Interview with Frank Thelen, Tech-Investor
Frank Thelen is one of Germany’s best-known tech investors. Recently he drew attention to himself with critical statements on the future of the automotive industry. His thesis: German manufacturers have no future. In an interview Thelen talks about the competition with Tesla and the advantages of electric cars. The interview is the start of a new series in which we discuss the future of mobility with independent minds.
Recently you shocked the German automotive industry with gloomy forecasts – including us at Volkswagen. Where are the companies going wrong in your opinion?
My criticism comes from a certain frustration. My wish is for a strong Europe with strong corporations and successful hidden champions. But especially in the car industry I see great parallels to the decline of the photo industry. Companies like Agfa, Kodak and Fujifilm had their stable business and then slept through the digitalization phase. In the end they had lost 100 percent of the digital photo market.
We do not have the impression that German car manufacturers are asleep. Volkswagen is investing 60 billion euros in future technologies within five years – in e-mobility, digitalization, hybridization.
We are not talking about multi-billion sums, but about first principle thinking, as we know it from Elon Musk. In the future, it won’t matter how a combustion engine works. The question is: Who has the best and cheapest battery, the best e-drive propulsion system, the most data, the most powerful chips, and who has a charging infrastructure? Where, for example, is there a battery research project in which the German automotive industry is a leader?
There are examples. Volkswagen is working with the US company QuantumScape on the large-scale production of solid-state batteries. Last year the Center of Excellence was opened in Salzgitter, where 300 experts are developing improved production processes for lithium-ion batteries. And in a few years’ time, a Gigafactory is also set to start production of battery cells in Salzgitter ...
That would be a great move. Provided that this excellence-cluster attracts outstanding talents and is equipped with the necessary budget. Just recently I heard from a German car manufacturer: battery production is a supplier issue. This is a completely wrong way of thinking, because the battery accounts for the largest value-added part of an e-car. Tesla has moved on, they are building their third battery factory. The situation is similar with chips for self-driving systems. Here too, Tesla has a huge lead – even over great companies like Nvidia. Or let’s talk about charging infrastructure: When does the German car industry want to offer something that is on a par with Tesla’s supercharger network?
With the IONITY joint venture, several manufacturers are currently setting up a fast-charging network with 400 charging stations along the European motorway network – conveniently located at service stations. This is also popular with Tesla drivers. And with the We Charge card from Volkswagen you can charge at more than 100,000 charging points in Europe.
This is good and I believe that Volkswagen is setting the right impetus. Herbert Diess was the first CEO of the German automotive industry to say: “Things can’t go on like this. But it’s also a fact that an American company has come here and built up a charging station network that allows me to drive around Germany without any problems. We, on the other hand, have always had new rounds of talks, even in the Federal Chancellery. Far too little has happened. I hope you can appreciate that this frustrates me.
Absolutely – nevertheless there are voices that see the situation more positively. Your fellow Lion [referring to a German TV show] Carsten Maschmeyer says: Electric cars from Germany will lead the way. Can you also understand that?
Actually, no. I would also like to get away from these sweeping statements. I have positioned myself concretely and extensively on this: What are the parameters that determine who will be the most successful automaker in the world?
What’s your answer?
Electric mobility is coming. So you have to ask: What are the key characteristics of an e-car? I look at the energy density, the price of the batteries, the number of charging cycles, the e-propulsion system. Many German cars do poorly in this respect. Another important issue is autonomous driving. For me, self-driving is the game changer. Because suddenly the vehicle gets a much higher frequency of use. It is better suited for sharing models. It will be like a leap from a horse-drawn carriage to a car.
German manufacturers produce cars in large volumes. Isn’t that a great advantage?
Absolutely – economies of scale play an important role. And when you see how Volkswagen, for example, sets up a production line, it is even more professional than at Tesla. The question is: Can the German manufacturers maintain their lead? Tesla is incredibly quick to set local plants up – in China, for example. The same thing is happening in Germany. Tesla uses existing preparatory work and saves itself two years.
Volkswagen, too, is starting electric car production this year at two locations in China – Foshan and Anting. Nevertheless, we would be interested: What can corporations learn from entrepreneurs in terms of speed?
I don’t have an easy recipe for this – and I have great respect for managing such a large company as Volkswagen. With 10, 100 or 500 people you can of course react very swiftly. But if you want to survive, you have to do the same at Volkswagen, for example with separate business units like your new software division.
With your own company you are involved in start-ups that develop air taxis and hyperloop systems. What image of future mobility do you have in mind?
We only invest in solutions without combustion engines. The Hyperloop, for example, draws its energy from solar panels. You travel climate-neutral and extremely fast – at speeds of up to 1,000 km/h. With another start-up, Lilium, we are building a jet with a pure electric propulsion system. It takes off and lands vertically – a big advantage in densely populated areas. Our goal is to connect cities within a radius of 300 kilometers.
That sounds more like the distant future. What is a realistic timetable?
The jet is technically ready. What we still need is certification from the authorities in the USA and Europe. We plan to have it operational by 2025. At Hyperloop, building a route network is the biggest challenge. My wish is that the Ministry of Economics should put 20-30 billion euros onto the – Hyperloop network – table. This would enable us to connect more cities than by train. We have the opportunity here as Europe to become the Hyperloop-nation and export the technology worldwide.
You have defended electric cars against criticism time and again. Why?
I am convinced that e-mobility is currently the best solution – whether for cars, scooters, planes or ships. Battery technology is developing rapidly. If someone says they have a better concept, I applaud them and am happy to invest with my modest means. But at the moment I don’t see that. The crucial thing is: we have to stop burning fossil fuels. We made a huge mistake with the oil age – mankind must correct it quickly.
How can you get people excited about e-mobility?
You can only convince by telling the truth: Yes, there are still problems, for example with the raw materials. On the other hand, batteries are recyclable. And: the electric car has a much better balance sheet for our planet than a combustion engine. E-mobility has weaknesses – but it is currently the best way forward and there is still a lot of potential for optimization, for example we can still greatly reduce the amount of rare metals. The internal combustion engine is already fully optimized.
As an investor, you travel a lot. How climate friendly is your personal mobility?
I drive an electric car and fill up with 100 percent green electricity. I am not a friend of the railways because I find punctuality, comfort and payment in need of improvement. I try to reduce the number of flights I make by means of video conferences. If a flight is unavoidable, I offset the emissions by providing financial support for climate projects. This is not ideal, because the CO₂ was released anyway. I want to protect the climate – but I also have to do my job and hopefully I can achieve more with my investments in green-tech start-ups than with radical restrictions.
Recently you left “Höhle der Löwen” [based on the BBC “Dragon’s Den” TV show] to have more time for your tech investments. Why?
“Höhle der Löwen” was a great time – I am grateful that I was allowed to be there. Nevertheless, I thought about it: What will I do for the next ten years? I am convinced that in the coming decade we will experience such profound changes as never before in such a short time. The technologies are well-known – from blockchain to 3D printing to 5G, quantum computing and AI. I like to talk about the building blocks of the future. I want to focus on products that use these technologies – and that make our life on this planet more sustainable, safer and better.
Frank Thelen is a European founder and technology investor. He became known through the TV format “Die Höhle der Löwen”, based on the BBC’s “Dragon’s Den” reality investment TV show. The 44-year-old holds shares in mobility start-ups such as Lilium Aviation and Hardt, among others. The acknowledged Tesla fan has his company headquarters and central part of his life in Bonn, Germany.
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