Axel Joachim Maschka
Senior Vice President of Sales and Business Development, Valeo SA
Axel has 27 years of experience in the automotive industry working for both leading OEMs and tier 1 suppliers. Axel started his career in 1992 at Daimler before moving to Bosch for 7 years where he was VP of Marketing, Strategy, and Business Development for the Diesel Systems business unit. In 2008, he then moved to leading tier 1 supplier Continental AG as CEO of the Engine Systems unit before a short spell at Volvo in 2011. In 2013, he then moved to become SVP Sales and Business Development at Valeo where he led sales globally for the tier 1 supplier, whilst also serving as an Executive Board Member. Read moreView Profile Page
I think a good place to begin would be for you to give us just a bit of background and context to your experience. How did you enter the auto space?
I entered the auto space about 27 years ago with Daimler. My first years were in aftermarket and in product management. Later on, I moved into Booz Allen Hamiltonwhere I was active on the commercial vehicle space, helping the merger of Volvo and Renault V.I.trucks. Then I spent the last almost 18-19 years in suppliers. I worked for Bosch, first in diesel and then in India in auto-electrics and electro mobility - starters, automators and small motors. Then in Continental and in Volvo, I was head of purchasing, working mainly with suppliers. I sourced the current SPA [Scalable Product Architecture] platform, including the SPA electrics, so everything that is in the 60s and 90s series today in the market. The last 5 years I was in Valeo as head of sales for all products, all customers, all regions. In this context, again, electrification was a key element, not only because Valeo is probably number 1 or 2 for alternators worldwide, but also because Valeo is really keen on the 48V system. Later on, we did the joint venture Valeo Siemens, which is one of the larger providers of electric architectures now in production or in development of major OEMs from Volkswagen to Volvo to Jaguar to Peugeot in various applications.
How is the culture different at a Tier 1 versus an OEM in your experience?
I think that's an important question. I really appreciate working for suppliers because there is one big difference, working for suppliers you only have a few customers. And the work is much more focussed on how to make sure the customer is happy. I've worked in two different OEMs, Volvo cars and Daimler. There, the customers have to be far away because you have a three tiered sales structure: you are in headquarters and you sell to the regional or national importer, and then they sell to dealers, then comes the customer. So the customer voice is really hard to hear and this makes space for a lot of politics. The other reason for a lot of politics in an OEM versus a supplier, is that nobody knows what will be the tastes three years down the road. So once you decide on a vehicle, the design, the options, the features, the capabilities, you don't know whether this will fly three years down the road. It's about guessing and the guessing is again power gaming between different fractions, more cost or more engineering, more of this or more of that, more halogen or more LED, more electric or more conventional. Whereas, as a supplier, you are much closer to this business. The key for suppliers is to win the business for engineering.
Once you are in production at an OEM, the pure sales are relatively far away, as you have these three years of co-engineering. So the challenge here is to get close to the customer, to work with him, to find the right design and the win the award, whether it's an option or whether it's a classic RFQ. Then you have this intense co-engineering work until the car goes into production. Then, finally, there's the sales, in terms of the money, the cash flow for you as a supplier manager is very far away, and you're already looking for the next vehicle to be launched.
Do you think the culture at OEMs will make it difficult for them to adapt to an electric industry?
Again, I worked in trucks and passenger cars. So trucks are obviously a B2B business, where you have many businesses, so it's somewhere in the middle. We can keep that to the side for a moment.
For an OEM, this culture of self definition and trying to predict the future where it's uncertain also means you also need to predict customer demand. Well, demand is switching fast now. Demand is not linear, there's exponential growth, like the electric vehicles now coming in. It's very hard to project a nonlinear development. Will it explode in 3 years, in 5 years, in 10 years? Will we still have diesel cars in 2030 or not?
Therefore, there is room for discussion. But, of course, the classic engineers are very proud of their ability to have the most efficient combustion system. It's very hard to convince them that they might not need to do that because there won't be the same demand that there has been in the last 100 years in the next 10 years. That's why it's culturally very hard for an OEM to be far away from the customer, to just follow the intuition of Bloomberg and forecast institutes, when the customer is still buying diesel cars every day.
You mentioned earlier about Valeo being a strong alternator business, which has then led to the 48V system. Can you elaborate on the engineering basis of the alternators and how that led to the 48 volt system?
For a long time, cars have been supplied by 12V solutions. It was 6V in the 50s. Trucks in Europe and Japan have 24V systems, though not in the US. Obviously trucks have a higher voltage because the energy consumption is much higher in a truck.
Now putting this on a 12 volt solution, with many more features coming in, soon you'll realise that for a Mercedes-Benz S-Class, an Audi A8, for a BMW 7 series, your 12-volt system has its limitations. You want it to be autonomous, you want to have calculations, you want to have rear-seat entertainment, that's lots of electric consumption on top of the already available demands. This has taken the 12V system to its limits for a while. In around 2000, they tried to use 42V, but this failed because suddenly innovation came and 12V was happy again to run for another two decades. Now, 48V is a mathematical calculation of 12. Because you have 3 phases and 6 phases, it's logical to have 12, 24, 48 and not 42V. But this is a way to increase your electric power in an existing vehicle, without passing 60V.
60V is important in electricity because it's the border between low and medium voltage. And you're meeting the requirements for mechanics as everybody's usages are different. From 60V onward, it endangers life if you connect the two poles with your fingers and you are not attentive. Therefore, we wanted to stay below 60V. Now, 48V was the natural choice and the big hype came when we thought "Oh, we have our diesel and gasoline cars, when we move towards some electrification, a mild hybridization, with a little bit of electric power we can actually make our gas and diesel engines live much longer." So we planned for 48V, then we said "Ah, diesel is under pressure now in the UK, in Germany, in Paris, all over Europe." The 48V system gives big savings. You cut off the highest consumption areas of the engine, you can help on the start and suddenly you have mild hybridised vehicle where the gasoline consumes like diesel.
This is great when you continue on combustion engine thinking. We now see that the world will move to electric, even in China and the US also, and with the legislation in Europe, suddenly a 48V enhancement of a combustion engine becomes more questionable. It's the choice between enhancing your old style, let's say, steam locomotive, the old style typewriter or passing straight into modern future-proof technology, in this case meaning electric vehicles.
So WLTP regulation fast tracked this?
Yes. New legislation that the European Commision now performed in light of having cities with health problems caused by too much pollution on the main roads, surpassing microdust, microparticles as well as NOx. This lead to regulation that now requires that from 2021 average emission levels of a new car should be equivalent to 95 grams of CO2. From 95 it will go down about 37.5%, this leads mathematically to 60 grams of CO2. Now, in December 2018, we have 120 grams. This means from now to 2030, you want to reduce it by 50%, one half. That is unprecedented. It's never happened before that legislation requires you to half consumption in a period of 11 years. At the moment, the only choice is to have a significant amount of electric vehicles in your product mix to fulfill this requirement.
So will the OEMs bypass the 48V systems?
Now, this comes back to your OEM situation. You sit there in your executive team, you have x amount of resources and the resource of engineering, typically 5-6% of your sales. There is a lot of engineering that needs to be done, autonomous vehicles, connected vehicles, you want to have nice displays everywhere in the car, LED lights and all this fancy stuff. And on top of that you need to decide "I do either 48V and my latest emission norms on my diesel and gas or I go for straight electric cars." And suddenly resources get tight and priorities get difficult. You have to decide, and it's likely that's what will happen now, to cut off the combustion engine where it stands and to put all the resources into electric to catch up with Tesla and to catch up with China and really make an accelerated run for electric vehicles. Then the money for combustion engines and 48V is limited or non-existent.
So what are the major components of a 48V system, in terms of the price per component?
Actually the 48V that I mentioned was done by suppliers like Valeo, Bosch, Denso and others now because they said "Hey, I have an alternator that makes 12V and I have the same alternator that makes 24V. I have lines producing millions of the same alternators in different sizes, now I basically change the electronics and then the alternator makes 48V. So basically, I have no capex requirements, except the electronics. And I have an electric motor that does around 12-15 kilowatts."