Although the Frankfurt Auto Show generated all manner of interest when the media was there and the new vehicles were unveiled with much pomp and circumstance, the show didn’t end when they left. Indeed, there were subsequent events held, like the one held by the VDA (the German Automobile Industry Association) and the Federation of German Industry (BDI) on the subject of sustainable industry.
And important observations were made by the man we once knew in the U.S. as the clever “Dr. Z.,” Dieter Zetsche (yes, he has a real doctorate), who is now the chief executive of Daimler AG.
Prof. Dr.-Ing. Has-Peter Keitel, president of BDI, noted, “When it comes to highly innovative and cost-effective solutions for climate protection, German industry is already leading the world.” Which, one could dismiss as rooting for the home team and, what’s more, not really all that key in the real world, where cars and trucks are bought and sold.
Which brings us to Dr. Zetsche, a man who knows a lot about the market. And a man who really ought to be listened to by vehicle manufacturers, as while declining gas prices are one thing, the issue of climate change—real or not, it really doesn’t matter because there is a critical of mass of people who believe that it is real, and consequently it has to be factored into any auto company’s plans lest it is interested in diminution as best, oblivion at worst—is one that will be more important as time goes on.
Zetsche said: “Taking the long view, the rule is: if you protect the climate, you will also protect your competitiveness. In the long term we will only stay ‘in the black’ by delivering ‘green’ products and services—and scarcely anywhere is this development currently intensifying as much as in the automobile industry.”
But Zetsche evidently understands that it isn’t a matter of just “going green,” that getting there is going to be both costly and difficult, especially as there are tremendous sunk costs associated with not only physical plant and equipment to make what is largely the status quo, but because it is going to take a different form of intellectual capital, in part, to understand that “mobility” not “selling cars and trucks” is going to be the way to the future.
Zetsche stated, “After a century of unchallenged dominance of the internal combustion engine, a ‘war of succession’ had begun, in which so far no single ‘successor to the throne’ can be predicted—particularly as the old ‘Regent’ will keep his scepter firmly in his hand for the foreseeable future. True, in the long term, hydrogen and electric power will replace diesel and petrol as energy sources. However, this changeover will not take place on a specific election day.”
In other words, the time of the old Regent is passing, but unlike an individual, this is going to be a case of transition, not a binary flipping of a switch.
He went on to say, “The fact that the technology diversity, which results from this, nevertheless has to be mastered simultaneously, is forcing us into a difficult balancing act: in order to be able to one day to replace the internal combustion engine, we have to sell it successfully today. Only then can we shoulder the immense investment in alternative power. But at the same time we have to invest in the future development of the existing technologies, which in the long term we intend to render superfluous.”
Zetsche understands that they’ve got to improve both gasoline and diesel engines today in order to move to the future, where those investments will go by the wayside. That take fortitude, guts, imagination, and commitment to the long-term.