Given that Schaeffler has an international footprint, what role does the U.S. segment play in the larger environment of the company?
Schaeffler has a 75-year long tradition in pioneering technologies in the automotive, industrial, and automotive aftermarket sectors. We develop everything from bearings to complete powertrain systems, as well as mechatronic and robotics solutions. Our global team consists of 83,000 employees with manufacturing plants in four different regions (Americas, Europe, China, and Asia Pacific). The Americas region represents 22% of Schaeffler Group’s global sales, of which, around 70% is attributed to the U.S. Schaeffer globally consists of 76 plants and 20 R&D centers. The Americas region is home to ten automotive plants, three industrial plants, three automotive aftermarket sites and five R&D centers. In 2022, we secured over 1,250 patent applications. Schaeffler is driven to provide solutions to the end customer, leveraging our German engineering DNA.
From a supply chain and aftermarket perspective, is the automotive sector changing as fast as some players of the industry are claiming?
There is clearly a trend toward electrification that is supported by the government through various incentives with the goal of reducing carbon footprint. There is a convenience factor to operating an electric vehicle (e.g., fun to drive, at-home charging, etc.). In this context, startups are eager to impact this transformation, ultimately changing the auto industry into a mobility industry. For example, the lines are becoming less distinct as we start to introduce ride-hailing services and robo-taxis. Part of this transition carries over into the industrial segment where we begin to see mowers and earth moving equipment running on batteries. Some communities are even starting to advocate against using internal combustion engines in these applications due to increased noise and environmental concerns. On the other hand, automakers are simultaneously announcing the expansion of their ICE manufacturing capacities in conjunction with important investments in electric vehicles and battery production.
However, electrifying entire fleets of large vehicles, full-size pick-up trucks and SUVs which support U.S. recreational and business needs will prove to be more challenging than standard passenger cars. Although these large size vehicles will have additional challenges, we expect to see more impact and increased development in the commercial vehicle space, especially in delivery vehicles that could benefit from the lower maintenance and operating cost of an EV.
An added benefit is that electrification makes automation easier for vehicle enhancements, including the replacement of today’s cumbersome ride height air systems with more dynamic and cost-effective electromechanical systems. Furthermore, large vehicles can be automated with rear steer solutions to aid maneuverability, trailer towing capacity, and to include features such as robotic arms that drop off packages; all of which are viable possibilities in an electrified and autonomous future. This transition may not fully happen by 2030. However, electrification is well underway and automotive players need to be part of these exciting solutions or part of the past.
This electric revolution sees tremendous support from governments. Could it be that this transition is somewhat forced?
Without a doubt, there are generous investments and tax credits that encourage this transition to a degree that could indeed be considered forced in the short term. Unlike other countries where operating ICEs will be more expensive due to special taxes, the U.S. is trying to lure customers in by offering various incentives. However, consumers tend to buy new products once they become more convenient, and with EVs we have not yet seen such a value proposition. Up to this point, electric cars have been primarily driven by performance enthusiasts (thanks to the powerful acceleration) and environmentally conscious individuals. EVs with autonomous functions could be a great choice for certain consumers who seek low maintenance, the convenience of charging at home and increased safety features. Interestingly, this approach has not yet been taken into consideration.
As seen in various states, like California, there is a more serious push toward EVs, to the point where ICEs will no longer be available for purchase in the future. Given the incentives for EVs, we must also take into consideration potential tipping points, such as charging infrastructure, electric grid stability, and availability of renewable energy. Nevertheless, in the end it ultimately boils down to consumers' desire to adopt EVs.
What are the steps Schaeffler is going to take to assure success in the coming years?
We recognized that electrification was coming, and a transformation would be necessary. Accordingly, we started to build up our know-how in motor design, complete drivetrains, and hybrid systems. We aim to remain our customers’ preferred technology partner for EVs and automation. As our customers have come forward with various new projects, we have worked together with them to develop new, exciting systems. At the end of the day, we are building upon our ICE foundation. While an electric motor is made up of multiple mechanical components and is what we excel at, we are not just a component manufacturer. We believe in providing innovative engineering solutions.
Building on this foundation, we are becoming a main player in the electric mobility transformation and staying true to our heritage of pioneering motion.
