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Electrification is a given in the automotive industry. Policy mandates have set targets for electric vehicle (EV) sales and the phasing out of the internal combustion engine (ICE), and automotive OEMs have set their trajectories to go fully electric. However, there are still parts of the ecosystem that would challenge the singular electric-only path, and some OEMs are looking for policymakers to embrace decarbonization holistically with consideration of things like e-fuels and alternative technologies.
If you listened to some of the speakers at Financial Times’ Future of the Car conference in London, U.K., this month, you would think that governments had overlooked alternative fuels and opted to pick EVs as the only route to meeting sustainability and net-zero agendas. While companies like Nissan and others highlighted their commitment to EVs, some others like Chevron and INEOS Automotive were vocal about the need for governments to give other technologies a chance to prove themselves in meeting the vehicle decarbonization agenda.
The three-day conference covered almost everything you might imagine when discussing the future of the car—from connected and software-defined vehicles to digital infotainment systems and their potential to add new experiences to consumers, plus new business models enabled by connectivity. While the subject of fully autonomous vehicles (AVs) wasn’t center stage, there was some talk about it, especially when the Mobileye CEO took the stage.
Software was a key topic, especially as Volkswagen had just announced the restructuring of its CARIAD software business and the appointment of a new CEO for the software and technology group. Speaking at the conference, Volkswagen Group CFO Arno Antlitz did emphasize that software was still a strategic pillar for the business. “You should own the software stack. We want to achieve that with less cash burn,” Antlitz said.
Semiconductors and software-defined vehicles
An important trend over the last couple of years is the increasing number of semiconductor executives taking the stage alongside automotive OEM CEOs at the conference—indicating the significance of both the electrical and electronic (E/E) architectures within the vehicle, as well as the software, infotainment systems and connectivity.
The opening keynote was with Benedetto Vigna, CEO of Ferrari. Previously, Vigna spent over two decades at STMicroelectronics. He said that for a car company to become a tech company, it’s not that easy.
“We have to be agile and nimble, and I believe in open innovation,” Vigna said. He added that Ferrari wouldn’t become a software house but will focus on working with partners and having specific teams in house, such as for performance software.
Shelly van Dyke, vice president of strategy for automotive at NXP Semiconductors, also took to the stage and talked about how automakers are increasingly talking to chipmakers directly. “We work with the OEMs to understand what they are trying to do with their platforms,” van Dyke said.
She added that automotive semiconductors will be the fastest growing sector of the semiconductor industry this decade; and that software-defined vehicles (SDVs) meant vehicles would “live” longer and that meant there was work to do on educating the supply chain on the implications of that.
In a follow up interview with EE Times, van Dyke said that NXP is focused on vehicle architecture enablement.
“There is an expectation that safety and security in the vehicle is maintained even with SDVs. However, with the advent of dynamically reconfigurable ECUs [electronic control units], the imagination is not yet fully unlocked,” she said. “I am eager to see the imagination spark. By the middle of the decade, as SDVs roll out, we will start to see more new capabilities from the vehicle. Winning OEMs will figure out how they can differentiate and what they can get from the ecosystem.”
This was echoed by Nakul Duggal, Qualcomm’s general manager for automotive, who said that in the new software-centric world for automotive, it was important to differentiate where it was possible to differentiate, but also reuse software where it can be repurposed.
Renault Group CEO Luca de Meo talked about a centralized E/E architecture, which meant less chips and connectivity enabling upgrades via over-the-air updates. Connected cars offer many benefits, he added, including reduction in cost, increase in residual value of the car, and keeping customers in the after-sales system for a long time.
In fact, Riccardo Calabro, senior director of product marketing at Qualcomm, chimed in. “Once you add connectivity to the car, you automatically add value to the car.”
ICE vs. EV
As noted earlier, for the first time I can recall on a major public stage, there was healthy debate on the alternatives to EVs for decarbonization in the automotive industry. While car makers acknowledged that electrification is well and truly under way and not something that can be held back, they agreed there would be some time to go before we get 100% electrification.
The message from some speakers was that governments and policymakers need to allow the automotive industry to better innovate with alternative technologies, such as e-fuels and hydrogen, rather than taking us down the path of electrification as the only means to achieving sustainability in the automotive industry.
Ferrari’s Vigna emphasized that ICE technology still has a long way to go in the industry, and Ferrari is investing in both ICE and EVs. McLaren Automotive CEO Michael Leiters said, “I’m happy that there is now a discussion about e-fuels in Europe. Battery technology is not yet mature enough for supercars, since it compromises weight and performance. EVs in general are a good opportunity for the commute in the city but if you want to go on a racetrack, they are not yet there; the battery is too heavy.”
Nissan CEO Makoto Uchida highlighted that the pace of electrification differs from market to market.
“After 2030, we will carefully monitor how the market evolves, how EV adoption evolves, and how policy evolves, and what value it provides to the customer,” Uchida said. “The transition to electrification is already massively happening, but it will take time. The market has already changed.”
On technology development, he said that Nissan is working on the electrified powertrain development, in terms of weight, size and cost reduction. He expects to have a 30% reduction in development cost by 2026. Uchida added that solid-state batteries will be a game changer, and Nissan has been working on this already for a few years.
Meanwhile, Ferrari’s Vigna said on the EV front, they have been working with partners on optimizing batteries for a combination energy and power density. “We are pushing our partners for better and better chemistries,” he said.
As expected, there was also debate around AVs, but some speakers took more of a pragmatic approach to specific use cases rather than touching on the hype we’ve heard over the last few years. In particular, MobileEye CEO Amnon Shashua said that full autonomy is being held back by regulation. His company announced a collaboration with Porsche, where its future models will provide premium advanced driver assistance systems (ADAS) with Mobileye’s system.
Focus on carbon intensity, not just electric
Decarbonization and lowering the carbon intensity of existing fleets was alsoi key topic. Renault’s Luca de Meo said, “E-fuel is an opportunity for running cars that will still be out there on the streets for a long time.”
A panel discussion entitled, “Beyond the EV—are alternative fuels the solution to net zero”, covered this topic in a very forthright way. Andy Waltz, president for the Americas products at Chevron, said the debate should focus on carbon intensity. “EVs [alone] are not going to change that. By picking single solutions, such as battery only, will stifle innovation,” Waltz said. “The ‘zero emissions’ soundbite is misleading: we need it, but [for that] we need to deal with ICE fleets today. The automotive industry is being steered only into EVs, and that is misguided.”
Fellow panelist and CEO of INEOS Automotive, Lynn Calder, seemed to be in sync with this.
“Regulation is too focused on short-term objectives. Big decisions are being made to push the industry only in a particular direction, [such as towards EVs],” she said. “The broader the technology options, the faster we will get to sustainable outcomes. We shouldn’t block entire options and technologies. This stifles innovation.”
On the panel, Hydrogen Electric Trucks CEO Asher Bennett acknowledged the fact that they were even having the debate about “beyond EV” on a public stage.
“The fact that we are about this is somewhat progress in itself—we wouldn’t have talked about this a few years ago. But regulators out there need to be supportive rather than hold us back. Let the industry figure out what’s needed,” Waltz said. “EVs are a great solution. But they are not the only solution.”