Environmental protection: Cars are becoming more electrified

The 2017 (8th) Global Automotive Forum was held at Chongqing Yuelai International Conference Center from June 7 to June 8. The theme of this forum was "Transformation, Innovation and Transformation and Upgrading". Major global automotive manufacturers, policy makers, regulators, representatives from various fields, and experts gathered together to discuss the challenges facing the automotive industry, and strive to inspire the industry to think about how to seize the opportunities for industrial development under new historical conditions from an overall strategic perspective. Let's follow the automotive electronics editor to learn about the relevant content.

The following is a transcript of the roundtable discussion in the sub-discussion of "Perspective of Automotive Parts Suppliers: Profitable Growth Strategies in Mature Markets: China and Germany":

Brainstorming and exciting discussion

Moderator: Let's ask some questions. These are the questions written on the cards above. You are in the United States and Europe, your company, and you are important to the university. We have discussed a lot about some of Trump's economic policies, especially his policies on Mexico. Of course, he has made some noise about China. I hope he will not take action against China. What do you think of Trump's policies? Or how do you view all this from the perspective of Dena's policies?

Bob Pyle: I can't speak directly to the president, but I was in the United States during the election. Republican leader Trump is now in office, and his strategy is to strengthen the rise of the United States and make America great again. As an American citizen, I can understand some of his ideas, and our manufacturing industry has indeed lost jobs overseas in the past few years. But this idea resonates with me.

On the other hand, it is about border protection, such as ending the North American Free Trade Agreement and renegotiating it? President Trump has many CEOs to help him on one hand. Our global CEO is also a member of the Manufacturing Council, which is a council led by Trump. Our leaders are also members of it, and they discuss the return of American manufacturing together. I think it is better to be able to join than not to join. In this committee, we will provide some consulting opinions to the authorities. If there is a seat in it, it is of course very important. We have a very open attitude towards the council. I think everything needs to be discussed. Turner should have an open attitude towards China and the United States. We are also very happy to have a say in that committee and to be able to coordinate discussions together. This is very important. Yes, I am also paying attention to changes in the US government's policies. We must pay attention to protecting consumers. This is a hot topic in Mexico, China, and the United States. These topics will continue. As a manufacturing company, the key is to support the development of customers.

Host: Mr. Yang Xiaoming, do you have any response? I would like to ask a question about the combination. What about Delphi? There have been some major changes in state-owned enterprises over a period of time. What is our business combination like recently? So how do we respond to the current economic trends with this change in combination?

Yang Xiaoming: Are you referring to some of our recent extended businesses? We see it this way, and the other two speakers also talked about this industry. This industry is undergoing a transformation. In such a transformation process, Internet of Vehicles and autonomous driving are all needed, and they also reflect the focus of the portfolio, which is why Delphi calls it a profound change in mobility. I think many people may want to know why Delphi has such ideas. Now that regulations have changed, as I mentioned earlier, China is also changing rapidly in terms of emission standards. Our opportunity is to seize our product portfolio. We have indeed transformed our company into a high-tech company. Focusing on the Internet of Vehicles, we will still use the topic of derivative companies and pay more attention to what we want to do next. We have to track market trends and continue to turn to mobility requirements. We are also acquiring some companies to accumulate a lot of data. The latest acquisition involves data transformation. How quickly can we collect data, manage this data, and calculate this data? This is crucial to our decision-making. Therefore, for Delphi, the focus of our product portfolio is the trend of the automotive industry, especially the trend of turning to mobility.

Moderator: One of the questions I want to ask is whether your traditional factory management or the management of the two types of factories can achieve a convergence effect?

Yang Xiaoming: I think this process is still going on. We will have better development of powertrain business next year. We need to consider the future trend in powertrain. System integration will create many opportunities for both companies. We do share the technology and system foundations of the original company and the new company. We believe that such a derivative is beneficial to both parties. For investment, there is more autonomy, and decision-making has more autonomy, which is conducive to business growth. I think we still have many opportunities in the future, and this kind of cooperation is very important.

Moderator: Next, I would like to ask Binuo, you just mentioned a lot of ideas and information. Let's talk about China specifically. In the first quarter of this year, the business in China grew by 25%, and it performed very well. What are the driving factors behind such a good performance? How do you view the relationship between your business growth and them?

Bino: This is a very good question. On the one hand, we focus on Chinese manufacturers. For example, in the past many years, our performance in China has been very strong. Our performance is 7% better than that of Chinese manufacturers. I don’t want to mention more Chinese OEMs. But it is obviously very exciting to see such growth with Geely. Great Wall and GAC are growing very fast. This is one aspect. On the other hand, it is obvious that all technologies are driving our development. At the same time, if you see LEG, this is the business growth brought to us by new technologies.

Moderator: I just asked Trump's question to Dana. You talked about opening a new factory in Chongqing, or using some new technologies to serve the Chinese market. What opportunities and challenges are there? When we deploy new technologies, how do you view these opportunities and challenges?

Bob Pyle: One of the most important aspects is that the market is becoming more and more mature. Everyone has mentioned this point. Everyone is getting more and more familiar with the automotive market. You can no longer just say that you can launch new technologies to the world and then launch them to China, and everyone will like them. It is not that simple. First of all, I think you should not take it for granted. In our case, we will drive technological innovation and bring technology to China. We have global projects and cooperate with global automobile manufacturers. We also pay attention to our customers. We will not see any unique challenges in Chongqing. We have a new factory in Chongqing. We have a lot of employees. We will have new people joining Chongqing. We think that new opportunities exist now. We have great opportunities in Chongqing. We focus on the development and services of China's eastern coastal areas. Because here, we can not only promote the development of light vehicles, but also provide some services throughout the European continent. Therefore, it is a strategically important step for us to deploy our business in Chongqing.

Moderator: Mr. Yang Xiaoming, you talked about the changes in product mix and processes, which sound very good. You also talked about the general trend of technology. In the past five years, you have been operating in China for many years and have a very good relationship with suppliers. How do you view the changes in the supply chain? What do you think, especially in the new era?

Yang Xiaoming: First of all, we don’t think we are becoming more and more vertical. We are very dependent on our second-tier suppliers, and we have cooperated with them for many years. We have also been rooted in Chongqing for many years. When it comes to changes in the supply chain, I think one aspect is very positive, because we are developing suppliers, not just in China, but in Asia. We are developing supplier groups and building a supplier base. In recent years, we have worked together with suppliers and have established many customers around the world, not just in China. This is one of the changes in the supply chain. Therefore, through such cooperation, the capabilities of both parties can be strengthened. I am not just talking about strengthening Delphi’s capabilities. The capabilities of suppliers have also been strengthened. We have also learned from them about speed and response, and how to respond quickly to such a fast-changing market. There are many aspects that we could not do before. When it comes to quality and system, I can indeed provide a lot of things for our suppliers to learn. It can be said that our supply base is getting stronger and stronger now, and there are many suppliers who are supporting us all over the world.

Moderator: We have seen Chinese manufacturers developing their own brands for many years, but some of them are not doing well. Is the supply chain dominated by foreign companies? It seems so. Do you have any local suppliers that have entered the first echelon? Or what kind of technology dominance will emerge in the field of electric vehicle self-driving?

Yang Xiaoming: When it comes to global car localization, the key is that if we can continue to innovate and invest, we can continue to gain the leading position and lead the entire industry. Specifically, Chinese suppliers can continue to grow and enjoy the growth trend globally. They can attract talents to invest and innovate, and some can also work with international participants to assist the market.

Moderator: There is a parallel forum for Made in China 2025. The automotive industry is also very important, and new energy vehicles are of course a top priority. After all, the automotive industry is the pillar industry of the national economy. Based on what Mr. Yang Xiaoming just said, how can the concept of Made in China 2025 be embedded in the field of automotive industry development?

Bino: Of course, China's Made in China 2025 policy is very important until 2025. We focus on electrification and discuss autonomous driving. I think we are the world's largest company in some parts fields. All the mistakes, whether it is innovation, strengthening R&D, or strengthening technology development. In China, as long as something is done well, it can be exported abroad because China is so large. Therefore, there are many opportunities for customers. I think good innovation can get the support of customers.

Moderator: Let me see if there are any questions from the audience. Let's collect them. The following question is this. I don't know if this question is a similar question. How do you see your role in all these trends, such as electrification and autonomous driving?

Bob Pyle: I think this is a very good topic. We see that the business model of suppliers is more actively involved in the process of autonomous driving. Yang Xiaoming also talked about Delphi. We are a traditional supplier. Many people don’t realize that we actually produce a lot of gearboxes and some control technology research and development. We see that for autonomous driving, electrification, hybrid electric vehicles, these mean risks. For Dana, there are not only opportunities but also risks. Even though Dana is so big, there are some aspects that we are involved in, and there are also some aspects that we are very interested in. For mechanics, we need to play a greater role. We are also very advanced in thermal management, thermal management of electric vehicles. We have begun to sell some transmission systems for electric vehicles. We will also invest in this field. We also attach great importance to partnerships and hope to accelerate our own research and development.

Moderator: Here is a question, not for any guest, see which guest is willing to answer this question, please share some legislation issues, especially some legislation on NEV, that is, new energy vehicles. For example, some punishment mechanisms, is there anyone willing to answer this question?

Bino: The trend is electrification, whether in China or other parts of the world. Diesel is dead, especially in Europe. In China, everyone wants electric cars, or the electric part of the car, which will cause relatively less pollution to the environment and save more costs, so we will work hard towards this goal.

Yang Xiaoming: I would also like to add that I think the most important thing is our long-term problem. Many people will ask how the legislative system will be implemented. I think the trend has not changed. The trend is electrification. In such a change, what role does the government play? The government will make it clear, and the government will also find a suitable way to make the electrification system more effective. It is not a question of whether legislation will help or not. For the government, what is the most effective way they are looking for? Is it direct subsidies? Or is it appropriate to use points? So I think the key is that we must make it clear that electrification is a trend, so the more important thing for us is innovation and keeping up with such a trend. Is it a real market? I think this market may be more driven by the government's subsidy policy and incentive mechanism, and now China also has some incentive mechanisms for Made in China. Local governments, such as in Beijing and Shenzhen, may have some restrictions, so consumers can only buy electric vehicles.

Bob Pyle: You are right. Some major markets, especially battery-driven vehicles, are indeed driven by the government. Of course, for many consumers, they have discovered the fun of driving electric vehicles. So more and more people will drive electric vehicles. For example, this is the case with Tesla. There are many people in the United States who know that if they drive a Tesla car, they will have a lot of driving fun. People are willing to buy it. Of course, electric vehicles are also high-end vehicles. And for car manufacturers, they have also made great investments. They are changing the battery to make it more efficient, so I think more people will find the fun of electric driving. So there will be more shifts to an industry driven by consumer needs rather than government incentives. We all know that many people may ask, where do some companies get their funds from? Then some companies may face some problems of capital shortage. For some traditional joint ventures, they are now turning to electric vehicles.

Host: Dr. Yang, what do you think of this situation? What changes do you think will happen in this market? Or what changes will happen on the customer side?

Yang Xiaoming: This is a transformation we are going through. We cannot say that it is only for traditional vehicles. For example, if vehicle sharing can become a trend for vehicle owners, then we need new business models. In fact, some new businesses are also exploring new business models, not just products. As a system or a technology-driven company, Delphi will also provide the solutions that the market needs. We not only provide solutions for traditional vehicle manufacturers, but also provide services to some new customers. For example, Internet companies, data, etc. We need to meet the needs of new customers. I am not saying that the pace of traditional vehicle manufacturers is slow. In fact, it is not the case. Today's vehicle manufacturers are very clear about such a trend of change. They also work hard in their own way and in the way they are good at. But it can be said that everyone knows that the current connected car is a trend, and how to process such data, etc., everyone knows. So for Delphi, we are also undergoing some transformation of our product portfolio. We should not only focus on software. In the past, everyone thought we were a manufacturing company. If you look at our product portfolio or the forecast of future revenue, you will see that software is a major source of our company's business. This is also our interpretation of future trends.

Bino: There are indeed many new business models, but we cannot say that new participants, such as Didi, are new business models, and traditional vehicle manufacturers are the old models. You can see that people can now use vehicles as a continuation of their homes. We also use this car to go to work. Sometimes I may be willing to use Didi after get off work or go out for dinner, which may be more convenient, and sometimes I may choose shared bicycles on weekends, which may be more convenient. For traditional vehicle manufacturers, they are also paying attention to some new models. There are also some new participants coming in, which also change all the ways of vehicles. We cannot say that the old model is bad, or that the new model is good.

Moderator: We just talked about electrification. Now Chinese automakers are becoming more and more demanding in terms of products and services. Are they now at the same level as some global manufacturers? Have they caught up?

Bob Pyle: I think it is a competitiveness issue. We have been working with Chinese automakers for many years. We all know that they may need to be competitive to gain a corresponding share in the Chinese market. Your quality must be very competitive, and so is your safety. Parts manufacturers are also facing a lot of pressure. They need better technology and better quality to meet the needs of automakers. This is a trend. For parts manufacturers with high quality levels, they may have more opportunities, otherwise they may be eliminated by the market.

Moderator: We just discussed electrification and automated driving. When will it become a mainstream trend? One question is when will electric vehicles account for 25% of the Chinese market? The second question is when will automated driving account for 10% of the Chinese market?

Bob Pyle: We will definitely reach this goal, but it is just a matter of time. I don’t recommend making such predictions. We all know the issue of electrification, which may be easier to answer. So I think it should be more about the near future. For example, if we want to reach a 20% market share in China, pure electric vehicles will account for 25% of the market share, which is probably around 2025 or 2030. Autonomous driving will take another ten years.

Yang Xiaoming: If you look at this industry, when it comes to the Chinese market, those forecasters are always afraid to make too many predictions. They cannot predict the rapid development of China and always underestimate it. For electric vehicles, we should look at what it is driving. We also know that the government has also issued some guidelines or some documents, and there are some goals. How many electric vehicles will there be by when? I think the goal of 20% electric vehicles will be reached from 2020 to 2025. We can see from the government documents. Not only the government is promoting it, but the market does have such demand. For example, there are some restrictions in Beijing. There is indeed such a demand for electric vehicles. From the technical level, I think the technology for electric vehicles is ready by 2019-2020. For example, Singapore is also trying it. From a technical perspective, the technology should be ready in 2020. If we want to reach 20% of vehicles, it is fully automated. I think it will be around 2025 or 2030 for China to reach 10% automated driving.

Host: How do you predict?

Bino: China has a very clear goal. The 2025 Chinese document states that by then, the number of electric vehicles will account for 20%. Regarding the issue of automated driving, we all know that we can buy self-driving cars in Beijing today, and we can also achieve automatic parking. There is such automated driving in the market, but when will people be willing to trust such technology? That is a matter of time. We need to be more effective and need to cooperate more with customers. Such automated driving has been around for a long time. I think there will be more dissemination. At the beginning, it may be used for automatic parking. Some automated driving on the road will gradually expand. For driving from Chongqing to Shanghai, or driving to Beijing in the future, using automated driving may be more of a problem.

Moderator: For traditional cars, it will be more energy-efficient and more environmentally friendly. 80% of vehicles are still based on traditional technology. For traditional vehicles, they still have opportunities. Finally, we would like to thank our discussion guests and everyone for the discussion. I hope everyone can gain more. Thank you.

The above is an introduction to environmental protection in automotive electronics: the increasing electrification of automobiles. If you want to know more related information, please pay more attention to eeworld. eeworld Electronic Engineering will provide you with more complete, detailed and updated information.