Automotive News - Traverse City - August 6, 2019 - 16

AUTOMOTIVE NEWS CAR MBS DAILY

TUESDAY, AUGUST 6, 2019

To offset slowdown, Valeo tightens cost controls

How is the EV market developing?
We can see that battery range is increasing,
but a lot depends on how fast the infrastructure is being built. The problem is not only
overnight charging, but a lack of fast-charging
stations for long-distance travel. There will
probably be market segmentation, with shorter-range city cars and longer-range cars. At
the end of the day, the consumer will choose.

Published July 29, 2019,
in Automotive News

ARIS - Valeo is a global leader in a
broad range of component categories: parking- and driving-assistance sensors and cameras; thermal
management for vehicles and passengers;
and powertrain, including clutches and highand low-voltage electrification. CEO Jacques
Aschenbroich, 65, spoke with Automotive
News Europe Correspondent Peter Sigal about
how Valeo is navigating a transformative time
for the industry. Here are edited excerpts.

Q: You were one of the first to warn, in
July 2018, about the challenging effects of Europe's new carbon dioxide
emissions rules on the supply chain.
How are they affecting Valeo?
A: In the second half of
last year, we saw the
JACQUES
negative effect. But we
ASCHENBROICH also warned that we saw
something worrisome
in China and also saw that the European
market was starting to decline. With the Chinese market going dramatically down, and
the U.S. market starting to drop, we are in a
situation today where all the three major
markets are declining.

&
QA

What's the reason for this?
In the short term, it's hard to say what is
happening. Market conditions in Shanghai
are very different than the U.S. or Europe. In
China, it's a combination of weakening GDP
growth and a tightening of credit and in some
areas of the registration process.
In the longer term, we want to be cautious.
What we have lost, we don't think we'll recover immediately. We will grow, but from a lower base. We need to adapt to the new market
conditions by putting pressure on our costs
and capital expenditures.
How are you doing this?
The auto industry is in the middle of a huge
transformation. Electrification of the powertrain is a fact now. Something very similar is
happening with driving assistance. We need
to continue to invest in those areas, develop
new products and innovation and invest in

what is our long-term strengths, like 48-volt,
battery-electric vehicles, ultrasonic sensors,
cameras and lidar.
However, at the same time, the automotive
market is slowing. We have already reduced
capital expenditures by €100 million ($111
million) compared with last year, and by the
end of this year, we will reduce another €100
million. We'll also reduce costs by €100 million this year.
Consolidation remains a hot topic in the
industry. Do mergers between automakers affect your profits as scale
grows?
A lot of consolidation has already taken place,
and it hasn't affected margins. It's being done to
leverage volumes to amortize research and development. Our total development effort represents more than 10 percent of our sales, so if
we can leverage our technology on a larger
scale, I don't think we will be the loser. We will
be the winner.
Speaking of technology, Valeo has
been a leader in 48-volt mild-hybrid
components. How do you see that market developing?
The only way to reach CO2 emissions targets, besides full-electric vehicles and hybrids, is to optimize the gasoline engine, especially in Europe as diesel sales decline. You
can [reach the target] with mild hybrids, and
you can put the motors in several positions -

belt-driven, on the gearbox or on the axles. In
the short term, belt-driven starter/alternators
are the strongest [sales opportunity], with
some sales for the rear axle. Gearbox-located
motors will be slower to emerge because it's
more intrusive.
Some see 48-volt as a bridge to high-voltage
electrification. I don't think it will be a bridge,
but if it is, it will be a very, very long one. If you
project into 2030, the market won't be 100
percent electric. Maybe 30 percent will be
plug-in hybrids and pure electric. So 70 to 75
percent of the market will be gasoline driven,
which can be optimized through 48-volt.
How is Valeo involved in high-voltage
electrification?
We have developed a full range of technology through our partnership with Siemens, including electric motors, the inverter, the
charger and DC-to-DC converters. We have
an important order book that we now need to
develop and put into production, which will
be at the end of this year.
Is there a place for hydrogen fuel cells?
How will electrification be split between battery-electric vehicles and fuel cells? I don't
know and I don't care. Why? Because all the
products we have developed can be driven by
either battery storage of electricity or production of electricity in a fuel cell in the car. We will
see how battery technology improves to solid
state, and how fuel cell technology evolves.

Tariffs are affecting the supply chain.
How are you preparing for them?
Our philosophy has been that we are "local
for local" - we produce and sell in the same
markets. Also, our own supply chain has been
optimized in terms of technology and logistics, based on globalization.
However, we can see now that the world
isn't predictable, so we need to rethink our
supply chain again for a more fragmented
world. In the short term, there is no other
choice but to pass any tariff costs on to our
customers, which they will have to pass to
their own customers.
How have you seen the supplier business change in the past decade?
Technology is now driving the industry as a
whole. Everything is based on mobility services and reducing CO2 emissions. We also
have new customers. We have all the electric
vehicle startups in China, for example, and
we have to choose the ones we think will be
the winners in the 21st century.
What is most difficult today is finding the balance between investing in new technology and
at the same time achieving profitability to generate cash to pay our dividends - and to invest.
You have been CEO and chairman of Valeo since 2009, and you were just nominated for another term. However, within the next two years, the two posts will
be divided. What is the reason?
I'm 65, so it's my last term. We have indicated that one of my duties, and the duty of the
board of directors, is to think about what will
come next. It's our responsibility to make
sure we have the right management in the decades to come. We have been able to attract
some very strong people to our board.
Would you remain chairman or CEO?
Let's wait and see. m

Why the vacuum brake booster is becoming a relic
Continental is ready for the technology's demise

Richard Truett
rtruett@crain.com

throttle body. As long as the flap is closed or
just slightly open, the engine will produce
enough vacuum to power the brakes.
But many of today's vehicles with electronic
throttles remove that flap, Beaver said.

lectrification is about to send another familiar under-the-hood component packing. This time it's the vacuum-powered brake booster.
Vacuum boosters are following distributors
Alfa Romeo vehicles
and carburetors into the automotive technolAnother way to create vacuum is with an
ogy history books as battery-electric
engine-driven pump, similar to
vehicles rise as a segment.
what is used on many diesel-engine
Electric drivetrains produce no
vehicles. But that didn't catch on,
vacuum, but that's only part of the
Beaver said, because of cost, comreason for vacuum boosters' demise.
plexity, weight and efficiency losses.
Another factor: the evolution of the
That's where the e-booster comes
internal combustion engine.
in. Instead of relying on the suction
Downsized, turbocharged engines
from the engine or a pump to put the
that use throttle-by-wire systems
power in the power brakes, the force
produce very little vacuum that can Beaver: Very fast could be created electromechanibe used to power a brake booster, pressure increase cally by a small, powerful motor that
says Robert Beaver, chief engineer for
pressurizes the brake fluid through
electronic brake systems at Continental
the brake lines.
North America.
The Alfa Romeo Guilia sedan and Stelvio
In a vehicle with a traditional vacuum-powcrossover are two of the first internal comered brake booster, the engine's pistons crebustion engine vehicles to be outfitted with
ate a vacuum in the intake system as they
electrically boosted brakes.
draw air into the engine.
Continental's system, called the MK C1, is
But that vacuum is behind a flap in the
designed not only to ease the transition from

vacuum to electric for automakers, but to enhance the safety of vehicles with self-driving
features.

Conti says its MK C1
offers manufacturing
flexibility.

Better performance
"For collision mitigation and autonomous
braking, this type of system can perform much
better than the traditional electronic stability
control system. It provides a very fast pressure increase compared
to the old system," Beaver
said.
"In a comparison test, from a speed
of 41 mph initial speed, we saw a reduction in distance of more than five yards."
Another test by Continental's engineers - this one with a gasoline-electric
plug-in hybrid vehicle - showed the system reducing carbon dioxide emissions by eight grams
per mile.
The self-contained system is smaller than a
traditional vacuum booster and weighs
about four pounds less. It requires no changes to the brake pedal, and no additional software or computers to run.
Continental said it also offers manufacturing flexibility. Beaver said it can be engineered to enhance the performance of hy-

brids and battery-electric vehicles by more
efficiently capturing wasted brake energy
during regenerative braking. m

Automotive News - Traverse City - August 6, 2019

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