The biggest opportunity to shape the future? Andreas Gorbach’s be a mover talk with Jörg Howe

The biggest opportunity to shape the future? Andreas Gorbach’s be a mover talk with Jörg Howe

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Hello and welcome to the latest edition of our Be a Mover Talks. Today we are in Leinfelden-Echterdingen. At Be a Mover, we introduce people who want to change something in our society for the better and who have a mission for the future. One of these people is Andreas Gorbach. Andreas! Welcome! Andreas is a member of the Board of Management: “Daimler Truck for Truck Technology”. In the past, one would have said for Research and Development.

Why this expression “Truck Technology”? Hello Jörg, I am delighted to be here with you as well. Yes, in fact, technology is an abstract term at first. Technology - what do I mean by technology? Basically, technology, as they say in English, is an enabler. So it enables something that would not be possible without technology. And in commercial vehicles this is especially an added value for the customer.

This is the task of technologies in commercial vehicles and thus, if for the customer, then of course also for the company and in the end for our shareholders. And that is also the beauty of the term commercial vehicle - the product already hints at its nature - it has a benefit and technology is intended to increase precisely this benefit. At Truck Technology, we have the technologies that differentiate us before the customer, especially in the long term, and also scale globally, combined into one organization, that we refer to along the entire value chain as Truck Technology.

So these are future technologies on the one hand, but of course also traditional technologies that we still need to move trucks. Did I understand that correctly? Yes, that’s right. It’s the technologies, that meet the attributes of long-term differentiation before the customer and global scaling. And that includes the drive, for one thing, and that’s exactly as you say, conventional diesel. And then, in the end, however, also hydrogen and electric.

In addition to the drive, however, it is above all what we might call the brain of the trucks, i.e. everything that has to do with software and electronics. So it is anchored in these two technology groups, drivetrain, and software and electronics, and as you say the conventional as well as the future. If you look at your life decisions, you are comparatively young for the Board of Management. Among other things, you studied in the USA, completed a Master’s degree in the USA, and you obtained a PhD in Stuttgart. What did your time in the USA do for your development into a truck technology man? Well, on the one hand, I didn't know back then, of course, where my path would lead me.

But it made me more aware of content, because coming here from training as a chemical engineer I changed direction again and worked in control technology. And I benefit greatly from this today. I learned a lot of analytical thinking in this role. But perhaps much more important was the personal growth being apart from parents, self-employment, a completely new environment and in all the uncertainty that I had back then, I needed to find my way.

Looking back, I think that was the most important thing. So how did you find your way to the truck? You hadn't planned it and so it wasn't predictable that, at some point, you would join the Board of Management of the largest truck manufacturer in the world. The honest answer is that it was actually a coincidence. I had actually just taken charge at a Daimler Truck Assessment Center as a kind of exercise for what I actually want to do.

And what happens then and that's maybe representative for others, I would do it like this again. I got to know my future boss at a personal level as well as the things he represented in terms of content, that impressed me to an extent that I decided to join Daimler Truck. Have you regretted it at any point? No. Interestingly, I hear this from many people working here. They say it was a chance encounter to join the team here, but the way people interact with each other a bit informal, sometimes a bit rough around the edges, but always relatively open, actually helped make you want to stay. How do you treat the people you work with? Tough love, friendly, open-minded, inviting? How would you describe it? Above all, I would describe it as authentic.

I think we consider each other - and this is typical of the company - to be on equal footing. The product and our customers are much more important than other dysfunctional types of interaction, that you might be familiar with from other companies. Yes, we are pragmatic. Yes, we are down-to-earth. And anyone who has experienced this and at the same time felt the enthusiasm for the product, is now more likely to remain in this company. Now you don't buy a Trak because it’s so beautiful, even though there is one behind us here, quite an impressive one, I think, but because you want to make money with it. The key concept is always

Total Cost of Ownership. Now, for years, we relied on the diesel engine, at the moment the Euro 6 stage. Some are also talking about Euro 7, but that is a whole different kettle of fish. However, the future is fast approaching. The future of the Trak actually has two pillars, if I have understood correctly.

Electrical and hydrogen. Why do you, do we, work with this two pillar model? Why not choose one or the other? So I'm glad that you asked the question, because I read responses to this question from others in the newspaper almost every day or in other media and they are quite different. And I think to be able to describe why we are doing both, you have to have at least three perspectives. The first perspective is that of the engineer. 119 00:06:32.319 --> 00:06:34.160 And of course, you have to admit that you can solve all the different transport problems - and we handle a lot around the world - in all the different regions with battery technology alone.

Incidentally, I could also solve all of them with hydrogen. And then you need to deal with significant restrictions here and there in terms of range, flexibility, payload, i.e loading options, etc. But if I’m willing to accept this restriction, it can be technologically solved by one of these solutions. The second perspective is the customer's and that is much more important. Our customers are professionals who calculate the Total Cost of Ownership as well as we do. And we hear both side from them, namely a dependency on the transportation tax.

And that’s completely different everywhere, from street cleaner or city bus to mining, long-distance haulage or construction sites. Depending on the application and also the region, and in terms of subsidies and energy costs, battery-electric might be more worthwhile for us - it's more economical, creates added value in terms of technology - and sometimes the hydrogen drive will be the answer. This is the customer’s point of view and it will not apply worldwide and not identically for all transportation problems . And the third perspective is perhaps the most important one. The availability of energy.

And if you look at the world today, there are, of course, countries that have too much energy, i.e. electricity, and others don't have enough. That’s why there is global energy trade, today primarily in the form of gas, oil and coal. Germany imports 60% - 70%, Europe 50% - 60% of its energy. Now, when you’re rushing into a hopefully decarbonized world in 2050 and the Federation of States around the Paris Treaty has hopefully persisted, then this will not change substantially. Of course, we will be once again generating local energy in Germany, for example, in the form of mostly green electricity.

But we will still import substantial amounts of energy in Europe and in other countries as well. We will do so again in the form of a molecule and not mainly as electricity. So you have to provide a green molecule, to enable energy trading worldwide. And hydrogen and its derivatives are highly suitable for this. Independent of mode of traffic, mobility and commercial vehicles, in a decarbonized world, hydrogen must play a central role.

If this is the case and it is also more economical for the customer in certain regions and for certain transport tasks and providing it's technically possible, you have to conclude, that you go down both routes. And so both will also prevail. Now it is possible to add further perspectives, such as infrastructure expansion. That would have been my next question. I have a friend who drives a Toyota Mirai. It's practically a handmade hydrogen vehicle.

He loves the vehicle, but as a rule, you have plan every journey, no matter how long it is, because the Cologne region offers only three possible hydrogen filling stations for these types of cars. Sometimes two of them are out of order. If all three are out of order, for whatever reason, then you've lost, you will have to go back to a diesel car. Infrastructure is the critical point if you say hydrogen yes, green hydrogen too, yes. But where does the infrastructure come from? This is the critical point both in the battery electric technology and in electrical charging as well as in hydrogen.

This will probably also be the critical point in the speed of implementation. Maybe, if you're being critical, you can say, in the beginning the OEMs were not fast enough in providing the products. What you saw at IAA was a real fireworks of electric and hydrogen-powered vehicles.

I think all manufacturers are going full steam ahead and making the products available. Infrastructure is likely to be the limiting factor in decarbonization and this applies both to battery electric as well as to hydrogen technology. But there again we need both. If you look at a typical rest stop and there are 50 trucks refueling diesel there per hour today and in the future, we would like to be electrically charging 50 trucks in one hour. For this to happen in an hour, we need around 700 kilowatts.

Then we need 35 megawatts of electricity. This is a huge challenge, to make this available nationwide at charging stations and much more still throughout the grid. And that’s another reason why the duality of hydrogen and electric charging makes a lot of sense. So if I imagine that, for battery electric technology, I would more or less always need a small power plant at such a rest stop to generate this amount of energy.

Because the grids in their current state can no longer cope with high loads . We recently had the situation that there was too much wind energy in the north. The distribution network operator here in Baden-Württemberg then said: You need to use less electricity.

Normally, you no longer need to explain to a person why we should consume less, when there is too much energy. But the grids can't take it. Do we even have stable electricity grids that can somehow manage something like this? So it’s all the more important, that we store electricity in the form of green molecules and hydrogen is also a great solution. One is not the argument against the other either.

I think we really need both. We need an expansion of networks and network stability. But we also need the opportunity to store a surplus of electricity in the form of hydrogen.

Whether that’s in the north of Germany, or in countries with much more sun, who then export the hydrogen to Germany. Probably also both. But it is indeed and I can only repeat it and you say it too – the focus now has to be on providing infrastructure and further prohibitions or regulations for the product are of no use because the speed does not increase as a result. Now we have a whole range of products, both the in e-sector, as well as, when I think about the GenH2 Truck, our hydrogen truck, upcoming products, which we can also offer to customers. Do you actually drive them yourself? Do you get into one of these and drive it to try it out? Of course! And what is your impression of the eActros? Because it is fun.

But much more importantly, and I think that applies to all employees, because we need to know our products. We need to know our products and above all we need to be able to assess what plays an important role for the customer. For example, what kind of impression do you have of such a battery-electric truck? Is it also fun to drive? Yes, everyone knows that from the car.

Of course, the topic of acceleration and torque is something great, but that doesn't really play the decisive role for our customers. Profitability is actually the decisive factor. And there are already applications in which involved subsidies and corresponding electricity prices mean that such a truck can be worthwhile economically. But that’s with infrastructure and the product, this is the third important factor. Profitability for the customer is not there nationwide and that’s why it’s not fun nationwide. So, in terms of driving yes, but not from a profitability perspective.

And that’s why we certainly need to continue to have substantial funding mechanisms in the transition phase and, above all, competitive energy prices. With batteries, handling safety is always a certain problem. Many people also think that batteries can catch fire and burn. Now we have three letters that somehow point towards the future, LFP.

So in principle battery chemistry. What exactly is LFP? Is this the right, the new way for batteries? In brief: Yes. For commercial vehicles, yes. What are we seeing today? Today, we see upscaled solutions, especially from cars . Smaller cells based on NMC, nickel, manganese, cobalt. And that's right, because you get the scale from the car and products can be made available relatively quickly for a market that is, however, still small.

This is what we see in the field today. Is this the best option for commercial vehicles? No. From our point of view an optimum is actually achieved when I have competitive costs for the commercial vehicles - now I’m back talking about to profitability - and when I have safety, robustness, long service life to take into account too. The requirements are substantially different for cars .

It’s more about energy density, it’s more about fun at the wheel, it’s more about power. And so a premium car or even a race car will never have the same technology as commercial vehicles in terms of batteries. LFP, i.e. lithium iron phosphate batteries, fulfill precisely these criteria

Service life and safety, but also costs are significantly better going forward than the prospect of what is possible with NMC. And that’s why I think LFP is the better chemistry going forward for commercial vehicles. Now this year is the year in which we want to sell the the GenH2 Truck, our hydrogen truck, in large numbers . So to speak, it's about developing the vehicle, the type, but also showing what it can do. What is the best way to show what such a hydrogen truck can do? Driving it. Yes, and are there a few highlights we can look forward to this year? Okay, I think we’re going to go a few marketing trips to demonstrate the performance .

We have already made it across Brenner pass. It is the major pass across the Alps. For those of us who don't know where Brenner pass is, who might be led to think of combustion engine, which is known as "verbrenner" in German. But it’s Brenner pass we're talking about. So a route on which a high transport capacity plays a decisive role, and along which long-haul trips also travel. And I think that’s the great thing to show that we have 1,000 kilometers here and more range, and with relatively high tonages.

And that’s also the sweet spot. We mentioned earlier, depending on the application, sometimes the hydrogen, sometimes the battery is better. These are, of course, applications where, looking forward, the fuel cell is more likely to come out on top. Now with the hydrogen truck the fuel cell is an essential element. You were CEO of cellcentric for a relatively short time.

Cellcentric is a joint venture of Volvo and Daimler Truck. How important it is to create the industrial application for this now, so to speak , to build a factory to produce fuel cells? This is of crucial importance. First of all, i have to admit, if I may here, that it was a great time and I’m still 200% convinced that we did the right thing. With cellcentric and in the joint venture with Volvo.

We can share the investments, but even - and this is much more important here, double the applicability. It is particularly important in the production of such major assemblies to produce significant quantities relatively quickly. And both companies are fully convinced that we are on the right technological path here. And the next phase is industrialization - that was your question - as the next important step.

And we are building one of Europe’s largest factories here for fuel cells. How long will it take before it is fully functional? So here, the topic of infrastructure is actually again the limiting factor. We assume, that in the second half of the decade we will enter large-scale production. And by then, of course, the cellcentric giga-scale factory will also be ready. Before that, we will not yet see the large quantities in fuel cell production, because the infrastructure is not yet there. And it doesn't bother you, that we are doing it together with our toughest competitor? No, it doesn't bother me, it helps.

And I think we’ll see more of that too in the future. We remain tough competitors, but we join forces where there is great common ground in the technology transformation and investments are also shared. And the differentiation then takes place elsewhere.

Now we’ve talked a lot about technologies and about the future. But the decisive factor is ultimately the human being, who, so to speak, is supposed to oversee and drive this development forward and, of course, logically the customer as well. How do you get your people to follow this path, this two-way strategy, electric and hydrogen, how do you leave no-one behind? You have to make changes in your mind. There are also many colleagues who have 20 years of diesel experience to build on. Can you even turn them in this direction? Surprisingly, that's fortunately very simply.

Why? We are facing enough challenges anyway in the industry, supply chain, etc. and with the transformation towards decarbonization probably the biggest challenge, that we’ve ever had in the industry. And that’s how you can look at it, but at the same time it's the greatest opportunity to help shape the future. The opportunity has never been greater and the employees recognize this. They see this in diesel technology because they have understood that the contribution they are making today provides the financial means for the future. So you could say, without diesel technology, there are no electric or hydrogen vehicles.

At the same time, employees recognize the design space they have, both for battery electric as well as for hydrogen vehicles and want to get involved. So this is already very intrinsically motivated. I can contribute my passion to this and that is also infectious.

But basically, it’s an intrinsic passion of employees to be able to help shape this. It’s actually a once-in-a-lifetime opportunity. Do you have the feeling that the social environment, I'm talking here in Germany about municipalities, regional governments, the federal government, policymakers are also supporting this change, that there is enough support or is it still very much in its infancy? Both. So on the one hand, I think we are experiencing a lot of pressure, of course, in terms of decarbonization. The pressure is not bad either. Is the pressure sufficiently supported by appropriate funding tools and by infrastructure expansion? I think we can take this up a notch, just as we can with the speed of bureaucracy and approvals of decisions and processes.

Does this mean that we will experience a lot of this for the future here, so to speak? Or do we have to go to the USA because this will be particularly well supported in the future by the Inflation Reduction Act? I believe that this is indeed going to be fierce competition. Of course, with the Inflation Reduction Act, the USA has sent a strong signal in terms of economic stimulus and job creation in the USA, that is unparalleled. I assume, and I hope that Europe will find a smart answer here that doesn't come in the form of protectionism, but in the sense of properly incentivizing future technologies.

With this optimism in mind, I believe that there remains a healthy competition of sites and markets. Okay, and finally the question: What would you like to see this year, in the near future? What are the next steps? I hope that with the same down-to-earth attitude, we have talked about, with the same passion for the products, but also for the technologies so that we can continue to drive the work forward together with the same amounts of optimism . Very nice, Andreas, thank you very much for this lively conversation! Thank you very much! And that was our Be a Mover talk, this time with Andreas Gorbach, Head of Truck Technology, i.e. the Board of Management for technological developments in the Truck unit. I’m glad you enjoyed watching and we’ll see you again at the next Be a Mover Talk in very near future. Thank you very much!

2023-02-18 03:04

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