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Transformation of the Automotive Industry: Expert Calls for Technological Diversity and Realistic Goals on the Road to Defossilization

How can the European and German automotive industry overcome the current crisis and master change? This question will be discussed in depth at the 12th International Engine Congress. Professor Dr.-Ing. Peter Gutzmer, Scientific Director of the congress, outlines the situation in an interview and points out possible solutions. As a former member of the Executive Board of Schaeffler AG for many years, lecturer and honorary professor at the Karlsruhe Institute of Technology (KIT) and co-editor of the automotive technology journals ATZ and MTZ, Prof. Gutzmer has extensive industry expertise.

Since the last Engine Congress in February 2024, the situation in the automotive industry has worsened noticeably, with restructuring measures and job cuts dominating the headlines. Does this come as a surprise or was the crisis to be expected?

Prof. Gutzmer: In fact, the general conditions for the entire industry have deteriorated noticeably in recent months, partly due to unexpected geopolitical influences – a development that could actually have been foreseen. Unfortunately, it is only recently that many voices in the industry and also in politics have pointed out that we need a variety of technologies in order to rapidly drive forward the defossilization of mobility and that e-mobility also needs the opportunity to develop within a realistic timeframe. Too one-sided a focus on climate aspects has neglected the holistic view of dependencies and safety aspects in the entire raw material and value chain of energy and mobility that is cultivated in other regions.

Instead, a focus solely on battery electric drives has been driven forward with unrealistic targets and unachievable deadlines. Unfortunately, no consideration has been given to a solution for the large existing fleet, which will continue to determine CO2-emissions in transport for a long time to come. This in turn has led to the enormous polarization and uncertainty among consumers that we are experiencing in the automotive market today. This exclusivity worries me immensely and is an important point that we want to address at the International Engine Congress 2025: It's not about which drive is possibly superior to another – but about promoting technological diversity in an even more challenging economic situation. The holistic view of the overall system, consisting of energy generation, energy supply and finally the energy converter, plays a key role here.
 

How do you envision this technological diversity in concrete terms?

Prof. Gutzmer: In order to achieve the goal of defossilization, which we all agree on, as quickly and effectively as possible, it will be necessary to pursue several technological paths simultaneously. In my view, we absolutely need fair competition between technologies – including existing vehicle fleets and value chains. We will still have to transport energy in molecular form on a global scale, including wind and solar-based energy.

Why are we abandoning the combustion engine, a technology in which European and German industry and science are among the world leaders? The thermal energy converter is not the real problem, but the fossil fuel. Technological diversity includes, in particular, giving CO2-neutral alternatives such as synthetic fuels from biomass or electricity-based e-fuels a real chance, in parallel with the development of battery-electric mobility.

Many international projects are already underway in this regard: in the USA, but also in Asia, synthetic and bio-based fuels will play a growing role in the coming years. In the short term, this will also happen via blends, i.e. fuels with a growing CO2-neutral proportion as an admixture. Europe will inevitably have to join this global development – hopefully sooner rather than later, once the necessary global norms and standards have been defined and implemented. HVO100 is a first seedling in this area.
 

You have already mentioned the Asian markets. What distinguishes the strategies there from the European approach?

Prof. Gutzmer: The best example can be found in Japan. Against the backdrop of issues such as energy availability and dependency, environmental and climate protection and in view of the global crises, the automotive industry there is pursuing a two-pronged approach that is supported by a broad social consensus: There is a targeted drive for innovation and at the same time a focus on making the existing solutions, which have contributed significantly to today's affluent societies, fit for the future.

The success of this strategy can be seen, among other things, in Toyota's successful business development: the company has opted for innovations in the electric sector, while at the same time integrating existing knowledge, for example with the continuous further development of hybrid drive concepts, in order to ensure economic stability even in the face of global competition and the existing diversity of markets. Fortunately, BMW is pursuing a similar strategy.

However, the decisive factor will be China, where we are not seeing such a polarized debate as in Europe, but a conscious decision in favour of a mix of technologies. China has understood this: Providing, distributing and using energy in the greatest possible variety is the economic core to which all areas must be subordinated. It is also a way of building up a global competitive advantage.
 

How much does the polarization described above have to do with political action in Europe?

Prof. Gutzmer: Unfortunately, a lot! The Green Deal and even more so the EU taxonomy have created conditions that basically only allow one technological direction. At the same time, unrealistic, less market-oriented targets have been set, such as a ramp-up to 15 million battery electric vehicles in Germany by 2030, but at the same time the development of the necessary infrastructure has only been half-heartedly pursued. These mistakes are now taking their revenge.
 

To what extent were many goals unrealistic and unachievable from the outset?

Prof. Gutzmer: Despite massive financial support, market penetration was not achieved due to an unfortunately overestimated market acceptance. Costs, vehicle segments and range are being discussed. It was also misjudged that a new technology would bring about rapid improvements at lower costs in a relatively short space of time. One of the consequences of this is that a stable used car market for first-generation BEVs has not been able to develop – a huge problem for manufacturers and leasing companies. Unfortunately, the effects on the labor market due to the one-sided focus on the mobility transition were also underestimated.
 

As a long-standing industry expert, how confident are you that Europe will strategically reposition itself in the coming months?

Prof. Gutzmer: I am very convinced that there will be movement in the discussion about the ban on combustion engines in Europe after the German parliamentary elections and the change of government in the USA at the latest. We need changes to the Green Deal, to the assessment of fleet limits and to fines – if the requirements for RFNBO are not tackled again in RED III, the industry will suffer lasting damage without any positive effects for the climate. I also expect negative effects on the necessary parallel growth of electric mobility.
 

What can we learn from the Japanese example?

Prof. Gutzmer: Japan has managed to conduct a cross-societal discussion. There, regulations and implementation are largely based on consensus and strategically focused on the overall system of CO2-neutral energy production and use, while here in Germany, it seems that not even an open, constructive dialog is possible.

In my view, it is essential that we get the political and scientific elites, industry and trade unions talking to each other again. The rules that we have created urgently need to be changed and adapted – and this will only be possible if all stakeholders reach a new consensus.
 

Can the Engine Congress 2025 contribute to an improved dialog?

Prof. Gutzmer: At least that is what we will be striving for. A central part of the congress will be a panel discussion on market-oriented targets. In addition, we will cover a current and broad spectrum of topics from passenger cars and two-wheelers to commercial vehicles and off-highway. We will be talking about the latest engine developments, hybrid concepts and hydrogen-based systems as well as e-fuels, which will take up a lot of space at the congress. In Baden-Baden, we will be bringing together a wide variety of voices from OEMs and suppliers, from the world of science and also from the world of politics. The Engine Congress is therefore more topical than ever.
 

Which decisions and courses of action are particularly urgent in the coming months?

Prof. Gutzmer: It is now important to set decisive milestones for a globally competitive automotive industry in a climate-neutral, prosperous domestic market: Introduction of the promised Green Deal and review of the current state of the EU taxonomy, rapid correction of the existing rules on fleet consumption and combustion engine bans, a review of the overall strategy in 2025 – yes, corrections to the entire legal framework. This is not in the least directed against the necessary growth of the BEV fleet, but is about reconciling social, economic and geopolitical aspects with the global goals of environmental and climate protection. We need technological diversity in order to transform our fossil-based energy system as quickly as possible into a CO2-neutral, globally networked energy and mobility network that guarantees social prosperity and security of supply.