a real shift now in the powertrain, which is occurring after decades of stability. We are actors of the change because for years we have been providing solutions for reducing emissions.
And at what point do you think the electrification of the powertrain will be consumer led rather than driven by regulation and governments?
I think there are several effects. Regulation is one thing. If cities in addition to regulation will ban non-zero emission vehicles then there will be a customer demand because there’s a need to go in the city centres. So, this is a part of the answer. The second reason, second key factor is price. Today, we can make a nice premium BEV, but you have to pay US$80-100k. Even the new models are @US$35k. The average price for cars in Europe today is EUR23,000 and for city cars let’s say EUR10,000-12,000 for city cars. So there’s a huge disparity in price for electric vehicles.
This disparity is mostly due to the batteries. So, battery costs absolutely huge today. In a premium car, EUR16-20,000 is the battery cost. Battery cost is on its way down. Today it’s US$170—250 per kWh, in the next 10 years we expect it’ll go down to between US$100 and 150 per kWh, even then it’s still expensive if you have 20kWh in the car or 100kWh as in the premium segment.
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By GlobalDataWe do not expect a parity in cost between ICE and electric. We won’t see that unless a better cost goes down to US$50 per kWh. So, what we see in the background is factor two (from where we are today) definitely, but we don’t see factor four. For factor four, we need a breakthrough technology in batteries.
Do you see ever see US$50 per kWh coming?
Not yet. With what we see, and everything you can read, there’s not enough to go to US$50 per kWh. Even if the technology is there you have to consider the timeline. You need to do eight to 10 years of validation.
What is the most promising technology that you’ve seen that’s out there?
Well, solid state is very good. To go a little beyond the traditional lithium ion with a liquid electrolyte, it will probably be a metal air solution like lithium air, magnesium air, zinc air. But the best is not fixed yet, everybody is working on it, so we believe it will happen. The IC is not dead in the next 10, 20 years.
With the cost of pure electric and the cost of adding more ADAS technologies there are mounting challenges for OEMs to meet market requirements, so do you see 48V as a good stepping stone?
Yes, but there is not a one size fits all solution because you have different segments for different markets. So if you look at all that EVs must be city cars, and particularly if non-zero emission vehicles are banned in cities. Then you have premiere electric vehicles, like the Teslas of this world, which are very expensive. But those two segments will be the prime focus of electric vehicles.
Because of the emission issues diesel is going to crash, so we need something else, and it’s where 48 volt mild hybrids makes sense.
In the middle of the market the value equation is much more difficult because people have less money for cars and the cars they have need to serve multiple purposes and sometimes travel long distances. So for them the diesel is best. But because of the emission issues diesel is going to crash, so we need something else, and it’s where 48 volt makes sense. So 48 volt gasoline mild hybrids cost less than diesels but with similar fuel economy but no problem with NOx or particulates.
We invented 48V hybrids in 2012 and we have a clear roadmap of where we want to go with it.
How big do you think the 48V mild hybrid market will be globally?
We think that for hybrid cars, it’s going to be in the next 10 years between 10 and 15 million. In addition to that, we do believe there will be small city cars in China, and in India, where we can see an additional 5 million. So, in total, something around 20 million is possible.
Do you think diesel is dead, then?
Diesel is not dead completely. It’ll stay mostly for commercial vehicles, because there is no equivalent in terms of total cost of ownership for fleets. Then the question is how much will you pay to clean the diesel at a point that it will survive on the market, and that creates a big burden on the diesel price. So, it’s not dead, but we see clearly the share of diesel going down in Europe and at a relatively high pace. France was as 75% diesel penetration, now we are at 40-45%. In Germany it was 45% now it’s 35%.
It is still resilient due mostly to the fleet owners and the leasers. The leasers, they still have diesel, for company cars typically, because the resale value of diesel was much better than gasoline. Now, the resale value of diesel is going down. So we see some of the leasers going from diesel to hybrid and electric.
So, the pace of the decline in diesel share in Europe, that’s surely a big problem for the manufacturers come 2021 when they have to get to 95g of CO2?
Yes, so they look to electrification. It’s why 48V is very good, but it’s not only 48V, there are many, many different solutions from microhybrid, midhybrid, full hybrid, PHEV. Electrification is very diverse and we can offer the appropriate solution for each segment of car.
In 2030 what do you see the share of pure electric vehicles being at?
The game is no longer changed by those in Europe but the game is made in China
We’re thinking probably above 15% of the market globally. We have revised our plans recently as we see China is pushing hard in that way. It’s going much quicker in China. They implemented their New Energy rules, you cannot sell next year any car in China if 2% of your sales are not New Energy Vehicles (PHEVs and small city cars limited to 100kmh are included in this definition). This is like California. And then in 2019 it has to be 4%, 8% in 2020 and 12% in 2025. It’s game changing – the game is no longer changed by those in Europe but the game is made in China.
I’m hearing this increasingly more that the Chinese OEMs are much easier and more open minded about taking new technology than European or North American OEMs.
Yes, they are, because they know they are laggards for the ICE. So they have said, “We will leapfrog, we will go directly to electric, and here we can set the standards ourselves in 2020, 2025”. And they are very, very proactive. Last year, they implemented 80,000 fast charging stations in China. Next year, they will implement 800,000. I think we have 4,000 Europe and 2,000 in the US. I was in China last week, you go to any fuel station, you have at least six fast charging electric station already there.
We do our own analysis and that’s why we see 15% by the 2030 time frame, which is 13 years from now and doesn’t seem too crazy.
There are some people that will tell you in 2025, 100% of cars will be electric. That cannot be. In Arkansas, when you have 100 kilometres to do with the pickup truck, you need IC engines. It will be electric some day but it will probably be the last to come on the market.
Where do you think the European CO2 regulations will go after 2021’s 95g?
There are rumours of 76g for 2025. For 2021’s level you can do with about 2% electric and 10+% hybrid, but if we go to 76g in four years’ time electrification is accelerated. In China there are at 5L/100km in 2020, and they want 4 litres in 2025, which is the equivalent of 2021’s level for Europe. So China is catching up at the speed of light. The US we don’t know.
Do you think the US will keep to their 2025 fuel economy timetable?
So far the EPA has not changed their target despite the announcement made by the Trump administration. The leading edge is California anyway and what CARB do. Maybe 25% of cars sold in the US are sold in California so what CARB does is really important.
What do you think of the Mazda approach of low temperature combustion as an alternative? Do you think they’ll have to electrify?
I have great admiration for Mazda. They are probably the best engine makers in the world. What they do for the efficiency of combustion engine…they just are the best of the best. The real problem is how long will it survive? Probably 10, 20, 30 years. They have the best diesel and gasoline engine in the world in terms of thermodynamic emissions. They are just doing the right thing for engines today. Without the electrification trend in the market they probably would be in the leading seat for engine technology.
What about fuel cells? Do you think there’s room for fuel cell electric vehicles?
Fuel cell, for me, is no story, because fuel cell is not any different to an electric vehicle. The fuel cell is just an electric car with a hydrogen tank in the boot and the fuel cell. You still have an electric motor with electronics. You still have a battery, so the base vehicle is an electric vehicle. We can see with the Mirai and Clarity that it definitely works. The fuel cell works perfectly. It has fantastic efficiency. It depends very much on the availability of hydrogen. Hydrogen doesn’t exist in its native state in the atmosphere, so you need to extract hydrogen. Do you crack natural gas? Do you extract it from water? You need lots of electricity to do so. Is the value equation good? I don’t know. I think, again, it’s not one size fits all. Toyota and Honda will tell you fuel cells make sense for the long haul. The fuel cell makes absolutely no sense for the city car. Japan is clearly leading the way for fuel cells today. We are working with some of the Japanese makers on how we can help them to make fuel cells happen. You also have proposals, like those from Nikola in California, for long-haul fuel cell trucks. It could make sense. But it goes back to the question of where the hydrogen comes from and how you store it.
Everything in the industry about fuel economy and CO2 at the moment is very much on the wheel-to-wheel basis. If we start looking more holistically and look at well-to-wheel what changes do you think might happen?
I think definitely you have to decarbonize the utilities. In France, we have a very decarbonized energy due to nuclear, so the question is nuclear good? We have a solution today, but it is long term? I’m not completely sure. You need renewables, real renewables. Other countries have more carbon based utilities. But we cannot be critical of governments they know they have to change this. China is opening nuclear power plants, windmills, solar plants every week, so they do the job. The problem is it will take time.
I don’t like it when the automotive industry says we have to consider well-to-wheel rather than wheel-to-wheel. This is an alibi to avoid being the guilty party. Everybody has to do the work. We can work on the technology in the vehicles and they will work on the utilities. Everybody has to work. We are citizens. We are engineers, but we are environmentally conscious.
We’ve talked a lot about electrification. Have you given up adding technology to the internal combustion engine? You have the e-charger, electric supercharger with Audi…
e-charger is a kind of bridge between pure IC and hybrid because it’s electric, so we use hybrid system, electric system, to feed the supercharger, so it’s a very good combination of hybrid systems with engine systems, and the supercharger is definitely there. We have four times more torque on the engine with e-machine and that’s really something that we believe will bring us a brilliant solution for the next 10 years. So, today, we have businesses that are really growing and supercharging is really helping, particularly the premium segment at first.
The Siemens joint venture for electric motors, how is that progressing?
Extremely well. Siemens was excellent at making motors on the industrial side, but they were not so good working in the automotive world. And we are very good with the automotive world because we are a big maker, but we are not very good in high-power motors, and high-power electronics. We already have some big orders because we demonstrate in the market capabilities which fit perfectly together.
So, you’re in production with them already?
Yes, Siemens was already in production for some parts. We were at various positions for other parts. Now, it’s all in the same house and we are developing for major car makers in China, in Europe, in Germany, and the rest of the world in big volumes.
Some people think that the brand identity of the OEMs in the future will be dictated by the electric motors they use and they’ll have to start making their own electric motors. They say electric motors at the moment are a commodity and not much differentiated. Do you think that will happen?
There is more differentiation than we can believe in a motor. There are more subtle differences in electric motors that you would expect at first. Will there be OEMs making their own motors? Yes, definitely. So, will they compete with us? Yes, definitely, but this is a huge market. There will be room for everybody. The point we claim is today we are number one worldwide in electric machine. We do more than 30 million e-machines per year. Call them alternators, starters, e-machine motors etc. One car out of three in the world has a Valeo e-machine today.
If you take the biggest carmaker in the world it’s at 10 million units, if they do 20% EVs that’s 2 million e-machines. We do 30 million. So, we have much more purchasing power, much more industry optimization. So, they can do it, but we will do it cheaper. We will do it cheaper, and therefore better.
