1 00:00:00,360 --> 00:00:02,720 Speaker 1: I'm Dana Perkins and you're listening to Switch It on 2 00:00:03,040 --> 00:00:05,640 Speaker 1: the B E F podcast. On the seventeenth of May, 3 00:00:05,800 --> 00:00:09,360 Speaker 1: BENF hosted our Munich Summit, one of six summits taking 4 00:00:09,400 --> 00:00:12,320 Speaker 1: place around the world each year, each with a different theme. 5 00:00:12,640 --> 00:00:17,079 Speaker 1: This summit focuses on where automotive manufacturing and energy converge. 6 00:00:17,480 --> 00:00:21,200 Speaker 1: So naturally, we were delighted when Michael Loscheler, CEO of 7 00:00:21,239 --> 00:00:24,960 Speaker 1: Opal Automotive, agreed to join us to discuss automotive strategy 8 00:00:25,040 --> 00:00:28,920 Speaker 1: in the transition to electric vehicles. Michael has experienced working 9 00:00:28,960 --> 00:00:33,519 Speaker 1: for numerous companies in the automotive industry, including Volkswagen, Daimler, 10 00:00:33,560 --> 00:00:37,120 Speaker 1: and Mitsubishi Motors. During our summit, he was interviewed by 11 00:00:37,200 --> 00:00:40,760 Speaker 1: Nicolas Solopolos, advanced transport analyst. Here at B and e F. 12 00:00:41,159 --> 00:00:44,640 Speaker 1: For more information about our summits, also taking place in London, 13 00:00:44,800 --> 00:00:48,760 Speaker 1: New Delhi, New York, San Francisco, and Shanghai, go to 14 00:00:48,880 --> 00:00:52,800 Speaker 1: about dot bien ef dot com forward Slash Summit. As 15 00:00:52,800 --> 00:00:55,520 Speaker 1: a quick reminder, bien ef does not provide investment or 16 00:00:55,560 --> 00:00:58,160 Speaker 1: strategy advice and are more complete disclaimer is at the 17 00:00:58,240 --> 00:01:00,960 Speaker 1: end of the show. But now let's hear the interview 18 00:01:01,240 --> 00:01:04,760 Speaker 1: with Michael Lohler, CEO of Local Automotive, about the future 19 00:01:04,840 --> 00:01:16,479 Speaker 1: of electric vehicles. So hello, Michael, thank you very much 20 00:01:16,520 --> 00:01:18,640 Speaker 1: for being here with us to day. It's it's great, 21 00:01:18,800 --> 00:01:21,360 Speaker 1: great pleasure to have you on the summit. So it's 22 00:01:21,480 --> 00:01:24,600 Speaker 1: also a very interesting time for the automotive industry, particularly 23 00:01:24,600 --> 00:01:26,840 Speaker 1: in Europe. Among many other things, we have the next 24 00:01:26,920 --> 00:01:30,200 Speaker 1: zero targets that are in place now for a course, 25 00:01:30,240 --> 00:01:33,240 Speaker 1: the European Union, the UK as well has some of those. 26 00:01:33,280 --> 00:01:36,360 Speaker 1: And one of the questions that are gaining more momentum 27 00:01:36,360 --> 00:01:39,720 Speaker 1: now the industry is that of legislating and end to 28 00:01:39,800 --> 00:01:42,800 Speaker 1: the sale of vehicles that are using in telecombustion engines. 29 00:01:43,640 --> 00:01:46,080 Speaker 1: What is your view and that I mean, first of all, 30 00:01:46,280 --> 00:01:49,680 Speaker 1: we try to be very customer focused because at the 31 00:01:49,760 --> 00:01:52,520 Speaker 1: end of the day, we offer mobility to our customers. 32 00:01:52,600 --> 00:01:55,040 Speaker 1: We want to give them excitement with with our cars 33 00:01:55,080 --> 00:01:58,160 Speaker 1: and offer clean and safe mobility and I think we 34 00:01:58,360 --> 00:02:01,680 Speaker 1: shouldn't forget this. This is really the key of our business. 35 00:02:02,120 --> 00:02:05,480 Speaker 1: At the same time, the political framework is changing. Yeah, 36 00:02:05,880 --> 00:02:07,840 Speaker 1: so what we from the open side try to do 37 00:02:07,920 --> 00:02:11,440 Speaker 1: is we want to be open for various technologies. Yeah, 38 00:02:11,480 --> 00:02:15,120 Speaker 1: what's very obvious now is that electrification is gaining momentum. 39 00:02:15,520 --> 00:02:19,200 Speaker 1: It's gaining momentum. We saw that last year. Our sales 40 00:02:19,200 --> 00:02:22,080 Speaker 1: of electric fire cars is increasing. We see that also 41 00:02:22,200 --> 00:02:25,600 Speaker 1: this year. And basically we prepare now the future for 42 00:02:25,680 --> 00:02:30,000 Speaker 1: this growing demand of electrification. But basically we also want 43 00:02:30,040 --> 00:02:33,399 Speaker 1: to be open for other technologies. Yeah, because CEO two 44 00:02:33,440 --> 00:02:36,520 Speaker 1: reduction is not only with electric cars. Are like last 45 00:02:36,600 --> 00:02:39,880 Speaker 1: year on the open side, we reduced our CEO two 46 00:02:39,919 --> 00:02:43,720 Speaker 1: emissions by twenty three Graham, which is quite significant, and 47 00:02:43,760 --> 00:02:46,840 Speaker 1: of course also gas and diesel engine contributed to this 48 00:02:47,120 --> 00:02:50,520 Speaker 1: great performance. But long story short, we want to be 49 00:02:50,600 --> 00:02:54,440 Speaker 1: open for all technologies. But we see clearly electrification is 50 00:02:54,800 --> 00:02:57,160 Speaker 1: picking up now. So you have a portfolio at the 51 00:02:57,160 --> 00:03:00,200 Speaker 1: moment that we talked about that has I see is 52 00:03:00,320 --> 00:03:02,920 Speaker 1: it has plug and fire bridges, has body electrics, and 53 00:03:03,320 --> 00:03:05,919 Speaker 1: soon enough you'll have even fuel cell cars, fuel self 54 00:03:05,960 --> 00:03:09,240 Speaker 1: vance vance in fact, and you just described that you 55 00:03:09,240 --> 00:03:12,760 Speaker 1: want to be ready for all the market eventualities. There 56 00:03:13,120 --> 00:03:16,120 Speaker 1: is that a longer term option as well. So looking 57 00:03:16,240 --> 00:03:18,440 Speaker 1: five or even ten years ahead, do you think that 58 00:03:18,480 --> 00:03:22,519 Speaker 1: you'll maintain this broad technology portfolio. So at the moment, 59 00:03:22,560 --> 00:03:26,160 Speaker 1: we have two architectures and we call them multi energy 60 00:03:26,480 --> 00:03:29,040 Speaker 1: and they are basically for one car. Let's take an 61 00:03:29,040 --> 00:03:33,000 Speaker 1: open coursa you can produce on one assembly line, I 62 00:03:33,040 --> 00:03:37,000 Speaker 1: guess diesel and electric car, and this works very well. 63 00:03:37,080 --> 00:03:39,720 Speaker 1: We are very flexible, we are very edgile, and whatever 64 00:03:39,800 --> 00:03:42,040 Speaker 1: happens in the market, we feel we are very well 65 00:03:42,120 --> 00:03:44,440 Speaker 1: prepared for this. So I think this is a very 66 00:03:44,440 --> 00:03:47,160 Speaker 1: good approach for the next couple of years. But then 67 00:03:47,400 --> 00:03:52,360 Speaker 1: more outwards, we think that electrification will gain momentum and 68 00:03:52,400 --> 00:03:55,480 Speaker 1: also as part of goopstell lunches, we will then transition 69 00:03:55,600 --> 00:03:58,720 Speaker 1: to pure electric platforms, and I think this is a 70 00:03:58,800 --> 00:04:01,240 Speaker 1: way to think about this. And on top of this, 71 00:04:01,480 --> 00:04:05,040 Speaker 1: we look also at things as you mentioned Nico Future, 72 00:04:05,120 --> 00:04:08,680 Speaker 1: so we think this also is a very attractive technology, 73 00:04:09,000 --> 00:04:12,480 Speaker 1: many advantages in terms of charging time also see you 74 00:04:12,560 --> 00:04:15,840 Speaker 1: two balance. But we transition from a let's say, multi 75 00:04:15,960 --> 00:04:20,080 Speaker 1: energy approach to then pure electric going forward. And what 76 00:04:20,240 --> 00:04:23,000 Speaker 1: is the platform strategy was something that I want to 77 00:04:23,040 --> 00:04:25,960 Speaker 1: come back to later on. But since you brought it up, 78 00:04:26,000 --> 00:04:27,880 Speaker 1: for you for doing it, of course, I guess the 79 00:04:27,880 --> 00:04:30,760 Speaker 1: answer is yes. But is that the given the fact 80 00:04:30,800 --> 00:04:34,120 Speaker 1: that as you say, electrification games momentum and in a 81 00:04:34,120 --> 00:04:38,159 Speaker 1: few years time, you will perhaps need two separate platforms, 82 00:04:38,360 --> 00:04:41,560 Speaker 1: one for electric and one for the non electric part 83 00:04:42,400 --> 00:04:46,960 Speaker 1: as electric sales gain momentum. Is that a multi energy 84 00:04:47,080 --> 00:04:51,880 Speaker 1: platform approach the something that you think will will stay 85 00:04:51,920 --> 00:04:54,120 Speaker 1: with you for for a few more years. Well, at 86 00:04:54,120 --> 00:04:56,440 Speaker 1: the end of the day, obviously the customer will decide, 87 00:04:56,920 --> 00:04:59,080 Speaker 1: and then we will decide how long we run the 88 00:04:59,160 --> 00:05:02,799 Speaker 1: multi energy platforms. As I said earlier, at the moment, 89 00:05:02,839 --> 00:05:06,640 Speaker 1: we feel very comfortable with this because it gives us flexibility. 90 00:05:06,680 --> 00:05:10,040 Speaker 1: But then we expect that electrification will gain more momentum, 91 00:05:10,200 --> 00:05:14,000 Speaker 1: so at one stage we will switch to electrified platforms, 92 00:05:14,160 --> 00:05:16,520 Speaker 1: but of course we have flexibility for how long we 93 00:05:16,640 --> 00:05:20,120 Speaker 1: run the multi energy platforms. Yeah, so I think it's 94 00:05:20,120 --> 00:05:22,839 Speaker 1: always good to be open for for many scenarios and 95 00:05:22,960 --> 00:05:25,080 Speaker 1: not just focus on one. I feel this is very 96 00:05:25,200 --> 00:05:28,359 Speaker 1: very important because it's hard to predict exactly what the 97 00:05:28,440 --> 00:05:32,080 Speaker 1: customer will require, and let's say five, six, seven years, 98 00:05:32,520 --> 00:05:37,320 Speaker 1: one thing is for sure, the political framework is very clear, 99 00:05:37,440 --> 00:05:39,919 Speaker 1: so we have to improve on CuO two and therefore 100 00:05:39,920 --> 00:05:44,560 Speaker 1: obsolutely electrification and Field said, will pay will play a 101 00:05:44,600 --> 00:05:47,520 Speaker 1: major role. Yeah, you talk about the customer and what 102 00:05:47,880 --> 00:05:51,800 Speaker 1: what they want, and earlier on about this very large 103 00:05:51,839 --> 00:05:55,080 Speaker 1: increase in the electric vehicle sales in Europe last year. 104 00:05:55,800 --> 00:05:59,480 Speaker 1: Do you feel that we're at the moment where you're 105 00:05:59,520 --> 00:06:04,160 Speaker 1: seeing organic demand for primarily electric cars or it's still 106 00:06:04,200 --> 00:06:08,280 Speaker 1: a regular or driven the market pushed by the automakers 107 00:06:08,279 --> 00:06:12,200 Speaker 1: in order to reach some of the very tough emissions 108 00:06:12,360 --> 00:06:15,159 Speaker 1: limits here in Europe. Well, from from the opposite, we 109 00:06:15,279 --> 00:06:18,480 Speaker 1: very clearly see there is customer demand. Yeah, it started 110 00:06:18,560 --> 00:06:22,520 Speaker 1: last year, Um, it's increasing now. Of course, the question 111 00:06:22,520 --> 00:06:24,960 Speaker 1: will it continue like this? Yeah, because to give you 112 00:06:24,960 --> 00:06:28,080 Speaker 1: a data point, like last year, or sold thirty five 113 00:06:28,080 --> 00:06:31,640 Speaker 1: thousand electrified casts. This is around five six of our 114 00:06:31,720 --> 00:06:34,640 Speaker 1: total volume, and of course we see this growing also 115 00:06:34,720 --> 00:06:38,479 Speaker 1: in twenty one. Yeah, so we think customer demand is increasing, 116 00:06:38,800 --> 00:06:41,279 Speaker 1: but the key question is will it come to levels 117 00:06:41,320 --> 00:06:46,320 Speaker 1: of thirty very very shortly? And it also obviously depends 118 00:06:46,400 --> 00:06:50,120 Speaker 1: on support from the government, charging infrastructure, many factors, but 119 00:06:50,200 --> 00:06:55,200 Speaker 1: we do think customer demand is significantly increasing, significantly increasing 120 00:06:55,240 --> 00:06:58,920 Speaker 1: going forward. As you have this certain multi platform strategy, 121 00:06:59,360 --> 00:07:03,240 Speaker 1: multi elements platform and you're going to shoot soon enough 122 00:07:03,279 --> 00:07:06,200 Speaker 1: to the to the all electric platforms, how does the 123 00:07:06,240 --> 00:07:10,640 Speaker 1: strategy and which platform we use affect your profitability? In 124 00:07:10,680 --> 00:07:14,360 Speaker 1: electric cars center, how do you even define the profitability 125 00:07:14,360 --> 00:07:18,480 Speaker 1: of electric cars? So there is a lot of discussion 126 00:07:18,480 --> 00:07:21,840 Speaker 1: in the industry now that will be in the twenty 127 00:07:21,960 --> 00:07:24,520 Speaker 1: five for different segments, will be earlier for other segments. 128 00:07:24,600 --> 00:07:28,320 Speaker 1: It would perhaps all the way up maybe from a 129 00:07:28,400 --> 00:07:30,920 Speaker 1: from from some people what they're saying, So, how do 130 00:07:30,960 --> 00:07:34,400 Speaker 1: you see the profitability of electric cars? Primarily buttery electric 131 00:07:34,400 --> 00:07:37,040 Speaker 1: cars developing in the next in the next several years. 132 00:07:37,240 --> 00:07:39,280 Speaker 1: So when we from the oppen side look at the 133 00:07:39,320 --> 00:07:43,600 Speaker 1: requirements of profitability of electrified cars, we don't differentiate between 134 00:07:43,640 --> 00:07:46,720 Speaker 1: electrified cars and I cast because at the end of 135 00:07:46,760 --> 00:07:49,000 Speaker 1: the day, we have to come to similar levels, right, 136 00:07:49,520 --> 00:07:52,240 Speaker 1: I mean, obviously the volume is reduced at the moment, 137 00:07:52,680 --> 00:07:56,120 Speaker 1: many things were changed. Obviously we get also support from 138 00:07:56,160 --> 00:07:59,800 Speaker 1: governments in various countries. But long story short, we have 139 00:08:00,040 --> 00:08:02,840 Speaker 1: the same requirements in terms of profitability, and I think 140 00:08:02,840 --> 00:08:06,440 Speaker 1: it would be very let's say difficult to differentiate for 141 00:08:06,480 --> 00:08:09,160 Speaker 1: a long period of time and say, look, profitability of 142 00:08:09,240 --> 00:08:12,120 Speaker 1: electrified cars is much lower than for I see, so 143 00:08:12,200 --> 00:08:14,240 Speaker 1: we have to come to similar levels. That's in a 144 00:08:14,360 --> 00:08:17,480 Speaker 1: very important requirement. And when do you see that in 145 00:08:17,560 --> 00:08:20,600 Speaker 1: terms of the time frame is that something you can share. 146 00:08:21,040 --> 00:08:23,760 Speaker 1: Do you see this profitability at the same level in 147 00:08:23,840 --> 00:08:28,320 Speaker 1: the next five years, for longer, for your for your business. Well, 148 00:08:28,400 --> 00:08:31,560 Speaker 1: we steer this obviously already today because the question is 149 00:08:31,640 --> 00:08:35,800 Speaker 1: today and I don't want that electrified cars have lower 150 00:08:35,840 --> 00:08:39,040 Speaker 1: profitability than I see cars. And we tried everything to 151 00:08:39,120 --> 00:08:41,960 Speaker 1: do so that this is going in in the right direction. 152 00:08:41,960 --> 00:08:46,600 Speaker 1: Now for a very short break, stay with us, So 153 00:08:46,800 --> 00:08:50,559 Speaker 1: shifting a little bit. Are related to the platform strategies 154 00:08:50,640 --> 00:08:55,280 Speaker 1: and the profitability of cars up until now and still 155 00:08:55,320 --> 00:08:59,559 Speaker 1: that now. Of course, scale when factoring production, primarily on 156 00:08:59,640 --> 00:09:02,200 Speaker 1: the in term combustion engine side of things, is a 157 00:09:02,280 --> 00:09:06,960 Speaker 1: key factor that affects both profitability but also for an 158 00:09:07,000 --> 00:09:09,920 Speaker 1: extent completive advantage in the in the auto industry along 159 00:09:10,000 --> 00:09:14,760 Speaker 1: many others. Do you see that changing scale becoming less 160 00:09:14,760 --> 00:09:18,000 Speaker 1: relevant in a in a more electrified era. Well, although 161 00:09:18,120 --> 00:09:21,320 Speaker 1: I would say scale is always helpful, Yeah, it's it's 162 00:09:21,360 --> 00:09:24,319 Speaker 1: always helpful. It's a factor. But what for us is 163 00:09:24,400 --> 00:09:27,800 Speaker 1: it is probably even more important, is that we have 164 00:09:28,000 --> 00:09:30,600 Speaker 1: a good control of the entire value chain. So what 165 00:09:30,720 --> 00:09:33,480 Speaker 1: what do I mean in terms of electrified cars? So 166 00:09:34,000 --> 00:09:36,880 Speaker 1: we for example investor also in the production and the 167 00:09:37,000 --> 00:09:39,080 Speaker 1: R and D of battery cells, which is a very 168 00:09:39,080 --> 00:09:41,720 Speaker 1: important strategic decision to say, look, we want to do 169 00:09:41,800 --> 00:09:45,559 Speaker 1: this ourselves um and not purchase it from from suppliers. 170 00:09:46,000 --> 00:09:48,600 Speaker 1: We invest, for example in Germany and France a few 171 00:09:48,640 --> 00:09:51,760 Speaker 1: billion of euros to do the battery sales ourselves, also 172 00:09:51,800 --> 00:09:55,000 Speaker 1: with the electric motor, so it feels like for us 173 00:09:55,040 --> 00:09:58,400 Speaker 1: this is co competent um and we want to manage 174 00:09:58,440 --> 00:10:01,040 Speaker 1: the entire value chain. This is very important. And then 175 00:10:01,080 --> 00:10:03,800 Speaker 1: of course we benefit from the fact that we are 176 00:10:03,960 --> 00:10:06,920 Speaker 1: part of good Sell. Launch is a very large automotive company. 177 00:10:07,320 --> 00:10:10,040 Speaker 1: So I think scale is always a factor, but also 178 00:10:10,120 --> 00:10:13,680 Speaker 1: strategic thinking what do we do ourselves and what do 179 00:10:13,720 --> 00:10:16,600 Speaker 1: we do with external papness. Is there something beyond scale 180 00:10:16,640 --> 00:10:20,040 Speaker 1: that may become a source of competitive advantage in the 181 00:10:20,080 --> 00:10:22,320 Speaker 1: next few year? You said strategic thinking of course, and 182 00:10:22,720 --> 00:10:28,240 Speaker 1: I guess product placement. Does the electrified era offer different 183 00:10:28,280 --> 00:10:33,360 Speaker 1: opportunities or additional opportunities to differentiate yourself and get some 184 00:10:33,360 --> 00:10:36,200 Speaker 1: some advantage over your competitors. Absolutely, and there are there 185 00:10:36,200 --> 00:10:38,280 Speaker 1: are many many ways to do that. And again it 186 00:10:38,320 --> 00:10:41,520 Speaker 1: comes back to Okay, what is our customer demanding from us? 187 00:10:41,559 --> 00:10:44,839 Speaker 1: What is the customer really requesting in terms of electrified casts. 188 00:10:45,240 --> 00:10:48,600 Speaker 1: So we try to differentiate this in various aspects, and yeah, 189 00:10:48,600 --> 00:10:52,400 Speaker 1: of course gain our competitive advantage in this. Okay, I 190 00:10:52,480 --> 00:10:56,720 Speaker 1: guess earlier when you talk about sells, you primarily refer 191 00:10:56,840 --> 00:11:00,680 Speaker 1: to this UH venture that you have, the automotive cell 192 00:11:00,760 --> 00:11:04,080 Speaker 1: company that you have with p s A, Total and Soft, 193 00:11:04,679 --> 00:11:07,960 Speaker 1: and the scale of that ambition I think has received 194 00:11:08,400 --> 00:11:12,080 Speaker 1: less attention than at least in Europe compared to other 195 00:11:13,240 --> 00:11:16,080 Speaker 1: forays of automakers in the In that in that business 196 00:11:16,120 --> 00:11:18,640 Speaker 1: you explained a little bit about the russianale behind it. 197 00:11:19,240 --> 00:11:21,240 Speaker 1: Could you expand a little bit on that? I mean, 198 00:11:21,480 --> 00:11:23,840 Speaker 1: for example, what is the role of the different partners 199 00:11:23,840 --> 00:11:26,520 Speaker 1: in this business? Again? Why does a lotomaker want to 200 00:11:26,559 --> 00:11:32,200 Speaker 1: become a sell manufacturer? Isn't that becoming a commodity business 201 00:11:32,559 --> 00:11:35,080 Speaker 1: relicly food? Well, a couple of things. I mean, first 202 00:11:35,080 --> 00:11:38,080 Speaker 1: of all, it's important that we control the entire value chain. 203 00:11:38,559 --> 00:11:41,560 Speaker 1: And we teamed up with Total and Stuft and created 204 00:11:41,600 --> 00:11:44,560 Speaker 1: a joint venture and we'll build now in the first 205 00:11:44,600 --> 00:11:48,720 Speaker 1: step two factories, one in Germany, one in France. Quite 206 00:11:48,720 --> 00:11:52,000 Speaker 1: significant investments or just here in Germany when when invest 207 00:11:52,040 --> 00:11:54,800 Speaker 1: two billion euros in a I would say a real 208 00:11:54,920 --> 00:11:58,400 Speaker 1: giga factory and we will produce and better resells for 209 00:11:58,600 --> 00:12:01,520 Speaker 1: five hundred thousands like ctrified cars per years, so it's 210 00:12:01,600 --> 00:12:05,520 Speaker 1: significant volume. And of course we first of all think 211 00:12:05,600 --> 00:12:08,200 Speaker 1: that together with our partners, we have the know how 212 00:12:08,280 --> 00:12:11,480 Speaker 1: for this, but then also the competitive advantage, and I 213 00:12:11,480 --> 00:12:14,600 Speaker 1: think it's it's very important to have in this case 214 00:12:14,640 --> 00:12:16,520 Speaker 1: here in Germany and test us lout on the factory 215 00:12:16,600 --> 00:12:20,560 Speaker 1: close to other factories where we manufacture our cars, so 216 00:12:20,640 --> 00:12:23,720 Speaker 1: we feel this is a competitive advantage instead of shipping 217 00:12:24,240 --> 00:12:27,240 Speaker 1: bettery sales around the world. It's obviously also good from us. 218 00:12:27,280 --> 00:12:30,880 Speaker 1: You too footprint similar things we do with the electric motor, 219 00:12:30,960 --> 00:12:33,760 Speaker 1: so we are of the opinion this is core competence. 220 00:12:33,920 --> 00:12:36,679 Speaker 1: We can also differentiate in terms of cost, but also 221 00:12:37,120 --> 00:12:40,880 Speaker 1: customer requirements and it's better in our hands and it 222 00:12:40,960 --> 00:12:44,640 Speaker 1: makes total sense in terms of the overall electrification strategy 223 00:12:44,640 --> 00:12:47,280 Speaker 1: going forward. We talked earlier on so I didn't just 224 00:12:47,320 --> 00:12:49,760 Speaker 1: take the final a few minutes to ask you something 225 00:12:50,080 --> 00:12:55,120 Speaker 1: broader beyond the technology striate or manufacturing decisions also has 226 00:12:55,200 --> 00:12:57,360 Speaker 1: gone through a lot in the last few years, and 227 00:12:57,640 --> 00:13:01,640 Speaker 1: that's probably an understatement. So can you describe from your 228 00:13:01,679 --> 00:13:06,520 Speaker 1: own point of view what happens since and when are 229 00:13:06,520 --> 00:13:09,440 Speaker 1: you coming out of that cycle? Does that cycle end, 230 00:13:09,800 --> 00:13:13,600 Speaker 1: and what's the next few years will look like? Yeah, 231 00:13:13,640 --> 00:13:16,079 Speaker 1: so a bit of background. So two thousand seventeen was 232 00:13:16,120 --> 00:13:18,439 Speaker 1: a very important year for Open because we became part 233 00:13:18,520 --> 00:13:20,440 Speaker 1: of Group p s A. R p s A took 234 00:13:20,559 --> 00:13:23,840 Speaker 1: over Open and Open had I think twenty years of 235 00:13:23,920 --> 00:13:26,360 Speaker 1: permanent losses. So it was very obvious that we had 236 00:13:26,400 --> 00:13:30,160 Speaker 1: to change something fundamentally, and we did so. We put 237 00:13:30,520 --> 00:13:33,360 Speaker 1: in house a plan together which we called the Pace 238 00:13:33,480 --> 00:13:37,120 Speaker 1: Plan and gave it very clear but also straightforward, simple 239 00:13:37,200 --> 00:13:40,360 Speaker 1: targets and said, look, we have to become sustainably profitable, 240 00:13:40,800 --> 00:13:44,160 Speaker 1: go electric and become a global brand. And then with 241 00:13:44,360 --> 00:13:48,040 Speaker 1: internal people and I think that's important, we really unleashed 242 00:13:48,040 --> 00:13:50,600 Speaker 1: the power of Open inside and said, look, we have 243 00:13:50,679 --> 00:13:54,880 Speaker 1: to improve our brand perception, the pricing, reduced complexity, reduced 244 00:13:54,960 --> 00:13:59,400 Speaker 1: costs and very simple things, and then worked very hard 245 00:13:59,440 --> 00:14:01,840 Speaker 1: on the implementation and this worked very well, I have 246 00:14:02,000 --> 00:14:04,800 Speaker 1: to say. So in the first year after the implementation 247 00:14:04,880 --> 00:14:08,040 Speaker 1: we came to profit level two thousand nineteen we had 248 00:14:08,040 --> 00:14:12,600 Speaker 1: one point one billion profits, so significant profit improvement. And 249 00:14:12,640 --> 00:14:15,360 Speaker 1: now we invest into the electrification is as you and 250 00:14:15,400 --> 00:14:19,240 Speaker 1: I discussed during this interview, and we also go more 251 00:14:19,280 --> 00:14:22,560 Speaker 1: into markets outside of Europe. So we feel this was 252 00:14:22,600 --> 00:14:26,280 Speaker 1: a very important transformation of the company. To your question, 253 00:14:26,520 --> 00:14:30,160 Speaker 1: will it ever end, No, it will always continue out 254 00:14:30,240 --> 00:14:33,200 Speaker 1: because first of all, we want to get better every day, 255 00:14:33,240 --> 00:14:36,880 Speaker 1: but the industry isn't such a transformation. So I feel 256 00:14:37,280 --> 00:14:39,560 Speaker 1: this was an important turnaround. But in a way, the 257 00:14:39,600 --> 00:14:42,360 Speaker 1: basis for what we are doing now in terms of 258 00:14:42,440 --> 00:14:46,520 Speaker 1: investing into electrification fuel sure we talked about. So it 259 00:14:46,720 --> 00:14:49,880 Speaker 1: will continue and I guess that makes the industry so exciting. 260 00:14:50,120 --> 00:14:53,000 Speaker 1: So what I heard here is a lot of you know, 261 00:14:53,040 --> 00:14:57,360 Speaker 1: like a large number of improvements, perhaps small steps in 262 00:14:57,400 --> 00:14:59,720 Speaker 1: some cases, bigger steps in other cases. Is that the 263 00:15:00,520 --> 00:15:03,239 Speaker 1: a learning a lesson for other companies or for investors 264 00:15:03,240 --> 00:15:06,720 Speaker 1: when they're looking at this transition that other companies will 265 00:15:06,960 --> 00:15:09,560 Speaker 1: will have to go through in the next few years. 266 00:15:09,720 --> 00:15:11,960 Speaker 1: So is it a continuation of a large number of 267 00:15:11,960 --> 00:15:17,480 Speaker 1: small steps Rundan something big that can change things very quickly? Well, 268 00:15:17,520 --> 00:15:20,880 Speaker 1: I would say it is a combination of big things 269 00:15:20,960 --> 00:15:23,320 Speaker 1: and small steps. Yeah, you have to do both. Um. 270 00:15:23,320 --> 00:15:27,320 Speaker 1: For example, in our case, our diversity complexity was huge, 271 00:15:27,600 --> 00:15:31,960 Speaker 1: and we significantly reduced it, like down by fifty sixty percent, 272 00:15:32,120 --> 00:15:36,120 Speaker 1: So heart decisions. Also, we transitioned very quickly to the 273 00:15:36,200 --> 00:15:39,480 Speaker 1: group architectures, the mighty energy platforms we discussed early on. 274 00:15:39,520 --> 00:15:43,920 Speaker 1: So I think it requires, especially in these days, very 275 00:15:44,080 --> 00:15:47,120 Speaker 1: big changes. At the same time, you always need to 276 00:15:47,160 --> 00:15:50,080 Speaker 1: have like small steps on top, because just rely on 277 00:15:50,120 --> 00:15:53,200 Speaker 1: a few things is not sufficient. Yeah. Um, so that 278 00:15:53,320 --> 00:15:55,840 Speaker 1: was our experience. And then of course it's always helpful 279 00:15:56,320 --> 00:15:58,720 Speaker 1: when you are in an environment where everybody in the 280 00:15:58,720 --> 00:16:02,240 Speaker 1: company knows, like, look, we cannot continue as in the past. Yeah, 281 00:16:02,360 --> 00:16:04,600 Speaker 1: and maybe that is also a good lesson out of 282 00:16:04,640 --> 00:16:08,760 Speaker 1: the COVID pandemic in many many examples, we know we 283 00:16:08,840 --> 00:16:11,920 Speaker 1: cannot continue as in the past, so we have to change, 284 00:16:11,920 --> 00:16:15,920 Speaker 1: and maybe that is accelerating the whole transformation. Yeah. So 285 00:16:15,960 --> 00:16:19,160 Speaker 1: we had very good experience with it and we we 286 00:16:19,160 --> 00:16:21,480 Speaker 1: we we feel we did the right things, but it 287 00:16:21,520 --> 00:16:24,720 Speaker 1: will continue. Like one last question I have free Michael, 288 00:16:24,800 --> 00:16:29,160 Speaker 1: is beyond technloud power train technologists and where you place 289 00:16:29,240 --> 00:16:32,360 Speaker 1: your manufacturing plants and everything, what are the other big 290 00:16:32,400 --> 00:16:35,600 Speaker 1: trends or mega trends that you're monitoring on a recurrent 291 00:16:35,640 --> 00:16:39,360 Speaker 1: basis and have the potential to affect the other industry 292 00:16:39,360 --> 00:16:41,720 Speaker 1: in the next two years. Well, I would say that 293 00:16:41,760 --> 00:16:45,760 Speaker 1: the key point from my perspective is um all around digitalization, 294 00:16:45,880 --> 00:16:50,240 Speaker 1: so connectivity within the car, but also digitalization in terms 295 00:16:50,240 --> 00:16:54,520 Speaker 1: of how people buy cars. So I think UM selling 296 00:16:54,560 --> 00:16:57,040 Speaker 1: online is a big, big topic. We learned about this 297 00:16:57,160 --> 00:17:00,280 Speaker 1: much more now in the pandemic, So the whole topic 298 00:17:00,320 --> 00:17:04,760 Speaker 1: of digitalization is probably changing the automotive industry very very strongly, 299 00:17:04,840 --> 00:17:07,520 Speaker 1: maybe even more than the power train one. And I 300 00:17:07,560 --> 00:17:10,080 Speaker 1: mean we are in good company with all the other industries. 301 00:17:10,119 --> 00:17:13,840 Speaker 1: But I think the whole topic of digitalization from a 302 00:17:13,840 --> 00:17:16,560 Speaker 1: customer point of view but also from a product point 303 00:17:16,600 --> 00:17:19,119 Speaker 1: of view, I think is very very big change, and 304 00:17:19,160 --> 00:17:20,879 Speaker 1: of course we have to do a lot of things 305 00:17:21,240 --> 00:17:25,320 Speaker 1: to get ready for this. So digitalization is from my perspective, 306 00:17:25,520 --> 00:17:28,119 Speaker 1: that the next big, big topic for us. Michael, thank 307 00:17:28,160 --> 00:17:31,159 Speaker 1: you very much for being here today and all the 308 00:17:31,200 --> 00:17:33,800 Speaker 1: best for the next few years. Thank you, Nicole, thanks 309 00:17:33,840 --> 00:17:43,040 Speaker 1: for having me. This week's show was produced by Eva 310 00:17:43,040 --> 00:17:46,240 Speaker 1: gonzalezi Isla and edited by Rex Corner of Grace Took Media. 311 00:17:46,359 --> 00:17:49,200 Speaker 1: Bloomberginni app is a service provided by Bloomberg Finance LP. 312 00:17:49,280 --> 00:17:51,960 Speaker 1: And its affiliates. This recording does not constitute, nor it 313 00:17:51,960 --> 00:17:55,520 Speaker 1: should it be construed as investment advice, investment recommendations, or 314 00:17:55,560 --> 00:17:58,960 Speaker 1: a recommendation as to an investment or other strategy. 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