Newly appointed head of France’s second largest automotive supplier, Valeo’s CEO faces two challenges: avoiding the pitfalls of an international situation shaken by the Ukrainian war, scarcity and inflation , but also to install the confidence of the financial markets. , chilled by his first ads. By 2025, however, Christophe Périllat’s plans to install more technology in tomorrow’s car are not lacking.
How does the war in Ukraine affect the activities of the Valeo group?
Christophe Perillat: We employ many people of Ukrainian nationality in our Polish, Hungarian and Czech factories. I think first of them, of their family. The situation is really terrible. You ask me what the direct consequences of this war are: they are minimal, because we have no factory or supplier in the country.
We operate a single production site in Togliatti, Russia, serving Avtovaz and Renault. It is a small place – about 500 people work there – which represents only between 0.5 and 1% of our global turnover. Its production is destined for the local market, so in case of problems to continue production there will be no consequences for our customers outside Russia.
What will be the impact of the conflict on the global automotive market?
The industry is coming out of two years of underproduction. Between 75 and 76 million cars were manufactured worldwide in 2020, the year of Covid, and 77 million in 2021, when the semiconductor crisis occurred. These figures should be compared with the production of previous years, about 90 million cars. Therefore, we have a production deficit of 30 million vehicles that has unbalanced the market: many customers are waiting for their car, deadlines have been extended.
Even if the war had an impact on the global economy, therefore, I remain confident, because the car industry has very complete order letters and a strong demand to satisfy. Therefore, the issue is not the market. On the other hand, as in 2021, the issue will be the ability of manufacturers to produce in Europe, as many suppliers in Ukraine will be severely disrupted. There are also many unknowns about inflation, the price of energy and raw materials …
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You have just taken over from Jacques Aschenbroich, who has been running Valeo since 2009. What are your priorities?
The group is very well positioned in the mobility market of tomorrow. I intend to accelerate even further in two areas: electrification and vehicle driving aids. In the first part, we decided to acquire the shares of Siemens in the joint venture created in 2016 to produce high voltage electrification systems for cars.
The integration of this activity within our Propulsion division will make it more innovative, competitive and profitable. In the second part, I announced an acceleration of our developments on a product essential for driving assistance: the Lidar (for “light and range detection”, a system that allows measuring distances and detecting obstacles by laser beam, Ed). This is a sensor with extraordinary performance that makes possible a very advanced degree of vehicle autonomy.
Following the submission of your roadmap last February, Valeo’s price dropped. Because ?
Because I wanted to be mindful of our goals in 2022 and our ambitions for 2025. There are many uncertainties regarding the automotive market: Ukraine, the component crisis, inflation … In this context, this caution was needed.
What are your ambitions for the autonomous car?
Accelerate again. Today, we are the world number one in these technologies. We make ultrasonic sensors (the beep-beep ones in your car!), Cameras, and then this newcomer, Lidar. We also design “drivers”, which are used to process the data captured by the sensors to merge them and reconstruct a 360-degree image of the vehicle’s environment to avoid obstacles (pedestrians, cyclists, trucks, etc.). We also develop a lot of software to allow the car to make decisions: accelerate, brake, avoid.
How quickly will these technologies become widespread?
30% of premium models will have a level 3 autonomy feature within five to ten years, a little later for the “mass market”. The driver will be able to delegate driving in the vehicle, stop looking at the road and do something else: read, send SMS, watch a movie … Two models in the world have received the approval of the control authorities to expand autonomy: the Honda Legend in Japan and the Mercedes-Benz S-Class in Germany. What do you have in common? Both are equipped with Valeo Lidar. For other cars that offer driving assistance today, you still have to show that you are careful by touching the steering wheel at regular intervals.
You are also announcing innovations in lighting …
In tomorrow’s passenger compartment you can change the lighting according to your driving situation, weather or your mood, to promote well-being. On the outside, the lights will be used more and more by designers to highlight the brand’s signature. Cars will also communicate with their surroundings through the lighting: when turning, signs will be projected on the road to inform pedestrians or cyclists of the car’s behavior …
Manufacturers invest heavily in the field of software, is this competition for you?
There is more and more software in cars and there is room for everyone. Valeo is a great electronics player. For us, almost one in two engineers works in software, systems architecture, cybersecurity, and artificial intelligence. The developments of our clients will be completely complementary. They’ll take over the top layers, the car management, and we’ll take over the bottom layers: software to make the sensors work, the 360-degree map around the vehicle, and so on.
The Gafa are also in an ambush …
More than the Gafa, we see above all the increasing power of the manufacturers of big chips, like Nvidia or Qualcomm, that think so much in the electrical architecture as in the electronics of the car, design computers to manage all the data and execute the instructions . Everyone has their share in this value chain in full recomposition. What we occupy and will continue to occupy is very important, so we have no worries on this side.
What is the aim of the recent collaboration agreement signed with Renault?
We are co-developing and co-producing a new electric motor that will not contain rare earths (mineral materials with exceptional properties used in high technology, editor’s note). These metals come mostly from China, hence a matter of dependence, because their extraction has an impact on the environment and their prices are very volatile.
Giving us the goal of eliminating rare earths allows us, then, to evacuate a whole host of problems. Renault will assemble the engines at the Cléon (Seine-Maritime) plant for its own needs. We will offer this engine to other manufacturers.
Does the growth of the electric car market offer you other opportunities?
Yes, for example in our activity of “thermal systems”. In an electric vehicle, there are almost three times more thermal products than in a combustion vehicle. They are used to keep a battery in good condition, particularly by cooling it during the fast charging phases, which is essential for the longevity of the cell.
They also preserve autonomy. In cold weather, a lot of it is lost, because some of the electrons in the battery that allow it to move forward also serve to heat the cabin. Therefore, we need very efficient heating systems. We are developing heat pumps like the ones used in homes, which are very economical in terms of electricity consumption.
What is the future of your combustion engine business?
Eventually, they are doomed to disappear, except in the aftermarket. Products specifically related to combustion engines represent a very small percentage of our turnover: today 11% and will be less than 4% in 2030. Fifteen years ago, we had already decided to stop having activities in diesel, nor are we in control of engines, an activity that we sold, not even in injection …
Will you continue to work on the hybrid engine?
For the automobile, it is a technology of transition. In many parts of the world, the market will end up focusing on high voltage, that is, the 100% electric motor. But the transition phase will be long and we are convinced that the 48-volt light hybridization market will continue to grow well beyond 2030.
The new Euro 7 standard sets standards that will make this technology almost necessary in all combustion engines. When it declines in favor of high voltage, the adjacent low voltage markets will take over.
What are they?
These are the markets for mobility in the broadest sense, in which we strongly believe. The technologies we master today, such as electrification or driving assistance, allow us to approach them with good prospects. These include the electrification of two-wheeled vehicles – bicycles, motorcycles and mopeds – but also three-wheeled vehicles such as the rickshaws we see in Asia.
There are also small urban cars like Citroën’s Friend in France, or this new object, the “droid”, a kind of refrigerator or Caddy where tires will be used for the delivery of the last mile. You will order a pizza or groceries and it is an autonomous electric cart that will arrive at the foot of your building to leave them after sending you an SMS.
How did you handle the semiconductor crisis?
We were one of the only ones to successfully serve all of our clients last year. At the beginning of 2021 we have significantly increased our stocks and given more visibility to our suppliers so that they can anticipate and size their investments. In the group, all factories use the same material requirements planning system and the same management system.
This made it easier to communicate and share products of scarcity between sites. But we supply more than 20,000 different references and buy more than 250 million components a day for Valeo’s needs. Identifying in this mass who will pose a problem is not an easy task!
Will scarcity continue?
Although the overall situation is improving, it is still complicated. There are still points of difficulty with particular technologies, but to be produced, a car needs 100% of its components. Every passing month shows the best.
The car weighs heavily on France’s trade deficit. What is France’s participation in Valeo’s activities?
France is a very important country for Valeo. We have our headquarters and the headquarters of our four companies. The country accounts for 15% of our turnover, 14,000 people employed, 23 factories. We are making efforts to preserve our French industrial footprint and ensure that much of the group’s innovation comes from our French laboratories.
We have also done a lot of reindustrialization. Factories have been converted to manufacture more electric vehicle-oriented technology products. Now we have to keep working on costs. Taxes on production are a topic of the presidential campaign. I hope that the candidates will take the opportunity to lighten the burden on companies based in France.
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