Mahle CEO Arnd Franz believes India’s flex-fuel shift is proving more resilient and market-aligned than the EU’s all-electric mandate.
18 Jan 2026 | 266 Views | By Ketan Thakkar
As the global auto industry resets its expectations after years of inflated EV optimism, Mahle CEO Arnd Franz believes a new clarity is emerging. Europe’s all-electric push, once projected as an irreversible march toward zero emissions, is now confronting practical limits in infrastructure, economics, and consumer sentiment.
At the ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
As the global auto industry resets its expectations after years of inflated EV optimism, Mahle CEO Arnd Franz believes a new clarity is emerging. Europe’s all-electric push, once projected as an irreversible march toward zero emissions, is now confronting practical limits in infrastructure, economics, and consumer sentiment.
At the very moment Europe grapples with this reality check, India’s calibrated shift toward a multifuel strategy built around E20 is offering a template that Franz believes is more stable, democratic, and economically grounded. “I love this word 'reality check'”, he says. “I’ve used it for years. Some people realise what’s happening now, but still too few understand that it is a huge bet to move an entire passenger car market to just one technology.”
Europe’s EV Reality Check
Franz begins with the broader industry outlook. Years of projections had assumed the industry would climb past 100 million vehicles a year. Instead, global production has settled closer to 90 million. Europe, once expected to stabilize at 23 million units, is now hovering around 16 million. “People thought they would be buying cars like crazy,” he says. “Now we are not at 100 million vehicles. We are at 90 million. Europe is at 16 million, not 23.”
Arnd Franz, CEO, Mahle
The slowdown has exposed deeper structural issues in Europe’s EV-first strategy. Incentives have been withdrawn in Germany, France, and the UK. Charging tariffs have risen. Leasing costs are higher. Even premium OEMs have cut or delayed EV programmes amid softening retail demand. The used-electric market has become a symbol of the correction, with several European regions seeing price drops of 35 to 50 percent as first-generation EVs sit unsold in dealer yards.
Leasing companies are recalculating residuals, and financiers are growing cautious. “In the past, we had gasoline, diesel, mild hybrid, plug-in hybrid, serial hybrid,” Franz says. “And still the European Union has decided to move to BEV only.” The ecosystem, he adds, is not ready. The grid lacks sufficient green electricity. Raw materials remain concentrated in a few geographies.
Production costs for BEVs are still about 10 percent higher than those of combustion vehicles. The charging infrastructure is struggling to break even, especially in rural and lowtraffic areas. Downstream, dealers face inventory that refuses to move without heavy discounts. “And after 10 years of this effort,” Franz notes, “we are only at 15 percent BEV penetration. Regulation now expects us to go seven times that in the next 10 years. Very convincing, right?” The emphasis signals his skepticism.
India’s Pragmatic, Democratic Pathway
India, often painted as slow to electrify, has instead pursued a layered pathway that Franz sees as more attuned to consumer behaviour, cost structures and national energy priorities. “India is the largest democracy in the world. People vote. If you impose something on them, they may like it or they may not.” Rather than pushing one technology, India has let the market settle into its own equilibrium. EVs have taken off in two-wheelers and fleets.
Hybrids are gaining momentum in urban markets. CNG continues to serve cost-sensitive regions. Ethanol is anchoring a domestic energy agenda. Hydrogen pilots have begun. This diversity, Franz says, provides both flexibility and stability. “The Indian way forward is a very sustainable way,” he says. “It reflects the will of the people, which is a multifuel world. Hydrogen, electricity, biofuels.” He also sees India’s potential to become an energy exporter over the long term. “If we can take all this energy on the Indian subcontinent, you will have an energy surplus. You can export hydrogen and e-methanol.”
E20: A Brave Shift With Avoidable Noise
Franz is unequivocal in his praise for India’s decisiveness on ethanol blending. “It’s not only the right thing. India is setting examples for the rest of the world. Even Europe can take inspiration. Europe is overdue on E20.” However, he acknowledges the turbulence that accompanied the rollout.
India’s mass-market buyers are acutely sensitive to fuel efficiency, and without clear messaging, even a two or three percent drop in mileage can become exaggerated. “If you go from E10 to E20, maybe 2–3 percent,” he says. But social media amplified the anxiety because no authoritative explanation came early.
The bigger concern has been pricing. In Brazil, ethanol works because it is consistently cheaper than gasoline, and flex-fuel engines are calibrated for it. In India, the price advantage did not materialise at the consumer end. Fragmented state-level procurement, transport costs, seasonal fluctuations in sugarcane supply, and uneven distillery readiness complicated the economics.
Public-sector oil companies maintained pump prices, leading many consumers to suspect that the shift to E20 brought no tangible benefit. “Normally, ethanol is cheaper than regular fuel,” Franz explains. “Should be cheaper. But they haven’t passed it on. Indian Oil and Reliance may be pleased, because the margins have gone up. But it’s about social acceptance. Ethanol shouldn’t be higher at all. If it goes up, you’ve got acceptance problems. People are sensitive.
Their businesses depend on fuel costs.” He adds that India’s agricultural inefficiencies compound the issue. Poor storage and silo infrastructure result in a significant share of produce being wasted.
Reducing this loss could provide more raw material for second- and thirdgeneration biofuels without straining the food supply. “If you take this loss from 40 percent to 20 percent, that alone can economically justify more biofuel supply,” he says.
India as an Engineering Lab and Growth Engine
For Mahle, India’s multi-technology landscape is not merely a policy case study. It is a business opportunity. “We’re a little over 400 million euros today,” Franz says. “We’re going to 700–800 million euros. It must be above a billion euros. It must be.” The diversity of powertrain technologies in India makes it a unique engineering environment worldwide.
Solutions for ICE, ethanol, hybrids, EVs, and two-wheelers can be developed in parallel, tested in real-world conditions, and localised at scale. This mix allows suppliers like Mahle to co-develop thermal systems, electric compressors, filtration solutions, diagnostics, and battery health tools tailored to a spectrum of needs rather than a single prescriptive future.
“India is not only about market growth,” Franz says. “It is technologically one of the most interesting markets worldwide.” Global Tier-1 suppliers increasingly view India as a hub for engineering, validating, and producing technologies for multiple global markets at competitive costs.
A Message to Policymakers from Franz
As the interview winds down, Franz circles back to his central principle: transitions work best when built on choice rather than compulsion. “Let the best idea convince the customer,” he says. “Everything must go towards CO2 neutrality, but through multiple technologies. Socially and economically, it’s the best solution.” And in that multi-pathway future, Franz believes India is not just an exception but a guide. “India is setting examples for the world,” he says again, firmly. “Europe is overdue on E20."