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Transition trouble: German car suppliers struggle with electric shift



Suppliers to the German auto industry are struggling amid the electric transition
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After years earning bumper profits by producing parts for fossil fuel-powered cars, German suppliers to the crucial auto industry are struggling as the transition to electric mobility gathers pace.

While Germany is well known as the home of titans like Volkswagen, Mercedes and BMW, there are also hundreds of other companies in the country that form part of the sprawling auto sector.

They range from huge firms like ZF and Continental, to far smaller companies, making everything from spark plugs to heaters and exhaust pipes.

But as the industry speeds towards an electric future — the EU is planning to ban the sale of new combustion engine cars by 2035 — specialised suppliers in Europe’s top economy are struggling to keep up, experts warn.

German suppliers have lost nearly three percentage points of global market share since 2019, according to a study by consultancy Strategy&, part of the PwC network.

“The success of the past 20 years is at risk of being eroded in a short span of time,” it warned.

“In particular, Asian suppliers have made substantial gains by investing heavily, and aligning themselves clearly towards future growth in emerging technologies.”

Still, analysts say some of the larger players are navigating the transition better while smaller firms are most at risk.

– High energy prices, interest rates –

One company that has traditionally relied on fossil fuel-powered vehicles is Eberspaecher, whose products include exhaust systems and heaters.

But the firm, which supplies major car brands, has for some time been seeking to pivot to manufacturing more items for electric cars.

At a factory in Herxheim, southwest Germany, workers at a series of high-tech production lines manufacture heaters for hybrid and electric vehicles.

As well as heating the vehicle, they also help to regulate the temperature of the battery.

The family-owned company, founded in 1865, has been producing the devices for some years and over 10 million vehicles have been fitted with them — evidence, it says, of its successful transition to the new auto landscape.

“We see a vast growth potential with e-mobility in the global markets, especially North America, Europe and China,” Karsten Bolz, from the company’s electrical heaters business unit, told AFP.

He sounded relaxed about growing competition, describing it as a “normal part of the automotive business”.

“We have the right tools, we have the knowledge, we have the right technology,” he added.

Nevertheless, Eberspaecher, with over 10,000 employees worldwide, still depended in 2022 for 52 percent its revenues on the combustion engine.

And last year, while net revenues rose to around 2.7 billion euros ($2.9 billion), the company made a net loss of 94 million euros, compared to net profit of 21 million the previous year.

Elsewhere, the situation appears more alarming.

Local media abounds with reports of suppliers making job cuts, or planning to do so, and increasingly looking at shifting production overseas, where costs are cheaper.

Like other German manufacturers, car suppliers are being squeezed by sharply higher energy prices triggered by Russia’s invasion of Ukraine, and elevated borrowing costs following a recent streak of interest rate hikes.

Of an estimated 400 suppliers in Germany, about 10 percent could face problems, with some potentially going out of business, Ferdinand Dudenhoeffer, from the Center Automotive Research, told AFP.

“For small- and medium-size businesses with a heavy focus on combustion engines, it’s very tough,” he said.

– Asia gaining ground –

The Strategy& study shows several Asian companies rising up the global ranking of suppliers in recent years.

In terms of turnover, Chinese EV battery giant CATL was in second spot last year, with Japan’s Denso in third, and South Korea’s Hyundai Mobis in third.

The battle for dominance with Asian rivals reflects the bigger picture in the auto industry — Volkswagen, for instance, is seeing its market share eroded in China by a crop of homegrown electric car makers.

It’s not all doom and gloom, however.

The top supplier globally in terms of turnover remains Germany’s Bosch, whose huge array of products ranges from brakes to batteries, according to the recent study.

And with the transition moving at different paces around the world, industry players see an appetite for traditional combustion engine products for years to come.

At Eberspaecher, which has operations in Europe, Asia, Americas and Africa, revenues from combustion engines “are an important part of the business, and will stay an important part,” said Bolz.

“You still have demand in different parts of the world for clean exhaust technologies.”

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UAE sought to use COP28 to advance oil deals: report




COP28 climate change summit president Ahmed Al Jaber is also head of the UAE's state oil company and state renewable energy firm
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The United Arab Emirates planned to exploit meetings with foreign governments arranged due to its COP28 hosting role to strike fossil fuel deals, according to leaked documents obtained by the BBC.

The leaked briefing notes, obtained by journalists at the Centre for Climate Reporting (CCR) working alongside the British broadcaster, were prepared by the UAE’s COP28 team for summit president Sultan Ahmed Al Jaber ahead of meetings with foreign governments between July and October this year.

Leaked “talking points” prepared for a meeting with China said that ADNOC, the UAE’s state oil company, was “willing to jointly evaluate international LNG (liquefied natural gas) opportunities” in Mozambique, Canada and Australia.

Briefing notes prepared for meetings with Colombia, Germany and Egypt suggested that ADNOC “stands ready” to support each country develop fossil fuel projects.

The documents showed the UAE prepared talking points for meetings with 20 countries, including the United States, UK and Germany, on commercial opportunities for state renewable energy company Masdar.

COP28 president Al Jaber is also CEO of ADNOC and Masdar.

A COP28 spokesperson told AFP that the documents cited by the BBC “are inaccurate and were not used by COP28 in meetings. It is extremely disappointing to see the BBC use unverified documents in their reporting.”

The United Nations Framework Convention on Climate Change, the body responsible for the COP28 summit, which starts on Thursday, told the BBC that the “cardinal principle” for hosts was “the obligation of impartiality”.

Climate campaigners have raised concerns about the influence of fossil fuel interests at the talks in Dubai, noting Jaber’s role as head of an oil company.

In an interview with AFP on Saturday, Jaber defended the large presence of heavy emitting industries including the oil and gas sector.

“Everyone needs to be part of this process and everyone needs to be held responsible and everyone needs to be held accountable,” he said.

COP28, which will be held until December 12, is due to be attended by 167 world leaders, including King Charles III and Pope Francis.

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Alberta proposes more open definition of software engineer in new bill

Tech companies and the APEGA feud as the Alberta government prioritizes tech growth



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Software engineers build technical programs — but not unless they’re regulated and certified. At least, that has been the stance of the Association of Professional Engineers and Geoscientists of Alberta (APEGA). 

Tech companies in Alberta like Neo Financial and Helcim recently petitioned to Premier Danielle Smith for a more open interpretation of the job title “software engineer,” as they were faced with lawsuits over job ad verbiage from the APEGA. 

It seems the government listened. 

Fast forward to November 2023? The Government of Alberta has proposed changes to legislation, specifically the Engineering and Geoscience Professions Act, to open up the legal definition of software engineer, as many tech companies use the title without actually seeking a professional engineer’s professional designation or certification. 

The proposed changes fall under the new Bill 7, which has generated approval from the tech industry

“This is an important development for the innovation sector in the province and will give companies and their employees the freedom to use titles that have long been universally accepted in the tech industry.”

  • Sam Pillar, Chief Executive, Jobber

However, the APEGA sees the initiative as a threat to public safety: 

“Title protection is vital to preserving public safety and maintaining high standards of practice and ethics.”

  • Jay Nagendran, Registrar, APEGA

Sure, tech companies could retitle job descriptions to “software developer” instead; however, studies show that these job ads receive significantly less applicants and interest than those titled with “software engineer.” The main goal? Supporting the tech industry in attracting and retaining top talent.

Experts predict similar issues will arise in the ever-evolving tech industry. For example, growing popularity of generative AI like Chat-GPT will create a demand for “prompt engineers” — see the dilemma? The legislative changes (if passed) are thought to foster tech company growth, improve the economy, and reduce red tape. 

Learn more about the proposed bill here.

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Nissan accelerates UK electric car production




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Japanese auto giant Nissan announced Friday it would invest up to £2 billion in UK electric car manufacturing, which the government touted as a sign of confidence in the sector.

Nissan said it will produce electric models of two best-selling cars, Juke and Qashqai, at its facility in Sunderland, northeast England, which is its biggest factory in Europe, building on UK net zero plans to switch away from dirty fossil-fuel vehicles.

The carmaker will plough £1.12 billion ($1.4 billion) into its UK operations and wider supply chain for research and development and manufacturing of the two new models, it added in a statement.

That will also spark further investment in infrastructure projects and the supply chain, including another electric car battery factory, bringing total investment to as much as £2 billion ($2.5 billion).

Nissan’s investment will support its UK workforce of 7,000 employees — and 30,000 jobs in the nation’s broader supply chain.

– Carbon neutrality plans –

“Exciting, electric vehicles are at the heart of our plans to achieve carbon neutrality,” said Nissan President and CEO Makoto Uchida.

“With electric versions of our core European models on the way, we are accelerating towards a new era for Nissan, for industry and for our customers.”

Uchida declared in September that there was “no going back” on the group’s electrification plans as it aims for 98 percent of European sales to be electric vehicles by 2027.

The news comes as Britain looks to take a leading role in the production of electric cars as companies and governments shift away from high-polluting automobiles.

The UK government confirmed Friday that it has awarded £15 million of funding towards a collaborative R&D project for zero-emission vehicles led by Nissan.

“Nissan’s investment is a massive vote of confidence in the UK’s automotive industry, which already contributes a massive £71 billion a year to our economy,” said British Prime Minister Rishi Sunak, who will attend a formal announcement at the site later on Friday.

“This venture will no doubt secure Sunderland’s future as the UK’s Silicon Valley for electric vehicle innovation and manufacturing.

“Making the UK the best place to do business is at the heart of our economic plan.”

Finance minister Jeremy Hunt pledged Wednesday in his budget update to invest £4.5 billion in strategic sectors including the auto industry.

– Net zero targets –

However, earlier this year Sunak softened policies aimed at reaching net zero carbon emissions by 2050, delaying a ban on the sale of petrol and diesel cars by five years to 2035.

That still means however that the country’s largely foreign-owned car manufacturing sector must switch to producing fully-electric vehicles.

Nissan had previously warned that a no-deal Brexit would threaten the Sunderland site, but committed to its future after the government agreed a trade deal.

Yet the nation’s car industry has warned that automakers will soon face a damaging 10-percent hike in customs duties on electric cars crossing the Channel.

Britain left the European Union in 2021 after clinching a last-gasp free trade agreement which removed tariffs on cars.

But under the deal, from January 1, 2024, at least 45 percent of the value of car parts must originate from Britain or the European Union to be exempt from customs duties.

That hits electric carmakers because their batteries often originate from China, despite UK efforts to establish production.

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