The Industrial Challenges of Green Vehicles in Catalonia

Damià Martín (Barcelona,1980) The industrial challenges of green Project manager in the Analysis and Foresight Unit of the Observatory for Industrial Foresight from the Department of Innovation, Universities and Business of the Catalan government. An Economics graduate from Barcelona University, he has specialised in the strategic and competitive analysis of sectors. vehicles in Catalonia Over the last four years he has collaborated on various reports analysing competitiveness to improve industrial clusters and has recently acquired great expertise in the area of energy's strategic implications for industry. Of note is the project analysing the challenges and industrial opportunities of photovoltaic energy, for which he co-authored a book in 2009 and, along the same lines as this publication, the project diagnosing the implications of electric vehicles for Catalan industry and the design and implementation of plan of public support actions, from this year. Damià Martín Tomàs Megía

Tomàs Megía (Blanes, 1969) Head of the Analysis and Foresight Unit of the Observatory for Industrial Foresight of the Department of Innovation, Universities and Business of the Catalan government. A Telecom Engineering graduate from the Polytechnic University of Catalonia and with an MBA from the Polytechnic University of Madrid. He has accumulated more than 15 years of experience, initially in the areas of information systems and ICT consultancy, in companies such as Cap Gemini IT-Systems and, later, in strategic consulting. His career has undergone periods of very close relations with the public sector, having taken part, from the start, in the relevant implementation projects regarding the Information Systems of the General Directorate of Citizen Safety, implementing the CIDEM Company Digitalisation Programme and starting up the Observatory for Industrial Foresight. In this last challenge, and throughout the last seven years, he has coordinated and taken part in more than twenty initiatives to improve competitiveness in various areas of industry, business, sectors and clusters, coordinating studies analysing the competiveness of industries and how to boost them. He has also coordinated various projects on industrial foresight and analysing the impact of trends and technologies. The industrial challenges of green vehicles in Catalonia Damià Martín (Barcelona,1980) The industrial challenges of green Project manager in the Analysis and Foresight Unit of the Observatory for Industrial Foresight from the Department of Innovation, Universities and Business of the Catalan government. An Economics graduate from Barcelona University, he has specialised in the strategic and competitive analysis of sectors. vehicles in Catalonia Over the last four years he has collaborated on various reports analysing competitiveness to improve industrial clusters and has recently acquired great expertise in the area of energy's strategic implications for industry. Of note is the project analysing the challenges and industrial opportunities of photovoltaic energy, for which he co-authored a book in 2009 and, along the same lines as this publication, the project diagnosing the implications of electric vehicles for Catalan industry and the design and implementation of plan of public support actions, from this year. Damià Martín Tomàs Megía

The Industrial challenges of green vehicles in Catalonia Bibliograﬁa I. Megía, Tomàs II. Catalunya. Departament d'Innovació, Universitats i Empresa III. Observatori de Prospectiva Industrial IV. Títol 1. Vehicles elèctrics – Catalunya 2. Automòbils – Indústria i comerç – Catalunya 621.33(467.1)

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The Department of Innovation, Universities and Business does not necessarily share the opinions stated in the documents from the Diagnoses of the Observatory collection and the authors are exclusively responsible for these opinions. The industrial challenges of green vehicles in Catalonia

Damià Martín Tomàs Megía

Acknowledgements

First of all, we would like to acknowledge the work carried out by the consultancy firm Bax&Willems and their collaboration on the project that has led to this publication. Their knowledge of the sector and their creativity in providing advice have laid part of the foundations for the findings of this work.

We would also like to acknowledge the magnificent sources of knowledge we have been able to make use of, resulting from the work by different international agencies, universities and private consultancy firms, particularly the characterisation of the automotive industry’s value chain as provided by INTERBEN, as well as the prospective studies carried out by the consultancy firm ROLAND BERGER.

Special thanks go to Ezequiel Navarro (PREMO) for his enthusiasm, the experience he has shared with us and especially for making us believe we were up to the challenge.

In general, we would like to thank the firms and professionals from the industry for the time they have dedicated to us, the knowledge they have placed at our disposal and their spirit of collaboration, so vital for a good understanding between the public and private spheres:

• Carme Saez and Inka Guixà from LaFarga Group • Juan A. Aixendri, Enric Pons and Jaume Cots from Ausa • Inocencio González from Catmoto • Pablo Gayà and Gabriel Alarcón from Sener • Julio Elvira from Mazel • José María Piqué, David Huguet and Ramon Busquet from Siemens • Jordi Mestre from Lear • Carlos Juan from J.Juan • Jaume Prat from Ficosa • Joan Montoliu from Derbi • Javier Piris and Luis Bravo from Nissan • Víctor Puig from Dilixi • Santi Castellà from Seat • Francesc Perarnau from Gestamp Automoción • Isidor Terradas, Lluís Rodríguez and Toni Castella from Facomsa

ACKNOWLEDGEMENTS 5 • Ángel Hermosilla from UPM • Xavier Amores from the Economics Office • Assumpte Farran from Icaen • Joan Pallisé from Circutor • David Miró from Sony • Rosa Palacín from ICMAB • Agustín Aragón and Donia Razazi from Fitsa-Foreve • Julio de Juan and Vicente González from MITyC • Xavier Fernández and Carlos Ibarlucea from Suzuka Zero • Ramon Arribas and Xavier Cazorla from CADS • José Manuel Barrios, Josep Maria Farran and Ignasi Ferrer from Idiada • Igor Cantero from Cegasa • Óscar Miguel from Cidetec • Ezequiel Puig from the UPC • Maite Garcia and Rafel Boronat from STA

And all those who do not appear on the list but who have provided us with a useful point of view.

Finally, we would also like to thank Elena Ribas for her collaboration, Joan Miquel Hernàndez for his wise direction, all our colleagues at the Observatory for Industrial Foresight and Secretariat for Industry and Enterprise, who have always been ready to make their own contribution, no matter how small, as well as our colleagues at ACCIÓ with the indefatigable Glòria Prats at their head, and particular thanks go to César López for having encouraged and shared a good part of this project in its initial stages.

6 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Prologue

When Tomàs Megía and his team at the Observatory for Industrial Foresight (OPI) visited us at PREMO to ask for our help on this project, we had just won the inductive components contract for the new General Motors electric vehicle through Delphi in Detroit, we had set up an alliance for its joint development globally with Lear in the United States, we were developing Renault network connection filters in Paris and we were working with our small team inTokyo to gain a foothold in Japan. All this designed and conceived in Barcelona by a highly qualified team whose average age was under 35.

This sector, which moves the world, industry, infrastructures and energy, started to transform a few years ago with the decision by the Japanese government to adopt a clear industrial policy designed to base its automobile industry on this new paradigm, with a first step at that time: the hybrid vehicle. Afterwards, more efficient internal combustion vehicles have followed, as well as mixed hybrids, extended range electric vehicles, pure electric vehicles, etc.

The work we’re describing here is a clear example of the opportunities and future directions of green vehicles. The most conservative estimates predict a market, only in power electronics, totalling 5 billion dollars by 2020. A wide- open blue sky where everything is yet to be achieved and where, in Catalonia, we’re competitive and have companies with technology, a history of trade dating back a thousand years and a young, well-qualified generation that was born polyglot and is used to working in teams and at a global level.

A competitive economy is one that gets more quickly to the same places the rest also reach, sooner or later. An economy that’s capable of finding the fastest route, as the Catalan economy has always managed to do.

Never before has such a great convergence of technology occurred in a sector that is just one step away from revolutionising cities, the generation of electricity, the integration of electronic technology, programming, communications, chemistry (batteries) and the environment. The report entitled“Indústria XXI”shows that the real weight of the industry and services for production in Catalonia is 59% in terms of GAV and 53% in terms of employment. Too important not to sign up for this challenge that, born in Japan, is spreading to the United States and Europe, led by France, and that has forced the large German manufacturers to thoroughly review the green solutions they offer. Now no-one can do without ecological solutions; not even industrialists like us, can ignore the fact that we’re all set to do it, both technically and in an economically viable way.

This industry is modular, lighter and more open to integration, less tied to the physical requirements of proximity, and requires Catalan firms to overcome our reluctance to working in a network, following models of open

PROLOGUE 7 innovation, sharing resources and capabilities to overcome the problems of scale that are stopping us from accessing the larger markets.

A few of us pioneers are already providing this new sector with added value and what we see outside Catalonia is neither better nor more competitive than what can be done by Catalan industries.With determination and a clearly defined Catalan industrial policy with vision, a new scenario will open up before us where our strengths can be maximised. Opportunities, when we take advantage of them together, are multiplied.

A task, then, worthy of being considered by all stakeholders. Congratulations to the OPI.

Ezequiel Navarro CEO Premo Group

8 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Index Presentation 11 Introduction 15 Executive Summary 21 1. Brief notes on the Catalan automotive industry 27 1.1 Sector composition 28 1.2 Brief competitive analysis 29 1.3 Expected trends 33 2. Green vehicles 35 2.1 Vehicles within the green trend 36 2.2 The multifaceted challenge of green vehicles 38 2.3 Alignment of interests 40 2.4 Future perspective for electric vehicles in Catalonia 43 2.5 Speed of penetration 44 3. Industrial opportunities 47 3.1 Decisive trends 48 3.2 Opportunities for the automotive industry 51 3.3 The battery paradigm 52 4. Capacities of the Catalan industry 57 4.1 Effects caused by green vehicles on Catalan industry 58 4.2 Analysis of capacities to industrialise green vehicles 59 4.3 Analysis of new industrial capacities required for green vehicles 64 4.4 Strategic positioning 64 5. Conclusions 67 5.1 Lines of action 71 References 75 Analytical files for green vehicle systems and components 79

INDEX 9

Presentation

The manufacture of automobiles and other vehicles is one of the most important industrial segments in Catalonia. The automotive sector in particular accounts for almost 10% of the aggregate turnover of Catalan industry and, at a time when exports are so vital to offset the extreme frailty of domestic consumption, this sector is one of the leaders in Catalonia in this respect, illustrating its high degree of competitiveness.

The recent economic crisis, which has reduced sales in the natural markets for vehicles made in Catalonia, is severely affecting this industrial activity, in addition to the stagnation that has been occurring in the sector for some yearsnow and which is expected to continue in the future. Specifically, in Catalonia and Spain, 120,657 and 615,742 fewer vehicles were produced in 2009 than in 2004 (ANFAC data) respectively, but even more crucial is the expected stagnation in European production while the world market continues to expand over the next five years, which could lead to a rise of more than 40% in sales for 2015 compared with those in 2009, according to OECD estimates. This trend is determined by other, more structural causes in the global economy, such as production and demand shifting towards countries like China and India, as the most significant locations, in detriment to other traditional production sites.

But this isn’t only affecting the automotive sector: Catalonia has one of the highest concentrations in Europeof manufacturers of other vehicles, such as mopeds and motorcycles, urban and regional transport vehicles and a whole assortment of tier two suppliers that, to a greater or lesser extent, are going through a period of sweeping changes once again determined by global trends.

The recent strong emergence of electric vehicles and the quieter green evolution of internal combustion engines encouraged by government policies from various countries and specifically European Union directives are leading to a paradigmatic change for the sectors involved and, in the Catalan case, are becoming an opportunity to defend and duly position its industry in the world.

Most advanced economies in the world are working to overcome this challenge and particularly the emerging economies. Secretariat for Industry and Enterprise spotted these industrial and business opportunities and is actively working to keep ahead, as far as possible, of the trends in this world, to determine the challenges and position Catalan industry at the forefront of green vehicles.

As a result of this pro-active approach, it commissioned the Observatory of Industrial Foresight to analyse the capabilities of Catalan industry required by green vehicles. This study has broken down each of the systems and components required now and in the future by green vehicles, analysing the impact of the new systems and technologies being incorporated and identifying the capabilities of Catalan industry in each case. It is therefore an exhaustive study that should provide us, in the first instance, with a complete picture of what the vehicle of thefuture will mean and, secondly, define the measures required by industrial policy to take on this challenge in themost

PRESENTATION 13 satisfactory way possible, both in industrial and technological terms. I would like to take this opportunity to express Catalonia’s resolute desire to continue being a leading region in vehicle manufacture at a European level, and also to confirm that we have both the capabilities and potential required to play a key role in the future of green vehicles.

I encourage you to share this study, and I hope and wish that its content and considerations will be useful for business people in their strategic decision-making, becoming an incentive to embark upon the road to green vehicles.

Antoni Soy i Casals Secretary for Industry and Enterprise

14 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Introduction At this stage of the game, everyone realises that electric vehicles have become part of the strategies of governments, councils, manufacturers and energy suppliers, among others. After many months of extensive debate on electric vehicles and their considerable media coverage, it seems that all interests are now finally converging on electric vehicles as a solution for private mobility in the medium and long term.

But unlike other recent examples of revolutionary technologies that have managed to definitively replace the incumbent technology within a short period of time, the case of electric vehicles involves many factors that suggest they will take quite a long time to penetrate the market. Firstly, we’re not talking of a product that will replace the internal combustion vehicle but rather complementary products and technologies that, over time and as their attributes and infrastructures develop, will gradually gain market share.

“Green” technologies applied to mobility go beyond the phenomenon of the electric vehicle. From engines that use alternative fuels to the longed-awaited hydrogen technology, including the lower consumption of fossil fuels, vehicles are continually improving their environmental features. The common strategic driving force for all these kinds of technologies is the sustainability of mobility and, along similar lines, the concept of green vehicles. Of course there’s talk of less dependence on energy, of reducing contaminating emissions and noise, but also of efficiency and taking advantage of alternative energy sources and particularly at a lower cost, taking into account the vehicle’s whole life. With the permission of hydrogen, the longest running technology for the coming decades is represented by the electric solution, especially because of its potential to improve vehicle features. However, from an industrial point of view all the other technologies and systems also arouse a lot of interest, as they result in a more sustainable and “greener” product and they will most certainly be optimally complemented by electric technology, providing the best product on the market.

The electric drive vehicle is actually a very old invention (the first car was driven by electricity) for which several attempts have been made throughout its history and, to a large degree, it has managed to penetrate certain segments of the mobility market where its intrinsic features are beyond the scope of internal combustion. Conversely, the green trend is a more modern phenomenon, arising from the world’s interest in reducing pollution and the greenhouse effect, this becoming the vital trend of the future in the world of mobility and generating a large number ofbusiness opportunities. If we add to these arguments the concern of governments in developed countries regarding their dependence on fossil fuels, then the virtuous circle is completed and we can state that we’re seeing a definitive campaign for the consolidation of green vehicles, with electric vehicles taking pride of place.

Still far from the mass introduction of electric vehicles on our roads but with green technology clearly making progress, in April this year the Spanish government announced its Comprehensive Plan for Electric Vehicles, led by the Ministry of Industry, Tourism and Trade. Also significant is the European Union’s policy on promoting green vehicles via different directives and, most particularly, via the Green Cars Initiative as part of the 7th Framework Programme (FP7).

16 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA At a more local level, we should also note Barcelona Council’s firm commitment to its LIVE programme and its participation in the MOVELE programme by IDAE (Institute for Energy Diversification and Savings), as well as other initiatives along the same lines, carried out by other Catalan councils. In the rest of the world, of note is the strong commitment shown by the governments of the United States and China, the drive of the French government, the Danish and Israeli initiatives, etc. There are also many different agreements between energy operators and central, regional and local government.

Given this scenario, the question is as follows: what will be the repercussions for Catalan industry of the mass introduction of green vehicles in the future?

Interior

Exterior Seats Safety and comfort Cockpit and instruments systems Windows Door modules Coachwork Interior furnishings Driver support Exterior door modules Windscreen cleaning Overhead systems Batteries and Roof modules Lights Auxiliary elements ultracapacitors Front and rear modules Comfort Auxiliary elements Safety Integrated solar panels Range extenders Lightweight composites

Electric Thermoelectric machines materials

Engine and powertrain Power Eﬃcient lighting systems Fuel and feed ? electronics Block and power Chassis Ignition, management and Structural elements Other sensors electric components Steering Low friction wheels and electronics Refrigeration Axles Transmission Wheels Exhaust Brakes Auxiliary elements Suspension Auxiliary elements

THE GREEN VEHICLE INDUSTRY Ready +To be adapted +New entrant = Future industry

The vehicle manufacturing industry currently accounts for around 10% of the aggregate turnover of all Catalan industry (IDESCAT). This is a sector with high levels of productivity, directly employing more than 40,000 people and accounting for over 15% of Catalan exports (2009). This demonstrates its high degree of competitiveness and importance, especially when there is a crisis in domestic consumption. But what will the green vehicle industry be like? What are the gaps and areas of opportunity for new industries coming into the automotive sector? What are the capabilities of Catalan industry to take on this challenge and what role might it play in this future? What is the route map it must follow in order to make the change over to green vehicles? Where are decisions taken concerning the new models, systems and components of green vehicles?

INTRODUCTION 17 Given all these questions and also given the uncertainty hovering over many of the factors that will determine how fast green vehicles penetrate the sector, especially electric vehicles, the Secretariat for Industry and Enterprise decided to find the answers by commissioning the Observatory of Industrial Foresight to carry out an analysis, the findings of which are presented in this report. This study initially formed part of the Green Vehicle WorkingGroup promoted by the Social Council of the Polytechnic University of Catalonia (UPC), with the participation of most stakeholders and serving as a basis to outline the administration’s lines of action in the industrial and technological sphere regarding green vehicles.

With regard to the content, we have first analysed the path towards green vehicle use and, specifically, the factors that will determine the different stages of this industrial business. This chronological exercise is at the very least extremely useful and perhaps even vital in order to draw up realistic, viable plans for the corresponding actions to be undertaken. To produce this transitory scenario we have employed the different predictions and hypotheses available and have adapted them to the Catalan situation.

Then we analysed the trends in automobiles: which are added because of the“green”trend and how the pre-existing trends are intensified.

From this point, we identified how the “green” trend impacts each of the systems and components that makeupan automobile, subsequently uniting the activities of firms in the automotive sector with these different impact categories. In this way, we’ve been able to quantify and classify the effect of green vehicles on each of the activities of the automotive industry in Catalonia. This document contains a series of files that summarise this information for each system and component in an automobile, indicating which industries already have a product that is ready to take on the challenges, which still have more or less a long way to go to adapt their product and which may see their current business decline and possibly even disappear from the value chain.

Finally, we have identified those industries joining the value chain, especially those related to the whole areaof “electric”systems and components, as well as the availability and/or potential of Catalan industry to provide solutions and products for these new areas and thereby reinforce the value chain.

However, some reservations should be made.The first regarding time: above all, a methodology has been used that is current within such a fast evolving area as the one we are concerned with here. Secondly, the heterogeneous, multi-productandmulti-locationnatureofthesectoranditsfirmshaslimitedthedepthofthequantitativeanalysis. Consequently, the diagnosis carried out is not exact but it is the best approximation within a reasonable timescale. In any case, the methodology employed will make it easier to revise and update this study in the future. Thirdly, most of the analysis has focused on the automobile and the systems and components that travel on board the vehicle. We have left the peripheral systems to the vehicle for another, later publication, as well as other automotive segments, such as manufacturers of industrial and service vehicles, coachwork suppliers, the moped and motorcycle sector, sailing, etc. Nevertheless, based on this initial study of the automobile, together with the extensive knowledge of these other segments possessed by the OPI thanks to previous studies, we’ve been able to extrapolate many of the conclusions reached for these segments.

18 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA NICHE INTERMEDIATE LARGE-SCALE Product Motorcycle components Auto components Railway and systems and systems manufacturers OEM Auto

Motorcycle Production Specialty manufacturers capacity Coachwork Metal transf. suppliers Plastic and other transf. Process

As has already been mentioned, this study forms part of the Green Vehicle Working Group which, under the auspices of the Social Council of the UPC and based on an all-inclusive view of this challenge, has determined the industrial, technological and scientiﬁc capabilities of Catalonia regarding the challenge of green vehicles.

An industrial strategy for green vehicles has therefore been deﬁned that forms part of the Catalan Automotive Strategy (2009-2020), approved by the Catalan government in March 2009 and establishing three areas of work: a plan of immediate rescue measures, a structural impact plan of transition and competitiveness in the medium and long term. In the coming decade, the aim of this strategy is to help achieve the following objectives (in line with the Industrial Policy Plan and the Research and Innovation Plan): maintain the market share of manufacturers with plants in Catalonia in the Spanish and European market; increase the relative weight of production in Catalan plants; maintain the relative weight of transport-related activities with regard to overall GDP; maintain the market share of Catalan component manufacturers in world trade; and increase the level of private investment in R&D and technological development.

Similarly, the study’s ﬁndings have also helped the corresponding area of the Strategy to Promote Electric Vehicles in Catalonia, IVECAT, a joint initiative of the departments of the Catalan government involved in this challenge.

While this study was being carried out, the Secretariat for Industry and Enterprise also took part on the board of General director of the autonomous communities in drawing up the Comprehensive Electric Vehicle Plan, produced by the Ministry of Industry, Trade and Tourism.

Lastly, this study and its conclusions have formed the strategic basis to promote the actions of the Green Vehicle Working Group, set up jointly by ACCIÓ and the Secretariat for Industry and Enterprise in order to coordinate the implementation of the industry and technology action plans of the Department of Innovation, Universities and Business, to be the point of connection with the strategy of the Catalan government’s IVECAT and especially to help ﬁrms embark upon this path and proﬁt from it as much as possible.

INTRODUCTION 19 We hope that this study is a good complement for the rest of the work being carried out in the field of green and electric vehicles, and that it contributes some strategy to the industrial perspective regarding this multifaceted challenge. We also hope that the content and knowledge generated throughout this project, including what we have been able to reflect in this publication, may be of use to the companies involved.

To end, we would like to note that the opinions, reflections and conclusions contained in this publication are the sole responsibility of its authors.

20 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Executive Summary The automotive industry is crucial to Catalonia: the size of both exports and R&D investment, the high employment, both direct and indirect, and the large volume of related business make this sector one of the most important for Catalonia. Nevertheless, at the beginning of the 21st century the sector started to suffer the consequences of a shift in the automotive world’s centre of gravity (as is happening in so many other business areas) towards the emerging economies. And this is happening both in terms of production capacity and demand.

The consolidation of green vehicles, and specifically the recent emergence of the concept of the electric vehicle, illustrates both sides of the same coin: on the one hand, it might intensify this global shift in business and, on the other, it might be a unique opportunity for Catalan industry.

Below we present the findings from an analysis of the different points covered throughout the study: what wemean by green vehicles and the role played by the electric option as such, the expected speed of penetration for this phenomenon and the repercussions for industry, the technologies that will determine the future, the impact on each of the areas of production, the gaps and weaknesses in the value chain, the challenge and the ability of Catalan industry to overcome it and, finally, the proposed lines of action to tackle this challenge from a strategic perspective.

Throughout this study, when we talk about green vehicles we mean any vehicle that evolves in line with the concept of sustainable mobility; i.e. less dependent on fossil fuels, reducing emissions and noise, energy efficient, making use of alternative energy sources and the recyclability of the materials used, primarily.

Its success is therefore strongly affected by government regulations and legislation and subsidies for vehicle purchases and for developing recharging infrastructures, the latter in the case of electric vehicles. Other decisive factors are how well these vehicles are accepted by end consumers, the availability of infrastructures and the competitiveness of technologies. In this respect, for several years now diesel and petrol combustion technologies have been working to reduce their emissions and continue to lead the array of “green” solutions. Other alternatives based on gas have secured a limited foothold in certain markets. More recently, alternative “bio” fuels have emerged, and combustion technologies are evolving to process them as efficiently as possible. The penultimate wave comprised of first generation hybrid solutions, which have made a very interesting contribution to internal combustion technologies in terms of managing consumption at low speeds and when stopping and starting, and in providing extra power.

Within these “green” solutions, electric vehicles have the longest future ahead of them over the coming decades. Nonetheless, the speed at which they penetrate the market will be determined by many factors: the price difference between petrol and electricity, presumably on the up; taxation on pollution, as governments will continue to increase taxes on those technologies that pollute the most and emit most greenhouse gases; the euro/dollar exchange rate, truly unknown in the future; subsidies for buying these vehicles, as it is expected that the price differential will continue to be offset to a certain extent, as the technology advances; technological developments,

22 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA with an expected progression in the different systems involved, especially batteries, where spectacular progress is expected; and the purchasing power of consumers, both public and private, to be able to afford the difference in price in buying these vehicles compared with those based on heat and internal combustion engines.

From an industrial point of view, the large-scale implementation of electric vehicles is a process that has just begun and it will pass through three very different phases:

An initial Industrial Positioning phase, with a still residual penetration in niche markets and fleets of pure electric vehicles, a significant number of first generation hybrids and a growing number of plug-in hybrids. Throughout this phase, the different industrial players will take strategic decisions and invest in technology and production inorderto get a foothold in this business, although the returns will still be very small. In this phase, it is also expected that industries will start to join the market that, to date, had not formed part of the vehicle business.

A second Maximum Industrial Complexity phase, in which plug-in hybrids will quickly take over a significant share of the passenger car market, where internal combustion vehicles will increasingly lose significant market share and electric vehicles will be seen more and more frequently, especially for use in towns and cities. In this second stage, electric vehicles will no longer be a niche option and their turnover will become highly significant, thereby justifying the investment and commitment of firms during the first phase. In this phase, with such a wide range of possibilities, industry will combine long and short production runs, extending their range of products and technologies, which will make it extremely complicated to manage manufacturers’demand for systems and components.

In the last phase of Mass Industrialisation, electric vehicles will take over a large part of the market share in detriment to internal combustion vehicles and also electric hybrids and they will be mass produced. There will be fierce competition between related industries, where customers, markets, technologies, products, features and uses will have radically changed from the first phase.

Stages in the emergence of electric vehicles

STAGE 1 STAGE 2 STAGE 3 Industrial positioning Maximum industrial complexity Mass industrialisation

ICV

ICV >> Hybrids >> EV ICV > Hybrids > EV ICV = EV = Hybrids Niche demand Mixed fleets-Bikes-Private Widespread private demand Batteries €450/kWh HEV Batteries approx. €300/kWh Batteries approx. €200/kWh Reconverted models Transitory models EV models from scratch Short production runs Hybrid mass industrialisation EV mass industrialisation Early pioneers PHEV Aux. industries pulled along Fierce competition aux. ind.

EV 2010 2020 2030 2040

Source: Produced by authors.

Returning to green vehicles, according to an analysis of the main technologies“taken on board”,the most decisive will be those related to the reduction of emissions, improved efficiency and the recyclability of materials. The electric option contributes directly through technologies related to batteries and super condensers, power electronics, electrical machines, lighting and small electric motors. Indirectly, technological developments are speeding up in

EXECUTIVESUMMARY 23 specific areas such as reducing weight and friction and also in heat engines, which have found a new rivalinelectric solutions. Along these lines, remote control technologies, communication devices, control and safety software and even design and architecture technologies are inherent to green vehicles that are being boosted by the emergence of electric vehicles.

Automotive product trends

Power electronics CI engines Electric + efficient powertrain

C02 Low Batteries friction Noise Consumption

Batteries Lighting Other BIO-LGP fuel Cost small fuels electric systems

Connectivity Safety Electronics Light Communications Features materials

Safety Comfort V2V-V2E Design Architecture

Source: Produced by authors.

On the other hand, technologies related to manufacturing processes will evolve towards the processing of new materials and new combinations of these materials, incorporating new processes, technology and machinery.

With regard to the product, there are few systems or components that are not involved in green vehicles. From components related to internal combustion, which will improve their features in terms of efficiency and emissions, to batteries, power electronics and the electric engines used in electric vehicles, including blocks of components of the chassis, exterior, interior and safety and comfort, which will be adapted in terms of efficiency, weight reduction and “electronification”. In the case of electric vehicles, complementary energy supply systems, such as photovoltaic and energy recovery, are also particularly important.

With the nature of vehicle components being affected by such a range of factors, it’s reasonable to suppose thatthe progression of green vehicles will transform the value chain, which will have to adapt to the new manufacturing requirements. Catalonia has a complete industrial sector in which most companies will have to modify their products by incorporating other technologies and materials, another significant portion is looking at a reduction in market share in the medium and long term and will have to diversify their product when the time comes and, finally, there’s a very small group that will not be significantly affected by this phenomenon. Specifically, the following havebeen identified:

24 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA • 33 companies with a product that will not be significantly affected by the appearance of green vehicles. Theseare basically seats, furnishings and bumpers. In these cases, material recyclability and weight reduction are the main challenges. • 79 companies that will have to redesign their product, changing certain technologies and/or materials. These companies are mostly concerned with the blocks of interior, exterior, chassis and safety and comfort. Their challenges involve intensively applying technological innovation and R&D. • 22 companies will have to reconceptualise their product from scratch, these working principally in the area of heating, air conditioning and brakes. These firms will have to intensify their R&D, as green vehicles will require the same functions but provided in a radically different way to the present. • 40 companies will lose market share in the medium and long term but still have some work to do in terms of technological improvement. These are from the engine and power block and their challenge lies in innovation but, above all, in diversification in the medium term. • 66 process companies, principally in the segment of transforming metal, plastic and other materials, will have to innovate in processes, incorporating technologies to process new materials and including new equipment to handle their raw materials.

Measures of actions by group Extra investment Product/process innovation R&D Diversification reconversion A 33 companies (10 local) – – Not very affected B Redesign required, changing 79 companies (34 local) technologies and/or materials C 22 companies (8 local) Change in concept Product companies D Loss of market share in 40 companies (18 local) medium/long term Process companies 66 companies (54 local) Source: Produced by authors.

With regard to new industries entering the green vehicle sector, Catalonia’s industrial weak points lie in components that are highly critical for electric vehicles, such as batteries and super condensers, and there’s little critical mass of firms in terms of power electronics and electric engines. In these last two cases, however, of note are theCatalan electric and electronic companies and sectors, which help to plug a large part of these specific gaps regarding electric vehicles and these firms have a great opportunity to diversify based on their current business.

However, in Catalonia the first incursions of green vehicles appear in segments other than passenger cars, suchas motorbikes, industrial, service and transport vehicles, where various initiatives have emerged. A business opportunity therefore already exists regarding green vehicles in all these niches, and Catalonia has leading companies that are moving towards electric mobility.

As a last point in our analysis, the challenge of green vehicles for Catalan industry is therefore formidable. Catalan industry is in a favourable position, with a large amount of business know-how accumulated over many years and is a relatively complete sector where there are more opportunities than threats. In fact, if we compare it with other traditionally leading regions, the gaps are common and are concentrated in systems inherent to electric engines and

EXECUTIVESUMMARY 25 storage; i.e. in the extremely new aspect of the technology. However, other more emerging regions have a considerable advantage in these product areas and an extra eﬀort must be made, as well as a highly strategic view taken, in order to make up for this weakness.

The growing number of new technologies and solutions brought about now and in the future by green vehicles will require an escalation in innovation to develop products but without losing sight of productivity, which is what guarantees their business. This balance will not be easy for Catalan companies, which are generally not large in size and will have to decipher this change and strengthen their capabilities in terms of technology, investment, trade, etc., either using the company’s own resources or through alliances or other types of collaboration with other ﬁrms and agents.

On the other hand, the strategy to be followed must also include a refocusing beyond the traditional limits of this business in order to access and collaborate with the decision-making centres for green vehicles, bearing in mind that, in these initial phases, these centres are concentrated at head oﬃces. We must also take into account the eﬀect of the shift in demand and production towards emerging economies.

In the short and medium term, the great opportunities will lie in the niche and service ﬂeet segments, both public and private. In this respect, Catalan industry has a notably wide range of industry in mopeds and motorcycles, industrial and service vehicles, coachwork for transport and commercial vehicles that have the large metropolitan core of Barcelona as their big source of demand and a unique place for trials and experimentation.

So green vehicles are becoming a new paradigm that will bring about a veritable industrial shake-up. Catalan industry is ready and can aspire to taking advantage of these opportunities, although it’s a diﬃcult path to take. The following public lines of action are therefore suggested to push this industry towards green vehicles with the idea of providing support for companies that must take this path and position the sector at the forefront of the automotive world of the future: reinforce the value chain, with actions aimed at providing players at all stages of the green vehicle value chain; stimulate industrial demand, working to locate in Catalonia the design, development and production of new green vehicle models; supportprojects, helping to greenlight those products related to green vehicles and particularly collaborative projects that combine capabilities and know-how; strengthen the competitiveness of the industry supplying systems and components as well as the auxiliary industry to adapt it to the new challenge and the conception of an aggregate strategy, supporting the creation and promotion of an industrial platform for green vehicles in Catalonia.

26 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 1

Brief notes on the Catalan automotive industry 1.1 Sector composition

The Catalan automotive industry is one of the most important in Spain. The volume of exports, extent of investment in R&D, level of employment generated both directly and indirectly and many other indicators place it at the forefront of industrial sectors in Catalonia. The sector is headed by two large manufacturers, Seat and Nissan, and a group of system and component companies with top class representatives in the world, in all a large critical mass.There are also outstanding companies in niche sectors, such as industrial vehicles and motorcycles, without forgetting coachwork suppliers. The automotive value chain is made up of more than 300 companies, those with foreign capital being the strongest in the product specialty, especially in terms of parts assembly (the so-called Tier 1). However, as we reduce the degree of functional product integration we find more companies with local capital. A very different map appears for specialists in processes, where Catalan companies are the majority, especially in metalworking, while there is more equality with companies with foreign capital in the transformation of plastics and chemical materials. Most of the companies in the sector are in these two groups that make up the main chain for the sector.

Map of the automotive sector

General basic supplier

Suppliers of technical services and technological centres

Main chain Transformation chain, Process Product OEMs supply specialists specialists Primary and service sectors raw materials Auxiliary chain

Sector of goods, machinery and industrial maintenance

Source: Inter-Ben Consulting, Mapa General del Sector de l’Automoció de Catalunya.

The rest of the value chain is well covered by a notable number of suppliers of equipment, machinery, industrial maintenance and auxiliary services, such as manufacturers of moulds, templates and tools.

In general, companies with local capital are not very international in scope and have little presence abroad in production terms. They are also the smallest companies in this sector. This characteristic leaves many companies with local capital in a very delicate position, as they do not have the right size to compete in the tough automotive sector and their customer diversification is limited to Spain.

28 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 1.2 Brief competitive analysis

The automotive sector is known for its tough competition and the low margins companies have to work with, a situation that is exacerbated by surplus capacity globally. This situation shifts production towards those sites with the best competitive conditions and greater growth in their domestic markets. Consequently, a few decades ago Spain received a large amount of investment from automotive companies that are now experimenting with other countries enjoying a similar situation to Spain’s at that time.

Production capacity of the automotive sector in global terms Thousands of vehicles

120,000

100,000

80,000

60,000

40,000

20,000 Surplus capacity Annual production worldwide 0 Production capacity worldwide 2008 2009 2010 2011 2012 2013

Source: Bipe.

This situation has been affecting manufacturers established in Catalonia, even though there has been an extremely strong demand for vehicles in Spain over the last decade and the European market (the natural market for Catalan exports) has seen record new vehicle registrations with more than 17 million automobiles per year from 2004 to 2007. The industry that has gained the most from this large number of registrations has been that located in Eastern Europe1, which in 2009 produced 19.7% of all vehicles produced in the European Union, while in 2004 its share was much lower, only totalling 7.25%. On the other hand, there has been a slight downturn in industry located in Spain.

1 Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia.

BRIEF NOTES ONTHE CATALAN AUTOMOTIVE INDUSTRY 29 Trends in vehicle production out of the total for the EU-27 Percentages

5 Spain

0 Eastern European countries 2004 2005 2006 2007 2008 2009

Source: Produced by authors with data from the ACEA.

In such a competitive situation, Catalan companies in the automotive sector have seen quite different trends in the most notable variables. The sector has suffered an apparent fall in the number of establishments and employees. The former is entirely in the systems and components industry, while the fall in employment has been equal both in component manufacturers and motor vehicle manufacturers.

Employees (thousands) 2000 2001 2002 2003 2004 2005 2006 2007 2008(*) Motor vehicles, coachwork, trailers 24.2 24.0 22.1 21.3 21.4 21.3 20.9 20.7 18.9 Parts and accessories for motor vehicles 25.2 24.9 24.9 24.3 23.9 23.2 22.8 22.1 26.7 Number of establishments Motor vehicles, coachwork, trailers 149 169 163 162 153 165 169 167 142 Parts and accessories for motor vehicles 405 329 348 289 313 298 282 283 280

(*) The change in sample characteristics for the industrial survey of firms and the new Economic Activity Code classification make it difficult to compare the years 2000-2007 with 2008, when these changes came into force. This is particularly evident in the“motor vehicle parts and accessories”group and especially with the employment data, which show the opposite trend to what would be logical given the crisis in the Catalan automotive sector. Source: Idescat. Estadística, producció i comptes de la indústria.

Turnover and profits, on the other hand, have remained stable with just small fluctuations. Manufacturers ofmotor vehicles, coachwork and trailers have obtained more than 80% of the sector’s profits with 66% of the turnover for the period mentioned. This shows that vehicle manufacturers work with greater margins than those enjoyed by their suppliers. In the case of component manufacturers we can see that the rise in turnover is not passed on equally to the rise in their profits, with turnover growing continually while profits are quite volatile, although a long-term downturn can be observed.

30 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Revenue (thousand euros) 2000 2001 2002 2003 2004 2005 2006 2007 2008(*) Motor vehicles, coachwork, trailers 9,573,020 9,170,060 8,550,306 8,588,566 9,563,255 8,908,036 9,754,852 10,258,624 8,824,130 Parts and accessories for motor vehicles 4,111,220 4,379,180 4,679,103 4,643,802 5,088,879 4,872,067 4,937,497 5,142,233 5,872,900 Profit (thousand euros) Motor vehicles, coachwork, trailers 136,955 311,489 222,294 178,305 217,455 –9,373 21,480 225,336 199,343 Parts and accessories for motor vehicles 131,282 95,168 –11,849 67,717 88,921 44,182 –14,524 52,995 –157,162

The variable with the best trend is apparent worker productivity as this has improved most significantly, especially among component manufacturers, with a rise of 50% in the period 2000-2007. This trend is the result, on the one hand, of a more than 15% reduction in the hours worked among component manufacturers and almost 20% among vehicle manufacturers and, on the other hand, a 25% rise in revenue for the former and more than 7% for the latter.

Trends in work factor productivity

325

275

225

175

125 Revenue per hour worked - vehicles

75 Revenue per hour worked - parts and accessories 2000 2001 2002 2003 2004 2005 2006 2007

Source: Produced by authors with data from Idescat.

With regard to trends in the foreign sector, exports and imports have grown continuously. The much greater growth in imports than exports has meant that the sector’s traditionally positive balance of trade has become negative over the last few years. Also evident is a reduction in the share of Catalan industry within the trade balance of the Spanish automotive industry.

BRIEF NOTES ONTHE CATALAN AUTOMOTIVE INDUSTRY 31 Trends in the foreign sector of the automotive industry

2,800,000 210

2,300,000 190

1,800,000 170

1,300,000 150

800,000 130

300,000 110

–200,000 90

–700,000 70 Balance of trade

–1,200,000 50 Coverage rate 2000199919981997 20012002 2003 2004 2005 2006 2007 2008 2009

Source: Produced by authors with data from Idescat. Data TARIC 87: Motor vehicles, tractors, cycles and other land vehicles, parts and accessories thereof.

Lastly, the percentage of purchases made by manufacturers from national suppliers and international suppliers has remained stable. Purchases from system and component firms established in Spain out of the total turnover of manufacturers have remained between 21.87% in 2004 and 21.92% in 2008. In this respect, and in terms of imports, in 2004 these accounted for 21% of the turnover and in 2008 they reached 22%. Both items have fallen absolute terms, however, down 17% in the case of the domestic purchases and 14% in the case of imports.

Consequently, over the last decade the Catalan automotive sector has been gradually weakening, with this decline increasing in the last two years and the closure of some system and component factories and numerous redundancies throughout the automotive sector. Nevertheless, the two large vehicle assemblers, Seat and Nissan, still have their factories in Catalonia, as well as most of the system and component industry.

The most immediate future, with the serious macroeconomic problems faced by the European Union and especially Spain with its very high unemployment, does not suggest high levels of demand for vehicles. To this negative macroeconomic situation we must also add the end of subsidies for buying vehicles that had been implemented throughout Europe in 2008 and 2009, which cushioned a large part of the impact of the crisis on car manufacturers and came to an end in summer 2010. Consequently, in the short-term, production levels are unlikely to be as high as they were in the period 2004-2007. However, the production of most vehicles in Spanish factories, small vehicles, is the segment that is making the most of the current circumstances due to its vehicles’ low emissions, lower fuel consumption and lower prices. For example, throughout 2009, when production in Europe dropped to 1996 levels, 3,233,549 vehicles were sold with emissions under 120 g CO/km. This figure represents a 59% improvement on 2008 and 130% on 2007. A clear example of how green vehicles are the product segment that is best overcoming the crisis and that not only has not fallen in sales but is growing spectacularly.

32 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 1.3 Expected trends

In 1980, 39 million vehicles were produced on the whole planet.This figure reached 69 million in 2008.Vehicle demand is expected to continue in the future with this spectacular growth: from 55 million vehicles sold in 2008, the forecast is of 70 million in 2018. Where this demand comes from will also vary substantially. The BRIC countries consumed 21% of the world’s vehicle demand in 2008. For 2018 this figure will have risen to 28%. On the other hand, the European Union, the natural market for the Catalan automotive sector, will reduce its 26% share in 2008 to a possible 21% in 2018. This means that the European Union will maintain its current demand for vehicles while other locations on the planet with see huge growth. Production is expected to shift, to a certain extent, towards those locations where demand will also be greater in the future.

Metropolitan areas of the world

Ruhr Area (11 million) Berlin-Brandenburg Randstad(*) (4 million) (6.5 million) London Katowice (11.5 million) (2.5 million) Tianjin (11 milions) Beijin Mumbai (11 million) Paris Ille de France Karachi (25 milions) (11 million) (19 milions) Delhi New York (25 milions) Tokyo (20 milions) (37 million) Los Angeles Shanghai (13 million) Osaka Istambul (13 milions) (12 million) (14 milions) Bangkok Mexico City Athens Hyderebad (12 million) (22 million) (3.7El Cairo million) (12 million) Madrid (14 milions) Manila (5 million) Dhaka (14 million) Naples Calcutta (22 million) Barcelona (3.5 million) (18 million) (4 million) Lagos Milan Rome (21 million)(3.5 million) (4 million) Jakarta (20 million)

Rio de Janeiro (13 million) Sao Paolo (21 million) Buenos Aires (15 million)

(*) Amsterdam, Rotterdam, The Hague and Utrecht. Source: Seat.

Another trend that will alter the product in the world of automobiles is the gradual urbanisation of the planet. Cities aregainingininhabitantsanddemandaspecificmobilityproductduetotheproblemscausedbythemassinhabitation of urban zones: pollution, congestion, space... Manufacturers will have to adapt in order to play their part in this growing market share of the city-car concept.

Consequently, the growth in sales for automotive manufacturers will change as developing countries, especially the BRICs, gradually incorporate a rich middle class into their population structure. Moreover, these vehicles will meet a specific demand generated by the needs of these large metropolises that are growing by the day, most particularly in those countries with large growth forecasts.

BRIEF NOTES ONTHE CATALAN AUTOMOTIVE INDUSTRY 33

Green vehicles 2.1 Vehicles within the green trend

The colour“green”is gradually imposing itself on the world of automobiles. Even models of vehicles that traditionally consume large amounts of fuel (4X4, sports cars...) have their hybrid and/or electric versions.

For some time now the automotive industry has been working to reduce automobiles’emissions and fuel consumption and, as has already been mentioned, the vehicle segment with the best performing sales is that of small vehicles with

low CO2 emissions and low fuel consumption. Although it’s true that the purchase of these vehicles has particularly been subsidised by various European governments over the last two years, and that increasingly more vehicles have low emission levels, their spectacular rise suggests that green vehicles are enjoying and will enjoy significant growth in the market. As can be seen in the graph below, in only four years the market share of the most polluting vehicles has fallen dramatically, while the situation for green vehicles has been completely the opposite.

CO2 emissions of new vehicles in the EU-15

Grams of CO2/km. Percentages

100

40 + 161

141-160 20 121-140

0 ≤ 120 1995 2006 2007 2008 2009

Source: ACEA.

This “green” trend is affecting all kinds of motorisation and fuels: improvements in petrol and diesel engine consumption, the combination of these fuels with biofuels, vehicles that run on natural gas and finally hybrids and pure electric vehicles. Electric vehicles are the culmination of this trend in reducing emissions, to the extent that a

country’s energy mix has technologies with lower C02 emissions than coal, such as natural gas or without emissions, such as nuclear and hydraulic energy and renewable energy sources. All technologies have incorporated the green trend that is dominating the market but naturally some provide a much more effective response than others. Internal

36 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA combustion engines have a technological limitation to reducing their contaminating emissions and will therefore always generate them. Moreover, their development will be slower because it’s a much more mature technology. On the other hand, technologies associated with electromobility have much further to go.The paradigm of green vehicles can only be achieved by electric vehicles that run on electricity from 100% renewable sources.

Types of electric vehicles

Non plug-in hybrid vehicles This vehicle combines a conventional internal combustion engine with an engine driven by electrical energy from a low power battery. The traditional engine is generally petrol as it’s lighter and simpler, although diesel versions are being developed. On starting and at slow speeds, the vehicle is driven by the electricity stored in its batteries and the conventional engine comes into play when it needs more power. One of the big advantages of hybrids is that they can take advantage of 30% of the energy they generate, especially in city driving, while a conventional petrol vehicle only used around 20%. Many hybrid systems can also accumulate and reuse energy, for example with regenerative brake systems. There are two configurations within this hybrid category: the parallel system and the combined system. Parallel systems are particularly simple: the heat engine is the main source of energy and the electric engine provides the systems with extra power when the vehicle is started and also when accelerating, to optimise consumption, as this is the time when the heat engine becomes more inefficient. This is the case of the Honda Insight. The more complex combined system has an electric engine that works alone at low speeds, while at high speeds the heat and electric engines work together, controlled by a computer for the best drive combination. Both engines are coupled to a mechanical device that adds together the power from both engines and transfers it to the wheels. The heat engine drives the vehicle and also feeds the generator, which provides energy to the electric engine, making the system less efficient. This is the case of the Toyota Prius. Another widely used classification is according to the capacity of the electric mobility, Micro Hybrids being the models that only act in stop/start functions, Mild Hybrids when the electric engine assists the fuel engine and Full Hybrids that can go for some distance on just electric power.

Plug-in Hybrids Plug-in hybrid electric vehicles (PHEV) share the characteristics of a traditional hybrid and an electric vehicle, as they have an internal combustion engine and an electric engine accompanied by a battery pack with enough power to go considerable distances exclusively in electric mode, recharged by plugging the vehicle into the electricity supply. This is the most efficient option for intermediate models that combine urban and interurban mobility.

Electric vehicles Pure electric vehicles or BEV (Battery Electric Vehicles) are those that only have an electric engine fed by a battery pack with enough power to serve all their driving needs. The fuel engine and petrol tank no longer exist in these models. They are currently highly suitable for short distances.

The so-called Range Extender, for some comparable to serial hybrids, is driven exclusively by its electric engine, which is capable of supply all the power the vehicle needs. It also has a small petrol engine specifically to generate electricity to recharge the batteries whenever necessary. In fact, it’s an electric vehicle in all senses of the term with a load of fuel and a generator to be more self-sufficient and avoid so-called‘range anxiety’.This is the case of the Chevy Volt and, very soon, the Opel Ampera.

This green trend is not only affecting vehicle emissions but also energy consumption associated with their production, the materials used and to what extent vehicles can be recycled. Automakers are also making progress in this respect, independently of the kinds of powertrain used in the vehicle.

GREENVEHICLES 37 Potential reductions in emissions by technology

FCV BEV Range extender

PHEV + contaminants)

2 2nd generation Biofuels Micro hybrid

1st generation Mild hybrid Biofuels Petrol

1st generation BEV Reduction in emissions (CO

Diesel 2010 2015 2020 t

Source: Produced by authors based on data from Renault.

2.2 The multifaceted challenge of green vehicles

The electrification of vehicles is providing a response to numerous challenges facing society and the economy. Twoof the aspects of this multidimensional or multifaceted challenge are related to the reduction of negative externalities offered by electric vehicles replacing internal combustion vehicles, while another two are related tothebenefit entailed by introducing electric vehicles integrated within the electricity system from renewable energy sources and intelligent electricity supplies, known as ‘smart grids’, and a further two respond to challenges of a political and industrial nature.

The multifaceted challenge of green vehicles

Reducing emissions

Reducing noise Promoting Energy security renewable energy sources

Reinforcing industry Smart grids

Source: Produced by authors.

Reducing noise emissions: electric vehicles are much more silent that combustion vehicles (although a considerable number of improvements had already been made in this area), as the motor hardly emits any sound.This characteristic is particularly important in cities where noise caused by vehicles is one of their main drawbacks.

38 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA However, the noise in green vehicles has been reduced to such an extent that, in order to avoid accidents, automakers are now working on“incorporating”a specific sound to warn pedestrians of the presence of this kind of vehicle.

Map of noise emission levels in the city of Barcelona

0-45 dB(A) 45-50 dB(A) 50-55 dB(A) 55-60 dB(A) 60-65 dB(A) 65-70 dB(A) 70-75 dB(A) 75-80 dB(A) 80-99 dB(A)

Note: Acoustic levels in dB. Source: Barcelona Council.

Reducing emissions of contaminants: like combustion vehicles, electric vehicles emit contaminants but these have a very different impact, as the quantity of emissions is much lower in the case of electric vehicles and the contaminantsareemittedwheretheelectricityisproduced.IfthiscomesfromsourcesthatemitC02, the production centres are usually located outside urban centres. This aspect takes on particular importance for cities with very densetraffic,wherealargepartoftheseemissionsisconcentrated.Asinthecaseofnoiseemissions,theintroduction of electric vehicles would lead to significant improvements in the public health of metropolises.

Energy security: in the case of Spain, the electricity that fuels electric vehicles is generated from a highly diversified energy mix. There are imported sources, as is the case in most of Europe for natural gas, uranium and partly coal, but there is also a locally generated portion that comes from hydraulic and renewable energy sources. On the other hand, petrol and diesel come almost entirely from imports. The replacement of totally imported energy with energy partly produced locally improves a country’s energy security by reducing its need to look elsewhere for this raw material. This point becomes very important in a possible situation of tension in the demand for petrol, usually accompanied by a sharp rise in oil prices.

GREENVEHICLES 39 Reinforcing industry: if, in the future, electric mobility becomes the norm, manufacturers will have to adapt to the paradigm supposed by electric vehicles in order to continue making vehicles. The automotive industry is facing the challenge to start securing a foothold in this new niche but without underestimating the current option provided by internal combustion vehicles. Not adopting this change could suppose the progressive reduction of the automotive sector, which is very important for Catalonia.

Smart grids: widespread generation is gaining ground, especially when motivated both by energy efficiency (intelligent consumption) and renewable energy sources that spread the generation of electricity throughout the country. Electric vehicles will be another element of smarts grids, injecting or demanding electricity according to the specific needs of the intelligent electricity network. But this is a long-term desire that electric vehicles andfast charging will partly help to promote.

Promoting renewable energy sources: electric vehicles and renewable energy sources complement each other perfectly. On the one hand, electric vehicles obtain a clean source of fuel that allows them to defend their“green”label compared with other automotive alternatives. On the other hand, electric vehicles provide predictability and make the most of electricity production from renewable sources. For example, wind generators would not have to be stopped at times of low demand (principally at night) as they could supply fleets of electric vehicles plugged into the grid.

2.3 Alignment of interests

In spite of the growing number of opportunities and positive externalities entailed by the incorporation of green vehicles as a solution for future mobility, the number of challenges to overcome is also high, as is the number of players that must align their interests for this multifaceted challenge to be a success.

Large cities have been the first and most resolute in starting to promote the green option and, especially inrecent times, the electric option. Cities such as Barcelona, London and Paris are competing directly in terms of appeal and personality. Electric mobility, with its typically low contamination (another issue is where the electricity used by these vehicles is generated and how) in terms of air quality and noise mean that this solution cannot be ignored. Beyond these direct externalities, cities see opportunities in the electric solution to implement improvements in urban mobility, in all cases undertaking initiatives related to the more intelligent use of individual and collective transport. Cities are therefore starting to provide their service fleets with electric solutions and are regulating their vehicle purchases accordingly.

Governments are also acting along the same lines, motivated primarily by three factors: the need to become independent, as far as possible, from the consumption of fossil fuels, the maximising of their renewable energy sources and the reinforcing of their automotive and peripheral industries.

Utilities has the opportunity to extend their slice of the business pie by selling their own fuel, such as electricity. However, even in the best of cases this would only lead to an increase of no more than 4% by 2030 (according to the most favourable scenario published by the Joint Research Centre (JRC) of the European Commission). The great interest in electric vehicles may lie in the opportunities they represent for improving the grid network and making it more efficient and more intelligent (smart grids), obtaining a return from this investment. We should note thatthe most interesting charging solution is the fast charge and this involves huge changes in the grid, unlike the slow charge. However, we have yet to see clearly what the business will be like and how it will come about. By way of

40 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA example, at today’s electricity rates it may take up to 70 years to amortise the new investment resulting from electric vehicles, according to the sector’s own sources.

Automakers are finding themselves involved in a race that would have been slower if electric vehicles hadn’t appeared. In heat engines, where they still have some way to go, they are the undisputed leaders. In the electric world, on the other hand, they have lost control over the main technology, shifting to batteries, electric engines and power electronics. Moreover, with regard to the vehicle’s environment, new mobility service agents will appear, both intermediaries and full-service companies, that might displace automakers from the centre of the business.

Lastly, consumers demand a competitive price and are not willing to give up on product features. Autonomy, the availability of charging points and the cost of acquisition are, from the consumer’s point of view, the big drawbacks to the electric option compared with the internal combustion option. Developments in technology and government action in implementing public charging points and normalising private charging points will be key in the immediate future. Regarding the acquisition cost, new formulas will have to be found and customers educated so that they value the cost of the vehicle throughout its lifetime.

Alignment of interests

Systems Cities and components Governments OEMs Electric Financiers Consumers firms Expectations for EVs –

Source: Produced by authors.

All this balance of interests might be disturbed by the economic difficulties experienced in the private and public sector. A possible cut in specific support policies could deter some of these powerful agents and the effects wouldbe devastating for the future prospects of the electric vehicle phenomenon.

GREENVEHICLES 41 Electric motorcycles

Electric motorcycles are vehicles with two and even three wheels that use an electric engine. They increasingly form part of a new form of transport that is accepted and for which new designs and models are appearing that are more attractive for consumers. Principally, in densely populated cities, electric two-wheeled vehicles (electric bicycles, mopeds and scooters) represent a good alternative to other urban means of transport. The main European cities are promoting individual mobility projects based on electric motorcycles, thereby extending the concept already implemented of “bicing” (rented bicycles) with the added improvements of autonomy and comfort. The fact that these bikes may eventually be charged electrically at a station connected to the grid will make these systems highly feasible that, with internal combustion and fuel recharging, were unfeasible. The world of electric motorcycles has a certain future, especially in countries in South East Asia where they are already a very commonplace sight in the streets. Below, by way of illustration, is a table showing the different models that already exist and the models that will be released in the near future:

Price (without Name Autonomy or kWh Date available Removable battery subsidies) Mercedes Smart n.a. n.a. 2013 Yes Brammo Enertia 80 km 9,500 Available No Brammo Empulse 100-160 km 7,700-10,700 2011 No Zero Motorcycles Zero S 4 kwh 7,000 n.a. n.a. Piaggio MP3 Hybrid 65 km 8,500 Available No BerecoVoltio 60-120 km 3,800 Available No Bereco E-MO 35-45 km 2,146 Available Yes VectrixVX1 105 km 7,405 Available No Electric Motorsport Native Z1.5 65 km 2,000 Available in USA Yes Oxygen Cargo Scooter 60 km 6,989 Available n.a. ARNGREEN B4000 90 km 3,272 Available No GoelixViva 90 km 3,210 Available No Goelix Linx 80 km 3,145 Available No Goelix e-Box 80-100 km 3,844 Available Yes Goelix Elektron 100 km 5,435 (inc. subsidy) Available No PGO iDep 40-60 km 3,310 Available No Honda EV-neo 30 km n.a. End 2010 No Yogo 35-70 km 2,740 2011 Yes Hyosung GEM 4.0 120 km n.a. Available in Korea n.a. Hyosung GEM 2.0 110 km n.a. Available in Korea No Quantya Squter 70 km n.a. 2010 n.a. Yamaha EC-03 42 km 2,180 2010 Yes Peugeot E-Vivacity Rieju MIUS 100 km n.a. 2011 No Rieju MIUS 4.0 60 km n.a. 2011 No Rieju MIUS 2.0 30 km n.a. 2011 Yes

42 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 2.4 Future perspective for electric vehicles in Catalonia

Stages in the emergence of electric vehicles

STAGE 1 STAGE 2 STAGE 3 Industrial positioning Maximum industrial complexity Mass industrialisation

ICV

EV 2010 2020 2030 2040

Source: Produced by authors.

Electric vehicles on our streets won’t become a reality straight away as their large-scale introduction is a process that is just beginning. In the initial stage, which we are currently going through, the retail prices of electric vehicles will be much higher than those of internal combustion vehicles. Combustion vehicles will be in the majority (almost omnipresent) even though we’ll start to see a significant number of hybrids, an increasing presence of plug-in hybrids and a few battery electric vehicles. Demand will come mainly from certain niches, such as urban goods vehicles, mopeds and scooters (urban use), public passenger transport and those end consumers who are early adopters. In short, a vehicle with specific or limited autonomy and an already available charging point. Vehicles will be produced in short runs and in line with the already existing models of internal combustion vehicles. This means that the automotive sector’s usual economies of scale will not come into play, making the product more expensive. The price of batteries will still be high, around 9,000 to 12,000 euros in the case of battery electric vehicles. In this initial stage, companies will start to position themselves: manufacturers will present their first models, systems and components manufacturers will start to implement the necessary changes in their products and the new entrants to the automotive sector will establish initial collaborations with their new clients. The first charging points will start to be installed, which will be slow charge. This will be a time of industrial positioning where turnover will be limited and heavy investment will be required in order to be competitive in the subsequent stages.

The second stage will be one of maximum industrial complexity. Hybrids will now have a significant share of the market, especially plug-ins. Internal combustion vehicles will start to lose market share significantly and increasingly, while electric vehicles will become more common, especially for urban use. Batteries will have fallen considerably in price and will have better features, and there will be a mass industrialisation of hybrids that will boost the systems and components industry specific for electrified vehicles. This wide range of products will make it extremely complex to manage manufacturers’ demand for systems and components. With regard to charging points, fast recharge technology will be available which will make it easier to use electric vehicles. Consequently, in this second stage, electric vehicles will no longer be a niche option and their turnover will become much higher, thereby justifying the investment and commitment of firms during the first stage.

GREENVEHICLES 43 In the last stage, electric vehicles (and to a lesser degree plug-in hybrids) will take over most of the market share and will be mass produced. Internal combustion vehicles will remain in certain niches, although there will still be a significant number on the streets and roads due to the long amortisation period for automobiles. As is currentlythe case with the internal combustion vehicle, the systems and components industry will encounter fierce competition to supply the necessary systems for electric vehicles. Batteries will have improved a lot in terms of price and features compared with 2010 and a few models are likely to take over the market and become commodities. As technology advances, certain areas may choose induction charging. Electric vehicles will have a very different design and architecture to the current internal combustion vehicles. This last stage will be when electric vehicles will attain their highest turnover and when the features of these vehicles will meet all the needs of consumers.

This view of the future has not considered the solution based on hydrogen technology in the long-term. In fact, investment by research centres and manufacturers themselves in this area is being cut back due to the effect of electric vehicles. In any case, a lot of the technology and knowledge accumulated regarding electric vehicles will also be useful for“hydrogen vehicles”.

2.5 Speed of penetration

Electric vehicles are a reality - a future reality, but a reality. They are not expected to flood the streets anytime soon as the product still has limitations, especially regarding price and autonomy and access to charging infrastructures. However, the hybrid option will be quite strong in 2011 and 2012, with a considerable presence of electric mobility on our streets. The speed at which electric vehicles will penetrate the market, especially battery electric vehicles, will depend on how various variables develop that will make EVs a competitive option compared with their rivals. Below is a description of the expected trends in the variables analysed within the context of the European Union, which is the main target market for Catalan manufacturers:

• Oil prices: after peaking at close to 150 dollars in July 2008, the price of a barrel of oil slumped to 30 dollars, principally because of the financial crisis and the subsequent global recession. Nevertheless, it has quickly gone back up to 70 euros, a barrier that it has not fallen below during the first seven months of 2010. The end ofcheap petrol (increasingly expensive to extract), the rise in the yuan and other currencies of South East Asia, the dramatic growth of countries such as China, India and Brazil present a clearly upward scenario for oil prices. Petrol and diesel prices, the latter totally correlated with the former, will continue this trend. These higher prices will increase the cost of using internal combustion vehicles compared with electric vehicles.

• Electricity prices: the price of electricity is expected to rise, especially due to the commitments acquired to implement renewable energy sources. This is a reality throughout Europe, although they might rise more in Spain than in the other countries due to the wide price differential. However, the price rises in fossil fuels are expected to be greater than those in electricity. This situation would make the electric vehicle option even more attractive compared with the combustion, as the increase in the cost of using them (electricity) will be less than that for internal combustion vehicles.

• Pollution tax: environmentally-friendly policies are being drawn up throughout Europe with new taxes or hikes in existing taxes. Higher taxes (e.g. those applied to fuels) make electric vehicles more competitive compared with internal combustion vehicles. Within a context of high public deficits, as is the case today in many European countries, and with greater permissiveness for green taxation due to a greater awareness of problems such as climate change, it will be easier to levy higher taxes (and therefore the price) for polluting activities.

44 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA • Euro/dollar exchange rate: trends in the European currency compared with the American have crucial repercussions regarding the speed of penetration of electric vehicles. As the dollar gains against the euro, fossil fuels will be more expensive for the euro area. This is passed on directly to the price of petrol and diesel and it makes the cost of using internal combustion vehicles more expensive. On the other hand, it also pushes up the price of natural gas, used to generate electricity for electric vehicles, although the impact is less as the energy mix includes several primary energy sources.

Indirectly, and regarding industrial reinforcement, a weaker euro against the dollar improves EU production costs compared with countries outside the euro area, stimulating domestic supply.

• Subsidies: different governments in the euro area are very committed to electric vehicles. Germany, France, Italy, United Kingdom and Spain are some of the main European countries that have approved significant aid for the purchase of electric vehicles. Subsidies reduce the price differential between internal combustion vehicles and electric vehicles, making the latter a more attractive purchase. As electric vehicles see their prices fall, these subsidies will also decrease and eventually disappear.

• Technological developments: the technological improvements expected in the case of electrified vehicles are much greater due to this field being so new. More specifically, batteries, a key element in electric vehicles, are expected to become much cheaper and to double their storage capacity over the coming years. Internal combustion vehicles will also improve their energy efficiency but less significantly than electric vehicles. The greater prospects for technological development in the case of electric vehicles will therefore mean that their features and price will improve more perceptibly compared with the current standards.

• Economic capacity: although, when taking into account the cost of the whole life of a vehicle, electric vehicles are starting to become competitive in terms of price (especially with the aforementioned subsidies), the price differential may still make consumers opt for the vehicle that involves less initial capital outlay. Currently financing difficulties, falling purchasing power and high debt are not the best circumstances for such an important purchase as that of an automobile and even more so when, as in the case of electric vehicles, they have a high retail price.

Determining factors in the speed of penetration of electric vehicles Variable Expected trend Determining factors Rising demand in emerging countries > falling in developed countries Oil prices ## Geopolitical instability; cost of extraction... Upwards, more in Spain, esp. due to tariff deficit Electricity prices # Also in Europe but less, due to implementation of renewable sources Pollution tax # Upwards, due to environmental concerns; much further to go in Spain (e.g. tax on liquid fuels) than in European Union Euro/dollar exchange rate "# In short-term, budget/debt problems are having much worse effect on European Union than United States Subsidies # Policies to promote EV sales around Europe Technological developments Improvements in electric technology applied to vehicles have further to go than improvements in combustion (EV vs. ICV) ## Economic capacity " High unemployment and debt (especially in Spain) Source: Produced by authors.

GREENVEHICLES 45 Comparative ICV vs. EV life cost

Which is more economical, a battery electric vehicle (BEV) or an internal combustion vehicle (ICV)? The comparison below takes into account the costs in Spain and throughout the useful life of an internal combustion vehicle compared with an electric vehicle. The assumptions, in line with the data and forecasts gathered throughout this analysis, are as follows: • Annual mileage of 15,000 km (a total of 150,000 in 10 years). • The price of petrol increases gradually by 80% up to 2020. • The price of electricity increases by 20% within the same period. • Consumption of 6 litres every 100 km for the ICV and 15 kWh for the EV. • 15% reduction in fuel consumption for the internal combustion engine. • Retail price of the combustion and electric vehicle in 2011: 16,000 and 30,000 euros respectively.

Not included: the benefit of savings on road tax, lower maintenance cost of electric vehicles, interest earned by the difference in capital invested in the vehicles, the possible residual value of the battery, social benefits such as free parking or wider mobility of EVs, the possible lower ratefor electricity consumed at night and the cost of charging at home. Most of these factors would benefit electric vehicles. The result, in terms of cost, for 2011 is summarised in table 1. If the same exercise is carried out but extending the variables to 2016, keeping the retail prices for 2011 and assuming the costs of technological improvements to reduce emissions will offset the savings in production costs for the internal combustion vehicle and that, in electric vehicles, the improvement in their cost would be offset by the withdrawal of the subsidy existing today, the result for 2016 can be seen in table 2.

Table 1 Table 2 2011 ICV EV 2016 ICV EV Vehicle price 16,000.00 30,000.00 Vehicle price 16,000.00 24,000.00 Cost of use 12,703.48 2,893.12 Cost of use 14,641.83 3,116.45 Subsidy 0.00 -6,000.00 Subsidy 0.00 0.00 Final price 28,703.48 26,893.12 Final price 30,641.83 27,116.45

It can be seen that, under the premises of this model, electric vehicles are more economical than internal combustion vehicles, although the difference is quite small. This difference would widen if we took into account the benefits ignored in this model, whichcanvary substantially depending on the location within Spain.

Life cost ICV vs. EV in 2011 and 2016

35,000

30,000

25,000

20,000

15,000

10,000

5,000 Cost of use

0 Vehicle price ICV (2011) EV (2011) with ICV (2016) EV (2016) without subsidy subsidy

Source: Produced by authors.

46 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 3

Industrial opportunities 3.1 Decisive trends

The development of modern vehicles has been principally affected by certain concerns that have shaped the automotive sector’s product strategies for some years now: on the one hand, the progressive rise in fuel prices: at the beginning of 2000, in Spain, one litre of diesel cost around 0.60 euros, while today it costs around 1.10 euros. On the other hand, climate change, providing a push towards more sustainable solutions. In this respect, the improvement in efficiency and reduction in contaminating emissions produced by internal combustion vehicles are the predominant and decisive “green”trends in the automotive world. But they’re not the only ones:

• Reducing emissions of contaminating particles and greenhouse gases: this trend is determined, in the European case, by a demanding agenda that aims to dramatically reduce vehicles’contaminating emissions, albeit without underestimating the growing demand for green vehicles on the part of consumers.

• Reducing fuel consumption: as fuel prices increase, they have a greater effect on the vehicle’s life cost. Consumers are increasingly more aware of this and demand vehicles with low fuel consumption.

• Reducing vehicle manufacturing costs: for European consumers, the proportion of their income required to purchase a vehicle has fallen in many countries over the last 15 years. However, within a context of stagnation (and decline in some cases) in purchasing power, it’s very important for automakers to reduce their product manufacturing costs as much as possible.

Percentage of available income allocated to transport

16 14.9%14.8% 14.9% 14.7% 14.0% 14 13.8% 13.5% 1.7 12.9% 2.1 3.5 2.1 2.2 12.0% 1.8 3.8 12 11.6% 1.9 2.0 2.0 10 6.1 8.5 8 6.3 5.8 7.8 5.8 8.8 5.8 5.4 7.7 6

4 Transport services 5.7 5.6 2 5.3 5.2 4.7 Use 4.2 4.3 3.4 3.9 3.8 0 Purchase 1996 2005 1996 2005 1996 2005 1996 2005 1996 2005 Germany Spain Italy United Kingdom France

Source: BIPE.

48 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA • Increase in safety: road deaths are one of the main scourges of western society. European manufacturers have spent many years working on improving the safety of their products in order to reduce the consequences of accidents.

• Improving features: like any other product, clients expect constant improvement and the case of vehicles is a good example. This is evident simply from the huge differences between an average vehicle made ten years ago and one from today.

• Reducing the noise emitted by vehicles: vehicles have improved a lot in this aspect and such reduction is being sought in the engine, aerodynamics and tyre friction. Noise reduction is particularly important and desired in the increasingly denser urban areas.

• Using other, less contaminating fuels: work has been carried out on engines so that vehicles can accept a greater proportion of biofuel in the fuels they use. European regulations have also set out the line to follow in this respect, with the obligation to use 5.75% of biofuel in 2010.

Other technologies, such as natural gas vehicles, also have their place, albeit with a very small penetration.

• Vehicle connectivity: manufacturers are working to ensure that vehicles don’t only give as much information as possible and interact with their passengers but also with the environment.

Green vehicles accentuate some of the pre-existing trends and incorporate new ones. Regarding the latter, the electric solution introduces a series of technologies inherent to electromobility that were far removed from the sector until now, such as storing electricity, electric drive and power electronics to control how the electricity is managed. Also required is technology to improve the efficiency of small electric systems and lighting, so as to minimise their effect on the battery.

Regarding the pre-existing trends, electromobility intensifies the demand for technologies to reduce the weight of materials used in the vehicle: any advance made in this respect directly adds extra autonomy. Reducing friction is a similar case in point, related to aerodynamics and mechanical and wheel friction. And, of course, in the area of comfort, new technologies are being developed to offer an alternative to heating based on heat emitted by the heat engine, just to give an example.

Electric vehicles are also tough competition for internal combustion vehicles in environmental terms, to such an extent that competitive pressure is increasing on heat engines and associated technologies to develop more quickly than expected, as well as incorporating the use of alternative fuels, such as biofuels.

Lastly, there are also all those trends that strongly affect a vehicle’s development in the long-term: the design and architecture of future electric vehicles that, once they are designed from scratch, will undergo notable modifications regarding their platforms. Wheel hub motors, their small size, the flexibility in battery location, weight distribution, etc. will determine new concepts of vehicles, hitherto unthinkable with the large, inflexible heat engines, their drive systems and fuel tanks; the communication systems in the vehicle and the inclusion of all intelligent programming to connect the vehicle with its environment, for safety reasons and also the charging logistics, the latter being very important due to the range anxiety that will be generated by the first generations of electric vehicles. The trend towards interconnectivity between the vehicle and its environment and with other vehicles is also in line with the current trends of social networks and the fact that vehicles are becoming increasingly“inhabitable”.The new concepts of vehicles generated by earlier trends will contribute greatly to this.

INDUSTRIALOPPORTUNITIES 49 Automotive product trends

Power electronics CI engines Electric + efficient powertrain

C02 Low Batteries friction Noise Consumption

Batteries Lighting Other BIO-LGP fuel Cost small fuels electric systems

Connectivity Safety Electronics Light Communications Features materials

Safety Comfort V2V-V2E Design Architecture

Source: Produced by authors.

BMW and carbon ﬁbre

BMW’s Megacity model, with a scheduled release date for 2013, is a highly illustrative example of the changes introduced by the green vehicle concept to today’s systems and components. In this case, light materials are combined with passive safety in the design of this functional electric car to make it more sustainable while maintaining the level of safety. Its great novelty will be that, for the first time, large numbers will be produced of a car built on a new architecture, based on plastics reinforced with carbon fibre, with defensive aluminium structures for the front and rear to prevent significant damage in the case of impact. Both the passenger cell and the chassis will be made out of this light but resistant material. Already in use in the aerospace industry and in automobile applications, carbon fibre is a material that consists, in a nutshell, of carbon fibres wrapped in a plastic resin, making it lightweight but strong and resistant.The use of carbon fibre also means a 30% saving in weight compared with the same car made in aluminium. This weight saving will result in less energy consumption, thereby positively affecting the autonomy and, at the same time, offsetting the weight of its lithium ion battery kit. BMW’s technological partner in this project is the German company SGL Group, which is currently building a carbon fibre plant inWashington, where it will make the raw material for its subsequent processing in Germany. Weight reduction is one of the most comprehensive trends in green vehicle systems and components, as it affects a large part of the components. Suppliers will have to adapt to such changes, even in the kind of materials used, as in the case of BMW’s future city car.

50 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 3.2 Opportunities for the automotive industry

The automotive sector is getting ready for a paradigmatic change after almost a century of basically working with the combustion engine. The first automotive models were electric vehicles, although the strength of the oil industry meant that internal combustion vehicles dominated the 20th century. In Spain, this situation became consolidated with the installation of the SEAT factory by the Italian firm Fiat, supported by the Spanish government, 50 years ago. One of the largest automotive clusters today, the companies located in Catalonia, as in the rest of the firms in the sector, are facing the challenge of green vehicles. As has already been seen, in the last decade the sector in Catalonia has lost its edge, principally due to the drive from countries in Eastern Europe, with a good competitive position and strategically located close to some of the largest markets in the European Union.The competitive stance of the Catalan automotive sector, focused mainly on production, places Catalan industry in a difficult position due to the great competitive pressure coming from the countries of Eastern Europe. This trend has got worse with the severe recession experienced by Catalonia since the end of 2008.

Electric vehicles present an opportunity for the Catalan automotive sector to turn this situation around. In fact, a capacity to produce green vehicles is not only an opportunity but a necessity as, at first sight, the automotive sector’s future seems to rely on getting on this bandwagon. Catalan automotive companies have the chance to position themselves strongly in the design, development and production of electrified green vehicles and their components and to differentiate themselves from other producers as specialists in this kind of product, emphasising their expertise in the business.

But this opportunity is not only for those companies that currently form part of the automotive sector. Electric vehicles require new components such as batteries, power electronics, electrical machines and systems to reuse energy that can be supplied by companies in Catalonia’s electrical and electronic industry. These industries, more than ready, can take advantage of business opportunities offered them by the arrival of electrified vehicles, taking their place inthe automotive industry’s value chain with their own products and substantially increasing their turnover and diversifying their business. By way of example, the forecasts by consultancy firm Roland Berger for these electric vehicle components suggest a turnover, in an optimistic scenario, of around 50 billion euros worldwide for 2020. 60% of this business will come from the manufacture of batteries and the rest equally from electric engines and power electronics. In a more pessimistic scenario, this figure would still total 22 billion euros. As can be seen, whatever the speed of penetration of electric vehicles, turnover will be very large.

INDUSTRIALOPPORTUNITIES 51 Turnover forecast for new electric vehicle components Billion euros

50.7 50

30 25.1 21.6 Electric engines 20 13.9 Power electronics 12.0 10 8.3 Batteries

0 Other components 2014 2017 2020 2014 2017 2020 Optimistic scenario vs. Pessimistic scenario

Source: Roland Berger.

However, the opportunities for these electronic and electrical companies do not only lie“inside”the vehicle. Electric vehicles require a new associated infrastructure that will open up new areas of business for all these companies. Opportunities will come from charging points (and the related public building work), adaptation of the grid and management of the complex energy system, emerging as electric vehicles spread.

3.3 The battery paradigm

The battery is the key component in the introduction and development of electric vehicles. There are currently two main problems: the first being its high price, where a battery for a pure electric vehicle can retail at between 8,000 and 12,000 euros. The second problem is its storage capacity and weight, as an autonomy of around 150 km requires a weight of 200 kg, leading to so-called‘range anxiety’.Technological developments in batteries and their fall in price will determine how fast electric vehicles penetrate the market and how successful they will be.

The materials used to produce batteries are highly diverse but recently, and especially for the needs imposed by electric vehicles, lithium ion batteries have become the dominant technology. Each battery manufacturer is looking for the best combination of materials to achieve optimum results. Specifically, lithium ion is combined with other elements such as nickel, magnesium and cobalt, among others.

52 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Battery energy density by the material used Energy density (Wh/kg)

500

200 Li-ion Li-metal 150 Li-metal El. liq. NaNiCl2 (Zebra) 100 NiMH

50 NiCad Lead

0 1970 1980 1990 2000 2010

Source: Renault.

Moreover, the supply of lithium is guaranteed as sites have been discovered that can cover a potentially big future demand, not only for EV batteries but also laptops, mobile phones and other devices. According to current forecasts regarding the introduction of electric vehicles, the automotive market will account for 40% of lithium demand by 2015 (today this part is almost inexistent). This proportion will continue to increase as electric vehicles gradually see their market share rise. The lithium reserves are spread around the world, although Bolivia, Chile, Argentina and Afghanistan are the countries with the most known reserves. All those companies dedicated to extracting this material will see their turnover rise with the progressive introduction of electric vehicles.

With regard to the price of batteries, this is expected to fall considerably as the electric vehicle business grows. According to the consultancy firm Roland Berger, the price of lithium ion batteries in 2011 will be around 475 euros/ kWh. This means a price of 11,000 euros for a 25 kWh battery, which is the capacity that many manufacturers are using for their vehicles. In any case, over the last few years there has already been a significant fall in wattage for automotive batteries. By 2015, this price is expected to have fallen considerably, down to 300 euros/kWh and by 2020 it should be close to 200 euros/kWh. This would mean that the same car battery would cost 5,000 euros, less than half the previous price. These lower prices will be due to various factors. One of these is the fall in costs thanks to economies of scale. As the production of electric vehicles grows, so will the number of batteries produced, pushing down their price. On the other hand, the effort being made in R&D and innovation will also improve storage capacity and reduce battery prices.

Regarding the geographical distribution of battery companies, South East Asia stands out for its large number of battery manufacturers, especially in Japan and South Korea.The mass production of all kinds of electronic products and the know-how accumulated places them in a leading position in this new key component for the automotive sector. The second location of note is the United States. This country’s government sees electric mobility as a national priority and is providing a lot of support for new battery firms and aid for their research and development. Over the last few months, various investments have been announced in battery plants to meet the expected future demand of electric vehicles. Lastly, there is also the European Union where, at present, the commitment is less decisive than in the two previous cases, therefore placing it behind its rivals.

INDUSTRIALOPPORTUNITIES 53 World map of investment in battery plants

Manufacturers:A123Systems,LGChem,EnerDel,JCI,DowChemical-Kokam. Manufacturers: LG Chem, Samsung and Bosch, Panasonic,Toshiba, Investment forecast: 3,097 (million euros) Hitachi, NEC, Sanyo, GSYuasa Corp., SK Energy, Sony. Production forecast: 1,139,000 units Investment forecast: 4,880 (million euros) Production forecast: 1,358.000 units

Manufacturers: Renault-Nissan Alliance, Evonik, Magneti Marelli*, Johnson Controls-Saft (*). Investment forecast: 929 (million euros) Production forecast: 250,000 units

(*)The amount of investment made and the production forecast are unknown.

Source: Produced by authors based on various sources.

Regarding the expected investment, a clear trend can be seen in the creation of joint companies between automakers and a battery manufacturer to supply the automaker. This is the case of the Renault-Nissan alliance with Nec (AESC), Toyota with Panasonic (Panasonic EV Energy) and Mitsubishi with GSYuasa (Lithium Energy Japan) among others. Automakers do not want to lose control of what will be the most important element for their electric vehicles.

The announcements of investment declared (detected) by different players in the business would total a joint annual production capacity of around 2,700,000 batteries for electric vehicles, available within a relatively short period of time. However, we are unlikely to see the same number of these vehicles on the road as the number of batteries on offer in such a short period. There might therefore be a surplus battery production capacity with the obvious consequences for these companies, even more so considering that the investment per production unit is around 300 million euros for a medium-sized plant. Given this competitive situation, the results of the technology of each battery producer and its relation with its client (the automaker) will determine the future of these production units.

As technology advances, the different options available today will gradually reduce in number until just afewkey options predominate. Batteries will become a commodity produced by a handful of firms, no more than a dozen, due to the importance of economies of scale in this business and the high R&D investment required.

Regarding the participation of Catalan companies in the promising battery business, some are starting to position themselves at the end of the value chain. The beginning, conception and production of the cell require intensive knowledge and experience that no Catalan company has (or few companies established in Catalonia have). On the other hand, the end of the chain, i.e. the BPS (battery packaging system), consisting of the introduction of sensors,

54 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA power electronics, ventilation and the metal encasing for the batteries is an option that is already present as a future line of business for some companies in Catalonia. Although less knowledge-intensive, this part will account for a significant proportion of the product’s final value and may be a very attractive opportunity for those companies capable of developing this business.

The battery business

What might be the volume associated with the battery business at the end of this decade, just in Spain? Below is a simple model, with a forecast for the variables in line the result of the publication and with the large majority of forecasts analysed, estimating the turnover associated with the most outstanding component of the new EV value chain. With the following assumptions made for 2020: • 2,000,000 passenger cars will be produced in Spain. • Based on two scenarios: one moderate and the other more pessimistic, it’s calculated that between 6% and 10% of these passenger cars will be electric vehicles. • Battery prices will range from 200 to 300 euros per kWh depending on the scenario. • The most logical scenario, and therefore the most probable, is that the degree of penetration will be inversely proportional to the battery’s price per kWh. A greater penetration in the market means lower battery costs, and vice versa. So an optimistic scenario is defined with a 10% penetration and a price per kWh of 200 euros, and a pessimistic scenario with a 6% penetration andapriceper kWh of 300 euros.

OPTIMISTIC SCENARIO PESSIMISTIC SCENARIO 10% penetration 6% penetration Price per kWh = €200 Price per kWh = €300 2020 kWh/battery Market share (%) Units produced Total kWh Turnover Units produced Total kWh Turnover PHEV 12.5 55 110,000 1,375,000 275,000,000 66,000 825,000 247,500,000 EV 25 40 80,000 2,000,000 400,000,000 48,000 1,200,000 360,000,000 Hybrid 3 5 10,000 25,000 5,000,000 6,000 15,000 4,500,000 Total 100 200,000 3,400,000 680,000,000 120,000 2,040,000 612,000,000

The turnover for batteries in Spain by 2020 would be between 612 and 680 million euros. This figure shows the importance of this component even with a scenario of relatively low electric vehicle sales, in no case higher than 10% of total sales.

INDUSTRIALOPPORTUNITIES 55

Capacities of the Catalan industry 4.1 Eﬀects caused by green vehicles on Catalan industry

As a concept, the green vehicle goes way beyond the vehicle itself, as it also affects the areas of energy, environment and mobility. Its industry will link up hitherto unrelated sectors and activities such as power electronics, electrolytic chemistry for the batteries and manufacturers of electric motors and machines, which will occupy a privileged position at its centre of gravity. Less closely related but also involved would be the companies working in electro-technical areas, switchgear, urban furniture, industrial recycling, programming and ICTs, even photovoltaic firms and, further down the line, support services related to logistics operations, sales and financing for the vehicle and/or its battery, the generation and supply of energy, technical advice for installations, rental, leasing and, in short, all business activities carried out around the new business models that will arise in the medium and long term.

From a technological perspective, the green vehicle concept involves “electrical” technologies, storage, reuse, management and drive and also technologies to lighten materials, those related to energy efficiency, architecture design, safety and comfort, etc. of the vehicle itself, and technologies to intelligently manage and control the electrical energy, the rating and management of fleets and their charging points or battery changing stations, monitoring systems and automation and even electricity generation, distribution and management, regarding the infrastructure required for the introduction of green vehicles. Also involved are remote devices and software for interconnectivity applications between the vehicle and its environment.

Catalan industry is strong in most of these sectors and has the related technological and scientific capacity. The introduction of electric vehicles will provide great business opportunities for all related industry and the effects will be seen in terms of product and business diversification, technological development, improved competitiveness, strategic alliances and the positioning of new products in new markets. Nevertheless, the crucial requirement for being able to choose to take part in this business is to have a complete green vehicle value chain, both in an industrial and technological sense, and one with sufficient critical mass, built on the current Catalan green vehicle value chain and complemented by new firms entering the market.

Evidently, the effects will be most clearly seen in the Catalan automotive industry, from large automakers tothe smallest suppliers. The sector is embarking on a one-way street in terms of industrialising a more ecological vehicle, along which we will see the sector’s structure ostensibly change, given the new alliances resulting from the market’s new requirements but also due to the emergence of other manufacturers from Asia, from private initiative and even some battery producers that have incorporated the final assembly stages. We’ll also see the value chain change with the entry of new firms from other sectors and also firms leaving the industry, as well as different product characteristics and requirements.

58 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA With regard to the timescale for these effects, the penetration of battery electric vehicles will not be immediate but gradual, starting first with the widespread use of hybrids of all types until electric vehicles respond in terms ofprice and features (principally autonomy).

Meanwhile, internal combustion vehicles will also develop in terms of efficiency and emissions, becoming more “green”. So we cannot rule out the indirect effect that the appearance of electric vehicles is having and will continue to have on industry related to the heat engine. In fact, within a context of regulatory pressure on the emission levels of polluting and greenhouse gases, which has driven significant advances in industry in this respect, especially inthe last decade, electric vehicles, provided with the suitable conditions of the energy mix and distribution and intelligent charging of electricity, will become an excellent rival in terms of environmental advantages and fuel prices. With regard to the systems and components industry, more closely related to the heat engine, this will receive added pressure to improve its products and commercial margins.

Throughout this long process of change, the vehicle production industry will go through different stages of development, during which it will gain in knowledge and experience that will help it secure a good position to take advantage of the opportunities as they arise. In the short term, there will be few electric models that can be industrialised, but a large amount of product innovation and development and a search for projects. In the medium term, however, the industrialisation of hybrid vehicles will start to become more widespread, in parallel with the industrialisation of internal combustion models, which will continue their development. This will be a highly complex stage in technological, industrial and strategic terms, which must be handled with the knowledge and experience gained in the previous stage. In the long term, after resolving the technological barriers of batteries so that electric vehicles can have a similar autonomy and cost to heat engine vehicles, it’s reasonable to expect a relevant reduction in market for all those systems and components related to the heat engine, unlike the systems and components for pure electric vehicles which will start to be mass produced, with the logical repercussions on the structure of the value chain.

Green vehicles will be the challenge of the future for this industry and, as such, what drives it forward. Sooner or later, green solutions will become more common and specifically electric solutions, and this will require a suitable reaction on the part of parts and components suppliers (systems and components and the process industry), as well as the engineers and technology centres that make up the Catalan sector. This challenge, however, is starting at a time of development and this is where Catalan industry can really gain ground and set its own pace.

Regarding industry on the other side of the plug, the deployment of the electric infrastructure required to introduce electric vehicles to the system needs the development of new products and services that might also represent an opportunity for a large portion of Catalan industry, although this area is not covered in this analysis.

4.2 Analysis of capacities to industrialise green vehicles

Overall, the production of green vehicles will modify the vast majority of the systems and components that are currently used for combustion vehicles to a greater or lesser degree. Electric vehicles, moreover, will incorporate new parts and solutions, adding these to the automotive sector, and will develop others that were previously of little import, which will subsequently become much more relevant. Companies supplying systems and components will be affected very differently, depending on their product. In general, some components will be affected very littleornot at all, others will undergo minor and/or significant changes, others will change completely and, lastly, some will disappear when“electric”solutions are implemented en masse. The adaption that companies will have to undergo to

CAPACITIES OF THE CATALAN INDUSTRY 59 overcome this challenge will be very different depending on the kind of change affecting them. Below we categorise these changes:

• Category A “Not significantly affected”: all those systems and components that do not undergo any kind of modification when applied to green vehicles. The companies that produce these will therefore not beaffectedto any significant degree. In Catalonia there are 33 product companies, notable for their business in the areaofseats but also in bumpers and upholstery.

• Category B “Redesign required and perhaps a change in technology and/or materials”: this category concentrates the widest range of systems and components and also a large proportion of the Catalan automotive industry. In this case, the components affected will undergo modifications related particularly to their weight, configurationandenergyefficiency.Thesemodificationsmightentailchangesinthematerialsand/ortechnologies used in their manufacture. This is the most numerous group in Catalonia, with 79 product companies in many areas, concentrated in blocks of the vehicle’s exterior, interior, chassis, and safety and comfort systems. Also within this group are 66 process companies, transforming metal, plastic and other materials.

Category Code and colour Not affected (there’s no substantial difference between the current product and the product for EVs)A Redesign required and perhaps changes in technology and/or materials B Change in concept C Share lost in the medium and long term D Emerges and could be covered by companies in Catalonia E Emerges and could be covered by foreign companies located in Catalonia F

• Category C “Concept change”: those companies that must totally change in their configuration for internal combustion vehicles and must be redefined from scratch. This impact is determined specifically by the electric solutions and includes only two groups of systems and components: brakes and comfort-HVAC (heating, ventilation and air conditioning). These are therefore the companies that face the most radical change in product of all the current automobile components. 22 product companies are facing this challenge, with a significant specific weight within their sector.

• Category D “Loss of market share in medium/long term”: these are the existing systems and components for internal combustion vehicles that will not be used in pure electric vehicles, although they will continue to exist in hybrids. Consequently, these companies will gradually lose market share as the electric alternatives become more popular than internal combustion vehicles and non plug-in hybrids. Most of the 40 companies that make up this category are in the engine and powertrain block.

• Category E “Emerges and could be covered by companies present in Catalonia”: all those systems and components that emerge with electric vehicles or whose presence multiplies compared with what they had with internal combustion vehicles and that could be supplied by companies already established in Catalonia. These companies, which work for other sectors, would primarily come from the electronics and electricity industry.

• Category F “Emerges and could be covered by foreign companies located in Catalonia”: those components that emerge with electric vehicles and there are no companies in Catalonia that could supply them. This is the case of the battery and super condensers.

60 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA China, electric vehicles and a new world order?

The production sites for the different electric models announced by the world’s automakers will be mainly in three zones: the United States, Europe and South East Asia. As these are highly strategic initial productions, in many cases only just completing the prototypes, and designing the assembly lines in others, the headquarters’location is a decisive factor in choosing these sites and drawing up the preliminary outlines for this map. In this respect, China and India, with their own BEV brand and product, are steadily positioning themselves in the world of electric vehicles. Another factor affecting what this map will look like is the market. Apart from the natural growth in demand of traditional markets, China and India are expecting to see growth rates of between 100% and 200% for their markets over the coming decade. Specifically, China predicts more than 24 million units (OECD data, 2009).Taking advantage of this opportunity, several European and Asian automakers have already publicly announced their intention to produce models in these regions. Electric vehicles might determine the new world order in the automotive sector and China could become extremely important in this order. There are many favourable conditions: the expected tripling of its market, domestic companies with infinite power, large production capacity, production cost advantages, infrastructures that are being built from scratch and might be set up for these electric vehicles at a marginal extra cost, state interest in promoting this industry to reduce its dependence on petrol, pollution and greenhouse gas emissions, revolutionary technology in which traditional manufacturers do not have any real advantage compared with the new players, etc. And, on the negative side, it’s a question of getting over significant barriers: brand, level of quality, safety and a global sales network.To overcome this challenge, large sources of finance are available in the form of economic stimuli provided by the government and the large size and ambition of their companies. Following the example of the Chinese company Geely Automobile, owner of the Swedish Volvo Cars since March 2010, they might acquire these kinds of assets quickly by taking over other manufacturers. China will be the great battleground for all the world’s manufacturers in the near future, many of which will decide to produce for and closetothismarket.Andinthisracewemustparticularlykeepoureyesonhowcertaincasesdevelop,suchastheChinesemanufacturers BYD and Chery and the Indian REVA.

Production sites of future electric vehicle releases

Source: Produced by authors.

CAPACITIES OF THE CATALAN INDUSTRY 61 All sections of the vehicle are looking at substantial changes, although it’s true that the challenges associated with these changes are very different depending on their type. The vehicle’s interior is the least affected, with the cockpit and the door and roof modules undergoing a slight redesign. The chassis is fundamentally looking at a category B change, working on new designs and configurations, weight reductions and changes in materials. In this section, the significant change will come from the brake system, which will see a change in concept in the longterm.

A similar situation will be experienced by the safety and comfort systems, where the lower and medium voltage wiring will not change much but the HVAC system will be completely overhauled in terms of concept, and the rest of the components will face improvements in energy efficiency and changes in their design and functionality.

The exterior will see its radiator cover disappear, unnecessary in battery electric vehicles, and the rest of the elements will be mainly conditioned by weight reduction to improve the electric vehicle’s autonomy.

The engine and powertrain will be the most severely affected by the specific arrival of electric vehicles. All their systems and components will lose their functions in battery electric vehicles and will be downsized in the case of plug-in hybrids and are therefore not required.The exception is steering, although this depends on how the powertrain is set up: a single motor or wheel hub motors.

Impact type by system category

Exterior Safety and comfort systems Glass B Driver support B Chassis and roof modules B Windscreen cleaning and other safety elements B Exterior door and rear modules B Lighting modules B Front-bumper module A Comfort-HVAC C Front-radiator cover module D Comfort-Entertainment (*) B Low/medium voltage wiring A Engine and powertrain Engine-feed D Chassis Engine-block and power D Structural elements B Engine-ignition and engine management systems D Steering B Engine-cooling D Axles B Transmission B Wheels-rims, tyres, hub caps, etc. B Exhaust D Brakes C

Interior Suspension B Seats A Cockpit and instruments B Door modules and overhead systems B Interior upholstery A

(*) No companies identified in Catalonia. The details for each system and component are provided in the analytical files. These files contain references to the companies that supply the product at present or that might be able to supply it. Source: Produced by authors.

62 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA All these changes are analysed in more detail in the specific files accompanying this publication. These files contain the product companies detected in Catalonia that produce the component in question, a small description of this group of companies and an explanation of the challenge posed for them by the arrival of green vehicles. The process companies that work for each section of the automobile are listed after the section for which they work.

As a summary of this analysis:

Group A companies should continue in the same way as before the arrival of green vehicles and therefore will not require any particular development beyond the effort they are already making in innovation and R&D to improve their products.

Group B companies must take on this challenge principally by innovating their product and, secondly, with additional investment to make the necessary changes to their product.

Group C companies should prioritise research and innovation due to the radical change their product will undergo, as well as make the extra investment required by the new industrialisation of this product.

Group D systems and components manufacturers must start to think how they might reconfigure/diversify their business as, in the long term, they will not be able to go on supplying the automotive market, although they will not be affected in the short term as hybrids will use their products.

Lastly, process companies, those that come a little more behind in the value chain and are principally responsible for transforming metal, plastic and other materials for product companies, will be affected by the challenge posed by green vehicles quite evenly. The changes in their clients will increase their need for investment, innovation, R&D and, as their Group D clients leave the automotive market, also diversification.

Measures to be taken by group Extra investment Product/process innovation R&D Diversification reconversion A 33 companies (10 local) – – Not very affected B Redesign required, changing 79 companies (34 local) technology and/or materials C 22 companies (8 local) Change in concept Product companies D Loss of market share in 40 companies (18 local) medium/long term Process companies 66 companies (54 local) Source: Produced by authors.

CAPACITIES OF THE CATALAN INDUSTRY 63 4.3 Analysis of new industrial capacities required for green vehicles

Regarding new components, their contribution to value within electric vehicles will be very significant. There is therefore a great opportunity for companies that produce this kind of product and that, previously, were not positioned in the automotive sector.

These new systems and components are power electronics, electrical machines, complementary systems to reuse energy to feed the batteries and storage systems. Of these new components, and with the current exception of energy storage systems, the rest could be covered to a greater or lesser degree by companies that already exist in Catalan industry.

New green vehicle components

Electronics for electric vehicles Energy storage systems Central computer systems E Battery pack F Power inversion and conversion E Super condensers F Battery charging/discharging system E High voltage wiring E

Complementary electricity systems Electric powertrain Photovoltaic systems E Electrical machines E Energy recovery systems E

The details for each system and component are contained in the analytical ﬁles. These ﬁles contain references of the companies that supply the product currently or that could possibly supply it. Source: Produced by authors.

4.4 Strategic positioning

By cross referencing the variables “impact category” and “specific weight” for each of the systems and components groups analysed in the previous sections that make up the automotive industry as a whole, the following segmentation is obtained:

• Segment S1. Corresponding to those systems and components with a greater weight in the Catalan automotive industry. These are products where R&D and technological innovation must be intensified in processes, lighter materials, processing new materials, reconceptualising some products and electronifying others. Of note are products related to the cockpit and instruments, comfort and HVAC, door modules, brakes and industry specialising in transforming metal and plastic. We can assume that there will be most opportunities wherever Catalan industry has most weight.

64 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA • Segment S2. On the other hand, if we look at the specific weight of systems and components that might lose market share in the medium and long term, this is moderate and that’s good news, given that this industry is endangered. This result is coherent with the fact that vehicle manufacturers outsource the least in this block of systems and components.

• Segment S3. Lastly, and as expected, the systems and components inherent in electric technology, in categories E and F, have a low specific weight except for power electronics, where there are few but large references with multinational groups behind them.

Strategic segmentation

40 33 79 + 66 22 Metal transformation Seats Cockpit and instruments Comfort/HVAC Plastic transformation

Overhead door S1 Brakes S2 Windscreen cleaning and safety Refrigeration Upholstery Steering S3 Energy supply Transmission Power elect. Speciﬁc weight Structural Electrical machinery

Ignition and engine management Doors Other energy Block and power Chassis supply systems Radiator cover Driving support Exterior Engine and powertrain Suspension Safety and comfort systems Battery pack Interior Exhaust Bumpers Axels Windows Chassis Wheels-trim Ultracap. Lighting New capacities D A B C E F Process specialists Industrial impact

Source: Produced by authors.

CAPACITIES OF THE CATALAN INDUSTRY 65

Conclusions Green vehicles are already a reality and electric vehicles are here to stay. It’s not the first time that electrified vehicles have tried to secure a place among combustion vehicles. This time, as we have already seen, the alignment of so many interests suggests that electric mobility will take over a large part of the automotive market in the long term. Green vehicles provide an answer to the key challenges facing humanity today, such as the rise in fossil fuel prices, climate change, energy security, improving the quality of life of city dwellers (with an increasingly large urban population) by

reducing emissions of noise, CO2 and other contaminants.

Green vehicles and particularly electric solutions will redraw the value chain and the business parameters of the automotive sector and of other vehicle segments: new players will enter the market from other sectors with technologies that were hitherto far removed from the vehicle industry, and new forms of business will emerge related to the “green” mobility concept originated by other players in the area of management and services. The inclusion of the electric world in this business and the great opportunity for the electronics sector may alter companies’ relative weights in the sector to date.

Most large automakers have been competing in the green dimension for some years now and already have a large number of hybrid and electric vehicles in the pipeline, about to enter the market towards the second half of 2010 and early 2011. Numerous interesting business initiatives have appeared, such as Tesla, Fisker, Think and the millions invested to produce batteries for electric vehicles. In the electric mobility business, start-up initiatives are multiplying, the most notable probably being Better Place.

In Catalonia and Spain, the automotive sector is of supreme importance within industrial activity due both to the number of workers employed and the business volumes and technological boost it provides, as well as being one of the largest items within Catalan exports. However, the Catalan automotive sector has been in decline for several years. The arrival of electric vehicles might be the catalyst that helps to reverse this trend or at least stop the steady loss of workers and business and thereby also stop the Catalan automotive industry from losing its position among other regions in the world.

Electric vehicles will not become established immediately but will go through various stages until just a few solutions become consolidated. The cost and features of batteries, together with access to charging infrastructures, will be the main limitations. While battery electric vehicles will begin their penetration in highly specific applications and niches, later consolidating in the long term, we can expect plug-in hybrids to create an opening in the world of passenger cars in the short to medium term. In the medium term there will be a stage of extraordinary industrial complexity with many different alternatives in terms of product, technology and markets existing side byside.

68 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA So, in the initial stage, opportunities will exist in niche products: electric vehicles will become strong in all those market segment where the battery’s limited autonomy and its charging are not a problem for users, such as fleets of private and public vehicles, city goods transport, public passenger transport on buses, etc. These are the obvious potential clients for electric vehicles in the first stage. Numerous initiatives have come to light in the field of electric motorcycles, hybrid buses, industrial vehicles, cleaning fleets and others. The large metropolitan area of Barcelona, as a huge demander of green vehicles and a site for tests and experimenting with these solutions, is a unique value that we should be taking advantage of.

Motorcycles (especially low horsepower, suitable for cities) are an interesting option for consumers. Catalan companies are especially well placed in these businesses and can take advantage of this opportunity. Nonetheless, they will have to move fast, as Asian countries have a lot of potential in the area of individual mobility.

The speed with which electric vehicles penetrate the market will depend on each country in particular. Denmark, Norway, Sweden and Holland will be the most interesting markets for electric vehicles before those in the Mediterranean basin. The same thing will happen in cities. Today cities are already competing to see which metropolis is the friendliest adopter of vehicles with electric mobility.

Many European countries have offered consumers large amounts of funds to buy vehicles with an electric powertrain, generating an attractive artificial market in this initial stage, when supply is still limited.

The production of systems and components for electric vehicles will require companies from the automotive sector in Catalonia to make a huge effort in investment, R&D and innovation with the difficulties entailed by slow returns due to the expected gradual penetration of electrified vehicles.

Various automakers in Spain have already announced plans to produce electric vehicle models. These are crucial to attract suppliers to the world of electric solutions.

As we have already mentioned, in the first stage the associated business volumes will not be high and thereturnon investment slow. Nevertheless, companies need to be ready for when the electric vehicle business starts to take off.

Electric technologies are advanced. Catalan industry has the challenge of integrating many of these technologies to apply them to their products. Any kind of a strategic technological alliance as well as acquisition will be crucial.

Catalonia has numerous companies that can supply the new products emerging with electric vehicles, although there are huge demands being placed on the automotive sector. Of particular note among these companies, for example, are large corporations such as SIEMENS and SONY which, although they are not working on electric vehicles in Catalonia, do have the capability and technology to do so.

The large majority of challenges for Catalan suppliers of systems and components concern the group of firms that must intensify their R&D and innovation in processes, technologies and/or materials in order to be competitive in a future green vehicle business. This group of more than 170 companies also represents most of the specific weight of the Catalan sector. On the other hand, the group of companies with a product that will decrease or disappear in the medium and long term is made up of 40 firms with a moderate specific weight.

Catalan industry has a lot of industrial capability that can be applied to new materials, making them more lightweight, as well as energy efficiency, key trends in green vehicles. It also has great technological skills in its technological and

CONCLUSIONS 69 engineering centres and many working groups in the scientific sphere. This is one of the big strengths of Catalan industry that might set it apart within the world of green vehicles.

The battery is the most valuable element within electric vehicles and the one that poses the main challenge to their implementation. Technological advances and economies of scale associated with battery production suggest that their price will fall quickly, helping electric mobility to penetrate the market.

The installation of battery manufacturers in Catalonia is strategic and would complement the new electric vehicle value chain. In spite of the limited number of units at the beginning, Catalonia can count on a large number of sources of battery demand: passenger cars, vans, industrial vehicles, motorcycles, buses. The implantation of a battery pack supplier would also have other benefits: large associated business volumes, a reduction in high logistics costsanda marketing effect for Catalonia as a region that is prepared and committed to electric mobility from a production point of view.

With regard to the production of electric vehicles for certain market niches, where the business is attractive right from the first stage, various Catalan companies have already made a start and are about to launch models ontothemarket.

The commitment to make electric vehicles exists the world over but, specifically, how the relative weight is distributed will be substantially different to the current situation, with the added factor of the global trend to shift production centres towards emerging markets. The countries of South East Asia will therefore be key with regard to storage systems and China, India and the United States with regard to the design and production of green vehicles. Catalan firms must get closer to the decision centres of these strategic players to break into the round of suppliers forthese models. In this case, internationalisation not only leads to more business but also provides a bank of tests to develop products in the short term and improve expertise in their manufacture.

The paradigmatic change entailed by green vehicles within the automotive sector is a new opportunity for Catalan firms to secure a privileged position within its value chain.

Catalonia has the industrial capability to take on the challenge of green vehicles and specifically electric vehicles. Moreover, it has the technological and scientific capabilities and resources to deal with its weaknesses. The areaof batteries is the weakest point of Catalan industry concerning the challenge of electric vehicles.

The opportunity provided by green vehicles is one of repositioning Catalan industry at the forefront of automotive know-how and innovation, one step beyond the production excellence that currently sets it apart. This challenge is not easy. Catalan companies are small at a time when a huge capacity in terms of investment, technology and commerce is required from them. Many of the companies do not have a local decision-making capability but are subject to their headquarters’corporate strategies.

A paradox might arise of encouraging and stimulating a leading market without generating local value in industry and services, with the consequences for the country regarding the trade deficit and opportunity cost. Initiatives to promote green vehicles, both public and private, must be designed so that they speed up the entrance of this industry in the electric vehicle business at the same time as and in line with stimulating demand for these vehicles.

70 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA 5.1 Lines of action

Having analysed the opportunities and threats posed by green vehicles, as well as the ability of Catalan industry to take on this extraordinary challenge, this last section will define the main lines of action promoted in the areasof industry and technology. As far as possible, we will also recommend actions to be taken by the administration for each of these aspects in order to accompany and support the change that must be undertaken by companies.

Strategy and platform

The challenges posed for the Catalan green vehicle industry are complex and diverse. The group of firms that make up this sector is highly heterogeneous and there are many parallel implications with other industrial sectors and also other areas of business. The need to establish synergies with sectors traditionally far removed from the automotive business, collaboration agreements and even alliances become particularly pressing.

This challenge requires a united strategic focus to determine the needs and the actions that must be carried out. Industry, both incumbent and new firms entering the market, must define its view of the future with a united strategic focus and form a unified group along the lines of an industrial cluster.

Lines of action:

• Support to establish and promote a specific platform for the electric vehicle industry. • Synchronise the different public and private strategies involved, especially large councils and large infrastructures. • Strengthen multidisciplinary experimentation centres. • Intercluster initiatives. • Control and monitor strategic variables. • Strategic marketing.

Reinforcing the value chain

The gradual introduction of green vehicles will lead to a readjustment in the value chain and also its diversification. This process will involve an inevitable restructuring of the vehicle production industry globally and, by extension, of local and regional clusters and/or concentrations.

At present, Catalonia has an almost complete value chain with regard to the production of internal combustion vehicles, this being one of its main strengths. With the emergence of electric vehicles, the Catalan value chain shows little business diversification and those systems and components most closely related to the heat engineare threatened with a reduction in the market in the medium and long term.

If Catalonia wishes to improve its position in the automotive world, it needs to strengthen theses weaknesses in the chain and maximise its strengths. This will ensure that automakers, in their natural and new emerging markets, will have all the industrial and technological resources required by electric vehicles.

CONCLUSIONS 71 Lines of action:

• Search for and establish a battery pack manufacturer. • Attract and reinforce the critical mass of new electric vehicle systems. • Support industry related to the charging infrastructure and periphery services for electric vehicles. • Encourage activities based on recycling or reusing batteries. • Support the creation of technology-based firms. • Reinforce the capabilities of the network of agents that support R&D and innovation in technologies critical for electric vehicles.

Stimulating industrial demand

For Catalan industry, the location of development, production and sales capabilities for green vehicles will be decisive. Regarding automakers, the assignment of hybrid and/or pure electric vehicles represents a greater guarantee for the future. For the remaining players in the sector, having models under development or in production in the region is directly proportional to their volume of business.

The closeness of the phases at the beginning and end of the value chain is the best stimulus for systems and components firms to develop and innovate their products and generate positive dynamics. For the process industry, the local presence of models, both under development and in production, will be even more important.

Lines of action:

• Attract models of industrialised green vehicles. • Support the design, development and production of new models of electric vehicles. • Support the local industrialisation of fleet vehicles and those for specific uses.

Competitive reinforcement of parts and components suppliers

As we have already seen, green vehicles entail substantial changes regarding the existing components and the companies that produce them. Trends already existing in the automotive world, such as the weight reduction and energy efficiency of the components, will become stronger with the arrival of electric vehicles. Other components will have no place in (pure) electric vehicles and their manufacturers will therefore have to diversify or reconvert their business in the long term. Some components will be reconceptualised. To a greater or lesser degree, the whole systems and components industry will be affected by this paradigmatic change resulting from electric vehicles and efforts will have to be made to improve its competitiveness in the future.

Lines of action:

• Product and process innovation. • Product diversification. • Acquisition of technology. • Product research and development.

72 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA • Strategic alliances. • Strategic plans for new business models. • Access to decision-making centres for green vehicles.

Project support

The design and development of green vehicles will be highly complex projects that will lead many companies of different profiles and sizes to collaborate in order to overcome complications in terms of technology, industrialisation, financing and sales. Beyond the vehicle per se, initiatives will also arise related to the different industries involved, such as the energy industry in the case of electric vehicles, to provide solutions for new products and services.

Lines of action:

• Financial support for projects to conceptualise, develop, industrialise and manufacture green and electric vehicles. • Support for business projects regarding industrial research and experimental development of new or improved systems, components and processes. • Support to draw up business plans and secure funding. • Adaptation of the standardisation process for the new electric, hybrid and hybridised models.

To end, we would like to point out that this study and its conclusions have formed the strategic basis used to define the actions of an industrial and technological nature related to green vehicles, always in line with the goals of the Industrial Policy Plan and the Research and Innovation Plan of the Department of Innovation, Universities and Business. They also form part of the measures contained in the Strategy to Promote Electric Vehicles in Catalonia (IVECAT) by the Catalan government.

CONCLUSIONS 73

References

Sources of knowledge

Press cuttings and others

• National and international press cuttings • Corporate websites

Databases

• Sabi • Informa • Idescat • Datacomex

Bibliography

• ACEA. Economic report full year 2009. Brussels, 2010. • ACEA. Economic report full year 2008. Brussels, 2009. • ACEA. Economic report-year 2007. Brussels, 2008. • ACEA. Economic report-year 2006. Brussels, 2007. • ACEA. Economic report-year 2005. Brussels, 2006. • AIE. Technology roadmap; Electric and plug-in hybrid electric vehicles. Paris, 2009. • Bax&Willems. Estudi dels canvis a la indústria de l’automoció de Catalunya per a la transició cap al vehicle elèctric. Barcelona, 2010. • BIPE. Prospectiva de la indústria catalana 2018. Paris, 2010. • CADS. Diagnosi i perspectives del vehicle elèctric a Catalunya. Barcelona, 2010. • CE DELFT. Development of policy recommendations to harvest the potential of electric vehicles. Delft, 2010. • Chemetall. Lithium applications and availability. July 2009. • Deutsche Bank. Vehicle electrification: more rapid growth; steeper price declines for batteries. March 2010. • Inter·ben consulting. Elaboració del mapping del sector d’automoció català. Barcelona, 2007. • JRC-Institute for Prospective Technological Studies, European Commission. Market penetration scenarios of electric drive vehicles. 2010. • McKinsey Quarterly. Electrifying cars: how three industries will evolve. 2009 • McKinsey Quarterly. A new segmentation for electric vehicles. San Francisco, 2009. • Paris Region. Green transportation: Paris Region developments in HEV and EV. Paris, 2009. • Rocky mountain institute. Status and trends in the HEV/PHEV/EV battery industry. Summer 2008. • Roland Berger. Powertrain 2020-The future drives electric. 2009. • Roland Berger. Powertrain 2020. Li-ion batteries-the next bubble ahead? Munich/Shanghai/Detroit, 2010. • Sernauto, TecnoEbro and CDTI. Spanish capabilities in the Eco-electro road mobility sector and the FP7 Green Cars Initiative. Spain, 2009. • Shell. Shell passenger car scenarios up to 2030. • STA. Pla director de tecnologies de l’automoció. Barcelona, 2009. • Volkswagen. A vision for future Mobility. December 2009.

REFERENCES 77

Analytical files for green vehicle systems and components

Product companies: GLASS

Companies identified The importance of reducing weight in green vehicles, Catalana de Parabrisas especially relevant in the case of electric vehicles (and Cristalería Española (St. Gobain) the price that will be paid to reduce this further) might Industries Tapla lead to a change in the materials used for vehicles’ Linde y Wiemann windscreens.Newmaterialssuchassolidpolycarbonate Omniglass sheets could become popular instead of the currently Trimplast predominant glass, changing the balance of forces since the players working with this product are diﬀerent (e.g. Sabic Innovative). Product specialists Another notable aspect is the role that might be played by windows as a passive measure for heat management 6 (reducing the need for heating and air conditioning and Small business volume therefore reducing the demand on the battery). Applications such as thermocoatings and antifogging Degreeoflocalcompanyinternationalisation surfacing treatments are being developed with this aim in mind. Low

Extent of business for local companies

Low

Local ﬁrms centred on market niches

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 81 Product companies: BODYWORK AND ROOF MODULES

Companies identified This structure is one of the heaviest parts of a car Ficomirrors SA (between 25% and 30%). Weight reduction, a particularly Industrias Mecanicas San Andrés strong trend in the case of green vehicles and especially Leo Industrial relevant for EVs, is not simple because this entails a Magna Mirrors trade-off with rigidity and safety. Moreover, in the case of Manipulados Eléctricos EVs, the bodywork might undergo a more or less drastic Visteon redesign depending on the different configurations that Zanini could be used for the powertrain (e.g. a wheel hub motor configuration would enable vehicles to be designed without a nose). Product specialists The need to reduce weight won’t affect aerodynamics so much in the early stage of electric vehicles as the models 7 will be designed more for urban use. The bodywork will Degreeoflocalcompanyinternationalisation therefore be modified to adapt it to the new structural configurations of EVs, especially when these are new High generation (e.g. in the skateboard structure). Another modification that might affect this element is a Extent of business for local companies change in material. The need for weight reduction in electric vehicles might represent a way in for carbon Moderate fibre, something the manufacturer Telsa is already using Large concentration of local companies with all its models. specialising in processes

82 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: EXTERIOR DOOR AND REAR MODULES

Companies identified Door and rear modules account for around 6% of a Advanced Accessory systems vehicle’s mass. Apart from the already mentioned weight Advanced Automotive Antennas reduction, an improvement in the vehicle’s heat Aprasa insulation would result in lower electricity consumption Gesa and therefore any improvement in this respect is Masats SA welcome in this part of the vehicle. Another possibility is Peguform to include elements such as solar panels or sensors of all kinds, which will have to be adapted to the speciﬁcations of the automotive sector. Product specialists

Degreeoflocalcompanyinternationalisation

Low-moderate

Extent of business for local companies

Moderate

Large concentration of local process specialists

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 83 Product companies: FRONT MODULE/BUMPERS

Companies identified Bumpers do not change with the car’s powertrain and Plastal neither green vehicles, in general, nor the emergence of Peguform electric vehicles are expected to signiﬁcantly aﬀect the manufacturers of these components. In any case, weight reduction in green vehicles and the possibility of Product specialists disruptive changes in the future architecture of electric vehicles might be the main factors to take into account 2 in this product category.

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Large concentration of local process specialists

84 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: FRONT MODULE/RADIATOR GRILLES

Companies identified Radiator grilles are the external part of the systems Gesa used to extracting surplus heat from the heat engine. Peguform As there is no heat engine in electric vehicles, there is a Rehau lot less surplus heat and it does not need to be extracted Zanini via a radiator. Consequently, radiator grilles, and indeed the whole system, won’t be needed by electric vehicles. This system is not aﬀected in the rest Product specialists of the internal combustion green vehicle categories. One possible new direction for radiator grilles and 4 therefore for their specialist ﬁrms would be components Small business volume to house and cover charging and plug-in systems in the case of electric vehicles, when these are placed at the Degreeoflocalcompanyinternationalisation front of the vehicle.

Low

Extent of business for local companies

Low

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 85 PROCESS COMPANIES ASSOCIATEDWITHTHE EXTERIOR BLOCK

Welding and Fibre Plastic injection Stamping cutting Thermocomfort processing moulding

Ind. Plàstiques Arbúcies Industrial Rieter Saifa Badia soldadura Campos 1925 Fiberpachs Trilla

Ilpea Industrie Novel Lahnwerk Gallemi

Estampaciones Flex N’Gate Bearcat Sabadell

Estampaciones Zona Estampaciones Franca Foga

Gestamp Gedia España

86 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: ENGINE/FEED

Companies identified The feed system for today’s heat engines is basically made Airpur up of the tank, fuel pump and a device that vaporises or Bitron Mark atomises the liquid fuel to be burned. As the energy Delphi Diesel Systems source in electric vehicles is not fuel but electricity and Ersa Parts Filter totally different components are used, the current GSB (CIE Vilanova - Grupo CIE) system will disappear in pure electric cars. Kautex Textron In the rest of the green vehicle alternatives, the changes Mann-Hummel ibérica, SA will be at the level of the volume dedicated to the tank in Manufactura Moderna de Metales gas-based systems, and at the level of the final injection Ti Group Automotive Systems system in the case of the different systems based on Transmesa alternative fuels. Similarly, as this is one of the key systems inavehicle’sefficiency,anyinternalcombustionalternative will undergo significant development in this respect. Product specialists

High company density

Degreeoflocalcompanyinternationalisation

Low-moderate

Extent of business for local companies

Low

Local ﬁrms in the areas of stamping and bar cutting

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 87 Product companies: ENGINE/BLOCK AND POWER

Companies identified The purpose of this system is to transform the energy Elring Klinger from explosions in the engine into rotating the axles. The GSB (CIE Vilanova - Grupo CIE) elements that comprise it are axles, valves, etc. Since J Juan energy is not generated with explosions in electric Mahle engines but through magnetic ﬁelds, the block and Nopatra power system (axles, valves) will not be needed in Relem electric vehicles. Riken España However, the co-existence of alternative fuels and hybrid Tecnilaf models in the early stages of introducing electric vehicles means that these systems will still have some future, although they are clearly being downsized. Product specialists Most of the companies specialising in these systems are 8 used to manufacturing with extremely precise control and quality and can therefore take advantage of their Most of the business is in the hands of expertise in those industries where the systems require foreign companies high quality and control, such as aeronautics, premium machinery and the aerospace industry. Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Forging and casting, principally local ﬁrms

88 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: IGNITION AND ENGINE MANAGEMENT SYSTEMS

Companies identified Electric engines are run on energy from a battery or Denso Barcelona other electric systems. Although these systems also Electromecánica Cormar need precise control, they are very diﬀerent from those Especialidades Eléctricas Escubedo used in heat engines and new systems will therefore be Guilera generated, with new players and new value chains. JST Nonetheless, there is a great opportunity to diversify Lear towards power electronics and control systems thanks Leoni Cables to the expertise acquired in electronics and their Prensas y montajes industriales integration within the engine’s system. Tyco

Product specialists

Segment dominated by foreign companies

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Concentration (local and foreign) in the area of electric components for engines

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 89 Product companies: COOLING SYSTEMS

Companies identified Heat engines’ cooling systems are associated with the Calsonic Kansei vehicle’s heating in order to remove their residual heat. Frape Behr In electric vehicles, the radiator systems will have to Guilera change as the whole heat engine will disappear. Electric Industrial Termostática (MOVI) engines, storage systems and power electronics also Mann-Hummel ibérica, SA generate heat that must be removed in some way and, Radiadores Nadal at present, the technology to do this tends to use Ti Group Automotive Systems dispersed refrigeration. Energy eﬃciency in the new Trelleborg system will be crucial as it will require a lot of energy Vilectra from the storage systems. For all these reasons, the current engine cooling systems have nothing in common with the cooling systems for electric vehicles. Product specialists

Complete value chain

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Notable presence of foreign companies

90 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: TRANSMISSION

Companies identified The main elements are the gearbox, clutch, differential Frendisa and axles. Some of these elements disappear with EVs Frens Sauleda because the transmission of power from the electric Gear Box del Prat engine to the wheels does not need the same system of J Juan gears and reductions as with an internal combustion Küster España engine. Moreover, depending on the configuration chosen for the powertrain (centralised motor, motor close to the wheels or a wheel hub motor), the driving Product specialists concept may be absolutely different to the present day, since the gears and even the differential can be done 5 away with, the latter in the case of wheel hub motors. However, at present the wheel hub motor solution is still Complete value chain far-off due to its inherent problems of user comfort and safety. Degreeoflocalcompanyinternationalisation

Low-moderate

Extent of business for local companies

Low

Notable presence of foreign companies

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 91 Product companies: EXHAUST

Companies identified In electric vehicles, since neither the engines nor the Faurecia Sistemas de escape España batteries emit gases that must be expelled and Magnetti Marelli controlled, exhaust systems are not required. On the Manufactura Moderna de Metales other hand, the exhaust continues to play a role in Mecàniques Joan the diﬀerent hybrid versions and, like the rest of the Transmac Rubí products involved in internal combustion, will have to improve its capability to control emissions. So exhausts will go through few changes in the ﬁrst and second Product specialists stage but will start to see their market share fall once pure EVs start to be industrialised, presumably at the end 5 of the second stage and intensively in the third stage of industrialisation. In any case, while there is a main Degreeoflocalcompanyinternationalisation combustion engine or a combustion engine to generate electricity, exhaust systems will continue to play a role in Low-moderate green vehicles. Extent of business for local companies

Low

Notable presence of foreign companies

92 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA PROCESS COMPANIES ASSOCIATEDWITHTHE ENGINE BLOCK AND POWERTRAIN Ignition, Fuel and feed Block and power management and Transmission Exhaust electric components

FORGING& STAMPING SINTERING CASTING STAMPING CASTING

Arbúcies Comforsa AMES AMES Infun Gedia España Industrial

Funosa Arbúcies industrial CIE Components STAMPING OF SMALL{SCALE Ilpea Industrie STAMPING Vilanova PARTS Fundición Pujol Mecàniques Joan Muntalà Usotor Talleres Montajes y Cial. Metalúrgica Auxiliares de Tecniacero Dytram Comforsa acabados Egarense Estampaciones Talleres Auxiliares de Estampaciones BARCUTTINGCASTING STAMPING

Deissa Infun Gedia España

Tecﬁsa

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 93 Product companies: SEATS

Companies identified The features that make seats competitive today are not Aunde likely to be very diﬀerent from those of the future with Cromoduro the emergence of green vehicles, although lighter Curtidos Farrés weight vehicles will mean that manufacturers have to Grammer Automotive make an eﬀort to reduce the weight and the materials Indepol used for interiors will have to be recyclable. Industria del Sillín Industrias Laubat Intier Magna Johnson Controls (JCI) Trety SA

Product specialists

Signiﬁcant amount of business. Complete value chain

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Signiﬁcant local presence in process specialists

94 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: COCKPIT AND INSTRUMENTS

Companies identified The function of the cockpit is to communicate to the Bitron Mark driver the information required for his or her safety and Continental Automotive Spain comfort.Tocounteractrangeanxiety,thecommunication Cromoduro interface will have to keep the driver informed at all Delphi Diesel Systems times of the battery’s status and even indicate the best Elausa Electronica i Automatismes charging options. Improved telecommunications (with Electronica Dabel charging point location and availability) and vehicle Especialidades Eléctricas Escubedo intelligence will therefore be vital in hybrids and electric Faurecia Interior Systems vehicles. Grammer Automotive There will also be other changes that are already starting Kostal Eléctrica to come about, mostly intensiﬁed by the electric drive Peguform system, such as joysticks, electronic steering, electronic Plastal brakes, etc., which will lead to instruments and vehicle Zanini interaction systems that are very diﬀerents from the Visteon sistemas interiores España S.L. ones used today.

Product specialists

Signiﬁcant company density in this segment

Degreeoflocalcompanyinternationalisation

Moderate

Extent of business for local companies

Low

Foreign companies have most of the sector’s business

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 95 Product companies: DOOR MODULES AND OVERHEAD SYSTEMS

Companies identified Door modules and overhead systems are the interior Arvin Meritor parts of the body and the roof module and exterior Aunde doors and rear modules. Brose Their contribution to the system used by green vehicles Butz-Ieper consists of helping ventilation and heat insulation for Cromoduro the cabin and, as far as possible, reducing weight and Faurecia Interior Systems incorporating more electronics. In the case of electric Ficosa vehicles, there is the extra importance of saving Gergonne GPI electricity, so as not to reduce the vehicle’s autonomy. Grammer Automotive Grupo Antolín Grupo Industrial Catensa Intier Magna Kostal Eléctrica Magna Mirrors Molan Pino Peguform Rieter Saifa

Product specialists

Complete value chain

Degreeoflocalcompanyinternationalisation

Moderate

Extent of business for local companies

Low

Mostly foreign companies present

96 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: INTERIORS

Companies identified The companies specialised in interiors will be slightly Carcoustics affected by the need for heat insulation but are unlikely Celix to notice any huge change in their product. With regard Cromoduro to the engine’s soundproofing, this will be less necessary Faurecia Interior Systems in electric engines as they are very quiet. These Fegomi companies’ products are therefore not greatly affected Linde y Wiemann by the arrival of electric vehicles but they will have to Naturauto include recyclable materials in the case of green vehicles Rieter Saifa in general. SA Isofel (Tramico) Continental Automotive Spain SA Startecnik Trety SA

Product specialists

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Concentration of soundprooﬁng ﬁrms

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 97 PROCESS COMPANIES ASSOCIATEDWITHTHE EXTERIOR BLOCK

Seats Cockpit and instruments Door modules and others Interiors

STAMPING PLASTICINJECTIONMOULDING STAMPING

Talleres Auxiliares Ind. Plàstiques Trilla Flex N’Gate de Estampaciones

Cial. Metalúrgica Egarense SMALL{SCALE STAMPING PLASTICINJECTIONMOULDING Usotor Ind. Plàstiques Trilla Dytram Plàstics Alt Camp Talleres Auxiliares de Estampaciones Kessel Automotive Ibèrica

98 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: LOW/MEDIUM VOLTAGE WIRING

Companies identified Low/medium voltage wiring is the equivalent to the Alstom Power SA wiring used in today’s cars (headlights, entertainment Angli Industrias SA systems, etc.). Draka Cables It is increasingly necessary to integrate the wiring Electro DH SA within vehicles to fit this into very limited spaces GJMSA and also simplify assembly and repair. “Bus” systems Kuster are used with increasing frequency for this reason, as Lear they mean that the number of wires can be greatly Optral SA reduced. Pﬁsterer Upresa SA Sadeca To reduce the weight of the wiring, copper is tending Schneider Electric to be replaced by aluminium. In any case, low/medium voltage wiring will continue to have the same characteristics as today. Product specialists

Degreeoflocalcompanyinternationalisation

Moderate

Extent of business for local companies

Low

Mostly foreign companies present

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 99 Product companies: DRIVER SUPPORT

Companies identified Driver support systems form part of the vehicle’s active Continental Automotive Spain safety and include elements such as night-time infrared Delphi vision, mirrors, distance sensors, adaptive cruise control, Electronica Dabel tyre pressure monitoring, traction control systems, brake Tyco assistance systems, etc. These systems will evolve in parallel to how they have been evolving with ICVs. Later on they will also have to incorporate the relevant Product specialists information for the driver on vehicle-to-grid, grid-to- vehicle and vehicle-to-vehicle communications to 4 optimise the use and functioning of green vehicles and Degreeoflocalcompanyinternationalisation particularly optimise the route thanks to the information provided. Low-moderate

Extent of business for local companies

Low

Foreign companies have most of the sector’s business

100 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: WINDSCREEN WIPERS AND OTHER SAFETY ELEMENTS

Companies identified Auxiliary safety systems such as windscreen wipers, Auto Liv electric window systems, centralised locking and, in Doga general, any system that includes a small electric Elastic Berger machine will have to be more efficient in order to be Ficosa more competitive within the panorama of electric Guilera vehicles. In fact, all these systems need to evolve to Kern Liebers increase efficiency in green vehicles, although in the Robert Bosch case of electric vehicles there is the added need to Valeo seguridad y cierre optimise electricity as much as possible. Safety belts will not be subject to modification. Although weight reduction will also affect them, for obvious Product specialists reasons they will be one of the last components to reduce their weight significantly. 8

Signiﬁcant company concentration with global segment leaders

Degree of local company internationalisation

Moderate

Extent of business for local companies

Low

Stamping, sintering and casting with the sole presence of Catalan ﬁrms

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 101 Product companies: LIGHTING

Companies identified The lighting system for cars is made up of the headlights, Guilera auxiliary lights, indicators, anti-fog lights, brake lights, Magnetti Marelli (Automotive Lighting) emergency signal systems, rear reﬂectors and interior TRW Automotive España lights. Companies specialising in vehicle lighting systems will have to oﬀer very efficient systems in electric terms. Product specialists In this respect, LED technology, which is already a growing trend in the automotive sector, will become 3 even more important. By way of example, one innovation Moderate business volume. Relative lack of is the case of BASF and Evonik, which are developing companies in the segment polymers based on LED technology to make illuminated surfaces that could be used for orientation in the dark. Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Highly notable presence of foreign ﬁrms

102 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: COMFORTHVAC

Companies identified Heating systems will have to be speciﬁcally designed for Calsonic Kansei electric vehicles. As residual heat is much less with Frape Behr electric engines, other systems such as automotive Hutchinson Palamós heat pumps and advanced ventilation systems are Robert Bosch fàbrica de Castellet SA being developed. The electricity for these systems will Ti Group Automotive Systems have to be supplied from the battery and will therefore Valeo Climatización reduce the vehicle’s eﬀective range. For example, it is calculated that between 2 and 3 kW are required for air conditioning to work. Efficiency in consumption will Product specialists be key in this kind of products for EVs.

Complete value chain

Degree of local company internationalisation

Low

Extent of business for local companies

Low

Large sector multinationals in Catalonia

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 103 PROCESSCOMPANIESASSOCIATEDWITHTHEBLOCKOFSYSTEMS,SAFETYANDCOMFORT Windscreen wipers Comfort (air conditioning) Safety Systems

SINTERING PLASTICINJECTIONMOULDING STAMPING STAMPING

AMES Ind. Plàstiques Trilla Talleres Auxiliares de Estampaciones Usotor

SINTERING Dytram

AMES CASTING

Dynacast

104 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: STRUCTURAL ELEMENTS

Companies identified The structural elements in electric vehicles will have JIT Martorell to adapt to the configuration chosen by the Comforsa powertrain (be it a centralised motor, one close to the Doga wheels or on the wheels). The use of lighter materials Estampaciones Sabadell such as aluminium is also increasingly more popular to Estampaciones Zona Franca reduce weight in these components. Funosa Gedia España S.L. Gestamp-Esmar Gestamp-Metalbages Infun Jordan Martorell

* In this ﬁle, process companies have been added to the list of companies identiﬁed. In bold, the product companies.

Product specialists

Category with a large presence of process specialists

Degree of local company internationalisation

Moderate

Various state companies with international presence

Extent of business for local companies

High

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 105 Product companies: STEERING

Companies identified With the emergence of electric vehicles, the tendency Fico Cables to shift from hydraulic to electronic systems will Grupo Castellón accelerate and the development of steer-by-wire GSB (CIE Vilanova - Grupo CIE) systems is also likely to speed up (based on airplane Honeywell fricción España systems, there is no steering column, axles or clutch Hutchinson Palamós as there is today). In an extreme case, the configuration Jit Martorell of the hub motor will mean that steering will be radically Teknia Deis (Deissa) different from today’s system. As in the previous case, Tenneco automotive Iberica steering will also have to adapt to the configuration of Zanini each vehicle. In many cases, the precision and weight ZF Lenksysteme will have to be improved as much as possible.

Product specialists

Complete value chain

Degreeoflocalcompanyinternationalisation

High

Extent of business for local companies

Low

Business volume mostly via foreign companies

106 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: AXLES

Companies identified Conceptually, axles are the mechanical links between JIT Martorell the vehicle’s diﬀerent elements. In electric vehicles, Nopatra according to the engine’s chosen conﬁguration, some of Talleres Brimo these links will be less necessary or not needed at all. As with the rest of the structural components, weight reduction will also be important for these to be Product specialists incorporated into electric vehicles and aluminium will therefore tend to be used whenever possible. 3

Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Concentration of Catalan companies specialising in processes

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 107 Product companies: WHEELSRIMSHUB CAPS

Companies identified Rims will have to be adapted to the new systems of the Hayes Lemmerz engine, suspension and brakes. The extreme case is Industrias Laubat the in-wheel or wheel hub motor design for electric Zanini vehicles of the future. Tyres will have to cut down their rolling resistance and therefore friction to reduce the energy consumed when Product specialists the vehicle is in motion. 3 Regarding hub caps and pressure control systems, in order to be more competitive in the green vehicle race, Degreeoflocalcompanyinternationalisation these will have to be lighter, eﬃcient and integrated within the rest of the added value elements. Moderate

Extent of business for local companies

Low

Catalan ﬁrms specialising in processes

108 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: BRAKES

Companies identified Most of the hydraulic systems in electric vehicles are Bosch sistemas de frenado SL tending to disappear. This also affects the braking Federal Mogul system, which will have to change in concept to adapt Frens Sauleda to the electric engine. In electric vehicles, the tendency Herckelbout Dawson will therefore be to use systems such as brake-by-wire, Hutchinson Palamós which replaces traditional elements (pumps, belts, fluids, Imi Norgren etc.) with sensors and electronic elements. Some experts J Horts believe that hybrids and electric cars will be the first Transmesa vehicles to rely on these systems, but only once their Trelleborg safety and efficacy has been proven will they be used in internal combustion cars. Brake manufacturers will therefore see their product change in concept and Product specialists must be prepared to adapt it. Moreover, the brakes on electric vehicles (pure and 18 hybrids) are being developed to take into account the Complete value chain reuse of energy from braking to supply the energy storage systems. Degreeoflocalcompanyinternationalisation

Low

Extent of business for local companies

Low

Business volume mostly via foreign companies

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 109 Product companies: SUSPENSION

Companies identified Tyres are expected to be inflated to high pressures in Aksys Insonit electric vehicles and this will make efficient suspensi- JIT Martorell on more complicated. Manufacturers will have to adapt Nifco their product to this new configuration. Tenneco automotive Iberica Another challenge for vehicle suspension is posed by wheel hub motors, as they perform quite differently from the normal systems (and are very uncomfortable Product specialists for users). Integrated systems are being designed, such as Michelin’s Active Wheel, with the suspension integra- 4 ted within the wheel rim. Complete value chain On the other hand, suspension provides the chance to reuse the kinetic energy generated by the movement, Degreeoflocalcompanyinternationalisation transforming it into electricity to charge up the batteries and improve the autonomy of EVs. Low

Extent of business for local companies

Low

Local ﬁrms present among process specialists

110 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA PROCESSCOMPANIESASSOCIATEDWITHTHECHASSISBLOCK Structural elements Steering Axles Wheels Brakes Suspension

STAMPING CASTING MACHINING CASTING CASTING CASTING

Benteler Infun Comforsa Perfectal Funderia Condals Infun

PLASTIC Gestamp Funosa Talleres Brimo INJECTION Infun Funosa MOULDING

Estampaciones CIE Comp. Vilanova SINTERING Ind. Plàstiques Trilla Funosa SINTERING Sabadell

PLASTIC DOGA INJECTION AMES STAMPING AMES MOULDING

CASTING& CASTING& Gedia España Ind. Plàstiques Gestamp Esmar FORGING FORGING

Estampaciones Comforsa Tecniacero Comforsa Zona Franca

Talleres Aux. de Jordan Martorell MACHINING Estampaciones

CASTING Mecanitzat CMR BARCUTTING

Infun Mecanitzat Soto Baldomero Ventura

Comforsa

WELDING&CUTTING

Badia Soldadura

Gallemi

Bearcat

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 111 Product companies: ONBOARD COMPUTER

Companies identified One day electric vehicles will also be able to Seat communicate with the electricity grid and Siemens infrastructure. The central computer and its controls Alstom must already integrate from 40 to 60 different Indra electronic components (radio, DVD, window control, Nissan mirror control, etc.) within the models being launched Sharp today, this being up to 100 in premium cars. The Sony complexity of this integration will increase, since key parameters will also be controlled concerning how the vehicle functions, with the motors and batteries. Company profile Insourcing is occurring with these systems on the part of OEMs; they increasingly prefer to develop onboard Software ﬁrms and power electronics computers themselves or in collaboration with others ﬁrms but keeping hold of the control. Powertrain Tier 1 companies are also developing and acquiring this know-how for their systems. For example, in October 2008, Magna Electronics took over BluWav Systems LLC, a developer and supplier of controls, motors and systems for energy management in hybrid and battery electric vehicles.

112 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: POWER INVERSION AND CONVERSION

Companies identified The aim of power electronics is to modify the form of Lear electric energy whenever required (e.g. to modify the Schneider Electric España voltage, intensity, frequency, etc). These elements are Delphi integrated within the mechatronic modules that will GE Power Controls Iberica control the vehicles’ electric elements, such as engine Premo speed, discharging energy from the battery, etc. Tyco In order to be competitive in electric vehicles, power Alstom Power SA electronics must be able to be integrated with other Premium SA elements, as well as being compact, low cost and Dabel SA energy efficient. Salicru Cipsa The challenge for power electronics manufacturers in Simon order to make their product more applicable to the automotive sector is to meet all the industry’s standards in aspects such as heat, vibration, weight, etc. Company profile Power electronic components:

Companies that already manufacture • Inverter: converts DC voltage from the battery into AC inverters and converters (in Catalonia or for the electric engine. Also responsible for around the world), complex power transforming electric energy recovered from braking. electronics ﬁrms The engine’s electronic controller (normally included within the inverter) is responsible for measuring the rate of power demanded by the driver. • DC/DC converter: converts direct current from the battery exit levels to the input levels of the engine’s control electronic phase.

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 113 Product companies: BATTERY CHARGING/DISCHARGING SYSTEM

Companies identified Battery charging systems have two purposes: to Wide range of companies in the electrics introduce electric energy into the battery as quickly sector as possible and to monitor the process to prevent damaging the battery, user and/or others. There are basically three charging systems for electric Company profile vehicles: slow charge, fast charge and induction charge (a system still being developed). A secondary use for Manufacturers of electric machinery and electric vehicles would be the storing of electric material energy in its batteries, which could be returned to the grid during widespread black-outs or dips in the electricity supply. Associated with this function is the development of technologies that permit bi- directionality (with the necessary safety protection), adaptation of the grid and the appropriate regulation (even incentives). These developments are still in their initial stages. Various European technological platforms have conﬁrmed that the necessary R&D to adapt batteries to bi-directional charging will not be completed until 2019 and production will therefore start in 2020.

114 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: HIGH VOLTAGE WIRING

Companies identified In addition to the wiring mentioned in the previous Draka Cables section, in many cases it will also be necessary to add Gjm SA wiring capable of withstanding higher demands. Kuster The electric wiring section is particularly determined by Lear the strength of the electric current it has to carry. Bearing Pﬁsterer Upresa SA in mind the fact that the proposed engines are usually Lafarga Group 30 to 50 kW, in many cases much more powerful wiring Schneider Electric España SA will be required to the kind used in combustion vehicles. Some of the automotive wiring ﬁrms today could refocus their business towards this kind of wiring. Firms working Company profile with industrial electrical installations might also play a relevant role in developing new concepts. Manufacturers of low and medium voltage power

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 115 Product companies: ELECTRIC MACHINES

Companies identified The successful introduction of electric vehicles in the Bosch market requires electric machines to be developed that Siemens are both cheap and highly eﬃcient with high power per Mavilor Motors SA weight and per volume ratios. The most important Alstom Power SA electric machine for these vehicles is the electric motor. Maraz SL The most widely used electric motors are continuous current, squirrel cage induction (also called the asynchronous motor), permanent-magnet synchronous Company profile and variable reluctance motors. Each of these alternatives has advantages and Manufacturers of electric motors for other disadvantages, in each case prioritising diﬀerent aspects applications of the vehicle’s general features. For example, induction motors are cheap but require a lot of space, while 700 permanent-magnet motors allow for highly compact designs.

500 Weight Regarding electric machines in general, one big source reduction of uncertainty is related to the availability of a reliable and diverse supply of metal, such as copper, and 300 permanent magnets, which are necessary to ensure high eﬃciency and high power density in electric Electric motor (e-motor) mass [g]

100 motors. 20 40 60 80 100 Power [W] To ﬁnd out which motor manufacturers are the most

E-motors with conventional magnets (iron) competitive, we must remember that the geographical E-motors with high performance magnets (neo magnets) focus is divided by technology. Asynchronous motors Source: Bosch. are dominated by European companies such as Bosch, Siemens and Continental Temic, while the most advanced permanent-magnet motors are Japanese, from Toyota, Honda, Aisin and Hitachi, among others. Companies’great challenge to break into the automotive sector will depend on them adapting themselves to the very large volumes and limited weights involved.

116 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: SUPER CONDENSERS

Companies identified Super condensers (or ultra condensers) could be an Alstom Power SA alternative source for storing energy to complement Condensadores Industriales SL the battery. Super condensers have one great advantage: International Capacitors SA they can be charged and discharged very quickly, Schneider Electric España SA providing electric cars with instantaneous motor torque. However, some manufacturers are reluctant to introduce Company profile them because they complicate the energy storage systems and simple systems are being researched. This is a more long-term product Super condenser technology for electric vehicle applications is still incipient and can be found particularly at universities and related organisations.

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 117 Product companies: PHOTOVOLTAIC SYSTEMS

Companies identified Many concepts, prototypes and also models of electric Aleo Solar cars presented have solar panels installed. One of the Helios Energy Europe most common applications for this system is to cool Vidursolar the car’s interior while it is parked in the summer sun Sharp (the time when most cooling is required coincides precisely with the time when most energy is generated) or to cool down the batteries. The use of these systems, Company profile although expensive today, provides electric vehicles with a very important plus in terms of autonomy. Manufacturers of photovoltaic panels and/or from the electronics sector

118 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Product companies: ENERGY REUSE SYSTEMS

From braking

Companies identified Systems that reuse energy from braking transform Allied Signals residualenergyfrombrakingandotherdecelerations Alstom Power SA in electric energy to partially charge the battery. Bosch These systems are highly eﬃcient, even over 80%. Internacional Capacitors SA The manufacturer BMW has been marketing this system JJuan under the name of eﬃcient dynamics since 2007.

Company profile

Brake manufacturers and/or companies with experience in other transport elements with experience in the ﬁeld, like the railway sector

From the suspension

Company profile Systems that reuse energy from the suspension transform residual kinetic from the movement of Suspension manufacturers with a high the suspension into electric energy to partially research and innovation capability charge the battery. These systems, developed by companies such as Levant Power (USA), provide signiﬁcant savings in large tonnage vehicles, such as trucks and buses.

ANALYTICALFILESFORGREENVEHICLESYSTEMSAND COMPONENTS 119 Product companies: BATTERY PACK

Companies identified The battery is a vital part of electric vehicles and is Ficosa seen as a key component that will determine to what Gestamp extent the market will accept such vehicles, as well as affecting the competitive difference between brands. Industry considers ion lithium batteries to be the Company profile most promising but other alternatives have not been ruled out for the future, which might advance more Companies with experience in making quickly. batteries for other systems, such as mobile phones and laptops. According to the part Having a powerful electric vehicle battery company of the value chain, others such as in the Catalan automotive industry could be vital for refrigeration, assembly and packaging. current OEMs, not only for its power to attract and the possibilities for joint research and development, but also for logistics reasons: battery transport and storage is very expensive (the logistic costs for batteries could account for 20% of their total cost) and therefore has a high impact on the cost and final price. To ensure an ion lithium battery functions optimally, it must be duly cooled. Consequently, in countries with extreme temperatures or with fast battery charging, its useful life can decrease significantly. Cooling is also achieved using complex systems with coolants or forced ventilation with air, in addition to control systems, which are normally included in the battery pack (also known as ESS or the Energy Storage System).

120 THE INDUSTRIAL CHALLENGES OF GREENVEHICLES IN CATALONIA Damià Martín (Barcelona,1980) The industrial challenges of green Project manager in the Analysis and Foresight Unit of the Observatory for Industrial Foresight from the Department of Innovation, Universities and Business of the Catalan government. An Economics graduate from Barcelona University, he has specialised in the strategic and competitive analysis of sectors. vehicles in Catalonia Over the last four years he has collaborated on various reports analysing competitiveness to improve industrial clusters and has recently acquired great expertise in the area of energy's strategic implications for industry. Of note is the project analysing the challenges and industrial opportunities of photovoltaic energy, for which he co-authored a book in 2009 and, along the same lines as this publication, the project diagnosing the implications of electric vehicles for Catalan industry and the design and implementation of plan of public support actions, from this year. Damià Martín Tomàs Megía