ROAD TO IABM INTERVIEWS
“POLAND IS THE CENTER OF E-BUS AND BATTERY PRODUCTION IN EUROPE, AND MANY OPPORTUNITIES AND CHALLENGES LIE AHEAD”.
Interview with Maciej Mazur, President of the Polish Alternative Fuels Association.
Building business relations in the automotive sector is the main goal of the International Automotive Business Meeting, during which experts and representatives of the industry from all over the world will meet online on October 20th.
Maciej Mazur is the President of the Polish Association of Alternative Fuels (PSPA). PSPA integrates Polish and foreign companies belonging to many economic sectors: automotive, infrastructure, financial, transport, municipal, energy, consulting, legal, as well as retail and works for the development of low-emission transport in Poland. With almost 120 members, the Association is the largest organization of this type in Poland and the 3rd largest in Europe. PSPA works closely with governmental and local government agencies and monitors the EV market in Poland and Europe and changes in legislation, providing information, analysis and statistics that are key to business development by publishing them on the ORPA.pl portal. The organization publishes numerous reports and studies and is a partner or co-organizer of industry events in Poland. Moreover, it initiates its own events. In 2019 PSPA issued 20 substantive reports, including “Polish EV Outlook 2019”.
The automotive industry is facing a massive transformation, moving away from internal combustion engines to alternative drives. Poland is the 5-6th country in Europe in terms of parts and vehicle production. Is Poland prepared for this change?
No country is fully prepared, because we are talking about the biggest change in motorization in the last few decades. The name “new mobility” includes many aspects: sharing (e.g. carsharing), autonomous driving technology, connectivity area. Drives is one of the elements of progressive transformation. Poland must be part of this change. Climate neutrality – the EU’s goal is to achieve it by 2050 – requires that the transport sector changes. The Polish path to transformation will be longer than other countries. Currently, there are about 18-20 million cars on the national roads and their average age exceeds 10 years. Every year we register 500k new cars and as many as one million used cars. Unfortunately, this has negative consequences for the quality of air in Poland.
Does Poland have a chance to be a leader of these changes or rather will follow others? If a leader, in which areas?
In some areas we are at the top of the European list. In Poland are based companies from the e-mobility industry, which are often indicated as examples of good practice abroad. Our country has also a very strong position in the segment of zero-emission public transport. Electric buses in Poland are currently manufactured by Solaris and Volvo, these will soon be joined by MAN and Rafako: we are indeed the largest exporter of e-buses in Europe, and there are already approximately 300 such vehicles on Polish roads. This market is developing more and more dynamically. The second area where Poland stands out on the electro-mobile map of Europe is the charging infrastructure. One of the leading suppliers of charging stations on the European market remains Zielona Góra Ecoenergetics. In addition, there are production plants related to lithium-ion batteries located in Poland, both in terms of the final product and the components necessary to create such products. The first place should be given to LG Chem – a Korean concern, which launched a li-ion cell factory in Kobierzyce near Wrocław. This plant has a chance to become the largest such factory in the world, twice as big as Gigafactory Tesla in Nevada. The LG Chem facility attracted several other investors from all over the world to Poland. The country also has the potential to create technologies for autonomous vehicles – a very wide field for potential investments.
There is often exchange of information among Polish entrepreneurship and the ability to adapt to the changing of business conditions. What is your assessment of the possibility of switching to new tracks of a manufacturer operating in the moto industry?
This is the moment of change. If we get too fast, we will fall off the track, but we can adapt to the new reality and enter the turn perfectly. Ideally, this means to see electromobility as an opportunity, not as a threat. Companies producing components or servicing conventional vehicles should not assume that in 20 – 30 years’ time span their business will remain as it is today. But if they see the opportunities that the development of electromobility brings and meet the changes, they have a chance to continue to compete successfully in the market, especially as the transformation of the transport sector creates new, potentially very profitable business models.
So, if a manufacturer of silencers, catalysts or oil filters would ask you if he can sleep peacefully at night or rather start worrying about the future, then what would you suggest him?
It is very important to look at the future with great openness, to be aware that car industry is changing. Today, already exist about 7k fully electric cars on Polish roads, we assume that in a realistic scenario this number will increase to about 300k in 2025. This is the reason why I am cautious about addressing to the upcoming transformation as a “revolution”, which suggests that it will be a sudden change. The term “evolution” is more precise. Change in the transport sector is a process that will last for years. Let us remember that the prospect of 5 years is, contrary to appearances, a relatively distant one – electromobility started to recorder serious increases of production only about 10 years ago. Consequently, 5 years is a lot when we talk about changes in the transport sector. PSPA assumes that it will take more than 10 years to reach a million electric cars. Our analyses show that in 2030, about 900k such vehicles will be registered in Poland.
I think that then we will no longer be talking about “electric cars”, but simply “cars”. We will get used to this phenomenon, although still many vehicles will be powered by conventional engines. Manufacturers of components that are not useful for EV do not have to assume that their business will end soon. However, they should already now consciously consider further development strategies and be aware that some parts of their business will be unnecessary for EVs.
How do you assess the possibility of taking over parts of production, so far located in China by Polish suppliers? Coronavirus has shown that the supply chain has been suddenly disrupted, which has caused huge negative consequences in the creation of the final product. Can such kind of re-industrialization of Europe take place?
China has powerful cards on the table, and it seems that it will remain the most important player on the global market. No one will be able to compete with such a growing economy. According to forecasts, in 2030, more than 90% of the world’s electric buses will be in China. This country is developing the internal market and exports very dynamically. It is not a country that usually open to foreign products unless a foreign company starts local production. The pandemic began in China, which resulted in a crisis in the local automotive market, but it was the government of Beijing that took the fastest action to get back on track for development. As early as March, the extension of the electromobility support program was announced, so thanks to China we will talk about “million dollars” of EV sales. The Middle Kingdom is the first country to exceed the annual sales barrier of 1 million electric vehicles. However, the Covid-19 pandemic made it clear that an alternative to China as a production center for the automotive sector is needed. Global corporations must have a “back up”. Covid-19 accelerated the need to make decisions on local production locations for the main components of electric vehicles, i.e. lithium-ion cells. Today, 90% of such batteries come from Asia and this is a huge imbalance. Europe must prepare for the dynamic growth of demand for li-ion cells and hence projects such as the Northvolt plant in Sweden. The mentioned company also invests in Poland. We already know that it is not enough to “invite” Asian manufacturers to Europe, it is important that we take advantage of the right moment and strongly develop the competitiveness of European companies. Therefore the European Battery Alliance is being promoted in the European Union – companies producing vehicles in Europe should have access to batteries produced in Europe.
When we think of alternative drives, we often think of electric vehicles in simple terms. What role can Poland – as a production hub – play in popularizing hydrogen drives?
Hydrogen is also an element of the megatrend of electromobility. It is worth to clarify some terms – we distinguish battery electromobility and electromobility associated with hydrogen fuel cells. These areas can coexist and complement each other. Where battery electromobility has its limitations, e.g. in the segment of heavy vehicles moving over long distances, hydrogen should appear there. Whereas hydrogen may prove to be too expensive, e.g. in the passenger car segment, battery electromobility will develop more dynamically in this area. I see the use of hydrogen primarily in passenger vehicles used by fleets or, more broadly, in trucks. In Poland, interest in fuel cells is very high. The Ministry of Climate has announced works on the strategy of hydrogen technology development in our country. PSPA is a part of this project. Its aim is, among others, to develop optimal solutions in the area of hydrogen transport. Germany drew up a similar strategy in June 2020, so the topic of hydrogen has already gained considerable momentum there.
Most of the vehicles manufactured in Poland are exported. But how, in your opinion, will domestic demand in Poland develop? Is the Act on Electromobility and Alternative Fuels stimulating enough for fleet replacement in state institutions, local governments and companies?
Internal demand can be created. The Act on Electromobility and Alternative Fuels is the best example of this. It states that the fleets of state institutions, local governments and municipal companies should have at least 10% of green cars from 2022 and this share will increase in the following years. The same applies to infrastructure. By the end of this year a certain number of charging stations must be established in local governments. If they are not installed, an intervention mechanism will be activated that will force the extension of the infrastructure. This applies to each city with over 100,000 inhabitants. The law is a turning point between the time when electromobility was hardly mentioned at all and the time when awareness of the subject increased rapidly. In 2018, when the law came into force, it was difficult to find any provisions in Polish legislation that could stimulate the development of zero-emission transport. By the way, I regret that Polish regulations still do not provide for restrictions limiting the import of old used vehicles that produce a significant amount of harmful emissions. These vehicles are still coming into our country in significant numbers. Poland has not even introduced an ecological tax – in other countries the owners of the most poisonous vehicles are punished and those whose cars reduce the negative impact of transport on the environment are rewarded (bonus / malus system). The Act on Electromobility has not solved all the problems, but it has introduced certain facilitations. Users of electric vehicles can park free of charge in paid areas, use the buffets, and from January 1 this year zero emission cars are marked with green boards. Moreover, fully electric models have been exempted from excise duty. But the statutory benefits package is far from sufficient. The PSPA is creating a “White Paper on Electromobility”, within which we will develop concrete proposals for legislative changes that will foster the development of zero-emission transport and remove the most serious barriers. We propose, among other things, the establishment of the so-called “E-tariff”, limiting the fixed costs of operators of publicly available charging infrastructure, regulations facilitating the installation of private chargers or the deduction of 100% VAT on the purchase and operation of electric vehicles. We have defined 50 demands that we believe should be introduced to dynamize the national e-mobility market. The government announces an amendment to the Act on Electromobility and we hope that our demands will be considered.
How do you assess the chances of the Polish national electric car just presented?
PSPA believes that this is a very difficult project to implement, burdened with many risks. There are many significant doubts whether this project will be successful. Of course, we keep our fingers crossed for the Polish electric car to appear on the roads, but few similar initiatives have been successful. The example of Tesla’s success is so far isolated. Elon Musk was the first to introduce an electric car with lithium-ion cells to the market and was the first to make purchasers aware of the fact that EV can be not only ecological but also fast and visually attractive. Tesla has set new trends; its followers are already doing much worse. An open question is financing the Izera brand. The 4 shareholders of Electromobility Poland are state-owned companies from the area of power engineering, which have their own gigantic challenges, bringing with them financial expenses. Electromobility Poland speaks openly about the necessity of further financing of the activity in order to move to the next stage. This car is supposed to be “Made in Poland”, but while Poland is very strong in the production of components, no finished “Polish” vehicle is produced here. The first assumptions of the project were stating that only domestic suppliers would create a Polish car, but this concept has changed. Although the team of designers is headed by a Polish designer – Tadeusz Jelec – he represents the Italian company “Torino Design”. The technological partner is German EDAG Engineering. Before the production starts, it is necessary to have an appropriate chassis platform, to have a battery supply. What about the warranty? Service? After-sales activities? Even if the car is already in series production, it will have to deal with products of companies with many years of experience. This “know-how” cannot be bought, even with unlimited resources. Let me explain better: I know only one company that has managed to get into the game and has fought against the tycoons of the moto industry, the Tesla mentioned earlier.
You mentioned Tesla, which is already entering seriously into the polish market and is also investing heavily just outside Polish borders….
This proves that Tesla sees Poland as a prospective market. Our country is already the right place to develop zero- or low-carbon business and “new mobility” projects. Tesla has made its pricelist and configurator available in Polish, and the disclosed vehicle prices are relatively attractive in relation to those offered by the competition. Now we are waiting for the brand’s showroom in Warsaw. With the entry of Tesla, we can say that all globally important players have already recognized the potential of the Polish market. Only 60 km from the Polish border, in the Berlin region, another Gigafactory is being built and Tesla is looking for Polish employees. This should not be treated as a staff drain, on the contrary, it may bring benefits to our economy. We know such examples when specialists worked in large corporations and now develop other, often their own, local businesses. We see it as an opportunity for the Polish e-mobility market.
Thank you for the interview!
(The interview was conducted by Krzysztof Kowalski, electromobility expert)
About International Automotive Business Meeting
International Automotive Business Meeting (IABM) is an elite meeting of the automotive sector, which brings together industry leaders and experts, car manufacturers, the largest Tier 1 and 2 suppliers, representatives of European, Polish and local authorities, institutions and industry associations. The event is attended by over 300 representatives of companies from Poland, Europe and the largest global automotive markets such as China, Japan, India and the United States.
IABM provides independent, professional and reliable knowledge on the situation on the automotive market in Poland and worldwide. The objective of IABM is to provide a clear vision of the changes in the automotive sector in the near future and its impact on the supply chain and to determine how electromobility and advanced driver assistance systems will affect the development of the automotive sector in Poland and worldwide. IABM is a unique opportunity to gain a detailed insight into the automotive industry and new technologies associated with it, as well as build a network of contacts in the industry and acquire business partners.
During this year’s online edition of IABM each participant will have many networking opportunities .
In the previous edition of IABM, representatives of 270 companies took part in 5 Speed Business Mixer sessions and hundreds of B2B meetings. Many of the conducted talks resulted in later cooperation between companies.
Detailed program and registration for the online edition will be available soon: www.iabmevent.com
Organizers: Italian Chamber of Commerce and Industry in Poland, Katowice Special Economic Zone (KSEZ) and Silesia Automotive & Advanced Manufacturing Cluster, City of Dąbrowa Górnicza.
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