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Joint Efforts to Decrease CO2 Emissions
Average CO2 Emissions per Newly Registered Passenger Vehicle in Germany 200
As proposed by the EU Commission, from 2012 onwards new vehicles should not produce more than 130g/km CO2 as a result of improved vehicle technology. An additional reduction of 10g/km is to be achieved through increased usage of biofuels and further technical improvements. Although there have been significant achievements in recent years, substantial efforts still have to be made to meet the EU goal by 2012. Suppliers of efficient CO2 emission reducing technologies that also support manufacturers in keeping vehicles both affordable and appealing to the end-customer are finding unique business opportunities in Germany.
190 180 170 160 150 140
A CO2 reduction of 50g/km is necessary to reach the goal.
130 120 110 100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
CO2 emission reduction developments EU Commission’s overall reduction goal for CO2 emissions by 2012 Source: German Federal Bureau of Motor Vehicles and Drivers (KBA), 2008
One Goal – Different and Complementary Approaches The German industry is following an integrated approach to reach this ambitious reduction goal by: - Further improving present combustion engines and transmissions - Moving to partial or complete running on electric energy (as with hybrid or fuel cell vehicles) - Increasing the use of alternative fuels - Making further advances in materials, electrics and electronics
Cold test: the new fuel cells also start at minus temperatures
Industry Overview 2008 www.invest-in-germany.com
3
Sustainable Mobility
Improving Today’s Powertrains In the medium term, the internal combustion engine will remain the main automotive propulsion source. In recent years we have seen significant progress being made in the further development of today’s sparkignition (SI) and diesel engines. Nonetheless, there still remains great potential for further improvement: SI Engines There is a clear tendency towards downsizing and supercharging. Small supercharged SI engines will replace today’s naturally aspirated engines. Future SI engines will be closer to diesel engines in terms of fuel efficiency. Specialists in fuel economy improving technologies including, for example, variable valve timing (VVT), direct-injection, turbocharging, friction-reducing measures, cylinder shut-off, and stop & go systems can expect to find promising business opportunities. Diesel Clean diesels are the best-selling passenNECAR Concept Study: cutaway model (side view), access floor, fuel cell ger cars in Germany today – accounting for nearly 50 percent of the market. In the future, diesel engines will be as clean Exhaust Transmission as SI engines. The demand for technoloThe coming into effect of the Euro 5 stan- As the energy interface, it plays a vital gies including two-stage turbocharging dards restricting diesel particulate emis- role in powertrain efficiency. Technologies and high performance injection with direct sions to 5 mg/km from 2010 onwards including double clutch transmissions, needle control valve is strong. will ensure that diesel par ticulate fil- automatic transmissions (with up to 8 or 9 ters remain in high demand. Euro 5 also gears), dry clutches and transmissions for restricts NOx emissions to 180 mg/km for hybrid drives are very much in demand. diesel engines and 60 mg/km for gasoline engines from September 2009. In a second step, emissions for diesel engines will be further restricted to 80 mg/km from 2014. This norm will make special NOx post-treatment necessary. Excellent business opportunities exist for NOx storage catalytic converter manufacturers, selective catalytic reduction (SCR) technology suppliers, and exhaust gas recirculation (EGR) specialists. As the exhaust system becomes ever more complex, the demand for complete exhaust solutions will rise accordingly.
4 Industry Overview 2008
Turning to
Potential German Car Buyers: What Are the Drive Technologies of the Future?
Alternative Drives The future shortage of fossil fuels is an issue widely recognized by German consumers. That’s why the need to turn to alternative drive technologies is widely accepted. Hybrid Technology Hybrid technology enjoys an impeccable reputation among German consumers. A survey commissioned by tier 1 supplier Continental AG shows that 30 percent of German consumers who intend to purchase a new car consider hybrid cars among their options – this despite the fact that there would be a significant price markup2. At present, hybrids do not make up a significant segment of the market in terms of units sold, but demand is growing. According to the German Federal Bureau of Motor Vehicles and Drivers (KBA), new registrations of hybrid passenger cars rose by 44 percent in 2007 3. As car manufacturers continue to launch hybrid models in the years ahead, sales are expected to rise accordingly. German OEMs expect to release their respective initial hybrid model series by 2010. Parallel to their individual activities, BMW and Daimler have entered into a co-development agreement for the mild hybrid technology to be implemented in rear-wheel-drive premium vehicles.
Hybrid
44
Biofuels
40
Natural-gas
33
Diesel
25
Gasoline 0%
16 10 %
20 %
30 %
40 %
50 %
Source: Market research study by puls GmbH, ACI Trendmonitor, 20061
Plug-in Hybrids and Full Electric Vehicles Plug-in hybrids and full electric vehicles represent a very promising future technology for the replacement of fossil fuels. Prototypes are already under development by German OEMs.
will also be significant demand for ultracapacitors which enable additional power on acceleration.
Fuel Cell Technology Fuel cell technology is widely regarded as being the most promising drive technology Energy Storage in the long term. Although Daimler, Ford, Energy storage solutions are widely held Opel (GM) and Volkswagen have put much to be the crucial component in hybrid and effort into the development of fuel cell vehifull electric cars. Lithium-ion batteries cles, commercialization will not be realized are considered to be the leading technol- within the next few years. Germany is home ogy in terms of range, weight and size. Sig- to more than 300 companies specializing in nificant quantities of powerful and durable fuel cell technology and over 65 institutes batteries will be required by German car working in the area of fuel cell R&D – makmanufacturers in the near future. There ing it the European leader. Add to this a solid supplier network and it‘s clear to see that German OEM Hybrid Model Launch Forecast Germany has already taken a leading position in the development and future market Manufacturer Initial Hybrid Model Forecasted Start of Production introduction of this important technology. The German government is pushing the Audi Q7 2008 implementation of fuel cells under the Na7 series tional Innovation Program for Hydrogen BMW X5 approx. 2010 and Fuel Cell Technology. By the year 2015, EUR 500 million will have been set aside for X6 German and foreign companies conducting S class development and demonstration projects Daimler M class 2009 in Germany. GL class Opel (GM)
Astra
2010
Porsche
Cayenne
2010
Volkswagen
Golf VI
2009
Source: Invest in Germany Research, Automotive News Europe, Automobilwoche, Spiegel 2007, 2008
1
N= 2,082
2
Source: Automobilwoche, May 5th 2007
3
KBA, Annual report, 2007
Industry Overview 2008 www.invest-in-germany.com
5
Sustainable Mobility
Running on
Blending Quotas for Biofuels According to the Germany Biofuels Quota Act
Alternative Fuels
Year
Alternative fuels such as biofuels have already enabled significant advances in the partial replacement of fossil fuels. Hydrogen is considered to be the most promising option for fully replacing fossil fuels in the long run. Hydrogen Hydrogen can either power a fuel cell or be combusted like conventional fuels. Most German OEMs are committed to the development of fuel cells. BMW has set on a course of the direct combustion of hydrogen in an internal combustion engine. Thanks to its strong chemical industry, Germany possesses strong hydrogen provision and storage competences. The creation of a nationwide hydrogen fueling infrastructure will be the next major step towards the commercialization of hydrogen powered vehicles.
Total quota in percent
Diesel quota in percent
2007
-
2008
-
2.0
2009
6.25
2.8
2010
3.6
2011
6.75 Minimum quota applies also to subsequent years. 7.00
2012
7.25
2013
7.50
2014
7.75
First Generation Biofuels Germany is a frontrunner in the utilization of first generation biofuels. Biodiesel (3.1 m t) and bioethanol (0.5 m t) account for a share of 6.2 percent (by energy content) of fuels distributed at the pump today. The German government introduced mandatory blending quotas for biofuels with fossil fuels in 2007 (see table above).
Biomethane
67,600 km
BtL (Biomass-to-liquid)
64,000 km
Vegetable oil
23,300 km + 17,600 km
Biodiesel
23,300 km + 17,600 km
Bioethanol
22,400 km + 14,400 km
20,000
40,000
60,000
80,000
Biomethane from byproducts (Colza cake, mash, straw etc.) *Driving power of biofuels (1ha. acreage) for a passenger vehicle Average fuel consumption of a passenger vehicle: SI 7.4l/100km, Diesel 6.1/100km Source: Agency for Renewable Resources (Fachagentur Nachwachsende Rohstoffe e.V.), 2007
6 Industry Overview 2008
1.2
Minimum quota applies also to subsequent years.
Source: Biofuels Quota Act 2007
Driving Power of Biofuels by Comparison*
0
4.4
Gasoline quota in percent
Beyond these quotas, the German government has set a biofuels share (by energy content) target of 17 percent by 2020 - some seven percent above the stated EU target. Sustainability criteria and green house gas reduction potential of biofuels will become part of the German legislation. Second Generation Biofuels Due to a higher energy efficiency compared with first generation biofuels, second generation biofuels such as BtL (Biomass to Liquid) and cellulosic ethanol provide an even more promising business opportunity for investors. By granting tax exemptions, the German government has clearly proven its commitment to those fuels about to enter the market in the coming years. Facilities are already being installed or under development.
Natural Gas Because it has lower CO 2 emissions than conventional fossil fuels, natural gas is already a feasible medium-term alternative. With annual growth rates of 35 percent, there are already more than 60,000 vehicles with natural gas propulsion systems on the German roads today. This significant increase has been made possible by the constantly growing number of natural gas service stations - more than 770 at last count. Biomethane (upgraded biogas) represents an additional path where innovative technology complies with established natural gas technologies.
Market Development of Natural-Gas Vehicles and Stations in Germany 60,000
800 700
50,000
600 40,000
500
30,000
400 300
20,000
200 10,000
0
100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Registered natural-gas vehicles
0
Natural gas stations
Source: German Natural Gas Vehicles Association, 2008
Industry Overview 2008 www.invest-in-germany.com
7
Sustainable Mobility
Advancing in Materials, Electrics and Electronics Materials Stricter safety regulations and increased comfort requirements have contributed to dramatically increase average vehicle weight in recent years. There is an urgent need to reverse this trend in light of current CO 2 reduction requirements. Suppliers of advanced materials (including light metals as aluminum and magnesium, highstrength steels, plastic and fiber-reinforced materials and composites) that can replace heavier materials are enjoying a steadily increasing demand from German OEMs. EE Electronics are a key technology for future powertrains. Improved and exchangeable engine control units are still to come. Driver information systems like, for example, shift-point indicators help recognize inefficient fuel consumption. The use of electric and electronic features (as seen with recuperative braking and by-wire systems like steer-by-wire) in chassis applications contributes not only to more efficient energy use, but also to a reduction in weight by replacing mechanical components. The expected demand for tire pressure monitoring systems is also great. A study F 600 HYGENIUS - research vehicle with fuel cell drive technology by market research institution Frost & Sullivan (2007) forecasts 100 percent market penetration of this technology by 2020. At This is already the case for LED systems. the same time, a great number of electric The trend will continue as demand for ensystems also offer up excellent opportuniergy efficient lighting solutions increases. ties for fuel improvement efficiency. Both industry and government are working together to improve the framework conditions for sustainable mobility. Intelligent transportation infrastructure, active safety, vehicle-to-X communication, and traffic management systems are just some of the focus areas where opportunities abound.
8 Industry Overview 2008
Incentives in Germany – Speeding up Sustainable Mobility Germany offers numerous incentives for all investors - regardless of whether they are from Germany or otherwise. There is a large selection of programs designed to suppor t a wide variety of business activities at different stages of the investment process available. Support ranges from cash incenti ves for the reimbursement of direct investment costs to incentives for labor and research and development (R&D). Supporting Direct Investment Costs Investors can count on direct grants to reimburse investment-related costs such as the setting up of a production facility. The amount of these grants generally depends on three factors: project scope, investor company size, and the new investment location. Investment incentives can reach up to 50 percent of eligible expenditures once these factors have been considered. In eastern Germany, one part of investment grants is the so-called Investment Allowance (Investitionszulage IZ). The Investment Allowance is granted in the form of a tax credit on premises and equipment purchases.
The High-Tech Strategy: Sectors with Relevant Budgets, 2006-2009 in EUR Million Sustainable mobility R&D projects can be financed through programs focusing on energy technologies, automotive and traffic technologies, and materials technologies. All together, these sectors provide an overall incentives budget of more than EUR 3,190 million for sustainable mobility-related R&D projects.
Space technologies Energy technologies Information and communication tech. Health research and medical technology Automotive and traffic technologies Nanotechnologies Biotechnology Environmental technologies Materials technologies Optical technologies Plants Aviation and aeronautical technologies Production technologies Microsystems technology Maritime technologies Security research Services
3,650 2,000 1,180 800 770 640 430 420 420 310 300 270 250 220 150 80 50
Source: German Federal Ministry for Education and Research (BMBF)
Investment incentives can also be provided in the form of interest-reduced loans made available by state development banks or in the form of public guarantees usually provided by state governments. Incentives for Research & Development Germany offers several incentives programs targeted at reducing the operating costs of R&D projects at national and regional level.
The National Innovation Programme for Hydrogen and Fuel Cell Technology Incentives available for applied research in the areas of: - hydrogen production, -storage and -infrastructure - fuel cell and combustion engine including H2-hybrid power train - value chain cost reduction Main focus is put on mobility activities. Incentives are provided in the form of: - R&D grants (max. 50 percent of eligible project costs) - Overall budget: EUR 500 million for 2006 through end of 2016 - Program open for: SME, large companies, research centers - Application procedure: The Federal Ministry for Economics and Technology calls for R&D proposals, fixed application periods are set
At the national level, all R&D incentives programs are subsumed under the Federal Government’s four-year High-Tech Strategy. The High-Tech Strategy defines specific sectors with a high dependency on new high-tech developments. Each sector comprises various R&D programs. More than EUR 15 billion is available for all sectors until the end of 2009. Funding is allocated in the form of R&D grants. On average, incentives cover up to 50 percent of all eligible R&D costs, with fundamental research entitled to higher funding and experimental development to lower funding. R&D grants at regional level usually target small and medium-sized enterprises (SME). Some states have focused their funding policy on specific industry clusters, but generally, funding programs are available for projects regardless of their technological focus.
Industry Overview 2008 www.invest-in-germany.com
9
Sustainable Mobility
Invest in Germany Closely Supports Your Project Management Team throughout the Entire Investment Decision Process Investment Decision Process – Areas of Invest in Germany Support Investment Process Milestones
Invest in Germany Key Support Areas
Strategy
Evaluation
Decision and Investment
- General market information Information
- Industry guides/reviews - Conditions for investment, e.g. economic data,labor market, incentive programs, and tax & legal framework
- Discussion of market entry strategies
- Support with final site decision
- Advice on project financing
- Selection of project partners and facilitators (service providers,financial partners)
- Model calculation of potential incentives Consulting and Project Coordination
- Proactive identification of business opportunities - Identification of projectspecific location factors
- Cost factor analysis - Identification of possibilities for cooperation with suppliers, R&D institutes, technology partners, etc. - Organization of site visits and fact finding missions - Contact with the economic development corporations of the German states
Invest in Germany Helps You Our teams of industry experts in the automotive and related industries will assist you in setting up your operations in Germany. From design and engineering centers to manufacturing and assembly plants, we can support your project management team from the earliest stages of your expansion strategy. We do this by providing you with all of the industry insider information you need – covering everything from automotive markets and segments to industry trends and the supplier landscape; automotive and environmental technology R&D to industry
10 Industry Overview 2008
regulation and the domestic labor market. Profit from our experience and know-how to identify the investment location which meets your specific investment criteria. We help turn your requirements into concrete investment site proposals, providing free consultation services to ensure you make the right location decision. We coordinate site visits, meetings with potential suppliers, ser vice providers, technology partners, universities and other institutes active in the automotive field. Our team of experts is at hand to provide you with the relevant background information on Germany’s tax and legal system.
- Negotiations with relevant authorities - Assistance with the incentives application process - Seamless project handover to the economic development corporation in the selected state
Invest in Germany’s financial experts help you create the appropriate financial package for your investment and bring you into contact with suitable financial partners. Incentive specialists provide you with detailed information about available incentives, support you with the application process, and arrange contacts with local economic development corporations. Take advantage of our range of free of charge services.
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