Freudenberg Sealing Technologies, the automotive industry’s largest supplier of sealing products, put a down payment on its future with two big investments earlier this year.
Freudenberg in January acquired key assets of Elcore, a Munich-based fuel-cell manufacturer, during the bankruptcy liquidation of its parent, Elcomax Group.
In February, it bought a more than 30% stake in XALT Energy, a U.S. lithium-battery maker based in Midland, MI, with provisions in the agreement to raise its stake to 100%.
Freudenberg projects a substantial portion of its traditional automotive business, estimated at $1.7 billion annually, will collapse with the rise of “electromobility,” including battery-electric and fuel-cell vehicles.
Claus Moehlenkamp, Freudenberg’s CEO (below, left), told industry professionals last summer at the Center for Automotive Research’s Management Briefings Seminars in Traverse City, MI, that electrified vehicles could grow to 40% of new-vehicle demand in 2040.
“It doesn’t matter whether the tipping point is 2035 or 2040 or 2045,” he said. “We have to do something to mitigate the worst case of a drop of around $1 billion in sales.”
“Initially,” Freudenberg executive Nils Martens told Wards in an interview, “we expect more focus to be on Europe and North America followed by Asia. We have also had discussions involving South America with local partners and customers there.”
Martens, senior vice president in charge of battery and fuel-cell systems, said both Freudenberg and its Japanese partner, NOK, began fuel-cell research in the mid-1990s.
Without divulging names, he reports Freudenberg supplies sealing-related products to all major FCVs on the market. That could include, although unconfirmed, the Toyota Mirai, Honda Clarity Fuel Cell, Mercedes GLC F-Cell and Hyundai Nexo.
Meanwhile, Freudenberg has supplied more than 800 cell seals and manifold gaskets on each of 13 fuel-cell buses operating in the northern California city of Oakland.
The new venture is different. Freudenberg intends to make every component of the fuel-cell stack in-house, including the catalytic membrane and gas diffusion layers.
The supplier has set a late-2019 target to have a fuel-cell stack ready for the market, initially producing 30 kW of power but scalable up to 60 kW, 90 kW and higher, although management is looking out to 2023 or 2024 to see meaningful returns.
In the lithium battery field, it plans to build upon the foundation laid by XALT Energy, the former Dow Kokam, which opened a 400,000 sq.-ft. (37,161 sq.-m) plant in 2012, later expanded to 460,000 sq.-ft. (42,735 sq.-m), with 700 MWh capacity, only to lose a reported $1 billion contract with a bus manufacturer in China for reasons that constitute a clear barrier to trade.
The supplier, although meeting China’s GB/T or “Guóbiāo tuījiàn” quality standards, was not included on the government’s list of certified manufacturers – only Chinese-owned companies qualify – and thus could not receive subsidies, putting it at a substantial cost disadvantage with domestic producers.
XALT’s lithium-titanate oxide or LTO cell technology boasts specific power of more than 3,500 watts/kg measured at 50% SOC, 10-second pulse and 86°F (30° C). Cycle life – tests are ongoing – is expected to be in the tens of thousands at fast-charging rates.
Battery cells are packed in expandable casings or pouches.
So far, XALT has named two customers on its website: New Flyer of America for 10 commuter buses, five each to be put in service in Portland, OR, and New York City and, separately, Williams Advanced Engineering for Formula E racing cars.
In September, the U.S. Advanced Battery Consortium awarded XALT an advanced engineering contract valued at $4.6 million to develop a 12V stop-start system using its LTO chemistry.
For both its lithium battery and fuel-cell technologies, Freudenberg believes trucks and buses, more generally heavy-duty vehicle applications, have excellent potential.
How big does Freudenberg expect its new businesses to grow by 2025? “Our aspiration is significantly above €1 billion ($1.1 billion),” Martens says.
