Thought Leadership

Podcast transcript – The Future Car transportation revolution episode 2

By Conor Peick

It is clear that, despite the numerous challenges facing automotive OEMs today, the goals of next-generation electric, autonomous and connected vehicles remain as primary objectives. As we continue to look forward, widespread electrification is fast approaching the mainstream automotive market. Nand I sat down to discuss the rapid growth of EVs in today’s automotive market, what is pushing them forward and how companies are planning for the future. A transcript from our conversation follows:

Conor Peick: Welcome, Nand. Thanks again for sitting down with us to talk today. Overall, today, I think we’re going to be focusing on electric vehicles. To start off, I’d like to get your thoughts on where we’re at with EV innovation and development, the industry as a whole.

Nand Kochhar: Good morning, Conor. We in the electrification have matured to a great extent in my mind. If you look back into history, we started with the hybrids and then slowly maturing into pure electric vehicles. The state we are in, is we have several companies that got electric vehicles in production and in usage and application. Obviously, we continue to face the challenges of what customers expect from electrification, which is the range as well as the charging time. So, there is still a need for a lot of innovation in those technologies to make those happen, as well as technologies to mature to continue to get the cost of electric vehicles to a reasonable level so that it becomes a consumer vehicle very competitive with the gasoline vehicles. So that’s where we are in the innovation cycle on EVs.

Conor Peick: What do you think are the main things pushing EV innovation forward? Is it primarily environmental reasons or certainly the increasing consumer interest has to play a role as well?

Nand Kochhar: The environmental factor, obviously, it’s a green image, and you can imagine, it is truly needed from an environmental perspective, that’s a big driver. However, at the end of the day, the consumer is always looking for what’s the holistic business case, consumer comfort, convenience is always very important as well; those factors, on top of environmental, which make a business case. So, if you have a charging station installed in your garage, that means you don’t have to make any frequent stops at the gas stations, and you can imagine that leads into a consumer comfort aspect of it, in addition to being green and environmentally friendly.

Conor Peick: I think another interesting thing is that EVs are almost becoming cool in a way. Obviously, Tesla first but then you’ve also had some pretty major brands jump on with Porsche and Ford, obviously, has announced their Mustang EV. They’re becoming not just a kind of a niche thing. They’re becoming much more mainstream.

Nand Kochhar: Absolutely. You’re right on spot. This has been a trend for the past few years, and that trend is converting into reality for all the reasons we just touched on comfort, convenience, green, and it’s the right thing to do for the environment. Every company is making sure they have a big role to play in the EV segments. It’s the mainstream companies which have a full scale of products from cars, SUVs, trucks, into specialty vehicles, so they are growing the market in there. The other thing happens is, as a result of bringing in EVs, we can get a lot of performance advantages as well. Depending on whether it’s a traditional zero to 60 performance, you can still accomplish that. In the early days of EVs, some of those things were not possible. The technology is maturing as we touched on, there was a lot of range anxiety. Previously, early-stage EVs could go, say, up to 200 miles, but now you’re already seeing vehicles coming out in the market, which are proposing that they will hit 400 miles to a charge. Those are the things that will make a huge difference in consumers’ minds. Because everyone wants to do the right thing for the environment, and if they don’t have to compromise on all the other aspects, they’re willing to pay for it a little bit more. They’re willing to adjust and adapt to the new technologies, and that’s why you see all OEMs – I should say, the majority of the OEMs – have recognized that and they don’t want to be left behind. They almost have their cycle plans come in with the EVs.

Conor Peick: These are a lot of the things that are kind of pushing EV development forward. But on the flip side, I’m curious what you see as the most pressing engineering and design challenges that continue to face EVs or OEMs that are planning to produce EVs: battery technology, the weight, noise, and driver experience; those types of things.

Nand Kochhar: Just like anything else, when a new technology comes, it brings a lot of advantages and it comes with its own challenges. What we have noticed in the industry initially is a lot of manufacturing-related challenges that there are differences when you’re putting an EV vehicle together versus a gasoline, what we’ve been doing for the past over 100 years. The manufacturing technologies, also the safety required or the safety for the electric vehicle, those types of technologies which needed to be adapted or grown, we’re just touching the surfaces on those things. The big thing in EVs still needs to be sorted out: the end of life or the recycling of the batteries. There are newer materials coming in; those are the huge challenges which the traditional automotive industry has taken about 100 years to go all the way from concept into recycling and reusability of content. Some of those still need to be figured out at a mass scale. So, those challenges will remain. In terms of the challenges on battery development itself, there were a lot of issues initially around the thermal management performance of the battery management systems, and they have been maturing to a point that consumers and the companies are comfortable putting these on their own.

Conor Peick: In regards to the manufacturing, you mentioned end of life and recycling. Along with that, there’s a lot of other larger-scale trends that are out there talking about mass customization. How do you see that playing into the development of EVs going forward?

Nand Kochhar: The customization or personalization is one of the user trends we talk about in the overall automotive industry. As the next generation of consumers is coming in, they’re used to adapting things to their taste. So, the good old days of, “You can get a car of any color, what you want, as long as it’s black,” those are gone. Customers are spending a lot more money, putting features and functions on what they want and they’re willing to pay for it. The other thing is happening is the adaptation of those customizations are personalized solutions based on the needs and those needs might change on a day-to-day basis, or on a weekly basis as long as people, for example, if they want to run a car in a sports mode and they don’t have that module, today you have a technology with software over-the-air update, that you could pay for those modules when you have the money and you want to upgrade your car. This is one of the huge trends we talked about from a process standpoint, how software and systems engineering plays their role that over-the-air updates will allow you to keep the same hardware but continue to add feature functions that the consumer is willing to pay for.

Conor Peick: So, effectively extending the life of the vehicle pastmaybe what we can achieve today.

Nand Kochhar: Exactly, you’re keeping the same hardware, but as the new features come in, you don’t have to change to the next model year. Our current frame of mind is that industry comes up with a new model year every year, and then, typically, if you do a vehicle for two to three years, you’re ready to adapt to the newer feature, functions; you have to go turn in your old lease car and bring in a new one. This is going to change all that paradigm when you have the ability to update the car with new features and functions through software.

Conor Peick: I’m just imagining here but maybe that could result in something like where you buy into a platform, and then instead of a new model year, it’s just a new feature release every year. So, you just update, and then maybe three or four years you switch to a new platform that you actually drive around in.

Nand Kochhar: Of course, when it comes to feature functions, yeah, you’ll be able to do. But obviously, at some point in time, this can go on for 20 years that you might want to upgrade your hardware as well. In other words, the need for changing the model year every year will change. That’s what we talked about in some of our other business models that when these technologies are coming, it’s not just as simple that EV vehicles are coming, it brings new business models as well. That’s a good example of a business model will change.

Conor Peick: So, then moving on, in our last episode, and this of course also plays a huge role into EV adoption, but we talked about infrastructure and how the entire infrastructure around charging needs to be expanded to really continue this momentum, I suppose, of EV adoption. Looking back, it took a long time to get gas stations in every neighborhood. So, to get that same level of accessibility, how can the industry get there in a much shorter amount of time relatively?

Nand Kochhar: I think this is one area where it’s not just the automotive industry itself, but all the other supporting industries have to create partnerships, and also the policies and the governmental policies, etc. need to support to build that infrastructure. If you imagine today if it is a gasoline station at every corner, it is all the oil companies are engaged in building that infrastructure for the automobile customers. So, the same way, if you draw that analogy, that it is not just the auto OEMs, it is all the new business development people, all of the information technology infrastructure because you will be managing a grid, so all of the IT and operational technologies will come into play, as well as the partnerships from all kinds of different segments. So, it might be the oil and gas companies are looking at their business models and they say, “Hey if this trend is real, people are moving away from gasoline or diesel-based vehicles into EV.” I’m sure they’ve got plans in place that they want to play in that market. So, those are an example of infrastructure. But to your point, this is one of the most important things of building that infrastructure. We touched on getting a range, addressing that anxiety issue. The next hurdle is that when you’re driving, let’s say, 500-plus miles in today’s environment, where the vehicles are, you will have to do a charging some point. So, you need the infrastructure not only at your home but in multiple stations. In a lot of countries, they have built infrastructure capabilities alongside the road of the highway so they can accomplish that. That brings another challenge, how long does it take to charge it? That’s the second biggest factor which comes into play as well. So, those are all in my mind, maturing of technologies. We recognize the issue and that’s where innovation and new business developments, new technology developments come into play, that, “Yup, we know what the problem statement is, and we need to make it better.” You will see that continuous improvement over the next few decades on those kinds of things.

Conor Peick: Yeah, and that charging time is, I think, very critical. I know it. I’ve read about a lot of people who, when they need to charge up their car, their Tesla, or their, you know, what have you, they make it into just a little time to watch a movie or read a book or something. I mean, it’s great. I think it’s a smart way to make the best of having to wait around but definitely to get mass adoption, I think the charging time is going to have to come down to make it realistic for more people.

Nand Kochhar: That’s right. I mean, I live in Detroit, as you know, and the frequent or a common trip for people in this part of the country – as an example, going to Chicago, which is a typical four-hour drive. If you take a break, it’s a 10 to 15-minute break, and if your charging times can come in that window, it won’t be an annoyance. It’ll be just a part of the routine. You just need to make sure there are enough charges along the way. You’re always risk-free. Even though you’ll start from home with a charge which can go up to 400 miles but you never know. The previous day your kid took your vehicle out and consumed some of the charging and then you had to pick up the vehicle and drive. You always have a backup. The last thing that people want to see is getting stuck on the road and especially on a highway going from city to city, which might be a bigger issue than within the city.

Conor Peick: Yeah. That actually brings up another interesting aspect of the EV charging infrastructure that’s very different from what we have now with the gasoline – the gas station infrastructure, which is that people can charge their cars at home overnight. So, in some ways, does that almost invalidate the problem, or is it just another kind of aspect to the charging infrastructure?

Nand Kochhar: Doing at home is again a convenience, and it might work for the majority of the time, but people want a backup. As I’m sure you have experienced, most of the office buildings have put charging stations as well. Some of the parking structures have put in the city center, not only the charging stations but they give priority parking to the electric vehicles. It’s a matter of convenience and comfort. It’s a matter of avoiding disaster situations that your battery’s out of juice completely and now you have to get it towed. So, it’s a convenience but people, when they are giving away their gasoline-based vehicle and keeping only a single vehicle, which is electric, they need that extra comfort level of operation. Today, you know how it started, a lot of people still maybe have a traditional automobile, and then they buy an electric car just because it’s trendy, and it’s the right thing for the environment, and they want to join that wave, but they always have a backup car if they have to make long trips or for other reasons.

Conor Peick: The longer kind of road trip, yeah. The other thing that I think plays a role is, of course, the cost to buy an EV, which has been, I think, initially, it was much more of an issue and we’ve seen some much better offerings lately, but that’s another thing along with the infrastructure that as the cost becomes more comparable to your average gasoline car, it’s just going to continue to propel the EV into the mainstream.

Nand Kochhar: You’re absolutely right. So, just like any other technology, when it comes out initially, the cost is high. Whether it is the telecommunication equipment, your regular cell phone, or it’s a LED TVs coming in the market, where they came in to the point of entry you see today, there’s a huge difference. So, the same thing as in, as the volumes grow, and the cost curves at some point will have that intersection that you can do the breakeven from your traditional vehicles, and then wildlands will continue to grow and the cost curve will continue to come down. But today, you’re right, it is a factor because you are paying a little bit more for your EV vehicle versus traditional.

Conor Peick: Another thing that you mentioned was that you mentioned the road trip from Detroit to Chicago being a common one in your area. I mean, I can also think about where I live in, the Portland, Oregon area. People love to drive up to Seattle, Washington or South down to California, of course, East as well into the kind of the American West. But it brings up the question of traveling across different regions and how each different region may have very different levels of availability of the charging infrastructure or even service stations that know how to work on an EV, maybe for the near term. Does that strike you as a continuing challenge?

Nand Kochhar: Yes, definitely. That’s where many people still — If they have to go, let’s say, across the US from end to end, from Detroit to San Diego, they will think twice if EV is the vehicle. At least, today’s technology is good enough to chart out the map and see what’s available where. You can at least do that. But that’s the level of comfort. But that road infrastructure and the gas stations at every corner, I would say, took more than 30-40 years to develop that even after the automobile came into play. So, the speed of innovation in any of the new technology is much faster than any of the previous technologies we have dealt with. So, in my mind, as the business equation changes, if there’s a business value in it, you will see that there’ll be very few spots left within the countries like US and a lot of other countries that where you have, so to say, dead spot. It is a very analogy you could use today is your cell phone technology. You do get into remote areas. You do have dead spots. But over the years you and I have experienced that is less and less, so you can get pretty much cell phone coverage in other parts of the world. That’s the level of similar analogy in the electrification, charging stations, and the other infrastructure. I think over a period of time it will grow.

Conor Peick: Like a charging station, do you think that’s easier to install than a traditional gas station?

Nand Kochhar: Yeah, there’s a whole industry. That part of the equation, primarily, sometimes not even the automotive companies themselves going into, but the energy industry. Being part of Siemens, I know Siemens has a big infrastructure, Siemens AG, just building around the charging infrastructures, as it is a big industrial company. I’m sure there’s few others in that arena who are maturing the charging station technologies and implementing and trying to bring their cost of charging station implementation to a lower and lower level so that it could be real.

Conor Peick: Excellent. I think next we can move on and we’ll focus a bit more on the actual vehicle technology to kind of kick-off that discussion. At least so far, Tesla seems to be pretty far ahead in terms of their battery technology and in their battery management. Do you think that’s true? If so, how are other companies trying to catch up to them?

Nand Kochhar: In my mind, definitely it’s true because they were the leaders, the innovators, came into the market first, really strong leadership – Elon Musk level, having a vision, and a lot of investments in it and was able to get the fundings and do that. So, definitely, it puts them at the leading edge. But over the years, as you mentioned, by now, it’s not only Tesla, almost all OEMs have come into play. In addition to that, several other technology companies and other industries have invested in this, and they are catching up fast. If you look at the global view, every month, if not, every other month you hear news of new either collaborations or new companies popping up as a startup, and some of very significant one, so if we look in the trucking segment, you will see several companies coming into play. Even companies like Waymo, which is equally strong from a technology perspective as Tesla, as a technology company, and then obviously the traditional OEMs from Ford, you touched on Volkswagen, Hyundais, everyone seems to have a plan in place, at least what they’re sharing publicly, which is coming into play. That’s one of the other things, these challenges are so new, and these challenges are so huge that people recognize no one person can do it on their own, so it’s creating a lot of collaboration models, both at a competitive level, so the model of one OEM sharing, joining forces with another OEM, but you also see technology companies adapting and working with tier-one suppliers. Hyundai and Aptiv declared their partnership for autonomous and EV vehicle development will be an example of a technology company Aptiv, the old Delphi, and Hyundai coming together and trying to invest in that arena. So, you can imagine a good outcome will come from these kinds of things.

Conor Peick: Speaking of battery developments, I remember earlier this year, I think one of the big announcements was GM when they said they were going to bring back the Hummer brand, and in particular, do it as an EV with a huge battery pack, bigger than I think anything else seen. I guess that’s another good example of other companies, you know, they’ve not been sitting on their hands while Tesla’s been leading. Tesla’s been leading but other companies are doing their best to catch up.

Nand Kochhar: That’s right. The other companies have their strengths in the manufacturing footprint, manufacturing knowledge as an example. The examples you brought up of GM and Ford recently announced the same thing for their F150, converting their traditional Roush plant, here locally, into an electrifying center. That’s big news, that you can see the trend from a traditional where Model T was invented and built, now getting into electrification in one of the most consumer-friendly products or the very popular number one seller is going to be going electric. That’s their F150 truck.

Conor Peick: Yeah, you cannot understate the popularity of the F150. It’s unstoppable, nearly. But along with that the topic of safety with EV is another big point of discussion. We’ve talked about it briefly before but, in particular, I’m curious about rapid charging and safety concerns related to that.

Nand Kochhar: In fact, safety comes from a couple of different angles. One is you’re dealing with high voltage. Even at your home, if you’re putting a 220-volt charger, there’s that aspect of it, and also the safety during the serviceability aspect of it. So, you need to come up with, for EVs, the new service procedures and you need to get your entire dealership infrastructure updated, trained; those are some of the challenges that come because at the end of the day, we want to make sure safety is always the number one priority. The other aspect is having a high voltage battery in the vehicle itself. So, in the vehicle-crash scenario that your battery is well protected, so you don’t have the chances for thermal events in case of a crash. That brings another challenge. This is very typical and traditional when you’re doing a vehicle development because now you have to draw the balance between. You’re trying to make the vehicle light so that you can get better mileage out of the batteries, similar to your fuel economy kind of thing. At the same time, you want to make sure you have enough structure around to protect the battery. So, those become the competing challenges, and that’s where I think we help our customers to develop these cross-attribute trade-offs offering a lot of simulation tools and things of that nature to make sure it’ll help deliver that.

Conor Peick: It’s another aspect of EV design that might be a subtle difference on the outside but probably makes a very large difference when you’re actually developing the vehicle.

Nand Kochhar: That is correct. Attention to details is key anyways in the automotive business but when you are going EV or autonomous, that degree of complexity just gets multiplied because you cannot ignore anything. The details are still very important. Any small little thing can cause a much bigger issue from a performance standpoint, safety, or otherwise.

Conor Peick: Then the other aspect of EV safety is, of course, environmental safety and environmental protection which we’ve mentioned now a few times in this episode. But getting back to the idea of recycling and the end of life recycling, we’ve talked about that as a challenge. So then, what are companies doing to address that challenge?

Nand Kochhar: That’s one area where I think a lot of maturity is still happening because we haven’t hit that scenario yet that where you have to give a mass production and you have to come into. So, there are obviously ways today but that’s one area, I think, is going to continue to evolve. There’s a lot of discussion about continuing to increase the number of miles you can get out of a battery so you don’t have to get into that situation. I think there was going to be some recent announcements around a million-mile batteries kind of things. These things are so new that is, I’ll say, at this point is changing every day, if not every week, every month. But I have a strong belief in that, that with all the effort going on, the overall system will address those challenges and figure out more and more efficient ways of doing these things as we move forward.

Conor Peick: What do you think about the role of the materials involved? I know a lot of the key materials and current battery technology are cause for concern, environmentally speaking at least.

Nand Kochhar: Yeah. I think, again, it’s the balance of two things. One is the availability of those materials; the fear about some days we’re going to run out of those materials. The second thing is the environmentally friendly way of bringing those materials to production and use enough. So, that’s always a balance. As you can imagine, there’s a lot of studies around that. “Yup, EV vehicle operation is easy but let’s take a look at all the materials we dig out and what does it take to bring those to the market, are they good for the environment?” I think that’s the ongoing balance of the draw between that making sure there’s still a net-zero impact to the environment, in the overall production from raw materials into building of these vehicles, usage of these vehicles, and the end of life. So, the big complex equation, I think, this we use in technologies, even in a traditional way, let’s say when we switch from steel into aluminum-based vehicles, it goes through similar kinds of cost analysis and trade-offs and practicality, and then obviously, companies make the right decision in terms of what makes the overall sense. So, I think, having that experience of not having dealt with EVs for the last 40 years but having dealt with a lot of the other technologies, and how they mature, how they move over a period of decades, gives me confidence that we will, as a community, we’ll have those solutions developed and mature as we move forward.

Conor Peick: To your point of new announcements coming out daily or weekly, I think it was just within the last few days that Tesla had their battery one of the big announcements was that they were planning to phase out cobalt, in particular, from their batteries. I think that’s just another example of the developments are coming fast and they will continue to do so.

Nand Kochhar: That’s right. Now, just multiply that globally. There’s other parts of the world which are not sitting quiet either, as you can imagine. In Asia Pacific, there are countries very very focused on these types of initiatives as well. We might not hear that that often but we always hear about Tesla, and now starting to hear about a lot of the other competitors like Rivian, here locally, building electric vehicles, trucks, and SUVs. But you’ll hear more and more as we look at a global view.

Conor Peick: It’s a good reminder to not focusing solely on the traditional OEMs that we hear about all the time – the Fords and stuff – that there’s a big world of players, especially in the EV market.

Nand Kochhar: That is correct. There’s a big list of players globally. There’s a big list of players who are successful in other businesses and they have the money and the funding to fund the next generation. I think you touched on Amazon. Amazon’s acquiring Zoox is an example of that. Amazon investing in Rivian is an example of these types of scenarios that they have a usage of Amazon trucks, and instead of buying from Rivian or just from Tesla, they wouldn’t want to invest in someplace so that they are part of that whole vertical integration of their business model. So, there’s plenty of money out there for the new OEMs. Everyone is looking for the next idea and the next technology.

Conor Peick: Speaking of that global scale, what we’ve seen is that a lot of cities and, I think, particularly in Europe are moving much more aggressively to the electrification of mobility in sort of all its forms, from cars and public buses to like the e-scooters, of course. What do you see is the interplay between these kinds of regulations and the push for a public EV adoption?

Nand Kochhar: Yeah, of course, that’s a very good point. We typically talked about automotive trends, but you also have to look at societal trends. One of the societal trends is more and more people are moving into the cities globally, and that means cities are getting congested. Once the cities are getting congested, they need to get engaged in these kinds of technologies because moving from point A to point B, whether it’s goods or people, you can just keep following the traditional model. You’ll have more public transportation. You’ll have more systems, the shuttles. You’ll have other things. That’s how the cities are developing their plans, keeping in mind the autonomous vehicles, the electric vehicles, the charging stations of those, and connectedness from the city to any of the transportation mode becomes a necessity. So, one of the things we’ve touched on European countries, and in fact, within the US also, some of the prominent cities. I was in New York last summer, between New Jersey and New York, you can experience all these modes of transportations, including up to what’s called ‘the last mile driven’ where you rent a car but when you park a car at a tram station and then you can take the train to go from New Jersey, Hoboken area into New York and then you can rent an e-scooter there to go to the next destination. So, all those things are very practical and very real happening. Obviously, we keep using the US as an example, that was my opening comment that these pockets existed in all parts of the world. So, if we go to Shanghai or Beijing, you might experience similar things in China. You might experience that in several countries within Europe, cross countries, etc. These things can be duplicated, and when there’s goodness and good technologies, it adapts and copies really fast, globally these days, being a global world.

Conor Peick: Just to finish up for today, and also to kind of provide a teaser for our next episode. I’m curious if you see a natural kind of synergy between an electric vehicle and an autonomous vehicle? Or is it just kind of emerging of two separate but concurrent trends?

Nand Kochhar: Yeah, I think it is merging two trends. The reason what’s in common, I was thinking about it, is the technology piece of it. So, there’s a lot in common. At the end of the day, the business model becomes a driver for a lot of these things, whether that’s a business model from producing a vehicle or the usage of a vehicle, in addition to the environmentally friendly for the electric cars. So, these trends are emerging. As an example, the connectedness and the role of the software, role of sensors is a big thing which is common between the two: autonomous and electric. So, having a software-based battery management system allows you to deliver efficiency within a vehicle, and then you have a similar technology software-based running your autonomous vehicles, and the sensors, and the IoT related stuff connected to the city infrastructure. So, you see a lot of commonality in the common foundation you can see is coming from the technology and delivering for the customers both aspects, the flexibility of having an autonomous vehicle, which is also from a cost perspective in some scenarios would be better, combine that with the electric vehicle which is good for the environment, good for overall operations for certain fleets, etc.

Conor Peick: And potentially more reliable, too.

Nand Kochhar: Yes, of course, as the technology matures reliability, which is a big factor, even to begin with, but these things become more and more reliable because they’re working very consistently, so you’re taking a lot of variables out for a sort of, say, manually driven vehicles, etc.

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This article first appeared on the Siemens Digital Industries Software blog at https://blogs.sw.siemens.com/thought-leadership/2021/04/26/podcast-transcript-the-future-car-transportation-revolution-episode-2/