Top executives of the Bosch Group reported this week on the financial impacts of the pandemic and significant activities in Germany and North America aimed at turning COVID-19 challenges into mobility opportunities.

At a global level, the company achieved a positive result in 2020 despite the coronavirus pandemic and had a successful start to the first quarter of 2021. However, it expects another challenging year, primarily due to ongoing pandemic risks.

To address what it calls the profound technological and ecological changes currently occurring, Bosch is combining the internet of things (IoT) with artificial intelligence (AI) in its new AIoT initiative, and it is concentrating on electromobility.

“We are one of the winners in the transition to electromobility, and we are significantly expanding our software business by tying in artificial intelligence,” said Dr. Volkmar Denner, Chairman of the Board of Management of Robert Bosch GmbH.

Bosch leaders believe that global efforts to combat climate change are boosting opportunities for electrification—and “green hydrogen.” Electrification offers the company—a conglomerate of businesses from appliances to tools—new opportunities in several business areas since it requires “solutions not only for electric driving in cars but also for electric heating in buildings.”

In powertrain technology, the company is establishing electromobility as a core business. That includes fuel cells that convert hydrogen into electricity. Bosch is developing both stationary and mobile fuel-cell solutions. From 2021 to 2024, Bosch plans to invest $1.2 billion in fuel-cell technology.

 

Semiconductor expertise: a competitive advantage

On June 7th, Bosch opened its 300-mm “wafer fab of the future” in Dresden in a significant example of the AIoT push that could benefit many of its businesses and customers. At roughly €1 billion, the new manufacturing facility is the biggest single investment in Bosch’s more than 130-year history. Its opening is all the more relevant given the current global chip shortage, especially for automotive.

The Dresden plant is said to be one of the world’s most modern wafer fabs, with highly automated, fully connected machines and integrated processes, combined with AI methods to make it a smart factory and an Industry 4.0 trailblazer. It is so important to the company and region that it was launched in the virtual presence of Federal Chancellor Dr. Angela Merkel, EU Commission Vice-President Margrethe Vestager, and at the event Saxony’s Minister-President Michael Kretschmer, Denner, and Harald Kroeger, Member of the Board of Management of Robert Bosch GmbH.

Production in Dresden will start as early as July—six months earlier than planned—with semiconductors for power tools. Automotive chip production will start in September, three months earlier than planned.

“Artificial intelligence is the key to further improving the manufacturing processes and semiconductor quality, as well as to achieving a high level of process stability,” Denner said.

That means that semiconductor products can go into full-scale production quickly, saving automotive customers the need for the time-consuming trials that would otherwise be necessary before the production release.

Without semiconductors, cars would not work, says Bosch.

In 2016, every new vehicle worldwide had an average of more than nine Bosch chips on board, in devices such as the airbag control units, braking systems, and park assist systems. In 2019, this figure had grown to more than 17. In the future, experts expect to see strong onboard chip growth due to driver assistance systems, infotainment, and the electrification of the powertrain.

With its wafer fab in Dresden, Bosch is responding to the increased demand for semiconductors.

“Semiconductors are the building blocks of progress. Electronic components equipped with chips from Dresden will make applications such as automated and resource-conserving driving possible, as well as the best possible occupant protection,” said Kroeger.

 

NA focus on electromobility and AIoT

In North America, Bosch ended its 2020 fiscal year with $12.3 billion in consolidated sales in North America, according to Mike Mansuetti, President of Bosch in North America, at a media briefing on June 8th.

“The COVID-19 pandemic had a substantial impact on our business, particularly in the second quarter of 2020,” said Mansuetti. “Our associates responded with great poise, agility, and creativity to help us meet the significant challenges we faced. As a result, we were able to rebound successfully in the second half of the year.”

Sales in North America were 15% below the previous year’s level due to the pandemic. However, Bosch’s broad diversification served as a stabilizing force, blunting the impact of the crisis on the region’s business results.

While the Mobility Solutions business sector suffered the effects of declining worldwide automotive production (even prior to the pandemic), demand for household appliances and power tools increased significantly, boosting sales in North America’s Consumer Goods business sector to $2.9 billion, a 12% increase.

“For the current year, we are optimistic about building upon the results of the second half of 2020 and the start of 2021, but also expect ongoing challenges due to industry-wide headwinds such as the semiconductor shortage,” said Mansuetti.

 

‘Technology neutral’ powertrain options

Despite the global economic challenges of 2020, Bosch continues to invest in North America across its portfolio as the company plans capital investments of about $360 million in 2021.

For its Mobility Solutions business sector, Bosch will invest more than $250 million in North American for 2021. At its Charleston, SC, facility, Bosch is ramping up production to support powertrain electrification as part of the company’s investment and growth in electromobility and respond to growth in its ongoing support of the internal combustion (IC) engine.

Bosch continues to offer its customers “technologically neutral” options for the powertrain with an enduring focus on increasing efficiency and reducing emissions. The Charleston facility expects to invest $80 million by 2023 to support these areas.

“We want to be the market leader for both battery electric as well as fuel-cell-powered electrification,” said Sujit Jain, President, Powertrain Solutions for Passenger Cars, Commercial & Off-Road, and Electric Vehicles, at the June 8th media event.

Toward that goal, over the last decade, Bosch has invested $6 billion in electromobility solutions—at a rate of about $600 million per year for the last 10 years. However, in 2021 the company will be investing $800 million in electromobility, a 40% increase over 2020. All of these investments are beginning to pay off for Bosch.

“Our sales revenue from the electrified powertrain business is growing at twice the market rate—at 40%,” said Jain. “Overall, we acquired over $22 billion worth of orders in electrification by the end of last year; $9 billion of those orders came just in 2020. We hope to achieve close to $6 billion in revenue from the electrification business by 2025 and achieve a breakeven a year earlier by 2024.”

Jain and his Bosch colleagues believe that no other company is more broadly positioned in e-mobility—from e-bikes to electric trucks. Their approach to electrification is to be a systems provider, complemented by a comprehensive portfolio of components, to offer all the crucial elements that are needed to make electrified powertrains from a single source.

Jain says that heavy-duty long-haul trucks are a good starting point for hydrogen fuel cells “because batteries big enough to provide sufficient range would be huge in volume and weight.”

Bosch is investing heavily to develop hydrogen fuel cell technology—to the tune of $1.2 billion over the next three years for both mobile as well as stationary applications. By 2023, Bosch is looking to produce the entire fuel-cell stack and the balance of plant components including the fuel cell power module assembly.

“Our fuel cells will enable a range of more than 500 mi with refueling times less than 5 min for heavy-duty long-haul trucks,” said Jain.

 

Striking a balance

In the U.S. market, Bosch is expecting the BEV (battery electric vehicle) market share to grow from around 2% last year to 30% by 2030. The rest of the vehicles in that timeframe will still be powered by an internal combustion (IC) engine, whether in a “pure” IC engine or as part of a hybrid powertrain.

“These [IC] engines will need to be extremely efficient and also will need to comply with the emission regulations,” said Jain. “Therefore, we must find a balance. On the one hand, we will need to come up with technology solutions for IC engines, and on the other hand, we need to continue to invest in electrification.”

He reminded the media that IC engines are in many applications—from passenger cars to trucks, construction and mining equipment, stationary and backup power supplies, and in hospitals and data centers. Some of those applications will continue to be well-served by IC engines.

“In summary, I think in the U.S., IC engines will be around for a very long time to come,” said Jain. “And for as long as is required, we have a duty to provide technology solutions to run [those applications] at peak efficiency levels with the least emissions.”

To do that, he suggests technology solutions like synthetic fields, electrically heated catalysts to reduce the cold-start emissions, and hydrogen fuel injection.

“The key is we should not think of just one technology solution as the recipe for the future,” said Jain. “We have to bring all the possible technology solutions to the vehicle. We have to do everything that is possible to pave the way for a CO2-free society.”