Bosch Jiang Jian: Embracing change, Bosch's journey towards the "new four modernizations"

On November 3-4, 2020, the 2020 China Automotive Industry Regional Economic Summit and the “Belt and Road” International Forum on Automotive Industry Development, co-hosted by China Automotive Technology and Research Center Co., Ltd. and Shaanxi Provincial Department of Industry and Information Technology, was grandly held. The summit closely follows the current policy, technology and market development trends, with the annual theme of "focusing on industry collaborative development and promoting regional industrial upgrading", aiming to fully integrate industry resources, actively promote in-depth cooperation in the regional automotive industry, accelerate the transformation and upgrading of high-end manufacturing, and lead the high-quality development of strategic emerging industries such as new energy and intelligent networked vehicles. During the summit, Jiang Jian, Vice President of Bosch China, delivered a keynote speech entitled "Embracing Change, Bosch's "New Four Modernizations" Journey".

Bosch China Vice President Jiang Jian

The following is the transcript of the speech:

Good morning, leaders and guests from the automotive industry! I am very grateful for the opportunity to give you a brief introduction on behalf of Bosch . The introductions made by several senior industry veterans and leaders just now are very good and have inspired you a lot from a macro perspective. I will report from the perspective of a multinational company with more than 100 years of history in the automotive parts industry. How are we transforming? How do we view the future technology trend?

Let me quickly introduce Bosch. Bosch is a multinational company. We were founded in 1886 and have a history of 134 years. We have about 400,000 employees worldwide, including 55,000 employees in China. Our global sales in 2019 were 77.7 billion euros, and we are ranked around 90th in the Fortune Global 500. Our sales in China reached 109.3 billion yuan in 2019, which is about 18% of the entire group. Among the 55,000 employees in China, 7,800 are R&D personnel. Globally, there are about 72,600 R&D personnel among the 400,000 employees. Another number is also worth noting. Among the 70,000 R&D personnel, nearly half of them, 30,000, are engaged in software development. Our R&D expenditure in China is about 6.3 billion yuan, and we invested 8.6 billion in China last year in 2019. Looking at the past ten years, we have invested 3 billion to 8 billion or 9 billion yuan each year in China.

Bosch is currently undergoing a transformation from a traditional hardware-based company to a so-called Internet of Things company, an IOT company. In this transformation, we have a "three horizontal and three vertical" strategy. The three horizontals are based on 3S, sensors, software and services, and the three verticals are based on connected transportation, connected industry and connected life in the industry field. Bosch also has investments in Xi'an. We have a Bosch Rexroth company in Xi'an, which is mainly engaged in the production and manufacturing of industrial equipment and is a very advanced provider of Industry 4.0 solutions, which is in our industrial field.

Let's focus on Bosch's views on the future of automobiles. About ten years ago, Bosch proposed the future direction of automobiles. This is Bosch's four modernizations, which are very similar to the new four modernizations we proposed in China, namely automation, interconnection, electrification, and personalization. Bosch has made a series of strategic transformations around the four modernizations. One of the transformations is that we believe that the automotive industry is constantly moving towards digitalization. According to forecasts, the proportion of electronic components in the total cost of vehicle components will increase from 16% in 2020 to 35% in 2025. The software code on the car has grown from the initial scale of one million to almost 100 million now. If autonomous driving is realized and popularized, the amount of code in this software will reach 300 to 500 million lines. For this reason, various companies have also invested huge investments in automotive electronics and software innovations. Currently, 90% of automotive industry innovations come from automotive software and electronics. In 2019, one-third of the entire automotive industry's R&D expenditures were spent on electrical, electronic and software. We expect this proportion to continue to increase to 40% in the next decade.

Bosch has very deep accumulation in the field of automotive electronics and software. In the past nearly 50 years, we have continued to develop semiconductors and have accumulated a lot. We were the first to realize the installation of digital circuits on automobiles. In the 1970s, our ABS was first used in Mercedes-Benz S-Class sedans. That ABS was actually equipped with control circuits. In 1979, Bosch designed the first on-board computer, which combined electronic fuel injection and electronic ignition in an ECU with 4KB of memory. Therefore, Bosch realized the importance of on-board software very early and has carried out 40 years of research and development. In recent years, Bosch has also expanded its software layout locally. Since 2018, Bosch has successively established the Intelligent Connected Business Unit, Innovation and Software Development Center, and Intelligent Driving and Control Business Unit. In 2019, Bosch Group already has 30,000 software engineers, and its annual investment in software development has reached 3 billion euros. Bosch China also continues to recruit hundreds of software talents every year.

Although software will play an increasingly critical role in automobiles, in order to achieve the improvement of the intelligence of the entire vehicle, the hardware must also be upgraded simultaneously and become more powerful to support software upgrades. Bosch has its own innovations and advantages in both software and hardware. In addition to the development of upper-level software, underlying support, including simpler electronic component architecture and more powerful computing platform are all very important. Currently, high-end cars have more than 100 control units, and small cars are probably equipped with 30 to 50 control units. Bosch is now developing on-board computers, which are domain controllers to control the various control units currently scattered in the vehicle, thereby greatly reducing the number of control units, which will be faster and have stronger computing power. In addition, we are also conducting cross-domain development to enable the entire vehicle to have a certain IT architecture.

Starting from January 1 next year, we have re-established a division called Intelligent Driving and Control Division, which combines several previously scattered divisions to promote cross-domain communication and integration. Although Bosch does not develop upper-level software, it develops software for on-board computers and control units, and provides customers with an intelligent experience through remote vehicle upgrades.

Let's talk about electrification. If digitalization is a very obvious trend in 2020, then another wave is electrification. It is not only a means to achieve low carbon, but also an industry that the country strongly supports. According to our market research, it is estimated that by 2030, 2/3 of new cars in the world will still use traditional internal combustion engines, which also includes hybrid technology. Therefore, we at Bosch have always held a so-called technology-neutral attitude to develop diversified powertrain solutions. We have listed four: fuel cells, batteries, internal combustion engines, and hybrid power. In terms of combustion batteries, we expect that 20% of electric vehicles worldwide will use fuel cells in 2030. The innovation-driven development strategy outline issued by the country clearly mentions the need to vigorously develop hydrogen fuel vehicles, and my country will achieve the goal of 2 million hydrogen fuel cell vehicles in 2030. We believe that fuel cells will be first popularized on a large scale in the commercial vehicle field.

By 2030, at least 20% of new cars will be electric and at least 31% will be equipped with hybrid systems, mainly for urban transportation and commuting. Improving battery life is what we are all working towards. By 2030, at least two-thirds of new cars will still be equipped with diesel or gasoline engines. Among them, how to improve the thermal efficiency of internal combustion engines is what we are currently continuing to tackle. In addition, zero emissions of internal combustion engines are also achieved through the use of some renewable fuels.

Bosch has also made a lot of efforts in these four areas in China. For fuel cells, we have established a hydrogen fuel center in Wuxi to develop hydrogen fuel cell powertrain products, from key components to fuel cells and even hydrogen fuel cell system settings and fuel cell stacks and other production lines. We should be able to have some mass production projects next year.

In terms of batteries, in addition to the battery capacity which will directly affect the range of electric vehicles, we have specially developed silicon carbide chips. This silicon carbide technology can increase the vehicle's range by 6%. One or two vehicles have about 50 semiconductors. Compared with the currently used silicon chips, silicon carbide can maintain lower heat loss, which can reduce heat loss by about 50%. This technology is the next generation technology of IGBT, and Bosch is also working hard in this area.

In terms of hybrid, Bosch has launched electric bridges and motor thermal management systems for new energy vehicles . Our joint venture United Electronics is the largest supplier of new energy motors in terms of shipments, except for vehicle manufacturers. Mass production has been implemented by the end of this year. In 2018, we put a 48-volt battery system into production in Wuxi, and we already have more than 28 customers around the world.