BOXBERG, Germany – Global automotive supplier Robert Bosch has made a name for itself as a systems integrator rather than a seller of individual, low-margin parts, but the company soon may get into the business of making arguably the commodity of the future: batteries.
Stuttgart, Germany-based Bosch already supplies battery systems, including motors and inverters, to more than 30 projects by global vehicle manufacturers such as Porsche and Fiat. BMW also has been a buyer of its kits.
But Bosch is ready to bring a second-generation high-voltage system to market, and the parts-making heavyweight thinks it can offer a more attractive and inexpensive electrification solution if it takes on cell production, too.
“We will decide by the beginning of next year,” says Michael Budde, managing director-Battery Systems at Bosch.
Budde says Bosch is taking an eyes-wide-open approach to its analysis. The supplier thinks it has a good view of future cost and pricing levels for batteries and, at the same time, is aware those metrics will define the success of battery-electric vehicles in the future.
“The cost pressures are high,” he tells WardsAuto on the sidelines of a deep dive into the Bosch automotive portfolio at its testing facility here.
It is a question of whether Bosch can discover a technical breakthrough, as well as new manufacturing capabilities, to double the energy density of current lithium-ion batteries and halve their costs by the end of the decade.
“Then we can say it really makes sense to enter that business,” Budde says.
A January 2017 report from the global consultancy McKinsey says battery costs have plummeted 80% since 2010 to a 2016 estimated pack cost of $227 per kWh to make a 60-kWh pack a $13,600 component, excluding motors and inverters. That is the battery energy of the Chevy Bolt EV from General Motors, a car that costs $30,000 after full federal tax credits.
McKinsey forecasts C- and D-segment battery-powered cars in the U.S. will not reach price parity without incentives compared to those using internal-combustion engines until 2025-2030, when it expects battery-pack costs to fall below $100 kWh.
Budde does not disclose the sort of cost minimum Bosch would consider sufficient to enter cell production, but says it does not see an industry partnership as a suitable means to mitigate expenses. Delphi, a key Bosch competitor, has expressed openness to partnering in electrification, although even its courtships appear limited to batteries for its 48V mild-hybrid technology.
However, a partnership in China, where foreign manufacturers are required to link up with a local producer could be an option, Budde says. Not an OEM, though, he adds.
“We want to remain an independent supplier,” he says. “Nevertheless, we think the main part of the decision is to find a breakthrough on the technology and manufacturing. The investment part is big, of course, but money generally is available. There is money to invest.”
Bosch invests €400 million ($468.2 million) annually on electrification.
“The question is how you differentiate yourself,” he says.
Differentiation has been Bosch’s approach to emerging 48V mild-hybrid technology. The technology, which Volkswagen luxury brands Audi and Bentley ushered to market last year to electrically power the supercharger and adjustable suspensions of their range-topping SUVs, is seen as a key strategy to achieving tightening global carbon-dioxide emissions and fuel-economy standards.
In most installations, a 48V system swaps out the engine’s traditional alternator for a motor-generator backed by a small Li-ion battery. The system does not replace the vehicle’s 12V electrical architecture or lead-acid battery; instead, it provides power to components such as those on the Audi and Bentley. It also assists stop-start performance, cooling and could provide a propulsion assist for a reduction in CO2 emissions of 10% and a 20% boost in fuel economy.
France’s Valeo supplies parts to the VW system and has bigger ambitions in the segment. Germany’s Continental also is a big player and U.K.-based Delphi is ramping up its presence in the field. Delphi expects 8 million vehicles will be equipped with the technology by 2025. Europe is expected to be the major adopter of 48V, followed by China.
While Bosch might be late to market with its 48V technology, Budde says the supplier has built a better mousetrap. Unlike its key rivals, the Bosch system uses passive rather than active cooling, so the battery can be placed in a wider variety of places in the vehicle. It also eliminates the need for hoses and cooling fluid.
The battery case is composite, instead of metal, so at 15.4 lbs. (7 kg) it is lighter than the competition and more cost competitive, Budde says.
“We also are very good when it comes to electronics for batteries,” he says. “We understand battery-management systems very, very well and we have an intelligent algorithm to get the most out of the battery.
“We have been very successful in the Chinese market against Chinese competitors, on their own turf. It is going through the roof.”
Components for the Bosch 48V system are available, but it will not go into production as a complete unit for Chinese OEMs until next year at a projected volume of 10,000 annually. Broader market availability won’t happen until 2019, because, Budde says, requirements of Western OEMs are more diverse.
It is designed for vehicles with automatic transmissions exclusively, while a unit for manual-equipped models will come with the next-generation system.
Bosch also is betting big on electrified axles for larger-vehicle applications, where proven Bosch motor and power electronics and a newly developed transmission are integrated into a single, scalable housing.
“That is the future,” Budde says. “We are receiving very positive feedback, especially on the transmission.”
Comparable electrified axles offer a 5%-10% efficiency improvement, which is the design direction for the Bosch unit. It also is designed to be highly versatile, Bosch says, so the supplier can deliver a system tailored to an OEM's performance specifications and space requirements directly to the vehicle-assembly line.
Bosch has had a version of its eAxle in production with the Peugeot 3008 and Fiat 500e since 2012, but the new unit scheduled for production in 2019 fully integrates power electronics for the first time.
To accelerate its foray into electrified propulsion, Bosch recently combined its electrification business with its ICE unit. While the supplier has 10 years of history with electrified propulsion, Budde says the combination into a single Powertrain Solutions division will bring its expertise in that business to the same level as its injection group. It also will provide OEM customers with powertrain-related technologies from a single source.
