​​​​​​​Bill van Amburg, Executive Vice President of the US-based non-profit Calstart (centre), and Mats Harborn, Chair of the European Trade Commission in China and Executive Director of Scania in Beijing (on the right), were invited to discuss automotive
25 April 2019

Outlook: How development of electric vehicles and 5G in China affects the European automotive industry

Companies operating in the European automotive industry need to keep a close eye on what is happening in China – particularly with regard to electromobility and 5G development. This was opined by two leading experts who took part in a panel discussion at Business Region Göteborg’s Automotive Gothenburg Networking Event.

Bill van Amburg, Executive Vice President of the US-based non-profit Calstart, and Mats Harborn, Chair of the European Trade Commission in China and Executive Director of Scania in Beijing, were invited to discuss automotive trends and developments in their countries and to offer their viewpoints. Calstart is the world’s largest organisation geared towards consolidating issues regarding cleaner transport technologies and environmental policies. Bill van Amburg opened the discussion by affirming that electrification is gaining considerable ground in the US, with lighter vehicles and longer ranges being two dominating trends. Electric-powered school buses and city delivery vehicles are becoming increasingly commonplace, and sights are set on electrifying heavier transport vehicles at a critical time as zero emissions will soon be a necessity. Autonomous vehicles are also becoming more ubiquitous, particularity off-road and in enclosed areas.

But there is a concern that innovations in these areas currently imply that we will be driving more in the future. Calstart believes that we should generally aspire towards fewer autonomous vehicles that we share, summed up van Amburg.

Mats Harborn, Chair of the European Trade Commission in China and Executive Director of Scania in Beijing, has spent many years in China. During the panel discussion he put paid to rumours that Chinese consumers have strong loyalty to national brands.

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Sixty percent of customers purchase a car based on how quickly they are able to pair their smartphone with it, explained Harborn. He also reported that attitudes are changing: many young Chinese people are more interested in sharing than owning, which is something he thinks will affect car sales and mobile phone services going forward.

 
China wants to be the best in the world at electrification

The first panel discussion addressed the rapid development of the Chinese automotive industry and its impact on both the US and EU. The goal established by the government in the nation’s strategy plan, ‘Made in China 2025’ stipulates that China will be the world-leader in electromobility. Mats Harborn stated that Chinese development of future vehicles is primarily spurred by three parameters: the will to be the best in the world, overcoming the country’s excessive emissions, and reducing noise levels.

There are, of course, other driving factors, such as increased safety. Autonomous and connected vehicles would create better flows in infrastructure with more predictable behaviours, thereby reducing accidents, Harborn said.

It is common knowledge that Chinese vehicle manufacturers are investing heavily in foreign makes, which is currently more about innovating and integrating components and technology, rather than copying them, particularly with regard to electric vehicles.

Today, China is top of the class, or has bought into those who are top of the class. But the production of electric vehicles is a subsidised industry, something that European manufacturers can benefit from later on and when subsidies are discontinued, said van Amburg.

But he also noted that Chinese dominance stems from economies of scale that no other manufacturers can match, including those involved with battery manufacture.

I think, however, that European and American companies are benefited by their expertise and development as relates to both business and environmental sustainability, Harborn said.

China, which only a few short decades ago could be considered a bicycle society, is today totally dominated by vehicles, with an estimated ratio of heavy vehicles to light vehicles at 50/50, which equates to an immense number of climate-impacting haulage miles on a nascent road network. At the same time, there are a large number of major cities with populations in excess of one million inhabitants where inner-city transport – such as distribution and waste disposal – is achieved by smaller fuel-driven vehicles that must and should be replaced, said Harborn.

 
Customs duties and tariffs causing problems

The next topic of discussion was the trade war between the US and China, which the two experts summed up with the words ‘total disruption’ – at all stages of the global production system. Customs duties and tariffs are throwing a spanner in the works, which in the long run will lead to regional solutions that do not benefit anyone, according to Harborn, who is critical of the US’s tough stance against China and advocates engagement rather than threats and restrictions. Bill van Amburg noted that a prevailing trend in the US is to blame everything on China – unemployment, price increases – because it’s easy.

Regardless of the political line in the trade war, there have been significant consequences for companies outside the US and China as well.

If companies had known that the current situation would be the new normal, they could have at least planned for it. But this is not currently possible and it is threatening the business models and survival of companies, he said.

 

5G possible for many

The third discussion of the evening was about the development of 5G technology and mobility services in China, and how these in turn affect the EU’s automotive industry. Mats Harborn noted that China has a great advantage in having a unified 5G and IoT market, unlike Europe, where the countries have different system prerequisites and legislation.

This gives China a head start in climbing the value chain when everything will be connected. But the 5G structure requires the participation of many companies, so I still think it provides business opportunities for more, said Harborn.

The large Chinese market means that Chinese mobility services are able to scale up and roll out faster.

With 1.4 billion consumers, China is the largest market on Earth. Any service can get 200 million subscribers in a snap. Those who have strength in China are strong everywhere, said Harborn. Bill van Amburg concurred with this and believes that those who want to lead 5G may have great advantages by operating in China, testing products there, and – as far as possible – contributing to the establishment of global standards able to benefit many.

Per Österström, Group Manager of Vehicles and Transport at Business Region Göteborg, served as moderator for the evening and linked the 5G question to fleet management, while Harborn and van Amburg proclaimed that 5G will first and foremost usher in a change with respect to logistics and shipping systems, not the trucks themselves.

In this, the positive effects are numerous. With faster systems and services, transport, which is the part of the production chain that accounts for the greatest emissions and most accidents, will be significantly improved. And we have already seen major improvements, said Harborn.

Here, however, van Amburg interjected with a warning:

For both the US and China, it is imperative to have a plan for all those who will be unemployed when fewer drivers are needed in the transport sector. These are consequences that we must take into account.

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