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The future of driving: electric, automated, connected
Presentation by Dr. Volkmar Denner,
Chairman of the Bosch Board of Management
at the press conference for the IAA
in Frankfurt am Main, September 10, 2013
- September 10, 2013
- Mobility Solutions
The IAA gives automakers and suppliers like Bosch the opportunity to put an avalanche of innovation on display. At the same time, events like this one give rise to at least two fundamental questions for the automotive industry.
- First, how will cars drive in the future? In all likelihood, they will be electric, automated, and connected. Bosch offers technological responses to this question – multifaceted responses that complement each other, and innovative responses that open up new markets, or at least increase market shares.
- Second, where is the automotive industry heading? How Asian will it become, and how European and American will it remain? Here, Bosch offers economic responses – responses that are proactive, diversified, and socially responsible. Being more present in emerging markets doesn’t necessarily mean having less of a presence in established markets. Taking advantage of dynamic growth in countries such as China is only half the story. Stimulating the recent weak growth in Europe with high-tech solutions is the other half. While this task requires tremendous creativity, it is the only way we can safeguard the long-term success of our European locations.
Bosch growth: automotive technology is gaining momentum
First of all, let’s have a look at our business. According to our estimates, the Bosch Group will register growth of 2 to 4 percent this year. We are improving our earnings step by step, even though considerable effort is still needed, and our photovoltaics business is still taking a very heavy toll. After a modest start to the year, our Automotive Technology business sector has been gaining significant momentum. Its operative sales will likely grow by 5 percent in 2013 – faster than global automobile production. And it is precisely in automotive technology that earnings will improve. This year, we are expecting a pre-tax return on sales of around 6 percent.
Long-term trends: an advantage for globalized suppliers
But what are the prospects beyond this year? The long-term trends in the automotive market affect suppliers like Bosch as well. In this regard, I would like to focus on a few important points.
- According to our estimates, global automobile production will grow by an average of 3 percent in the coming years. This is one to two percentage points lower than in the years before the financial crisis, the effects of which are still being felt in Europe in particular. Even so, weakness here will be offset by growth in North America and above all China.
- The European automotive market will at least begin to experience a gradual revival. One of the reasons for this is the average age of passenger cars, which has reached a record high of nearly nine years. In North America, however, the average age is eleven years –and growing demand there can be seen as the resulting catching-up process. A country like China, on the other hand, is catching up on a much larger scale. Vehicle density in China has just recently reached a tenth of western Europe’s, and the country's dynamic growth will continue against this backdrop.
- Manufacturing will also increase in the emerging markets. For example, German and Japanese companies are increasing their share of foreign manufacturing activities at roughly the same pace – from around half in 2005 to two-thirds by 2015. Globalized suppliers clearly have an advantage here.
- Around the globe, environmental protection as well as accident prevention targets and standards are becoming ever stricter. This is giving a boost to powertrain electrification and the automation of driving, both of which are coming step by step. By 2020, we expect that 12 million newly registered vehicles will have an electrified powertrain. After that, the number will see a steeper increase. Furthermore, by 2025, nearly every new car sold worldwide will be connected with mobile data networks – and the data transfer rate will be so high that real-time hazard warnings will also be possible via car-to-x communication. This is an important prerequisite for automated driving.
As this short overview has shown, the automotive industry is facing a number of economic and technical challenges. Bosch already has the expertise required to tackle these challenges.
- We are already close to our customers in the automotive industry, wherever they are in the world – with a network comprising 95 manufacturing locations as well as 50 research and development sites. Of the 36,000 engineers working at Bosch in the area of automotive technology, by the end of this year 19,000 will be located in Europe, 2,000 will be located in the Americas, and nearly 15,000 will be located in Asia Pacific.
- Our strong technical presence is paying off: in the last decade, we already registered above-average growth in Asia’s emerging markets. For example, China’s and India’s share of global vehicle production has tripled since 2003, and Bosch’s sales in these countries have increased sevenfold.
- And it is especially in powertrain and safety systems, the most technically dynamic areas of development, that we are market leaders and have an innovative edge. Bosch is number one in the areas of fuel injection and brake control systems, as well as in the realm of sensor technology. This is bolstered by cutting-edge production processes that are highly precise, and above all, unique. For example, we use ultrashort pulse lasers to drill fine nozzle holes for our gasoline direct injection systems. And our business continues to develop positively – also when it comes to components for CNG powertrains, for which we produce the world's smallest injector. In 2012, we produced a million units – the number will likely surpass 1.3 million in 2013. Driver assistance systems are experiencing particularly strong growth. Market volume in this area will increase by a third each year between 2013 and 2017 – Bosch’s growth will be even higher than this, and considerably so.
To secure its future, Bosch is focusing on the success factors that are decisive in the automotive industry: quality, internationality, and innovative strength.
- We are continuing to expand our extensive global development and manufacturing network, for instance with new locations in eastern Europe and Asia. In the Asia-Pacific region alone, we will have invested some 2.8 billion euros between 2011 and 2013. China is our main focus in the region. With a total investment of 300 million euros, we opened three new automotive technology locations in the country in 2013 alone, namely in Nanjing, Donghai, and Chengdu. What is more, our "local for local" development strategy has played a particularly important role in China. For instance, together with German and local manufacturers, we have developed navigation systems that are specially designed for the Chinese market.
- Beyond our low-cost solutions for emerging markets, we are focusing on maintaining our leading position when it comes to technological progress. This is essential if we are to secure the lasting success of our locations in established markets. To this end, we have invested some 300 million euros to build a new research center in Renningen, close to Stuttgart. With our electronics and sensor technology expertise, we will help shape the future of the automobile in the areas of electric, automated, and connected driving.
The technological progress we have made with gasoline and diesel engines is also significant on our path to e-mobility. We can now achieve fuel savings with internal combustion engines of some 20 percent even over 2012 levels. And we are still leveraging additional potential to make driving more fuel-efficient. For instance, we have expanded the start-stop system to make it a coasting assistant. To this end, a sensor gives drivers advance warning of upcoming bends in the road or town limits. On highways, this systems networking translates to a real fuel savings of up to 15 percent in real driving conditions. That leads to not just lower fuel costs, but also lower CO2 emissions. This is where e-mobility comes full circle: thanks to our efficiency technology, the strict CO2 emissions standards expected to come into force in the European Union in 2020 can be met with varying levels of electrification, depending on the vehicle class. Our product portfolio for the hybrid drive will also help achieve this objective. We have already made hybrid drive systems possible in the mid-sized vehicle segment, for instance with the boost recuperation system. With its 48-volt generator and compact lithium-ion battery, the system allows us to recuperate so much braking energy that we can achieve a fuel savings of seven percent – a huge benefit at a low cost.
We are also realizing major solutions with the hydraulic, strong, and plug-in hybrids, and with the purely electric drive like the one we provided for the series-produced Fiat 500e. By 2014, Bosch will have worked on about 30 orders related to powertrain electrification. While these projects are not immediately intended for the mass market, they are paving the way for it, also in emotional terms. They represent a new kind of driving experience, one that is quiet and enables rapid acceleration, particularly at low rpms. The Porsche Panamera with Bosch plug-in hybrid technology, which is on display at this year's IAA, is one example of this. Such vehicles provide a new user experience and can promote the market's further development.
Despite the progress we have made, we still have quite a bit of work to do, both in business and technological terms. Our aim is to reduce the cost of lithium-ion batteries by at least half, and to at least double their energy density. To this end, we have agreed to enter into a joint venture with two Japanese partners, GS Yuasa and Mitsubishi, subject to the approval of the antitrust authorities. The potential partnership is set to be headquartered in Stuttgart, and will allow us to combine our expertise in electronics and sensor technology with our partners’ in-depth knowledge of cell chemistry. Moreover, it will enhance Bosch's access to the Japanese market.
For Bosch, e-mobility is far more than just the drive system of the future for cars. With systems for e-bikes and e-scooters, we have made it possible to experience e-mobility in other ways as well. In so doing, we are supporting the multi-modal transport concepts of major cities. And we are also involved in providing a consistent infrastructure. For example, our subsidiary Bosch Software Innovations has enabled e-roaming, which allows customers to use the charge spots of different providers. The company has developed the required software platform for Hubject GmbH, a consortium of automotive and energy companies in Berlin. Bosch Software Innovations also offers the corresponding “starter package” for charge spot operators. Particularly in the area of e-mobility, Bosch has focused on developing innovative business models, and this goes well beyond the traditional product business.
Saving energy and lives: the Bosch iBooster
And yet many new Bosch products from a broad range of areas are compatible with this new type of driving. Among them are electronically controlled brake boosters such as the iBooster, which can operate without any vacuum from the internal combustion engine and remains active during electric driving as a result. Depending on vehicle design, the iBooster can increase the range of electric driving by up to 20 percent. What is more, it builds up braking pressure three times faster than conventional pumps. At speeds of 30 kilometers per hour, this can shorten braking distances by up to 1.5 meters. Combined with ESP®, our automatic emergency braking can prevent a third of all head-on collisions with pedestrians. With the iBooster, up to half of these accidents can be prevented. This is technology that saves lives – in other words, technology that is "Invented for life".
Automated driving: new sensors, new systems
Innovations such as these clearly demonstrate that we aim to achieve safe and sustainable mobility. And the road to accident-free driving requires more automation, as more than 90 percent of all traffic accidents are the result of human error. This fact alone is reason enough to reduce the burden on drivers. In this area, Bosch has developed more pioneering solutions than any other supplier – take ABS and ESP®, to name only two. Today, we are the only automotive supplier that is testing automated driving on Germany's roads. At Bosch, more than 5,000 engineers are working on the future of our safety and driver assistance systems. We have made progress not only in the realm of sensor technology, for instance with the stereo video camera that we are bringing to the car next year. We are also developing a range of new assistance systems. These systems demonstrate the three traffic situations in which we can begin to automate driving:
- Parking is the first. In 2015, Bosch will be launching an expanded parking assistant. The system will include a remote control that helps maneuver the car in crowded garages. In the future, the car will be able to look for a space in parking structures on its own with the help of a 360-degree video sensor.
- The second is stop and go. As early as 2014, Bosch will be launching a traffic jam assistant that keeps the vehicle in its lane in congested traffic by way of steering intervention. In the future, the system will become a traffic jam pilot with an automated lane-change function.
- Third, the future of automated driving on the freeway has taken a clear direction. This field of development includes combining adaptive cruise control with the lane-keeping assistance function. By the end of this decade, a highway pilot will be available.
Connected driving: more safety, more service
The aim of vehicle networking is not only accident-free driving. It also strives to make driving more comfortable and to increase the range of services on offer. Here, too, Bosch has developed a broad range of solutions:
- The first is the “connectivity control unit”. In connection with vehicle condition monitoring, a CCU paves the way for new Bosch services for fleet operators, such as timely error analysis and targeted maintenance. A major leasing company will be the first to use this in 2014.
- The second is Drivelog, an online portal. The platform provides drivers with a digital overview of all vehicle-related costs and service offers. Our portal already counts almost 250,000 visitors each month. And this number could increase very soon: as of now, all members of the German motor club ADAC can use selected Drivelog functions.
- The third is mySPIN. This new Bosch solution aims to integrate smart phones into the vehicle. In other words, with this technology we are safely bringing the internet into the car. Via mySPIN, smart phone apps appear on the dashboard display.
The future of driving: converging development paths
This brings me to my conclusion. Whatever our engineers are working on – whether they are making driving more comfortable, safer, or more economical – their efforts are improving quality of life. This is where the main lines of automotive development converge: electrification, automation, and connectivity are interconnected. Bosch is moving forward briskly on all three of these paths – and this will give rise to new growth opportunities, especially in Europe.
Bosch at the IAA 2013
Bosch Automotive Technology gains momentum:
five percent more growth,
around six percent return
Bosch automotive technology at the IAA 2013
From products such as the iBooster to advances
in electromobility and highly-automated vehicles
Click here to find further information.
Curriculum Vitae Dr. Volkmar Denner
At the 65th International Motor Show in Frankfurt, Bosch is showcasing technical solutions for connected mobility. A variety of innovations are helping to make road traffic cleaner and more efficient, as well as safer and more comfortable. Bosch is exhibiting its highlights at booth A04 in hall 8.
RF00203 - September 10, 2013