U.S. bailout negotiator helps France in race for electrification and self-driving cars

October 27, 2018 06:01 CET

PARIS — In 2009, Xavier Mosquet was part of a team that advised President Barack Obama on a bailout for U.S. automakers. Now, Mosquet, a senior partner and managing director at Boston Consulting Group, is helping another president, Emmanuel Macron of France, to steer a path for his country’s automotive industry.

Macron has asked Mosquet and Patrick Pelata, the former chief operating officer at Renault Group, to come up with a series of recommendations to ensure that France does not fall behind countries like Germany in trends like electrification and autonomous driving. They expect to present their findings next February.

“The auto industry, along with construction, is one of two industries that fuel long-term economic growth,” Mosquet said in an interview. President Macron “is looking at it, and saying, there are lots of changes now, and I am not really sure that what we have done in the past 20 years for that industry will be sufficient to carry our success forward.”

The stakes are high. PSA Group and Renault employ about 120,000 people in France alone, and about 270,000 people in total work in “core” industry jobs — vehicle and parts manufacturing — according the French trade group CCFA. Hundreds of thousands of others work in associated fields such as auto repair, or as taxi drivers. Auto industry jobs are important because they create added value to the economy — 105,000 euros per worker in France, the CCFA said.

Mosquet said he was particularly concerned about the impact of technological shifts on Tier 2 and 3 suppliers, who are often the largest employers in small, regional communities. Such suppliers are “especially vulnerable because many are undercapitalized,” he said. “I am not too worried about the big suppliers, because they know their business.”

Avoiding diesel’s fate

Mosquet said he would like France — and Europe — to avoid a repeat of what is happening with diesel powertrains right now, as automakers are scrambling to respond to sharply falling consumer demand and increasingly strict EU and local regulations.

“We were five years too late on diesel,” he said. “We could see already in 2011 that it was not going to be a viable solution for future emissions standards because of the cost” of treatment systems.

The transition to electrified power trains requires involvement from all stakeholders, he said: automakers, governments and utilities. It is not enough to produce electric or plug-in hybrid vehicles, he added — there must be a sufficient charging station network and a commitment to cleaner energy generation at the grid level.

“We will be thinking about how to create a market for electric vehicles,” he said. That could include nonmonetary incentives such as free parking.

Mosquet said France is well positioned for mass adoption of electric vehicles.

“With nuclear power, we have a very clean and efficient CO2 model,” he said, noting the debate about clean sources of electricity. “We should be one of the leaders in this evolution.”

Reputation to overcome

Mosquet acknowledged that France has a reputation as being unfriendly to employers, but he said Macron — a former finance minister with a background in investment banking — was working hard to change that.

Yet, France still needs to increase its attractiveness to foreign investment, he said, citing the example of CATL, the Chinese battery manufacturer, which has announced investments in Germany, “but they have not announced any in France, for instance” he said. “So, there are shifts in value pools and job creation in the future, and France sometimes yet does not have a clear position.”

Another area where Mosquet says France could use a boost is in attracting startups, many of whom are driving innovation in autonomous vehicles. “It’s partly a matter of branding,” he said, noting that Israel has a global reputation as being startup-friendly through the success of companies such as Mobileye.

“French engineers are in high demand around the world,” he said. “There are no reason why we can’t create a startup ecosystem here.”

“There is no sense that France is falling behind right now,” Mosquet said. “But there is a real possibility that this could happen. If we look at, for instance, shared mobility and how digital applications have totally changed that, we do not see yet the role of France in that industry.”

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