Interview with Prof. Ferdinand Dudenhöffer: “We are in the first wave of transformation”

Prof. Ferdinand Dudenhöffer from Duisburg’s CAR-Center Automotive Research is one of the best-known automotive experts. In an interview, he talks about the upheaval in the industry, the prospects for e-mobility and Germany as an automotive location.

The car industry is in a state of upheaval. How do you assess the situation at the end of 2019?

Prof. Ferdinand Dudenhöffer: The industry has had a difficult year and there will be difficult years to come. There are two important reasons for this: The first is the customs war between the USA and China, which is placing an even greater burden on suppliers than on manufacturers. In many cases, it is already leading to losses and job cuts. The second important reason is the paradigm shift towards electromobility. New concepts and models come onto the market – at the same time however, work that was previously associated with the combustion engine is no longer necessary. The industry is undergoing the greatest change since the invention of the car. This transformation will keep us busy for some time to come. I assume that have we only experienced the beginning of the first wave in 2019.

How well or poorly does the industry deal with the challenges?

Dudenhöffer: It is true that many companies are cutting costs, adjusting factory capacity and employment. Anything else would be wrong, because the combustion engine is gradually being phased out. For this reason, it is right to bundle investments in e-mobility. Those who fail to do so today will be missing their customers tomorrow.

Companies are by no means in agreement as to which drive technology is the most promising. What is your opinion?

I am convinced that the all-electric battery car will prevail and determine mobility in the passenger car sector. Fuel cell vehicles are only suitable for commercial vehicles or buses. Vehicles the size of a Golf with a fuel cell drive costs in excess of 80,000 euros. Even with a 50 percent reduction in costs, this cannot be marketed. A comprehensive hydrogen tank infrastructure cannot be financed, and the energy balance of the fuel cell car is frightening. You turn electricity into hydrogen and then back into electricity with the fuel cell. For propulsion, 25 percent of the actual energy is used, while for battery electric cars, the figure is 75 percent. Plug-in hybrids are often referred to as a bridging technology – but in my opinion it will be a very short bridge. A big problem with hybrids is the inadequate control mechanisms. The vehicles only help to protect the climate if the driver actually uses the electric motor and doesn’t just take the buyer’s premium with them. This can barely be checked. The bottom line is to consistently rely on the electric drive – just as Volkswagen or Tesla do.

What are the chances that e-mobility will quickly assert itself?

I expect the breakthrough to come in 2021 – forced by the EU’s stricter CO2 targets. Companies will then be under great pressure to sell more e-cars in order to avoid expensive and socially unacceptable fines. On the German market in particular, this puts manufacturers in a dilemma: they have to sell more electric cars, but conventional fuel remains cheap.

What needs to change?

One of the biggest problems is the lack of a concept in economic, energy and environmental policy, which lives from one day to another. If you look at it, you can sometimes lose faith. Take the climate package, which does not provide a clear regulatory framework for e-mobility, but raises many questions – whether about charging points or commuter allowances. What we urgently need are significantly higher CO2 and thus higher fuel prices. Then people will also switch more quickly to electric cars – even without purchase subsidies. We should prevent today’s car owners from receiving financial compensation in response to rising fuel prices. New car buyers will then independently switch over to E. With such a solution, nobody is worse off. But everyone who compares the prices sees the advantages of an electric car.

What can manufacturers do?

An adjusting tool is available from the marketing department. So far, many people have been skeptical about electric cars. For example, they are not sure how long the battery will last or what the costs will be. Companies could take this worry away with a monthly subscription price: The customer can use an e-car at any time, but they are not the owner and bear no risks. Similar to a rental agreement for an apartment. The electricity for charging can also be taken into account – the customer then pays a flat rate and has nothing else to worry about. That would simplify the decision for many.

You have touched on this – what is the effect of the transformation?

Yes, it’s just beginning. At the moment we are still in the first wave of transformation – which is shaped by the economy. Next come structural adjustments. A look at the development budgets shows what lies ahead: By contrast, over 90 percent of production is still geared to combustion engines. In the long term, this 90 percent must become zero. I assume that the second wave of upheaval will begin in 2025.

What can companies do to secure jobs and prepare employees for new challenges?

It is not the companies that are responsible for Germany, but the politicians. I warn against raising expectations too high. Companies operate in the market. They have to invest to ensure that their products will continue to be successful in the future. If they start to pursue economic policy, this can quickly lead to excessive demands. You must be honest: many companies will not be able to avoid job losses – for example through severance payments.

That all sounds rather gloomy – what significance will the German automotive industry have after the transformation?

I know I’m a bit direct sometimes, but the change will be tough, let’s not kid ourselves. The goal, however, is worthwhile. If we get it done quickly, we have the chance to remain as one of the important automotive nations.German car manufacturers will maintain their key role. I am sure they will. The question is: What role does Germany play? Politicians must swiftly create the framework conditions for the car of the future to have its home in Germany. I can’t be on the road with the electric car and the diesel at the same time. I have to make my mind up – otherwise nothing changes at all. We need priority for e-mobility. If this takes too long, electric cars will not be built in Germany, but in China – and we will have to import them. A hesitant political stance intensifies the job problem.

Thank you for the interview.

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