Member of the Board of Management for Technical Development, Škoda Auto a.s.
A coffee with Johannes Neft from ŠKODA
Powertrain revolution here, new regulations there. The transformation of the automotive industry is, above all, a sustainable ...
Transcript (17 segments)
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Interviewer0:00
The IAA 2023 in Munich is the industry meeting for the automotive industry, but it was even more exciting for me because I had the opportunity to meet the development board member of Skoda, Dr. Johannes Neft, and I'm talking with him about the development of the brand, electrification, and what the powertrain transition and digital transformation mean for a manufacturer like this. You may have wondered why there's completely different music here; it's a different format I'm calling 'Auf einen Kaffee' (Over a Coffee). I used to love the 'Auf eine Zigarette mit Helmut Schmidt' format, and since we met in Skoda's media lounge with that classic coffeehouse atmosphere in the background, I thought we'd name it that. I'll do this regularly, talking with interesting people from the automotive industry and tech companies to look behind the scenes. This episode is sponsored by itemis AG from Lünen, a hidden champion—though not so hidden anymore. They still have open positions and are one of the best employers in the Mittelstand. If you want to help shape the future of mobility and IoT, check out www.metachelas.de or itemis AG's website or LinkedIn. If you want to give feedback, leave a voice message at t.ly/hallo (max 90 seconds). Now, I've downloaded some copyright-free café jazz music, which you can enjoy while I talk with Johannes about what's on Skoda's roadmap. The IAA hasn't just started—there were media days before—but we're sitting here in the heart of Munich in Skoda's Media Lounge, and I have Johannes Neft opposite me. We'll talk about Skoda, but Johannes, perhaps you can briefly explain to our listeners what you do at Skoda.
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Johannes Neft3:22
Hello from my side too. I am responsible at Skoda for the entire development scope, development and also a bit of research scope. That means for the most part we develop all body-in-white scopes for Skoda, but not only for Skoda—for example, the current Passat, the new generation, was developed by us on behalf of Volkswagen. We are also responsible for individual modules. Soon we will take over an important engine module family for the whole world for the group. We also have individual modules we are responsible for, and individual markets like India or ASEAN, for which we partially develop vehicles for the group. So one can say that Skoda's position within the Volkswagen Group has been somewhat upgraded in recent years. We have gained tasks, especially in technical development, but not only; as a brand we have received additional responsibility, for example for the ASEAN markets and India. And it's fair to say we are getting more and more responsibility, and we try to live up to it and work it off as well as possible.
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Interviewer4:54
Why we are sitting here: I had the pleasure, I must say, in June of driving nearly 1000 km with the Enyaq Coupé iV80 through southern Germany and Austria. It was exciting to see because it's not a small vehicle, although we chose the coupé variant. We averaged a consumption of 12.9 kWh over those 900 km at an average speed of about 80 km/h, and we won the efficiency award at the ID 1000. Then I spoke with your colleagues, and they asked if I was at the IAA and offered the opportunity to talk with you. A lot has changed at Skoda in recent years regarding the electrification of the portfolio, and the iV80 is, I think, a wonderful example of how successful that has been.
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Johannes Neft5:56
That is the case because, like everyone else, we commit to the goals of the European Union and to sustainability goals. We not only commit to external goals, but we also believe it is right to enter electrification. The Enyaq and the Enyaq Coupé are our first models. We will make more models in the coming years, and we want to be successful not only in the A segment but also in the A0 segment with electric vehicles. Electrification is also an opportunity for the brand to open up new target groups. Electrification is always an opportunity, and it is a different opportunity in different markets. Even in India and ASEAN, we will enter electrification much faster than many think. Two years ago, no one thought electrification would play a role in India, but it is coming faster. Why? Not because of sustainability, but because total cost of ownership is a big factor. Electricity is extremely cheap in India, making even slightly more expensive electric vehicles attractive to customers. They are already being bought in larger numbers. That will be an opportunity for us to enter the Indian market with electric vehicles. We are working on it; the concept is not yet finalized. We will certainly not just transfer European technology one-to-one; that won't work. We are thinking about how to do it best. Very exciting.
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Interviewer8:05
There are corresponding challenges. You just mentioned the classic challenge of a completely new market with special requirements and infrastructure. But it's also about supply chains and value chains changing completely. There are goals you set for the entire group: when will we be CO2 neutral or climate neutral? How are we working towards these goals? That means a lot has changed in recent years, especially when coming from a classic combustion engine portfolio.
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Johannes Neft8:46
Yes, a lot has changed. I must say that initially laws played a big role, but now we see that sustainability is becoming a topic we want to promote out of our own commitment. It starts with building a new engine test center where we use the complete waste heat from the test benches, and we also use the connected gearboxes as electricity generators. We try to become sustainable everywhere: we use more photovoltaics, we try to generate heat not from gas but from other electricity sources, we green facades. These are small things, but they show that the sustainability mindset goes beyond the product and into our work. On the other hand, the big topics are the electric vehicles that allow us to use sustainable energy and improve the CO2 balance.
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Interviewer10:07
For someone in research and development, this must almost be a gold rush feeling, right? So much is happening and technological leaps are accelerating.
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Johannes Neft10:19
That is indeed the case. It's not just the powertrain that is in transformation, but also the whole topic of digitalization in the vehicle, functions in the vehicle. We are currently going through an extreme transformation in development. To illustrate: a few years ago, we developed component-oriented, hardware-oriented. There was a designer for a component, and he could develop that component largely alone, with coordination meetings. It went into the vehicle, had a specification, and it worked. Now we are in a world of functions. Electric vehicles have many new functions, like charging functions, and we have started to bring many additional functions into the vehicle. Developing a function can no longer be done by one person; multiple people within a department need to communicate, and even cross-departmentally. When we move to autonomous driving, we enter a world of systems, and systems can only be developed cross-departmentally. To go from hardware development to function development to system development, we need new processes, new IT tools, and different competencies. Coming back to your question about gold rush: yes, it is a gold rush. On one hand, it's super exciting for someone who wants to do technology. But we must not forget that it is also a huge mountain of work that we have to do in parallel, a huge amount of additional qualification for employees, and many new processes to install. So we have a lot to do, and I find that very exciting.
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Interviewer12:28
You explained how holistically you approach sustainability and transformation, from generating electricity at sites to building circular systems and greening facades. That makes change visible. Then moving to the challenges of digitalization and the powertrain transition, you mentioned something very important: you need new talents to handle this development. Could you say that this digital transformation and powertrain transition also change the company, the processes, how we approach the job market, and that we are opening up to new target groups, creating entirely new departments and areas with a different spirit than 15 years ago?
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Johannes Neft13:31
We will definitely need new competencies, different competencies. But we must not lose what we are very good at as established OEMs in hardware. We will still need good chassis, good steering, efficient body structures, and nice Simply Clever ideas that are hardware-driven. But we also need top-notch Simply Clever ideas that are function-driven. We have to take the idea that we as Skoda strongly pursue—focusing on usability, always adding a little extra that surprises people, like the ice scraper in the fuel filler flap or the umbrella in the door panel. Now we need to move from hardware-driven ideas to function ideas. For example, we need a dog mode for the vehicles, using existing sensor functions and controls to generate additional ideas that help the customer. For that, we need new competencies. We need to think differently, we need a different spirit—not change it, but expand it. We need to work more agilely, faster, especially when bringing software functions into the vehicle. We cannot use the same development process as for hardware. Anyone who has worked with software knows that software development is not something you start, let sit for half a year, and then look at the result. You have to work daily in sprints and loops, improve, fix bugs, and make the software customer-ready. These are the things we need to learn, and we have already learned a lot. I see that we as a group are making progress, moving forward. That is the big challenge for all established OEMs, not just Volkswagen Group.
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Interviewer16:09
Yes, but also a huge opportunity because ultimately, through features and services, software provides a distribution channel for future services and monetization opportunities.
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Johannes Neft16:29
Yes, there are definitely new opportunities. We need to take the functions we have developed for the car and bring them into connectivity. The best example is that everyone expects to be able to turn on the auxiliary heater via the car app, open doors, etc. So we are moving out of the car and need to put these functionalities into an app that can be operated from a smartphone, and it all needs to be seamless, even with an iPad, all the way to ordering the vehicle. That's a huge range we are working on.
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Interviewer17:16
I find that fascinating because if we had had this conversation 10 years ago—just 10 years, and we know how fast they flew by—we could not have imagined that the IAA 2023 would be in Munich, and what vehicles we see on the market today. I have a very open question: what would interest you for the next decade? If you say IAA 2033, assuming it's in Munich, what vehicles do you think we will see from Skoda? Without revealing anything, because development cycles mean you'll have two generations again.
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Johannes Neft17:53
I won't reveal anything either, but what I expect and where we need to work hard is, first, what I called seamless—the connection of different communication forms inside and outside the vehicle will become standard. We will definitely see a big leap in simplified operation. We've talked about developing new functions, but these functions must be easy for the customer to use. We are learning a lot in that area. I am convinced that in 10 years we will not have fewer functions, but the customer will be able to operate the car much more easily, perhaps even without noticing it—without having to turn something on or take a conscious action. I expect significant progress in usability. I find that super exciting. I wrote an article about ambient computing about 10 years ago—things you don't see but that just work, with predictions that the computer or platform will make decisions and provide what you need at that moment. I am very curious to see what 2033 looks like, regarding the IAA location, which manufacturers are there, and what you will have at your booth.
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Interviewer19:49
At your booth. Johannes, thank you very much for your time.
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Johannes Neft19:51
Yes, thank you.
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Interviewer19:55
Now I'm curious what you think of this format. And if you ever want to hear about a particular company and how they got to where they are and where they want to be in 10 years, just send me a short voice message at t.ly/allow or contact me via metachel or on the website www.mdacheles.de or on the LinkedIn newsletter. Thank you very much for listening, see you next time, and ciao.