Carmakers warned of electrification shake-up

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Carmakers warned of electrification shake-up

Post  Administrator on Thu Sep 15, 2011 9:18 am

Carmakers could face competition from start-ups as the switch to electric vehicles lowers barriers to market entry and accelerates a structural transformation of the car industry, according to the sector’s biggest supplier.

Bernd Bohr, head of automotive technology at Germany’s Bosch, told the Financial Times that key systems suppliers are set to benefit as the proportion of electronic components in the car increases and combustion engines are replaced by batteries and electric motors.

“With electrification there could be a trend towards having new original equipment manufacturers [OEMs] in the playing field,” he said at Bosch’s stand at the Frankfurt Motor Show.

“This is because the entry barrier to making a car – if you have a supplier providing the complete power train [a car’s key architecture], for instance – will be lower than with today’s combustion engine.”

Carmakers are currently obliged to meet tough emissions standards across different markets, requiring an array of complex technology that Mr Bohr said would not be needed in an electric vehicle. “We are therefore closely watching the market to see which OEMs are coming up,” he said.

Several pure electric vehicle manufacturers have already gained a foothold in the industry, among them US-based Tesla Motors and Fisker Automotive.

But other industry participants believe that the technological complexity of building a car will prevent the emergence of a dominant new player in the way that Apple conquered the smartphone industry, for example.

“I don’t believe it myself because building a car is much more complicated that it might appear from outside – it’s not as simple as just buying the components and joining them together,” Peter Schwarzenbauer, head of marketing and sales at Audi, said.

“So I can’t imagine new carmakers suddenly emerging overnight. But I do believe there will be start-ups that offer new mobility concepts.”

Elmar Degenhart, chief executive of Continental, the German supplier, told the FT: “It’s difficult [to become a carmaker]; it’s not just the technology. You need structures such as a sales network, parts supply network and repair capability – these are huge investments that would be required to compete internationally,” he said.

But Mr Degenhart sees opportunities in the growth of in-car systems and electronics. “With the expansion of networks within the car and the interconnecting of the car with the outside world, the proportion of electronics in the car will tend to accelerate, not slow,’ he said.

Electrical and electronic systems have a share of value added in today’s vehicles of 40 per cent, but this is set to rise to 75 per cent in the electric cars of the future, according to Bosch.

Mr Bohr said there was therefore potential for systems suppliers to win new business. “Regarding who makes what in the electric car, here the game is absolutely open,” he said.

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