How Bosch is shaping the automotive market in Latam: Interview with its president for Latin America.

Key takeaways: Bosch’s innovation method; a business opportunity for ethanol-run engines; the timing of vehicle electrification in Latin America.

The German company Robert Bosch is one of the world’s innovation powerhouses.  It is the 10th largest patent applicant at the European Patent Office, and per ClearAccessIP, it has a portfolio of close to 113,000 active patents, which is ranked as the fifth most-valuable in the world.

In the past decades, Bosch decided to focus on the automotive industry, the company’s president for Latin America, Besaliel Botelho, told Latin Trade. In this area, it already made many significant advances in airbags, electronic stability controls, protective sensor technologies, and cleaner combustion engines, among other fields.

The company’s reach is very impressive: “there is not a car in the world that does not use a Bosch component or technology,” Botelho, said.

The pandemic dented revenues in Latin America, and now Bosch is faced with the challenge of achieving sales volumes required to justify production in Brazil. The executive predicts that the car industry will recover this year, but worries about things like Ford’s announced closing of its manufacturing operation in Brazil.

This happens amid a global shortage of microcontrollers, chips that are crucial car components. This unusual situation, which will hardly be resolved any time soon, was induced by a mix of a surge in demand for chips used in computers and electronics during the pandemic, and Trump’s trade war. It already forced GM and Ford to slash production in countries like Mexico and Canada.

However, this difficult situation did not drive Bosch’s innovation process into a tailspin. The company in Brazil is currently working on products compliant with new government standards that require cars to have more efficient engines and be substantially safer by 2030.

Bosch’s innovation recipe

Bosh’s innovation strategy is a distinct corporate strength. It does not rely on predicting the future.  “We do not wait to see what the market is telling us. We shape the market. In mobility, we focus on things that make it safe, clean, and fun to drive,” Botelho said.

At Bosch, designers understand current market conditions and the characteristics of user experience, and then, they set out to analyze what might be feasible for customers, and what will make sense for society, Botelho explained.

Sifting ideas in this manner, the company’s R&D team cuts down the number of candidate projects to be developed. For projects still in the pipeline, they build prototypes and check their financial potential drafting down-to-earth business models.

The pipeline is constantly reshaped at the process’s many gates, where the team decides what stays and what is discarded.

Finally, when a product reaches the market, they add one last ingredient to their formula: calculated patience. They know that many technologies take time to mature and, as Botelho said, they are willing to wait for them to catch on.

Product development roadmaps at Robert Bosch leave some empty spaces to fill in details as time and research progress, but there are some solid certainties that guide the whole journey. “Electrification and autonomous drive will take longer, but these are the trend, and the way to go and to make our investments,” Botelho stated. The future of mobility as it is partly shaped by Bosch, will surely have more connected, safer, electric cars.

The ethanol option

Irreversible as the trend may be, electric will take a long time to implement in Latin America, Botelho hinted. By his own accounts, by 2030, 30% of the cars sold in the world will be fully electric or hybrid. In Latin America it might take even longer as all-imported electric cars will be costlier than in other regions with lower logistical costs, he said.

In the end, widespread vehicle electrification in Latin America will depend heavily on car makers’ strategies, Botelho claimed. Missing infrastructure and relative prices will probably make Latin America a late entrant to this domain, well after electrics are acclimated in China, Europe, and the United States.

In the meantime, combustion engines must be made cleaner, and in that scenario, those running on ethanol could be preferred to others. This represents an interesting business opportunity for Brazil.

Innovations around ethanol already transformed the country’s industry in many ways, he said. From sugarcane mills improving the quality of their alcohol to auto component-makers developing corrosion-resistant parts, better adapted to run on this fuel.

“Brazil has an asset nobody has,” the executive noted. From “well to wheel”, this fuel is closer to a CO2-neutral option. Sugarcane absorbs CO2 and “cars are much cleaner than some electric vehicles that get energy from coal,” Botelho said. If electricity generation behind vehicles is not clean, plugging-in cars in will not help the environment, he warned.

Flex-fuel engines that run on pure ethanol or on an ethanol-gasoline mix, like those marketed in Brazil and Argentina, will probably gain relevance in the global combustion engine industry for years to come.

Ethanol will eventually relinquish its potential preeminence to electric and hybrids. Botelho predicts that full plug-in vehicles will win the stage sooner than later as consumers learn “how fun it is to drive an electric car.”