Automotive industry braces for unforeseen challenges and unlikely partnerships

The automotive industry for decades has worked individually or not used to working in partnerships. That’s not an option for future as auto industry as OEMs we have to partner with companies that are creating charging infrastructure.

Automotive industry braces for unforeseen challenges and unlikely partnerships

The global automotive industry is seeing multiple disruptions in its quest for becoming cleaner. While the ambition to become green is good, the kind of energy requirement it will take to power up electric vehicles is unthinkable.

For the commercial vehicle industry, there is one likely source, which is available abundantly in nature and is powerful enough to move heavy vehicles, and does not need to be mined. It is hydrogen. The idea of using hydrogen as a fuel has been long studied and planned, but the ground reality is that it is still a difficult fuel to manage.

“Hydrogen does have many challenges like production and storage is difficult. Either you have to store it as compressed or as liquid hydrogen. Both of them are difficult and then creating a distribution network is also a challenge. But the thing is, it is green energy and is available in abundance if we can figure out how to distribute it and it works very well along with the battery electric technology,” says Raghavendra Vaidya, MD & CEO, Daimler Truck Innovation Center India.

He points out some other challenges for the automotive industry. Firstly, most OEMs including Daimler have committed to be carbon neutral by certain date. A big part of that will require to taper down IC-engines and ramp up BEVs (Battery Electric Vehicles) or hydrogen-based vehicles. The challenge there is more on the software-side because when you have a BEV, it is not as complicated as the IC-engine vehicle from a vehicle standpoint.




Raghavendra Vaidya, MD & CEO, Daimler Truck Innovation Center India: “We have to learn how to partner for problems that can’t be solved alone. The challenges are massive and are not the same challenges that we have faced in the past 40-60 years.”

“But then you have limited energy in the truck and how do you distribute that energy to move the vehicle to cool or heat the truck there are so many energy consumptions and these are things that we’re still discovering and trying to see how we can control that using the software. There is a massive amount of challenges we need to overcome on the software side as we go to zero emission. The other challenge, which is the ecosystem level challenge is that there have been lots of studies on as we ramp up on the sales of BEVs, the amount of energy required will keep going through the roof, there are studies which show that you know the generation and distribution is not good enough. And there are ecosystem-level challenges where the companies that generate energy, the utility companies that distribute the energy and have to partner with the OEMs, and somebody has to take the responsibility of creating that infrastructure. No one company can do it,” explains Vaidya.

Partnerships will remain key to unlocking new opportunities

One of the major changes that the automotive industry is now seeing is unlikely partnerships between traditional competitors. For instance, Daimler and Volvo have been one of the stiffest competitors in the automotive sector, but have joined forces to work in the area of hydrogen. Then there are non-automotive-related partnerships, for instance, working with Google and Apple or utility companies among others.

Vaidya says that “The automotive industry for decades has worked individually or not used to working in partnerships. That’s not an option for future as auto industry as OEMs we have to partner with companies that are creating charging infrastructure. We have to partner with utilities, the people who are generating the electricity.  The industry is learning how to tackle these ecosystem-level challenges through partnerships and not go solo. We can talk about challenges for hours and hours but the thing is, there is no Plan B. We must get off these IC-engines. There is no option not to do that.”

“It’s not about whether can we tackle these challenges. It’s only about how we tackle these challenges. It’s not about whether can we work in partnerships. it’s about how we work in partnerships. For example, if you see the fuel cell that we produce, there is a joint venture between Daimler and Volvo. A 50-50 JV where we are developing the fuel cells together. While we’re the most-fierce competitors in the market. Both Volvo and Daimler Trucks will have the exact same fuel cell. Now both of us have to compete in the market, the challenge is how do we differentiate beyond fuel cells? Can we develop fuel cells ourselves? Yes, we can, but that’ll just cost twice as much. We have to learn how to partner for problems that can’t be solved alone. The challenges are massive and are not the same challenges that we have faced in the past 40-60 years.”

“A big part of the differentiation will be software because everybody buys batteries from 3 or 4 large vendors. Every cell in the battery is almost the same. But when you put those batteries into the truck, it’s not about the battery, it’s about how do you optimally use that energy to extend the range as much as possible and make the truck as better as possible. That’s mostly with the software. We are building internal capabilities on software where over the next 8 to 10 years we will differentiate our products using software and that is where every OEM is focused on today,” concludes an optimistic Vaidya.

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