ETEM Gestamp is an international company dedicated to designing, developing, and manufacturing aluminium profiles and machined aluminium components for the automotive and industrial sectors. Emmanouil Fountoukis is General Manager of the company.
Mr. Fountoukis, market conditions have changed quite a lot over the last year, especially in the electromobility segment with Chinese manufacturers dominating the batteries market. Tell us a bit more about the challenges that the automotive industry is currently facing.
The global automotive sector is grappling with several challenges in the current landscape. The industry will continue to be weighed down by geopolitical tensions, disrupted global supply chains, high interest rates. A slower-than-predicted adoption of electromobility, that we are currently witnessing, is attributed to the new emissions legislation and the fact that some of the biggest European markets, like France and Germany, have lifted the subsidies on purchases of new EVs. All these factors, in combination with weak global economic growth, elevated living costs and high interest rates will constrain sales.
However, despite their slow growth rate, EV sales will remain a bright spot in this uncertain market. Experts forecast that in 2024 global EV sales, together with plug-in hybrid electric vehicles (PHEV), will expand by 21%, to 16.7 mln units. Battery electric vehicles (BEVs) and PHEVs together stood for 15.8 % of global light vehicle sales in 2023, compared to 13 % in 2022. Of course, China remains the world's top car exporter in 2023 and will account for around half of global EV exports in 2024.
Chinese OEMs have seen an opportunity in exporting their higher spec EVs in Europe as their prices are very competitive versus those of the legacy OEMs. They can achieve higher profit margins by selling the more expensive of their vehicles in Europe rather than within China, where most of EVs sales are from Chinese OEMs and the competition is fierce. If we also consider the developed position of China in the field of batteries technology and its access to the relevant strategic raw materials, China could potentially grasp a large share of the European market soon and this is already a headache for the European auto industry.
Amid such a dynamic environment, do you plan on making any adjustments to your strategy?
The market volatility is generating various types of challenges across the automotive supply chain. While the trend of electromobility has triggered numerous investments in extrusion capacity, the slower growth of electric cars sales is not expected to significantly affect the demand for aluminium extrusions. Although we believe in the eventual dominance of electromobility, we remain prudent by maintaining a diversified sales portfolio. The need for lighter cars and hence the demand of extruded aluminium parts is meanwhile growing in alternative powertrains, where our company is well positioned because of its unique technical capabilities, customer service and quality level.
In addition, our adherence to flexible manufacturing systems, lean production, digitalisation and automation ensure the company’s sustainable and competitive operations.
The production base of ETEM Gestamp in Sofia operates with four extrusion presses with an annual capacity of about 40,000 tonnes of profiles per year, depending on the product mix. Investments in new extrusion presses and continuous modernization of existing ones ensure that quality meets the most stringent requirements.
In addition to expanding our extrusion capacity, we are also investing in surface treatment and other adding value processing according to the needs of our customers. Finally, the ability to innovate on materials performance is instrumental to our competitive position.
In today's business world, discussions on production and long-term goals inevitably involve addressing sustainability practices. How has your portfolio evolved over the years to align with such principles?
Our products are inherent to the sustainability of our clients. This is because of two reasons. First, aluminium can be eternally recycled and hence one can achieve very high recycling content and low carbon footprint. In addition, aluminium’s light weight (about one-third of the weight of steel) constitutes it as a material of choice for the OEMs in order to achieve their lightweight targets. The two aforementioned factors, in combination with the high-performance alloys Etem Gestamp is capable of offering, contribute to a very light weight with low carbon footprint which subsequently supports our clients’ targets for zero emissions until 2035.
Our portfolio spans from components for the battery of the electric vehicles, to chassis, Body-in-White, Crash Management Systems and frame parts, mostly with unique crash properties ensuring passengers safety.
At Etem Gestamp, we are committed to preserving a sustainable environment and have initiated actions that ensure sustainability and positively impact the local and global communities. Aligned with the ESG targets set by our clients, we have deployed an agenda for emissions reduction in Scopes 1, 2 and 3. During the last two years, we have set up two power purchasing agreements (PPAs) for green electricity. Our state-of-the-art equipment ensures high energy efficiency, and our green agenda enables us to move fast towards achieving our commitment for 100% use of energy from renewable sources.