Carmakers face up to political risks

Adel Murad
Updated 11 November 2017
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Carmakers face up to political risks

Political risks facing carmakers in the next decade could exceed environmental pressures and may lead to drastic strategic changes in the industry. There are several examples of future political risks faced by car companies in the immediate future.
In Britain, exit from the EU poses grave risks to car companies operating from the UK. Some executives have been vocal about this risk, calling on the UK government to give assurances it cannot give at this stage. Aston Martin’s CEO Andy Palmer called for more clarity on “Brexit” while Didier Leroy, VP of Toyota, said recently: “We cannot stay in this kind of fog when we don’t know what will be the output of the negotiations.” Toyota has a plant in Britain that employs 3,000 people and intends to invest $317 million when the “fog” clears.
Meanwhile, Dieter Zetsche, Daimler’s CEO, said from Stuttgart that the policies of US President Trump are a risk for German carmakers. Trump is championing the protection of US carmakers and has criticized import of German cars to the US as “unfair trade.”
VW’s Seat is preparing contingency plans to move its headquarters from Catalonia if the political standoff with Madrid gets worse. This will affect 14,000 workers in Martorell, near Barcelona. Development of a new Seat SUV has been put on hold.
China, too, is imposing restrictions on car imports in efforts to support its emerging car industry. One of the measures taken by China is imposing escalating quotas for electric cars starting in 2019. This has compelled companies to invest heavily in an expensive technical leap with slim profit margins. Large profit margins in the Chinese markets are a thing of the past.
There are other risks facing the industry including the need to cut costs; demands for wage rises of up to 6 percent by workers’ unions; the danger of investing in the wrong technology and the huge investment needed to develop electric vehicles and autonomous driving.
Leaders of car companies are to be commended for chartering a viable future in these turbulent times.
• Adel Murad is a senior motoring and business journalist, based in London.
Email: [email protected]


Saudi Aramco seeks to overhaul engines and fuel amid electric vehicle hype

Updated 06 March 2019
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Saudi Aramco seeks to overhaul engines and fuel amid electric vehicle hype

  • Diesel has proven a key cause of health-threatening nitrogen oxide pollution
  • Saudi Aramco is working on gasoline compression ignition which mixes fuel and air more effectively prior to combustion

GENEVA: More efficient fuels and more sophisticated combustion engines are needed to bring down carbon dioxide pollution and to secure the long-term future of Saudi Aramco’s business, the company’s chief technology officer said on Wednesday.
“The growth of transport is greater than the growth of alternative drivetrains,” Ahmad Al-Khowaiter, Chief Technology Officer at Saudi Aramco told journalists at the Geneva car show.
The spike in electric car production in Europe will not offset an overall increase in global greenhouse gas emissions as emerging economies industrialize and buy cars with petrol and diesel engines, Al-Khowaiter said.
“Improving combustion engines is key to sustaining our business in the long term,” he said.
While carmakers have rolled out advances in combustion engine technology, the availability of sophisticated fuels has not kept pace, Al-Khowaiter said.
Diesel became an industry standard more than 100 years ago and has remained popular mainly because it did not evaporate quickly, making it safer to handle during storage and refueling.
“Rudolf Diesel did not consider fuels which evaporated easily. That was an accident of history,” Al-Khowaiter said, referring to the German founder of the diesel engine technology.
But diesel has proven a key cause of health-threatening nitrogen oxide pollution, which is blamed for respiratory diseases, forcing the industry to explore ways to cut emissions.
“We can now optimize the fuel and the engine at the same time. And we can bring it to market by adding another fuel pump at the gas station, just like it is done with higher octane fuels,” Al-Khowaiter said.
“We do the patents on the fuel development to enable the engines to be efficient,” the executive said.
Saudi Aramco is working on gasoline compression ignition which mixes fuel and air more effectively prior to combustion, resulting in lower nitrogen oxide and soot emissions and a 30 percent improvement in fuel economy.
The petrochemicals giant is also helping to develop mobile carbon capture technologies which could be built into next generation passenger cars for around $1,400 per vehicle, and help to cut carbon dioxide emissions.