Note: This is an automatic translation of the German-language interview "Nachhaltigkeit in breitere Schichten zu bringen, ist die größte Herausforderung"
How do you implement sustainability in a meaningful way at an automotive supplier? Dr. Dirk Kesselgruber, the new CTO of GKN Automotive, talks in an interview about the important efforts and the challenges.
GKN Automotive has established itself as a supplier and service provider not only for drive components such as shafts, but for complete drive systems. For example, the complete powertrain in the Fiat 500e comes from the company. In addition, GKN Automotive is undergoing a transformation following a reorganization within the Group. Dr. Dirk Kesselgruber, the new CTO of the British-based company, now has overall technological responsibility for the automotive division. Together with MTZ - Motortechnische Zeitschrift, springerprofessional.de spoke with Dr. Kesselgruber at the GKN plant in Lohmar. In addition to the interview in the recently published MTZ 10/2023 on the future of hybrid drives, he talked to us about the need for sustainable business and the concrete implementation of sustainability goals.
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springerprofessional.de: Dr. Kesselgruber, GKN is currently closing its propeller shaft plant in Zwickau-Mosel. How much of this traditional business remains in today's phase of mobility change and transformation of the automotive industry?
Dirk Kesselgruber: I won't comment on the plant closure, but we can of course have a classic content-per-vehicle discussion.
If you take an all-wheel-drive vehicle of today and an all-wheel-drive vehicle of tomorrow - an all-wheel-drive internal combustion engine and an all-wheel-drive BEV - you can see that the propshaft or propshaft is disappearing. What we see in the propshaft area, though, is that first of all, the number of all-wheel-drive vehicles is going up. That has the simple logic that with BEVs, you scale performance by adding motors. So you don't build bigger and bigger motors, you build one or two basic motors and then scale by adding another drive to the vehicle on the second axle. That means the number of sideshafts will increase in the market. Electric vehicles have much higher torques, the systems are much stiffer, have different acoustic requirements. That's why the value and technology of sideshafts on e-vehicles will also increase compared to internal combustion vehicles.
In the all-wheel-drive sector, we are active with differential transmissions and torque management systems. And the good thing here is first of all: the e-drive has a differential gear. So far, we've noticed that the main feature has been to provide a vehicle with electric propulsion. But we notice that all the torque management features are coming back in the prioritization. That means, from now on, other aspects like 'fun-to-drive', driving dynamics, off-road possibilities become interesting. In principle, this means that the all-wheel-drive technology we have in the combustion engine will be transferred one-to-one to the BEV. And that is also clear from a logical point of view, because from the user's point of view - if I detach myself from the pure drive technology - it doesn't really matter in the end whether he drives electrically or has a combustion engine. However, he wants to have a differential lock. He wants to have a torque management system. So he needs certain aspects of driving dynamics that he expects from a vehicle, and he wants to be able to adjust them just as he did before.
This change is now slowly taking place, and we feel how requests for basic technologies are going in exactly this direction. In this respect, it means a change in the portfolio for GKN, but within our core business, it is seen more as an opportunity. Anything that is integrated into the electric axles is basically an additional opportunity.
Is that a shift in focus, so to speak, from longitudinal to lateral acceleration in electric vehicles?
Exactly. And traction. A lot of traction. Because these vehicles have impressive traction capabilities. Suppose a wheel suddenly hangs in the air or you're standing on ice with such a vehicle: just because you're now suddenly driving sustainably, you don't want to stop - at minus 40 degrees in Sweden.
When we talk about control technology: How big is the share of software in the business, actually?
This share is increasing, of course. Over the past few years, we have built up our greatest competencies primarily in electronics, software development and systems engineering. In systems engineering, we concentrate on classic control engineering, i.e. function representation. But we also deal with vehicle integration, acoustics and comfort issues - areas in which understanding has to be abstracted to the driver level. This proportion is growing, and is currently approaching a 50/50 split in the powertrain area. In the driveline area, of course, mechanics still predominate, and the diversity will be reduced there. On average, we will probably have about one-third mechatronic disciplines. But the trend is upward, because we have new projects and are building up personnel, especially in these areas.
In the MTZ interview, you also talk about recycling issues, i.e. sustainability. Initially, investments in sustainability are often costly. How much is GKN currently investing in sustainability?
The advantage is that - I won't give exact figures - we get a return. So as soon as we switch to a green solution in the production process, such as using groundwater cooling, cost savings result. Or we set up solar plants at certain locations around the world to generate our own electricity, which leads to a payback. While there is an initial investment, there is also a return on capital. We are currently looking at a number of issues - the most pressing, of course, being climate-neutral electricity. There are various approaches to this: We generate it ourselves, purchase locally generated hydroelectricity, or buy quotas. This is relatively clear to calculate.
When it comes to product sustainability, the separation is more difficult. When I develop a new product, sustainability is just an additional attribute that I add. On the other hand, when I convert an existing product to sustainability without retaining the value, it results in an investment that does not pay off. However, if I create a catalog of requirements for a completely new product generation and incorporate sustainability from the beginning, there is no additional cost. In my organization, there is now a Product Sustainability Office that supports projects, including customer projects on the OEM side. This allows us to work out our carbon footprints and identify potential. For new products, we have also established processes on how to embed sustainability. This office is already in place.
Please define what sustainability means to you!
Sustainability is everything that is sustainably given value, i.e., that is not consumed. That definition in itself is already a good investment. It means I don't invest in resources that are completely used up after use and generate entropy, but rather I obtain new basic values at the end of a cycle to produce new products. This basically leads to a closed economic cycle in terms of energy, materials and refinement that no longer generates losses. It is the principle of energy conservation and material conservation in its purest form. As a society, we are used to consuming cheap products. We get certain functions and conveniences cheaply, but in return we destroy values. We extract oil from the earth or consume materials - they are gone. Or they can't grow back fast enough. But the market offers these products. This means that if a product previously cost 100 euros and I now get the same product for 700 euros, but there are long-term sustainability effects because it can either decay or be efficiently recycled after 25 years, the consumer does not immediately see the value in it. The modern consumer doesn't think about what happens to the product value they hold in their hands when its life cycle is complete. This is an issue, in my opinion, where a mindset shift or cost assessment is required to perceive the long-term impact. Take a brake, for example: one is made of conventional cast steel, the other of environmentally friendly steel. The latter is 40% more expensive, and both brake equally well.
Naturally, you choose the cheaper part ...
Correct. But it doesn't start with the manufacturer, it starts with the consumer. In most cases, those who can afford it can also afford the more expensive part. So how do you bring sustainability to broader strata? In my opinion, that's the biggest challenge. That's why I say that when you think about the future, you have to look at it as a process. While you have an end goal in mind - say, "The world will look like this at a certain point in time" - you can't force that state. Transformational resistance acts as inertia. At the same time, one must not lose sight of the long-term goal. You have to set the incentives so that each step leads in the right direction.
What is currently the main goal of sustainable efforts?
Sustainability has several goals. A classic environmental goal is to reduce CO2 emissions over the entire life cycle of a product. We look not only at local emissions, but also at total emissions. An important discussion revolves around how much energy is required for the production, operation and subsequent disposal of a product. A debate is emerging about what "sensible disposal" even means. This is a central issue.
Another topic is social responsibility. It's about generating wealth without compromising the quality of life of others. We strive to act in a socially responsible manner and contribute to society.
The third theme is compliance with rules and regulations. This means that we comply and act honestly. These three issues are essential.
At the product level, one issue is that the manufacturing requirements of our systems can lead to different specifications. For example, if a screw is made of steel, the choice of production method can have an impact on the environmental impact. Manufacturing with green hydrogen is more expensive than using coal furnaces. So we are offering a sustainable product A compared to a less sustainable product B. The question is whether the market will accept this offer. This transformation is a process. Uniformity of sustainability goals is important, but the speed of transformation varies. In the past, the direction was inconsistent, but now we have some alignment in the industry.
The individual goals may be different, but the end point is the same: net-zero emissions. Complete decarbonization is unrealistic, to be sure. But we need to move in the right direction.
And how do you strike a balance in the marketplace?
We are using Systems Engineering and the Product Sustainability Office to achieve our climate goals. We are adapting our operational processes and have the technical expertise to adapt to the market movement. In terms of our product, we need to understand the carbon footprint at all times and how we can reduce it. On the design side, we consider resources and make decisions. Then there is a balancing exercise: is the market ready to accept these changes, or if not, how can we optimize the cost structure to still ensure sustainability? In this, we are constantly in competition, which is the advantage of the free market. We are competing with other companies that are all asking themselves the same question. This is also what ultimately makes me feel positive: We find solutions because we all face the same challenge.
Some GKN sites have advantages in becoming carbon neutral, while there may be disadvantages for others. For example, Bruneck in South Tyrol has a hydroelectric power plant. How can such approaches be transferred to other sites, like Lohmar?
This is definitely an issue. There is no universal solution for CO2 emissions but only local ones. Each site has its own situation, and we have to adapt to the strategies of each country. And you can't be too dogmatic about that either. So I have to come to terms with each situation, adapt to each country's strategies, and then see how I can do it best. In countries where the energy transition is not yet so far advanced, we may have to rely more on self-production. If I have hydropower next door, like in Bruneck, then all I have to do is plug into the waterfall. If I'm perhaps operating more in countries where there's nothing but coal-fired power for the foreseeable future, then I'll have to put solar cells on my roof if I want to meet the targets. As a company, I can only achieve my climate targets if all my sites play their part. But I can't say: "I simply won't produce in areas that are not yet so decarbonized". That would be super cherry picking and then at some point I'd be nowhere. Local factors also play a role in our products. Products will be more regionalized in the future. This relates to material selection and other aspects that make products regionally specific. For example, material mix for products in Europe compared to Asia or the USA.
Will green energy eventually become a locational advantage?
Of course. But: an energy-based location advantage always depends on the energy price. In the long term, I think green energy will always be cheaper than fossil fuels.
Very long term?
No, I'm not so sure about that yet. I get a lot of output from a wind power plant relative to a comparatively small investment. But I'm not an expert on energy. However, I believe wind and solar power is inexpensive power, almost unbeatably cheap. I think the problem will again be the issue of baseload and how to deal with it. Some politicians claim there is no baseload issue, but let's assume there is. I think we will manage to get there. Burning coal or lignite is definitely not a solution. And I think if you look at electricity prices in Germany, there is a significant amount of tax burden. Political control plays a big role in this, and that is a disadvantage of location.
However, as a company GKN, we certainly have the opportunity to make decisions within the framework. There is always the question of whether we produce ourselves or how we structure our contracts, how much contingent and capacity we buy from which location. That is definitely important. Because the way it is with us is that electromobility and the electric transformation are part of our current brand identity. We want to manage the transformation in electrification, and the whole thing is only honest if we say, "We're tackling the other issues consistently now." Otherwise, the whole electromobility theme would be deceptive.
For GKN, it's relatively simple after all: GKN builds the motors, the electric axle. All materials are theoretically representable within the framework of a circular economy, and CO2 emissions from start to finish (grave-to-grave) are also statistically well representable. Right?
Theoretically, yes. The question is when and at what cost this is feasible in terms of market position. But technically, it is feasible. From a vehicle perspective, the battery is certainly the biggest issue, while everything else can be largely managed.
We've talked about power generation, we've talked about infrastructure, all of that has to work together. If that's not ready at the same time, so that we have a mainstream product by 2035, we haven't achieved our goal as an economy. Then GKN will still have the best e-drives in the world, but we will still be using coal-fired power. This keeps us busy, and at the end of the day, we have to ask: Which direction is our energy and motivation driving us - a backward destructive direction or a forward constructive direction? The goal is set, and our driving force is moving us forward.
Forward direction: How long will we even drive cars in the world?
I'm very optimistic about that. Individual mobility is here to stay. After all, there's always this grand narrative of urbanization, which would naturally lead to more public transportation, as is already the case today. After all, streetcars and buses are not new innovations, and in densely populated urban areas where there is public transport, it is often the preferred choice. After all, in an inner city, a car is always difficult. But individual mobility in rural areas will not be made obsolete by shared mobility or autonomous driving - and why should it? The use case remains the same, whether I drive myself or have someone drive me. Moreover, many studies show that shared mobility or autonomous driving will not solve the problem of congestion in urban environments. In the world, there are many countries that are highly urbanized. Cars are important there. What megatrend should change that? None, I think.
Note: This is an automatic translation of the German-language interview "Nachhaltigkeit in breitere Schichten zu bringen, ist die größte Herausforderung"