TheFutureEconomy.ca: What is the current state of the Canadian auto industry?
Don Romano: The industry is stable. There are clearly risks associated with the geopolitical climate and you will never be exactly sure what is going to happen south of the border but you cannot spend all your time worrying about it. Hyundai has a lot of demand for our products and we are seeing a lot of showroom traffic and our sales are strong, so overall I would say that we are very healthy right now and I would think that is shared across pretty much all manufacturers. We are all experiencing what I would call a very healthy, good year.
What do you identify as a major factor impacting the industry right now?
It is a risky time in automotive because you must invest so much money into so many different areas – more than ever before in the history of our industry. For instance, you have to be invested in autonomous systems, connectivity, electric vehicles and other areas.
You have to be invested in autonomous systems regardless of whether your vision is for cars to drive themselves or simply for consumers to be safer in their driving environment. They are the same systems and they are ultimately requiring more and more R&D investment. What drives an autonomous system in California is going to be different than the system needed in Toronto, especially during the winter months when there is heavy snow and dramatic weather differences. So we must deal with issues that are specific to Canada. So we are still at a relatively early phase for autonomous technologies but the advantage is you are seeing the systems employed in cars making them safer today – Lane Keeping Assist, warning systems, rear view cameras, autonomous braking, emergency braking; all of these technologies are making driving safer. But, again, whether you are doing it because you want to see cars driving autonomously or you just want to make your customers safer, you have to be invested in all these areas in the autonomous sphere.
“There are a lot of ways to power an electric vehicle.”
Then you have connected systems: the systems that connect you not just to your Apple or your Samsung, but to your home, to your office and to all your connected world. This is one of the most rapidly growing areas where you can literally envision a car having no controls at all but being led solely by voice commands. You get in the car and tell it what to do, and in the meantime you tell it to have your laundry delivered, to turn the lights on in your office, to drop the temperature in your home. It becomes your personal assistant, not just a mode of transportation. We are investing in R&D in that area.
Then you have the electrification. In this area you are developing a whole different drive train and battery systems you must integrate it with. So when you look at all these things that are transpiring right now, it is a big risk for manufacturers in terms of their R&D investment. And one of the advantages that we at Hyundai have is that we have the necessary resources and we are invested in all these areas.
How much of a threat is the electric car to the internal combustion engine today?
I think it is the solution in the long-term. All manufacturers are making electric vehicles and as production numbers increase, the costs go down. But right now car companies across the globe are relying on government subsidies to make this work. So, directionally we are heading towards a future dominated by electric vehicles. But to say that will happen in 5 or 8 years is false. For the most part, people who are buying electric cars are doing so as the second car that they own.
So before we are ready to take over the world with all electric vehicles we have to wean ourselves off of gasoline, and the only way to do that is to develop electric technology that will be able to replace the time and distance we can travel with gasoline. Knowing the technology as I do right now, we have a ways to go. I would say though that in 20 years we could look back at combustion engines and see them in a museum. I do not think they will be around.
“We do not believe that there is any one perfect solution to address the emissions issues that we are facing.”
One thing that must be understood is that there are a lot of ways to power an “electric” vehicle. Today, the most common way is to plug it into an outlet or to a charging system and to charge the battery. The challenge with that is that it takes time, so you have to adjust your lifestyle and we have to install considerable charging infrastructure for the 1.9 million cars sold per year in Canada alone. If you start thinking about some of those challenges it is mind blowing and easy to see that we really do not have the total solution yet that enables us to provide the infrastructure to allow everybody quick and easy access to charging stations. Even if we did, how much time are we going to spend charging our cars when we can fill them up with gasoline in three minutes? A game-changer that could take place is in battery technology. We are still working off of lithium batteries and there are limitations to the capacity those batteries have to propel society forward. So that is where we start talking about alternative ways to power electric engines and that is where the hydrogen fuel cell discussion comes in.
What do you see as the most feasible alternative ways to power electric engines?
We just launched Ioniq, which I am very proud of because we do not believe that there is any one perfect solution to address the emissions issues we are facing. In some cases a pure electric vehicle is the perfect solution, especially for commuters going short distances. However, if you are in Toronto and you need to occasionally go up to Ottawa, it may not be the best solution. In that case, a plug-in electric hybrid would make sense. A plug-in electric hybrid runs on electricity for anywhere from 50 to 100 km before it shifts to a very fuel efficient, small gasoline powered engine. Then, as soon as that engine kicks on, it begins to recharge the battery and then you can go back on electric. In that case, you will never have any concerns that you do not have enough electricity to get from point A to point B. Then, we have hybrids where the gas and electric engines work in harmony together to achieve optimal fuel economy and reduce emissions. Ioniq provides all three solutions – it is the only brand that does so. So when you go to a Hyundai dealership, you can actually have your driving habits assessed to determine which eco vehicle would work best for you.
Then, for the real challenging consumers out there that want to try something new, we have fuel cell vehicles. We are the only manufacturer in Canada that sells a fuel cell vehicle. What is interesting is that a fuel cell vehicle runs off hydrogen but it does not burn hydrogen. It is an electric car that is actually powered by hydrogen gas flowing over a membrane and what it does is it combines the hydrogen molecules with oxygen molecules, which creates a little electrical charge when then combine. That charge is collected and put into a battery, and when hydrogen and oxygen combine what comes out of your tailpipe is water in the form of a very light steam. There is no combustion – it is a purely electric vehicle. The advantage of a fuel cell vehicle is that you can fill it up in three minutes just like gasoline. In fact, the pump you use acts just like a regular gasoline pump.
“If you ask me where the future is headed, I think hydrogen provides the optimal solution for zero emissions and convenience for consumers.”
I recently had a meeting with a fuel provider where we discussed replicating some of the expansion they’ve done in California here in Canada, by putting hydrogen pumps in a number of gas stations. We are beginning to discuss how many stations we would need equipped with hydrogen pumps relative to how many cars we could produce, and over what time period. We want to have a very methodical ramp up to provide hydrogen gas at their filling stations. But it is early days and we are at the beginning of those conversations and analyses.
So if you ask me where I think the future is headed, I think hydrogen provides the optimal solution for zero emissions and convenience for consumers. But, that infrastructure that makes hydrogen possible on a large scale is going to take longer to develop. Right now we all have outlets for electricity, so today plug-in hybrids and electric vehicles are a better short-term solution.
How is the Canadian automobile industry working with governments to define which technologies are most suited to the future of the Canadian auto sector?
What we have is a group of auto manufacturers working with the government to exchange information that is critical for the government to understand so that when it creates policies or invests in technology, it is not picking one technology over another and making the wrong decision. What governments need to do is kind of what Hyundai does and that is keep one foot in all the technologies and watch them evolve: watch consumers as they buy the vehicles, drive them, relate to them, look at the satisfaction ratings. Once governments are armed with that kind of information, then they can begin to invest more wisely. So our consortium provides that information to the government and tries to encourage the government to not pick winners and losers in technology. Technologies change and we must be careful not to assume that things are going to go in one direction or the other early in the onset of that technological development.
How do you see collaboration between the auto industry and other Canadian industries?
The opportunity for collaboration is enormous right now. I do not think there has ever been so much collaboration outside of the traditional auto manufacturers. And I am also seeing the traditional component manufacturers move rapidly into a lot of the new technologies that are going to propel us into the future. It really takes a village to produce the kind of vehicles we need to ensure that we have a safe and clean environment in the future. In Canada we have component manufacturers like Linamar and Magna, and they have a number of suppliers that are all innovating rapidly. We are even seeing companies like Canadian Tire that is actually using fuel cells for the forklift systems in their warehouses. There are a lot of interesting dynamics all over the place and we collaborate with them as well, for example, by sharing hydrogen fuel for our fuel cells. So yes, some pretty interesting new partnerships have been formed as we all are trying to address the need to reduce emissions.
“Canada has an obligation to lead the world when it comes to the electrification of all of our industries.”
Where do you see opportunities for Canada in all this?
I would say that the best opportunity for us is the fact that over 80% of our electricity is produced without emissions, so I think Canada has an obligation to lead the world when it comes to the electrification of all of our industries. Again, in terms of how we get there – whether it is new battery technology or hydrogen fuel cells – I think trying to pick a technology is ridiculous at this stage. We really do not know and I think it is important for any manufacturer that moves into this technology to keep one foot in every space of the technology arena; whether it is a plug-in, a hybrid, a full electric, a fuel cell or maybe something else.
Ultimately, we just have to keep an open mind and not pick a direction that limits our ability to adjust in the future. Canadian car manufacturers are all going in the right direction, we are all working together and we are all intent on achieving zero emissions. The timeline is still undefined but we are working as quickly as we can. And that applies not just to the emissions side but also to the new systems that operate our cars, whether through autonomous systems or connected systems. All of these things are going to produce a safer, more convenient, better experience in what used to be just a car that got us from point A to point B, and that will in the future help us manage our lives better without emissions.
“In 20 years we could look back at combustion engines and see them in a museum. I do not think they will be around.”
That is my vision. It is just a matter of trying to determine the timeline and trying to determine which technology is going to rule the roost, so to speak. We will leave that to the luminaries. For me, it is a matter of using the technologies we currently have to make the world better, and to make cars safer and to provide our customers as much convenience as we can.