industry overview sustainable mobility

8/13/2019 Industry Overview Sustainable Mobility

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IndustryOverview

The Automotive Industry in Germany Sustainable Mobility


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The Automotive Industry in Germany Sustainable Mobility

Germany.Driving the World toSustainable Mobility.

For decades Germany has enjoyedworld renown for its strong andinnovative automotive industry. Ger-many has also captured a leadingposition in environmental technolo-gies and is today the world market

leader in renewable energies. Ger-man automotive companies arebuilding on this tradition and com-petence to meet current environ-mental challenges.

Striving for a leading position in allfields of sustainable mobility, theGerman approach is opening newwindows of opportunity in all vehiclemodules: powertrain, electrics andelectronics, body, chassis and inte-rior. In fact, there have never beenso many business opportunities inthe German automotive industry asthere are today.


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Industry Overview 2009 www.gtai.com 3

Joint Efforts to De-crease CO

2Emissions

As proposed by the EU Commission,from 2012 onwards new vehicles arenot allowed to produce more than120 g/km CO

2as a result of improved

vehicle technology. An additional re-duction of 10 g/km is to be achievedthrough increased usage of biofuels

and further technical improvements.Although German cars are alreadyvery efficient especially when com-pared to their direct competitors substantial efforts still have to bemade to meet the EU goal by 2012.

Suppliers of CO2emission reduc-

ing technologies, which also helpmanufacturers keep vehicles bothaffordable and appealing to the end-customer, are finding unique busi-ness opportunities in Germany.

220

200

180

160

140

120

100

Performance-related Efficiency

Co2Emissions per 100 KW Performance

Germany France Italy Japan Korea

Source: vda

EU Traffic CO2 Emission Increase Levels (1990-2006)

50

40

30

20

10

0

-10Austria

Belgium

CzechRepublic

Denmark

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Luxembourg

Netherlands

Poland

Portugal

Spain

Sweden

UnitedKingdom

Source: vda

One Goal Different andComplementary Approaches

The industry is pursuing two majortechnology paths In order to furtherreduce CO

2and other exhaust gas

emissions as well as to make ve-hicles more energy efficient. Thefirst and most widely discussed isalternative drives. These include,for example:Hybrid vehiclesFull electric vehicles

(battery and fuel cell electric)Alternative fuels

However, conventionally driven vehi-cles also offer significant potentialfor further improvement. Examplesinclude:

Enhancing internal combustionengine (ICE) fuel efficiency (e.g.turbocharging)Advanced powertrains (e.g. directshift gearboxes - DSG)Exhaust gas after treatment

New materials (e.g. lightweight)Electronics (e.g. tire pressuremonitoring)

in million tons


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4 Industry Overview 2009

Turning toAlternative Drives

The future shortage of fossil fuels

is an issue widely recognized by Ger-

man end users. Thats why the need

to turn to alternative drive technolo-gies is widely accepted. Based on a

survey of major OEMs, suppliers,

potential infrastructure providers,

and launch customers conducted byRoland Berger, it is expected that

electric vehicles (BEVs and hybrids)

will capture a market share of up to

25 percent in Europe by 2020.

Hybrid Technology

At present, hybrids of course do notconstitute a significant segment ofthe market in terms of units sold,but demand is growing. A surveycommissioned by Continental AGshows that 30 percent of German

consumers who intend to purchasea new car actively consider hybridcars among their options thisdespite the fact that there would bea significant price markup. In theyears ahead, sales are expected torise accordingly. German OEMs willrelease their respective initial hybridmodels from 2009 onward.

Full Electric Vehicles

Full electric vehicles represent ahighly promising future technologyfor zero emission mobility. At theNational Strategy Conference forE-Mobility in Berlin, the governmentannounced its commitment to makeGermany the leading market in thisfield: a so-called National Develop-ment Plan for E-Mobility is on theway. Some EUR 500 million will bemade available for projects in thisarea as part of the plan. BecauseGerman OEMs are already workingon different electric vehicle models,

companies with expertise in this fieldwill find a broad spectrum of busi-ness opportunities. Moreover, field

trials are already under way: BMW istesting its Mini E in cooperation withthe energy company EON in Munich,and with Vattenfall in Berlin (whereDaimler is also testing its Smart cartogether with RWE). Furthermore,within the scope of E-Energy (a joint

effort for the development of an ICT-based energy system of the future),some EUR 140 million will be mobi-

lized for the development of modelregions integrating electric vehiclesinto power grids. Beyond this, 13Fraunhofer Institutes are supportingoverall research in this field by devel-oping high-energy power solutionsincluding materials, electrochem-

istry, power electronics, and solarenergy systems among others.

100

90

80

70

60

50

40

30

20

10

0

Future Market Share of EV/HEV (in percent)

ICE vehicles including:Advanced combustion systemsBiofuel-powered enginesMicro/mild hybrids

PHEVEV

Manufacturer Initial Hybrid Model Start of Production

Audi A4 2009/2010

Q5/Q7 2009

BMW 7 series 2010

X5 n/a

X6 n/a

Mini E 2009

Daimler E Smart 2009

A class 2010

B class 2010

S class 2010

Opel Ampera (EV) 2011

Porsche Cayenne 2009

Volkswagen Space UP! 2011

Golf Twin Drive 2010

2010 2015 2015

ICE

25%

Source: Roland Berger. Automotive Insights (02.2008), N=2,082

Source: Germany Trade & Invest Research, Automotive News Europe, Automobilwoche, 2007


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Running onAlternative Fuels

Alternative fuels such as biofuels

have already enabled significant

advances in the partial replace-

ment of fossil fuels. Hydrogen isconsidered to be the most promis-

ing option for fully replacing fossil

fuels in the long term.

Hydrogen can either power a fuelcell or be combusted like conven-tional fuels. Most German OEMsare committed to the developmentof fuel cells. BMW has set on acourse of direct hydrogen combus-tion. Thanks to its strong chemicalindustry, Germany possessesstrong hydrogen provision andstorage competences.

The creation of a nationwide hydro-gen fueling infrastructure will bethe next major step towards thecommercialization of hydrogen pow-ered vehicles - around 20 hydrogenfueling stations have already beeninstalled.

Germany is a frontrunner in theutilization of first generationbiofuels. Biodiesel and bioethanol

account for a share of 6.2 per cent(by energy content) of fuels dis-

tributed at the pump today. TheGerman government introducedmandatory blending quotas forbiofuels with fossil fuels in 2007.Beyond these quotas, the Germangovernment has set a biofuelsshare (by energy content) target of12 percent by 2020 - some sevenpercent above the stated EU target.

Energy Storage

Energy storage solutions like bat-teries or ultra-capacitors are widelyknown to be the crucial componentin hybrid and full electric cars.Lithium-ion batteries are consideredto be the leading technology in termsof range, weight and size. Significantquantities of powerful and durablebatteries will be required by Germancar manufacturers in the near fu-

ture. This opens up opportunities forplayers along the whole value chain;ranging from material suppliers tocell manufacturers and integratorsas well as suppliers of electronicmanagement systems. Moreover,there will also be significant demandfor ultra-capacitors which provideadditional power on acceleration.

Fuel Cell TechnologyFuel cell technology is still consid-ered as being a very promising drive

technology in the long term. WithDaimler, Ford, Opel, and Volkswagenputting much effort into the develop-ment of fuel cell vehicles, significantsteps have been made in pushingthis technology forward. Germanyis currently home to more than 300companies specializing in this field- and over 65 institutes working inthe area of fuel cell R&D - makingit the European leader. Add to thisan excellent supplier network andits clear to see that Germany hasalready taken a leading position inthe development and future marketintroduction of this important tech-nology. The German government ispushing the implementation of fuelcells through the National Innova-tion Program for Hydrogen and FuelCell Technology. EUR 500 millionis being set aside for German andforeign companies conducting devel-opment and demonstration projectsin Germany.

Number of Registered

Natural Gas Vehicles

Number of Natural

Gas Stations

6.000

5.000

4.000

3.000

2.000

1.000

0

800

700

600

500

400

300

200

100

0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: German Natural Gas Vehicles Association, 2008

Market Development of Natural Gas Vehicles and Stations in Germany

Registered Natural Gas Vehicles

Natural Gas Stations


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Improving TodaysPowertrains

In the short to medium term, the

internal combustion engine will re-

main the main automotive propul-sion force. However, in recent yearswe have seen significant progress

being made in the further develop-

ment of todays spark-ignition (SI)

and diesel engines. Nonetheless,

there still remains great potentialfor further improvement.

Internal combustion engines

There is a clear tendency towardsdownsizing and turbocharging, butother technologies also bear a great

potential to make ICEs more fuelefficient, such as friction-reducingmeasures, variable valve timing(VVT), cylinder shut-off, and stop &go systems. Future SI engines will becloser to diesel engines in terms offuel efficiency. Clean diesels are thebestselling passenger cars in Ger-many today; accounting for nearly 50percent of the market. The demandfor technologies including two-stageturbocharging and high performanceinjection with direct needle control

valve is strong.

Transmission

Being the energy interface, trans-missions also play a vital role inpowertrain efficiency. Technologiesincluding double clutch and automa-tic transmissions (with up to eight or

nine gears), as well as hybrid drivesare very much in demand.

Exhaust

The coming into effect of the Euro 5emissions standards restricting die-sel particulate emissions to 5 mg/km from 2010 onwards will ensurethat diesel particulate filters remainin high demand. Euro 5 also restrictsNOX emissions to 180 mg/km fordiesel engines and 60 mg/km forgasoline engines from September2009. In a second step, emissionsfor diesel engines will be furtherrestricted to 80 mg/km from 2014.This norm will make special NOXpost-treatment necessary. Excellentbusiness opportunities exist for NOXstorage catalytic converter manu-facturers and selective catalyticreduction (SCR) technology suppli-ers. As the exhaust system becomesever more complex, the demand forcomplete exhaust solutions will rise

accordingly.

Year Total Quota

(in percent)

Diesel Quota

(in percent)

Gasoline Quota

(in percent)

2007 - 4.4 1.2

2008 - Minimum quotaapplies also

to subsequentyears.

2.0

2009 6.25 2.8

2010 6.75 3.6

2011 7.00 Minimum quotaapplies also

to subsequentyears.

2012 7.25

2013 7.50

2014 7.75

Thanks to higher energy efficiencycompared with first generation bio-fuels, second generation biofuelssuch as BtL (Biomass to Liquid)and cellulosic ethanol provide aneven more promising business op-portunity for investors. By grant-ing tax exemptions, the Germangovernment has clearly proven itscommitment to those fuels aboutto enter the market in the coming

years. Facilities are already beinginstalled or are under development.

As a result of emissions lowerthan those of conventional fossilfuels, compressed natural gas(CNG) and liquified petroleum gas(LPG)are also feasible medium-term alternatives. With annualgrowth rates of 35 percent, thereare already more than 64,000vehicles with natural gas propul-sion systems on the German roads

today and 340,000 LPG vehicles about 11 times as many as onlyfive years ago. These significantincreases have been made possibleby the constantly growing numberof gas service stations - over 800for CNG (more than in any otherEuropean country and a third ofthe total count) and 4,850 for LPG.Biomethane (upgraded biogas)represents an additional pathwhere innovative technology com-plies with established natural gastechnologies to lay the foundationsnecessary for sustainable mobility.Benefiting from a reduced tax rateuntil 2018, the flame of the naturalgas success story looks set to burnfor a long time.

Source: Biofuels Quota Act 2007


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Advances in Materials,Electrics and Elec-tronics

When considering approaches to

make vehicles more environmen-

tally friendly, it is necessary not

only to look at the powertrain but

to keep the overall system in mind.One way to increase car efficien-

cy is to reduce its total weight.Accordingly, lightweight materials

become increasingly popular. Inaddition, advanced electronics sy-

stems provide valuable solutions to

reduce vehicle fuel consumption.

MaterialsStricter safety regulations andincreased comfort demands fromcustomers in recent years haveresulted in a steady increase in

average vehicle weight. In orderto halt this trend, suppliers ofadvanced materials (including lightmetals like magnesium and alumi-num, high-strength steels, plasticsas well as fiber-reinforced mate-rials and composites) are enjoyinga steadily increasing demand fromGerman OEMs.

ElectronicsAs a key technology for future auto-mobiles, automotive electronics can

be applied both to reduce the fuelconsumption of the vehicle itself aswell as to efficiently steer the vehiclethrough the traffic system. The useof electric and electronic features(as seen with recuperative brak-ing and X-by-wire) contributes notonly to more efficient energy use,but also to a reduction in weight byreplacing mechanical components.

The expected demand for tire pres-sure monitoring systems is alsosignificant as they ensure a low roll-ing resistance of the car. A study bymarket research institution Frost &Sullivan (2007) forecasts 100 per-cent market penetration of this tech-nology by 2020. This will become astatement of fact if the EU enacts itsplans to make tire pressure moni-toring systems compulsory for all

new vehicles from 2012.

Correspondingly, a great number ofelectric systems also provide excel-lent opportunities for fuel efficiencyimprovement. LED systems, for ex-ample, offer low energy consump-tion and long durability.

Both industry and government areworking together to improve theframework conditions for sustain-able mobility. Intelligent transpor-tation infrastructure, traffic man-agement systems, vehicle-to-Xcommunication, and active safetyare just some of the focus areas inwhich opportunities abound.

USDb

illion/year

14

12

10

8

6

4

2

0

USA

Source: Mikroelektronik Trendanalyse bis 2012; ZVEI 2008

Demand for Microelctronics by Region 2007 to 2012

Europe/Germany

Japan Asia/ Pacific

2007 2012

4.2

6.1

8.3

5.2

13.2

8.3

4.9

6.8

3.5

6.8


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Incentives in Germany

Incentives in Germany Speeding up Sustain-able Mobility

Germany offers numerous incen-

tives for all investors regardless

of whether they are from Germany

or otherwise. There is a large

selection of programs designed tosupport a wide variety of business

activities at different stages of theinvestment process available. Sup-

port ranges from cash incentivesfor the reimbursement of direct

investment costs to incentives for

research and development (R&D).

Supporting DirectInvestment Costs

Investors can count on direct grants

to reimburse investment-relatedcosts such as the setting up of aproduction facility. The amount ofthese grants generally depends onthree factors: project scope, in-vestor company size, and the newinvestment location.

In Eastern Germany, investmentgrants are complemented by theInvestment Allowance, which isusually provided in the form of a tax-free cash payment but can also be

allotted in the form of a tax credit.

Investment incentives can also beprovided in the form of interest-re-duced loans made available by statedevelopment banks, or in the form ofpublic guarantees usually providedby state governments.

R&D Project Funding

Germany offers several incentivesprograms targeted at reducing theoperating costs of R&D projects.Programs operate at the regional,national, and European level andare wholly independent from invest-ment incentives (see below).

At the national level, all R&D in-

centives programs are subsumedunder the Federal Governmentsfour-year High-Tech Strategy. TheHigh-Tech-Strategy defines specificsectors with a high dependency onpromising high-tech developments.Each sector comprises variousR&D programs. Approximately EUR15 billion in total are reserved inthe form of non-repayable projectgrants until 2009.

Within the current framework ofthe German economic stimulus pro-gram, an extra EUR 500 million R&Dfunding budget has been set asidefor application-oriented researchin the area of mobility. Interest-reduced loans and grants are alsodisbursed for developing new hybriddrives, fuel cell and battery tech-nologies.

The National Innovation Programme for Hydrogenand Fuel Cell Technology

Incentives available for applied research in the areas of:

Hydrogen production, storage, and infrastructureFuel cell and combustion engine (including H

2hybrid powertrain)

Value chain cost reduction

The main focus is placed on mobility activities. Incentives are providedin the form of: R&D grants (max. 50% of eligible project costs)

Overall budget: EUR 500 million for 2006 through the end of 2016

The program is open to: SMEs, large companies, research centers

Two-stage application procedure:

1. Submit project outline at any time to program managing authority (NOW GmbH)2. Submit formal application


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How to Profit from Public

R&D Spending

To participate in R&D funding pro-grams, companies must define anR&D project with clear objectivesand a fixed time line. The projectapplication should highlight the in-novative character of the project andthe technological risks involved.An application for R&D funding alsohas to set out a commercialization

plan, detailing how research resultswill be transformed into products,processes or services which gen-erate additional turnover and/oremployment in the region wherethe R&D project is located.

The total amount of incentives aproject may receive depends on thesize of the company (small, medium-sized or large), whether the projectis conducted in cooperation withother companies or research insti-

tutes, and the research category ofthe project (fundamental research,industrial research, experimentaldevelopment).

Incentives available for application-oriented research in

the areas of: (selection)

Hybrid drivesFuel cell technologiesInnovative battery technologiesICT for electric mobility

Incentives are provided in the form of: R&D grants

(maximum 50 percent of eligible project costs) and R&D loans

Overall budget: EUR 500 million for 2009 through the end of 2011

The program is open to: SMEs, large companies, research centers

Application procedure

R&D grants: calls for proposals for specific research areasby the relevant ministry

R&D loans: application at any time to federal KfW Banking Group

Special Program for Mobility Research

NECAR Concept Study: cutaway model

(side view), access floor, fuel cell


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Our Investment Project Consultancy Services


Germany Trade & InvestHelps You

Germany Trade & Investsteams ofindustry experts will assist you insetting up your operations in Ger-many. We support your project ma-nagement activities from the earlieststages of your expansion strategy.

We provide you with all of the indus-try information you need coveringeverything from key markets andrelated supply and application sec-tors to the R&D landscape. Foreign

companies profit from our rich ex-perience in identifying the businesslocations which best meet theirspecific investment criteria. We helpturn your requirements into concreteinvestment site proposals; providingconsulting services to ensure youmake the right location decision. Wecoordinate site visits, meetings withpotential partners, universities, andother institutes active in the industry.

Our team of consultants is at handto provide you with the relevant back-ground information on Germanys taxand legal system, industry regula-

tions, and the domestic labor market.Germany Trade & Investsexperts helpyou create the appropriate financialpackage for your investment and putyou in contact with suitable financialpartners. Incentives specialists pro-vide you with detailed informationabout available incentives, supportyou with the application process, andarrange contacts with local economicdevelopment corporations.

All of our investor-related servicesare treated with the utmost confiden-tiality and provided free of charge.

Complete your project management needs from our range ofinvestment and one-stop project consultancy services.

Project Management Assistance

Coordination andsupport of nego-tiations with localauthorities

Joint projectmanagement withregional develop-ment agency

Project partneridentificationand contact

Market entrystrategy support

Business oppor-tunity analysis andmarket research

Location Consulting /Site Evaluation

Final sitedecision support

Site visitorganization

Site preselectionCost factoranalysis

Identification ofproject-specificlocation factors

Accompanying in-centives applicationand establishmentformalities

Administrativeaffairs support

Organization ofmeetings withlegal advisors andfinancial partners

Project-relatedfinancing and incen-tives consultancy

Identification ofrelevant tax andlegal issues

Support Services

Decision & InvestmentStrategy Evaluation


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Imprint

Publisher & Editor

Germany Trade and InvestGesellschaft fr Auenwirtschaftund Standortmarketing mbH

Friedrichstrae 6010117 BerlinGermanyT. +49 (0)30 200 099-0

F. +49 (0)30 200 [email protected]

Chief Executive: Michael PfeifferContact Automotive Industry: [email protected]

Conception, Layout, Text, TranslationsGermany Trade & Invest

Support

Promoted by the Federal Ministry of Economics and Technology and the

Federal Ministry of Transport, Building and Urban Affairs in accordancewith a German Parliament resolution.

NotesGermany Trade & Invest, May 2009All information provided by Germany Trade & Investhas been put togetherwith the utmost care. However we assume no liability for the accuracy of theinformation provided.

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About Us

Germany Trade & Invest is

the foreign trade and inward

investment agency of the

Federal Republic of Germany.

The organization advises andsupports foreign companies

seeking to expand into the

German market, and assists

companies established in

Germany looking to enter

foreign markets.

All inquiries relating to

Germany as a business location

are treated confidentially.

All investment services and

related publications arefree of charge.

www.gtai.com

Germany Trade & Invest

Friedrichstrae 6010117 BerlinGermany

T. +49 (0)30 200 099-0F. +49 (0)30 200 [email protected]

About Us

Germany Trade & Invest is

the foreign trade and inward

investment agency of the

Federal Republic of Germany.

The organization advises andsupports foreign companies

seeking to expand into the

German market, and assists

companies established in

Germany looking to enter

foreign markets.

All inquiries relating to

Germany as a business location

are treated confidentially.

All investment services and

related publications arefree of charge.

www.gtai.com

Photo:Daimler

industry overview sustainable mobility

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