How will Webasto capitalize on the move to EVs?
Our decision to go into this area, which we call electromobility solutions, came at the right time. We are seeing strong orders for our products, which helped us double sales in this area last year. Despite major current challenges, we continue to systematically expand this area, which is now the second strong pillar of our business after roof systems. Above all, the business for our batteries and electric heaters is really taking off. In the first quarter of this year, incoming orders for our e-mobility business exceeded orders for our roof systems and our heating and cooling systems divisions.
What have been the key wins?
In addition to two large-volume projects for Hyundai-Kia passenger cars for 68.7-kilowatt-hour and 50.9 kWh battery packs, which we will build at our plant in Dangjin, South Korea, we received our first battery order from a German automaker at the beginning of the year. We will add a new plant in Slovakia to help us meet this order. The business has huge potential. By 2025 at the latest, we plan to reach the sales of 1 billion euros. But that is dependent on us having the financial capacity and the human resources to keep expanding that business.
How will Webasto capitalize on the move to autonomous cars?
A key product for us is our roof sensor module, which integrates lidar, cameras and radar sensors in the roof that help enable autonomous driving. We demonstrated the technology at the 2019 IAA in Frankfurt and now we have received our first orders for the system. The advantages of this solution are that being positioned on the roof provides a wider overview of the area around the car and if there is an accident it is less likely the sensors will get damaged than if they were in the bumper.
How has the war in Ukraine impacted Webasto?
We lost Russia as a market for our fuel-operated heaters, and some customers temporarily reduced production at the beginning of the fighting because their supply chains had been affected. We also have some suppliers in the Ukraine that were able to continue delivering to a limited extend. Moreover, we found other solutions to cover our needs. Overall, the consequences of the war have been manageable for us so far.
What alternative solutions did you find?
We still get parts from Ukraine now. We built up stocks and we have added backup suppliers outside of the country in the event that our suppliers there cannot produce because of the war.
Are you concerned about de-globalization?
I believe in the free market. The more this gets hindered by tariffs, duties and taxes the more expensive everything gets. Nevertheless, this has become a reality given the current geopolitical situation. As a result, things are getting more and more regional. Therefore, we have to make our regional businesses as independent and cost efficient as possible. Overall, Webasto is quite independent because we produce in the market for the market, and we mainly purchase in the market for the market. There are, however, still some components that are shipped long distances. Therefore, we have to decide whether it makes more financial sense to continue doing that or to find an alternative supplier in that region. We also have to look at this from an ecological sustainability perspective, asking ourselves whether transporting goods over very long distances makes sense. This could lead to a totally different value-added structure in the future.
How has Webasto offset the risks and vulnerabilities from raw materials?
One way is that we try to avoid using rare earth materials in our products. When it is impossible to avoid using a raw material with a widely fluctuating price we try to make sure index-based pricing is used to help protect margins and reduce re-negotiating deals when prices are volatile. This will need to be applied to more materials in the future.
How are negotiation going with automakers?
It's always a challenge to discuss prices with our customers, but there is a certain level of understanding that there is a necessity to somehow support us as we try to manage the rising inflation. We are progressively finding good solutions despite challenging times for both parties.
How does COVID-19 continue to affect the business?
I would say it's not an everyday topic of discussion anymore because it has become part of our normal working environment. But even so, I believe that we all are suffering from a form of long COVID because the entire economic system was thrown off balance by the pandemic and things have not returned to normal. For example, the Czech government decided non-Czech citizens had to leave the country during COVID. As a result, we lost a lot of employees because they had to return home, where they found new jobs. We had to start with an entirely different crew at our plant, which was like opening a new business. In addition, we are still trying to find a balance between work from home and coming into the office, which is having some impact on the overall performance of the company especially in regards of creative or problem-solving processes.