CTO of MAN: Dr. Frederik Zohm on Battery vs. Hydrogen Trucks - Hydrogen Podcast - Hyfindr

As we speak right now, the SOP is there and then we really sell this trucks. And only if society feels the pressure that something has cost, it tries to avoid that. Certainly here you can see that also there hydrogen might play a role. We have a complete revolution of our business anyhow in our hand. So there is really need for change.

Yeah. Thank you Björn for inviting me. Yeah, so we are here in the R and D headquarter of MAN in Munich, in Germany.

Yeah, me too. Me too.

Yeah, so I'm born in Lower Saxony, and then I studied mechanical engineering in Aachen, and I studied also economics in St. Gallen in Switzerland. And then started of with my professional life in different truck, bus companies. So started at Daimler where I also met you for a couple of years together. Yes. And then joined MAN in 2017. And since then, I'm here head of technology, CTO.

Yes. And these interesting times are already on since I joined here. Yeah. Yes. Because what we see now on the ground, like our trucks with new propulsion systems, either battery electric driven or hydrogen driven, certainly started when I also started here. So then the first concepts were derived and then we decided about what do we do for serious development. Yeah. So it's super special times. With the change, especially in the powertrain technologies, but then on top digitalization on processes, but also on our product performances in front of our customers, and then certainly on top of it, the automation. So there's a lot to do for us.

I would like to buy that, yes. Yes. So it's like, you're right. The one thing is to have the oversight, strategic thinking, looking around the next 3, 4, 5 curves and ahead of the years, especially as a CTO. But I think to a job always also belongs that you go to gamba, You need to go, when you feel there's pain, you need to go there, you need to go there personally. And that doesn't mean to micromanage, but it means to go where perhaps things don't work well, where things are stuck and try to release them together with the team, because it's never a one person's wonder or heating hand who helps to overcome a situation. But it's important, that when things get stuck, that you walk there, discuss with the team and try to resolve it in order to release pressure and then get focused back again and things back on track.

That I cannot tell you. There you need to ask the guys who are appointing board members. The supervisory board. Yes. What I can tell you is I believe in professional life is always, it's important to have this ability to think ahead, but have also your personal knowledge and really make a difference by the decisions you take. Being a board member I think is probably a very interesting, but also a very challenging job.

I think the best part is working together with a team and to have so many different inputs. So if you have to oversee a broad variance of discussions and you have great experts working in your team, you get a lot of insights and have the ability really to learn a lot. That is the enjoyable part of it. Second part to it is, at the end you can make the decision. And really change things by helping to come to certain decisions where you believe we need to go. And I think the harder part is, you have then also to burden the decision and have to take the consequences of your decisions. When then the supervisor board rethinks if they want to prolong your contract, yes or no. I once heard a very nice statement that said if you want to make a career in a big company, you make sure that you are never faced with your own decisions. Now you basically for until 2030, I think, you make decisions and you need to bear the burden of your decisions in a good way and in a bad way. But I think you want to deliver results, and this is probably special for a board member, right? This result driven leadership.

I would not put it on a single situation, but what I would put in is that at MAN we have this team oriented performance culture, which is basically our headline for leadership development. And this had these two aspects of leadership. The one is the performance culture, driving decisions and really know your business. And the other one is team oriented. Yeah. Don't put yourself above the team, but be part of the team and come and drive the team, to the right decisions. And whenever you see that, you see by speak up culture, raising your hand and saying: Hey! Dare to try. These are the things which really make differences in leadership, especially when we are in crucial waters when it's not so easy. Yeah. Also to contradict. Yeah. To have a little bit this, I always say in R and D, you need this report against red culture. Yeah. Dare to say for me, the traffic light is red. I believe we have here a problem. Take the end in court like you do in production and really, that is I think hard sometimes to do. It's more easy to give it a yellow and then just follow it up and see what happens. So there I think, you can see great leadership when you see those people and persons acting in a team oriented, but also performance driven way.

Yeah. I think the first thing in crisis is, you need to stay cool. Yeah. Your head, your brain needs to work. Yeah. So if the blood pressure is too high, avoid fear. Yeah. Avoid fear, you could say. Yeah. You really need to keep up the level of certain distance to the problem, perhaps in the middle of the problem. Yeah. And when you recall Fukushima, you don't only have a problem as a company, you have a problem for yourself and for your family and involved person. So it's a more obvious, broader problem. Yeah. Nevertheless, you need to handle all those differently. Problems which are caused by one incident and try to really stay cool. Stay ahead and find also those in the teams who don't overreact, but also say, yeah, also I never experienced a situation like this. I believe we do it like that. And for example, especially in Japan. And when I recall a little bit, that situation was super special because I had a great team. At that time I worked in procurement in order to really say we come, we meet the next days. We take care of our suppliers, we take care of our families, we take care of a lot of things. Then you really rely also on your team to have this ability to stay cool.

I think that.. A couple of years ago, we decided in our management team of R and D, that we do a reverses mentoring and really asked persons out of our team staff, persons to reflect for half a year on our leadership behavior. And that was one of our, and my personal greatest learnings. Yeah. They really speak up on your weaknesses and then then you can work on that. And they are outside of your reporting lines or they're in the team? In the team, yeah. But it's no direct reports. Yeah. And they reflect a little bit about our behaviors, how we solve solutions, how we debate. Okay. How we also behave in meetings. So a coaching in the organization? Yes, it's a coaching in the organization and that was a super strong learning for all of us. Okay. And especially for me. And I think one of those learnings is, sometimes you get in heated discussions and then we just had this crisis mode. Yeah. Also heated discussions always need the cool head and thinking, and not only emotions on the plate, because that will not solve the solutions if everybody puts in this full emotions. Sometimes it's needed in order to free up the space, but to take yourself a little bit back. Yeah. To listen more than to talk. These are the learnings. You take them out of these situations. And I think also your employees they don't want a machine as a leader. They know we are all humans. And I think you're a very approachable guy and I think this is also very important, that regardless which role you have in organization, that people can come to you and tell you? Yeah, that's for me the most important thing. Yeah. I'm appointed. I have people around me who trust in me and give me this role. But it's only for a certain period of time and only inside of the organization you have then this role. If you're outside of the organization, you don't have that role, or it's not anticipated that you have that role. So I think we are all humans. We can all behave like humans and this is the most important thing, that also the role doesn't change yourself in your behaviors too much from where you'll actually be.

We build goods for transportation purposes. Either we transport people when we build buses or we transport goods, then we build trucks. And when you talk about a normal truck, which we see, mainly on the highways, which is a four by two, they run a hundred to 200,000 kilometers, they consume in between 20 to 30 liters of diesel, meaning that it's roundabout in average, 30,000 liters of diesel per year. So it's a significant impact on our CO2 footprint in the world. And if you look only on our Scope three pollutions by CO2, it's roundabout 160 million tons, which is in between Netherlands and Austria. Oh, really? Just by the amount of trucks and buses registered under the bin of MAN. So there is really need for change, in order to reduce carbonization. Especially in transportation. Transportation has a big impact. Especially goods transportation long haul. And therefore we focus since a long time on these subjects. You could define different starting points. A long time ago we developed the first battery trucks. Then 2009 we operated with first hydrogen buses. We did it on the Munich Airport in 2012. We followed up then with hybrid buses. But at that point of time, I think also our customers were not really ready to use it. The sold amount of buses, for example, were pretty low. Acceptance was pretty low. That certainly changed also over the growing awareness about climate change and the impact of carbons on that climate change. And then we started off in 2017, 2018 with first battery electric trucks, which we first tried in a smaller series, kind of a b sample phase in Austria. And then later on, as we speak, then developed into series. And as we speak right now, the SOP is there and then we really sell this truck so everybody can now decide, of our customers, if they want to make a difference. For every product we have also a decarbonized powertrain ready.

I think it's twofold. It's never the one unique effort. It would be nice to say it's a pure environmental understanding of ourself that this is needed. That could be one answer, but certainly regulations is a further driver to do so. And when you really would like to change the transportation on a bigger scale, in a fast environment and in a faster time, then you need also regulatory support to really make it happen. When we talk about changes in drive trains, we not only change the product, change is needed. We need to debate also then about the infrastructure change. Yeah. Because currently we have fueling stations for diesel all around Europe. Yes. Enhancing, allowing basically these transportations. And now if we change then the drive train to different medias, be it battery electrics or be it hydrogen, then you need to change also that infrastructure and therefore you need more players for that change. And if you want to do that fast, then you need also regulations to enhance. It's also leveling the playing field more or less for everybody who is doing business, right? Yeah. But you could say that when you look on the car industry there, you could see that, also not so much is driven by legislation. Okay. But by the offering of certain products, it seems that it picked up. Yeah. Yeah. So when you talk about the Tesla case. Yes. Which successfully launched the branch or product with a completely new technology, which was certainly also foreseeable that the change will happen there on the CO2 side, with our Pesca colleagues. But I think it was more ahead of time. Yeah. I think it was rather driven by offering a different solution. Yeah. Which then found their customers.

I would see that differently. CO2 has an impact. If you believe in climate change, mankind driven, then CO2 is one part of the equation. Perhaps one of the biggest part, if that's the case, it should have a price tag. Because we are living in a capitalistic world where price makes difference, and only if society feels the pressure that something has cost it tries to avoid that. Yeah. So if you would like to avoid CO2 then perhaps you should give it a price. And that's how I started the thinking model about CO2 needs a price in order to really reflect the impact. So if a flood, like in the Ahrtal is coming up with CO2, because it's driven by climate change, then these costs are a super high burden for us as a society. And therefore we as a society should reflect and get this cost back by those who consume CO2. That's the first thought to it. The second thought to it, when you think then on the more individual basis, then it's certain that individuals by their own purchasing power have different abilities to cope with CO2 prices on an individual level. Meaning that millionaires have seen the more easy way to cope with CO2 prices than normally paid inhabitants of Europe. And therefore I believe that transport logistics is perhaps the most, fairest game where you can price CO2. Because it's then basically not distributed on the pure individual. If it would be this directly on individual mobility or on how you heat your homes. We had this debate in Germany about these topics, but when you put it on transport logistics. Yeah. Then we need to divide it by 400 millions, because we are all using transport every day. Yeah. Because everything we have on our clothes, which we have in our fridges, which is at home, was at least three or four times on a truck. Yeah. So then that's perhaps one of the fairest distribution when you think about giving CO2 a price. Yeah. When I prepared, I think the trucking industry is very much driven by the total cost of ownership. So any investment in a truck is more or less a business case. And you need to assess it from a 360 point of view. And if CO2 would have a price to it, it would come into the Excel sheet. Exactly. And that's the third part to it. Okay. Yeah. When you want to enhance the transformation, especially in that sector, if diesel has to burden the impact of CO2, whereas other propulsion system like battery, electrical, hydrogen don't have to burden that, it would make the equation of our customers differently. And therefore perhaps fairer.

I think there are a couple of aspects and I don't have now all aspects, but one is, that already under the former government, the CO2, the release of the amount in Germany for CO2 free transportation was decided, which also is a part of the different way of putting basically money into the decision. And this release, is most likely to be expanded. That I think is important, because as you stated, Björn, our customers are investors into goods. They need to make money with what they buy from us. So they don't incorporate only one kilometer or one year. They incorporate it for to three to four, five years. So they need certain boundaries to stay long, robust for a longer period of time in order to make a proper calculation. So I think that's the one part which is good. The second part to it was that, also under the Ampel Coalition, it was decided to increase the tax for CO2 driving power trains. So for our diesel power trains, that was increased quite significantly. Oh, really? Yes. And it was done in December 2023. It overall is a burden to our customers and their burden to all of us, by 8 billion a year. Which basically these additional CO2 tax, or additional CO2 Maut, brings in for the state and what the government, also now the new coalition, wrote down is that they would like to really, reinvest this, and that was always our pledge. You can tax, so you take money, but give it back to the relevant industry. Yeah. Under the decision of the the Ampel Coalition out of this 8 billion, 5 billion were mainly given to the Deutsche Bahn, which has nothing to do in the first place with truck transportation. So now we see that if you take it away from our customers, I think it's fair to also give it back. Yeah. And invest in the roads and invest then also in helping our customers, also to transform themselves into CO2 free trucking and therefore enforcing and allowing and supporting investments in infrastructure, as well as charging infrastructure, as well as in the truck in itself. Yeah. So I think these are the two aspects which are definitely, I believe, allowing a faster transformation into CO2 free transportation.

Yes. The. When you make a decision about what kind of technology do you want to bring into serious solution at that point of time, you certainly reflect, under different evaluations, where is the technology right now? So when we needed to decide, round about 17, 18, 19, where to go in 23, 24, we certainly reflected where are the different technologies at that point of time. And there's one topic to the discussion, which is the pure physics. Yeah. In the pure physics, if you take a hundred percent green energy, you get 75% of velocity in a battery electric truck, so it's a rather super efficient system. There are not a lot of systems in the world that are so efficient, just losing 25% of energy. So when you then would take it and use the same mass for hydrogen you need first to produce it and then the fuel cell is not as efficient. So then you are roundabout by 25% of velocity. So this difference between 75 and 25 is money. And somebody has to pay it. It's our customers first place, and secondly, it's ourselves. So that's one way we said, yeah, why not taking the more efficient ion system. You can debate you need to store it, blah, blah, blah. And doesn't take that out of the equation. By the way you can store electricity also without making hydrogen out of it. The second part of it, how mature, technical, robust. At that point of time you make the decision, the different technologies, and when we made this decision, we saw that the Pescar Industry has already basically embarked into battery electric vehicles. Especially VW was really pushing hard onto it. Yeah. At that point of time there was a sourcing out for 50 gigawatt of battery sets, which was a sourcing never done before. Yeah. And we certainly could internally make use of these ideas, scaling effects, robustness and so forth. So when you look on our truck, which is right now on the street, it basically has the same module as in VW cars. Okay. Which allows us certainly to say super robust, tested. It already is a kind of a proven technologies. And you had to say that in 2018, 19 fuel cells, for example, had not that durability. We were talking about coaking and so forth, and, therefore we did not make a decision on a serious development. We made a decision on a preseries development. And that's how our decision took place. Right now we have now 80 to 85% of our portfolio completely turned into also battery electric trucks. So you always can buy alternatives, either diesel or a battery driven solution. And for certain the applications, we opened up then the door and also to think whether and how hydrogen can be a solution. So we have a BEV first. Yeah. But not only strategy. And that's what brings me, perhaps also in the Hydrogen Leadership Podcast.

Yes and you raised now a couple of aspects. Yes. When we start, I make your question last. And some other topics I would like to comment first. When you talk about logistical systems, they differ dependent on regulations you have. What do I mean with that? In Europe, you have that regulation that after four and a half hours, the driver has to stop for 45 minutes. It's mandatory. So you have a logistical system which basically ticked in this four and a half hours of distance and as the trucks in the long times can only run 80 kilometers on an highway. You see warehouses or everything is built up for four and a half hours. And that certainly, it solves this problem of a battery electric powertrain. Because you can refuel in this 45 minutes. Make use of the time you otherwise would be off. Yeah. Your disadvantage is a little bit taken away. Yeah. Okay. When you talk about a Chinese system, especially those trucks which you are focusing on, they have a kind of a speed logistical system. So they have two drivers. Or perhaps even three. And then the key task is drive as fast from Shenzhen to Beijing as possible. Oh really? Yeah. Okay. And then certainly brakes are harmful. Okay. And then you need perhaps different solutions. Okay. Secondly. Second comment to the Chinese system in itself, it's a very competitive environment where a lot of Chinese truck manufacturers, we believe also the mathematics doesn't go away. And physics also doesn't go away. So it's always hard to say, can you really produce trucks for that kind of money? And we believe that they have challenges in the profitability internally in China. The bigger opportunities are outside of China. So when you quote 88,000 renminbis, then I believe it is a price, for which you can buy it. The question is how much margin is then left over, according to your cost you have, when you have that system. And certainly China has one big advantage in itself. It is a very transformative society. When we both were born in the seventies, we were raised in the eighties. When you compare our society today from the society we were grown up. Okay. There were some changes, but not so much when you compare Chinese society in the eighties to a Chinese society today. They have basically transformed from zero to a hundred. Yeah. So they're much more transformative. What do I mean with that? They're much more willing to let loose on old things and invest in new things. That's why they, for example, buses very fast change into battery electrics. Trucks in Pescars we see also big changes. Similar developments. We see also that they have a really dare to try a lot of Pescar companies coming out of companies where we never expect that they would build. Yeah. So they're much more, they're taking much more risk, much more transformative also much more willing, basically also supported by the government to then really support with hard decisions, this transformation about infrastructure installations and so forth. Yeah. And when you see their highway network, how it expanded in record time, when you see the railway system, how they expanded in record time, that are certainly, it's a very transformative society. That's, just what i want to pled. So they're much more receptive for that. Yeah. Going back to your questions. We, with our four and a half and four and a half system with nine hours on the clock of the driver, certainly basically diminish a little bit the problem of reach. Nevertheless, with today's offering, three to 400 kilometers per shift, yeah. I mean per four and a half hours. It's already close to the 1000, 1,100 kilometers you really need in order to be long haul ready. Okay. Yeah. And when you then foresee, because when you look at the next five years ahead, certain next steps which are foreseeable on the technology development. Yeah. That, we showcase, we will deliver soon 750 KW charging, which is known as mega charging. We also showcased already half a year ago that we can also go beyond one megawatt of charging power. Then you come super fast to a reduction in charging speed. So diminishing this disadvantage and by the announcements of the Chinese manufacturers right now that already deliver this close to serious in Pescar industries. And then the foreseeable next step is that also battery density, so in size as well as in the density itself, might change also dramatically. And then we come to very different offering possibilities. Yeah. So it always depends. Not only, I mean it then depends on development speed and as now.. And also the use case, if I understand this is most important. Yeah. Yeah. But millions and billions of dollars are now basically going in development of those technologies. Yes. What is the right battery cell technology? What is the charging technologies? What is the livestocks electronic in a truck or in a car? There's so much focus right now that every month, new patterns, new ideas are coming up, and I believe that it seems like, I also don't foresee the future, otherwise I would play lotto and then I'm done. Yeah. That battery has right now a big push in innovations, helping them to pass away and overcome deficiencies, whereas we see in the hydrogen space, due to the fact that it's driven as most of the times as we are driving it. Yeah. As a second option, as a pre-development option, perhaps not as much money is in the game. Yeah. And the leap, the jumps from a fuel cell, there are gradual improvements, but it's not leapfrogging like we go from 50 KW charging which was high and ambitious in 2015. Yeah. To one megawatt charging, which is basically high and ambitious when we speak right now in two to 10 years later.

Yes. And that's foreseeable, because the amount of money is different going into certain developments. So how many companies right now in China are trying to build battery electric vehicles? Yeah. Yeah. How many companies around the globe are trying that and how many are investing into hydrogen development? Just by the pure scale of money. And it's a different game, a different amount of people scratching their heads with their big bright minds about solving problems. Right. So it's foreseeable that more problems will be solved where more brains are scratched.

What we've done is and it is public and we showcase on the fair in Hanover, is that we bring a small series for hydrogen combustion. That's not only for showcasing a technology, but it's also to see how receptive our customers are for that technology and what kind of problems we can solve with this kind of application better than we can solve with a battery electric solutions. So when we talk transportation yeah, everybody thinks about four and a half ton 40 tons, four by two. But we have also quite different transportation efforts, which are far beyond 40 tons, 150 tons when you want to basically transport windmills or somethings like that. So how do we want to decarbonize these propulsion systems? Yeah. Because the diesel is a universal, what it's used wherever. What is also obvious that we are not only providing solutions for trucks and buses, but we are also providing solutions for third parties who are until now using diesel as a solution. So in agriculture, in c and I. And also in, in other applications like speed boats and pleasure boats and so forth. And certainly here you can see that also there hydrogen might play a role in future times as the main propulsion system or the main fueling system. So when you talk about ships, it might be much more easy, especially if you then go to even bigger ships. Yeah. That you have the full system change to hydrogen because you can store better on the ship in itself. Yeah. So we see that certain technologies which are right now commonly driven by diesel might change differently. But for the core of our products in the current moment, we believe it's going battery electric.

Yes. As the diesel engine is a very universal engine, polishing since a hundred years, a lot of different applications. And we have, since a long time serving customers, also to deliver our diesel engines to them. So some of them are for example, Klaas in the agriculture business. And what you just mentioned is the Kässbohrer piston bully. Yes. Which we, who are going skiing know, are this nice red and running round the hills and helping us and allowing us to ski in the morning on the proper base. And with Kässbohrer for example, we developed a solution because also in, in Skiing Resorts, most obvious, CO2 is a topic. Yes. Yeah. And if you want to really show that you are also transforming, you need also to transform those piston bullies. Yes. And Kässbohrer is doing so. And one of our engines, it's the same, which we also put in our truck for the hydrogen combustion. It's now used in order and together with Kässbohrer, we built up a prototype in order to see whether and how this hydrogen based propulsion system can be a solution in the Ski resort. Yeah.

It's a yes and is a, no. It's not existing officially. It is existing officially, but certainly, funds are limited. Okay. Unfortunately. Unfortunately. Yeah. As funds are limited and we are in a very changing environment. When you compare ourselves to, let's say 2015, we had to do four things. Sometimes we had to make something on the cabin, sometimes on the chassis, sometimes on the powertrain. Yeah. And sometimes on the ee. If we talk today we have different variances of powertrains. Could be not only diesel, we also have to invest in diesel because also our customers expect superior fuel efficiency. So we still earn our money with diesel trucks. So we also working on that. You have to work on battery. We discussed it. You have to invest also in hydrogen. Yeah, when we talk then other technologies like digitalization. So how do we do software defined vehicles? How do we get closer into the transportation management system of our customers? We certainly also debate about that. It's a lot in our industry about uptime. So who brings the biggest efficiency to our customers is certainly a preferred partner. So we also talk about preventive maintenance topics and so forth and to the highest next step. And then certainly the automation, the full autonomous truck for extent, we can also invest that. Yeah. So when you scale up all those investments. They add up. They add up. And then there's not enough money where we can say let's do the thinking out of the box completely new. How can we revolutionize our business? I believe with all those, what I just said, we have a complete revolution of our business anyhow in our hand. Yeah. And then what we are trying as MAN to be very focused with those developments, which we try really that at the end we are a little bit ahead of time with our concept. Yeah. To have then a more easy, serious development. Yeah. So it's not longer more experimental part to it where some of the experiments can fail and we just drop them. So therefore we need.. You're driven to work on something that you deliver. Yes. We try with this money, which we invest in predevelopment to be pretty close and decisive for our serious development. Yeah. Like we did with the Bavaria fleet where we build up fuel cell trucks to bring them really into the operations to learn with our customers how the fuel cell is behaving, what are the advantages and disadvantages compared to battery, electric propulsion systems or diesel propulsion systems. So we are rather closer to the customer with what you could say early. Early experimental fleets. Yeah. Then we are doing fancy things, which looks like Q and James Bond, and all of a sudden you find the miracle stone and turn your industry upside down. It's not happening, right? No, no.

I think when we look upon the next five years, I think it would be super crucial that we don't only bring a truck, which is CO2 free, but we implement the system. Yeah. So that we really can say that those trucks we develop now into series are not one-offs, but we really see that the substantial part of our business is shifted into this CO2 free propulsion system, mainly battery electric propulsion system. If we can state that at the end of this next five years, which is a super short time. Yeah, it's crazy. Yeah. That a substantial part comes to life and then we have the next great innovations into our trucks. Before we can read them in the newspapers. I think then we have made the right decisions.

So I always try to look rather through the front window, then to the back mirror. I believe that mistakes and also taking not the right turn in the first step, but in the second step belongs to your life experience. Yeah. What I can recommend, I believe and I've read it by Charlie Mugler, who wrote a nice book about his experience in life, is listen to those who have made already some of those experience. Yeah. I think there is a lot of knowledge around you that you don't have to experience everything new. Sometimes your parents know it. Yeah. When you are a child, or sometimes your teachers know it, and so a little bit. That would be my recommendation. And that helps, to be curious to learn. Yes. Yeah. And listen. That is helpful. Yeah. But I think mistakes and also misachievements are a part of life. Yeah. And as long as you are not hit by super hard bad luck, I think you have a very joyful life.

Thank you Björn also for inviting me being part of your journey also. Yes, it's always interesting to see how also your endeavor is progressing step by step. I wish you all the best and see you soon. Thank you very much.