In an erudite conversation with BASF’s vice-president — Automotive Business, Strategy and New Business, Brieux Boisdequin talks about BASF’s strategy for the BS-VI norms in India, electric mobility and the new disruptive technologies and its effects on the automotive industry.
What incremental opportunity does BS VI bring for BASF which is already present in the catalyst space?
The transition to BS VI is a big opportunity for BASF, simply because every vehicle will need to have at least two catalysts, and commercial vehicles up to 3-4 of them. So, the market size itself will be growing two to three times and in that BASF will be extremely well positioned to capture more market share.
Are you also expanding capacities and earmarking new investment towards meeting this increased demand?
Yes, we are in the process of expanding our facility at Chennai for automotive catalysts. This will be done in time for the transition that will happen early next year. We will only chalk further investments after assessing how the market develops over the next two to three years. As of now, we are preparing for all the business that has been awarded to BASF.
How is BASF ensuring sustainability across different product segments?
Sustainability is an integral part of BASF's corporate strategy. Everything that we do in terms of innovation must have a sustainability aspect attached to it and lightweighing is a good example of just that.
Electric mobility is another example where we have many research activities going on in the area of battery material technology as well as have an established business in lithium-ion wherein we have operations and sales business in countries like the US and Japan. We are now exploring opportunities in all major automotive markets around the world.
BASF is also a major player in automotive paints to OEMs in India. What innovative methods and sustainable solutions have you devised there?
A big focus area for us is reducing the time taken to paint and coat the car and also cutting down upon the energy consumption in the process. We call it the 'short process' and can skip multiple ovens and have layers applied wet-on-wet. This is definitely a big trend in the Indian market and BASF is again well positioned here. We started many years ago with BMW in Europe and this technology has been gradually adapted as per the local needs in India and implemented with our customers. We offer a wide range of water-based paints and primers and that's a big area of sustainability during the paint process.
Are you seeing increased OEM focus in adoption of these water-based, low VOC paint solutions?
This will also be driven by regulations, similar to the allowed limit of VOCs inside a car. There is a cost to such innovation and if it is necessary because of regulations, OEMs will adopt it but as of now there is no such strict VOC regulation at the paint shop in India. So, we find it difficult to implement such solutions, especially when it also requires a lot of investment at the customers' end and their paint shops will need to be updated with new equipment and paint products.
Are you also collaboratively working with the industry in generative engineering and coming up with lightweight designs?
Yes, we recently inaugurated what we call the Creation Centre in Mumbai. This is a space where we invite designers from the automotive industry to come and feel the different materials that we have in our library. They can also see a few applications where those materials have been used in the past and then we brainstorm together and come up with some new ideas which they can implement in their projects and thus, together we launch new products. This calls for a lot of material and design optimisation when moving from metal to plastic.
How crucial is Industry 4.0 for BASF and what technologies have you incorporated at the shopfloor level at your facilities?
It's a very important topic for us and is driven by the improvement of quality by virtue of quality management systems. It is also driven by our customers' requirements from us. A couple of examples include for instance traceability, wherein raw materials in the warehouse go to the production of the materials that eventually go in the finished goods delivered to customers and the entire supply chain is traceable. Another element is automation in our production where we reduce manual intervention and bring consistency in our production.
Being a chemical company, what are some of the sustainability measures that you are adopting at your facilities?
BASF, in our corporate strategy, has announced that between now and 2030, we want to grow without adding any CO2 emissions. This is a very ambitious target because we are investing heavily into new assets and new plants in India, China and also in other parts of the world. In order to achieve that, we will have to innovate in our manufacturing processes and also find ways to utilise renewable energy — solar and wind. In India, we are looking into putting a large investment that we have announced and we would like to be the first petrochemical site at Mudra (Gujarat) using and relying only on solar energy.
Once the EV ecosystem grows bigger, how do you see your coolant, fuel additives and emission catalysts business getting impacted?
Yes, fuel additives and exhaust catalysts are going to get affected but if we are talking about engine coolants today, there will be much more different coolant requirements to cool batteries in the future. That's where we are preparing our battery business to come in and be an alternative area for our exhaust business going forward.
So, what roadmap do you have to get prepared for a surge in volumes in demand for battery materials?
We don't drive the roadmap. We serve our customers, who have their own roadmap. So, we are ready in that sense; if a customer asks for battery materials today, then we have the capacity already installed on the ground and we can meet those demands. We can expand this capacity, depending upon how fast the industry is adopting battery technology and that will be driven by our customers as well as regulations.
Charging infrastructure is going to be one of the challenges that will restrain India in its journey towards full electrification. China is becoming a key market for e-mobility by virtue of the government pushing it very strongly by providing incentives for EVs and also by limiting the amount of internal-combustion engines.
Is Li-ion the final word in terms of battery technology or do you think it to be replaced by other cost-effective and better solutions?
Lithium-ion is not the end but it definitely is going to be the standard for the foreseeable future because there is still a lot of innovation potential in Li-ion batteries. Li-ion batteries have been used in smartphones for a while and also in EVs for a few years now and every year we come up with a new generation of Li-ion batteries. We will continue to do that and I don't foresee a significant change in battery technology in the near future.
With innovation, we will see cost coming down. As we get more energy density from a given battery size, there will be reduction in the number of cells required in a single pack and thus, all the key concerns of charge time and range can be resolved with more innovation in Li-ion technology.
Is India's approach of moving towards electrics a good idea when again we don't see any lithium reserves in the country for local battery manufacturing?
There won't be a complete 100 percent shift to electrics overnight. In the short term, it will only help to address the high oil import bills of the country, and also there are no lithium reserves that we know of in the country today. However, we will also see technologies like recycling, wherein recycled battery material from smartphone batteries will go into making Li-ion batteries for the transportation sector. So, we will see establishments of these 'urban mines' developing in India and that, according to me, will be great sources of lithium, even though there are no natural reserves. It will take time, but over due course, it will happen.
What is your growth outlook for this year from the Indian market?
I don't have a crystal ball and won't be able to predict a number for the outlook this year, but what we have seen is that the market has been in the downturn until now with the past few months especially being difficult. Hopefully, we are reaching the bottom of this and we know September onwards the festive season starts and typically it's a good season for the automotive industry as well. So, we hope to see an impact this year itself and then with the transition to BS VI technology, hopefully, the uncertainties will slowly be addressed and consumers will come back to buy cars again. But when it happens, is anybody's guess.
Does that put you in a fix as the RoIs on BS VI-related investments could get prolonged a bit?
BS-VI is a regulation-driven technology and, therefore, OEMs have no choice. So whoever is going to produce cars next year, will have to shift to different catalysts and products. As of now, we are not worried on our return on investments with regards BS VI.
(This interview was first published in the October 1, 2019 issue of Autocar Professional)