Hydrogen vs Electric?

Sasan Hashemi (Host): Welcome to episode number four of Beyond Cost. Today we're going to talk about innovation in manufacturing. We have a very special guest with us: Rainer Balbach. He is the Managing Director of AC Agility Consulting and has vast experience ranging from automotive to non-automotive industries, across production, innovation, engineering, and procurement. Basically, he has seen it all. Awesome to have you here today.

Rainer Balbach (Guest): Thank you, Sasan.

Sasan Hashemi: Rainer, I gave a short introduction, but for our listeners who may not be familiar with you, would you like to give a quick introduction from your side?

Rainer Balbach: Yes. First of all, thanks for the invitation. It’s nice to be here again after a long time in Vienna. My story is quite simple. I am the son of an enterprise owner in the automotive transportation business. So very early on, I was thinking about mobility. How do we get people from A to B? What is it all about, and how could it be done better? After my first education as a toolmaker, I went back to school, then to university, where I studied sheet metal working, sheet metal forming, deep drawing, and metal forming in general. Stuttgart was next door, and Mercedes-Benz was there. I started at Mercedes-Benz as a planner for so-called initial material processing. That was in 1978. At that time, we were working on new ideas for lightweight mobility, especially using aluminum in deep drawing. I stayed with Mercedes-Benz for 35 years. I started as a planner in Stuttgart and later worked in Sindelfingen, focusing on planning activities and new technologies, especially in body-in-white manufacturing. There was always the big question: How do we industrialize new technologies? And how do we check the cost? At first, I was always a little annoyed that I had to go to the calculation team to get cost figures. I thought: Why can’t we do this ourselves? I know the process, I know the paid time, machining time, manufacturing time. But another department combined the technical data with CapEx and OpEx to calculate the final price. That’s when I started thinking about integrated planning. Around that time, Andreas Tsetinis also came up with new ideas. From then on, I always believed in an integrated view of planning: understanding the cost impact directly within engineering. That was my core story. Later, I moved into global activities.

Sasan Hashemi: Let’s stay with sheet metal for a moment. At Tset, we have a love-hate relationship with it. It’s such a fascinating technology, but it’s tricky. Many experts say sheet metal forming is almost an art. Some things are possible that no book would ever suggest. Did you have a similar experience?

Rainer Balbach: Absolutely, especially with aluminum. It behaves completely differently and tends to stick to steel tools. You need special lubrication, coatings, and surface treatments. There’s always something new. Sheet metal is now also in competition with new technologies. For example, giga-casting and mega-casting replace up to 150 sheet metal parts with one large casted part. We studied this approach at Mercedes-Benz as well.

Sasan Hashemi: How did the organization react to that change?

Rainer Balbach: Not easily. Planning departments and design departments are naturally resistant. That’s human nature. When new technology comes up, people feel threatened. As a planner, you must calm emotions and bring clarity. We also introduced integral carriers that combined front axle, steering systems, and front body structures into one high-pressure die-cast part. These transformations require cross-functional collaboration.

Sasan Hashemi: You seem very strong at breaking silos. Over the last 30 years, has automotive improved in cross-functional thinking?

Rainer Balbach: There has been progress, but there is still a long way to go. Specialists tend to stay within their domain. When their expertise becomes less relevant, fear arises. Mercedes-Benz experimented with incubation centers. BMW brought design, quality, supply chain management, and costing under one roof in Munich. That approach was much faster and more efficient than trying to change each individual mindset separately.

Sasan Hashemi: During your career, globalization accelerated significantly. You helped establish operations in Southeast Asia and China. What was that experience like?

Rainer Balbach: It started with Graz, Austria, at Steyr-Daimler-Puch. I synchronized central development and procurement with local production. Later I worked in Korea, Japan, China, Singapore, South Africa, India, Egypt, and South America. I helped establish CKD plants worldwide.
At that time, many countries required local content to allow imports without high duties. So OEMs established completely knocked down plants globally to remain competitive.

Sasan Hashemi: How did that change your perspective?

Rainer Balbach: It expanded my cultural openness tremendously. Living abroad, learning local food, local customs, and working styles deeply influenced me. You cannot integrate teams by order. You must recognize and respect cultural differences.

Sasan Hashemi: Let’s talk about EVs. Have emerging markets become innovation leaders?

Rainer Balbach: They learned quickly from Japanese and European OEMs. What we missed was maintaining openness and adaptability. We cannot transfer our structures one-to-one. Frame conditions differ. Take foundries as an example. Europe is losing foundry business due to high energy costs. Other regions offer better energy prices and infrastructure. Business cases matter.

Sasan Hashemi: In Europe, especially Germany, we relied heavily on “Made in Germany.” In the era of software-defined vehicles, where is our USP?

Rainer Balbach: We must rethink our development process. Software-defined vehicles change everything. It starts from customer use. A car today is like a smartphone on four wheels. We must listen more closely to customers and clearly define value. Engineers can build anything. The question is: at what price and within what timeline?

Sasan Hashemi: Let’s discuss hydrogen versus battery electric.

Rainer Balbach: It is use-case dependent. Hydrogen does not make sense for passenger cars in urban environments like Vienna. But for long-distance transportation and heavy-duty use cases, hydrogen is relevant. The key question is total cost of ownership combined with lifecycle analysis.

Sasan Hashemi: But infrastructure and technological progress influence total cost calculations.

Rainer Balbach: Exactly. Hydrogen slowed down due to infrastructure gaps. Now the focus is shifting toward infrastructure and electrolyzers. The same applies to battery electric vehicles. Energy storage is critical. Grid limitations prevent full utilization of renewable energy. Storage systems are essential to balance production and demand.

Sasan Hashemi: Are we leaders in hydrogen technology?

Rainer Balbach: Technologically, yes. But we lack economies of scale and infrastructure. It is a management and political framework issue.

Sasan Hashemi: We covered globalization, industrialization, EVs, hydrogen, infrastructure, and complexity. How can we move forward?

Rainer Balbach: My goal is managing complexity. We have many options and challenges. We must integrate data and provide clear decision-making options: Option A, B, C with advantages, disadvantages, and cost transparency. Artificial intelligence can help manage complexity and support decision-makers.

Sasan Hashemi: Many executives aim to “stay relevant.” How do you operate under uncertainty?

Rainer Balbach: We need more entrepreneurs. We promoted too many controllers and consultants, not enough enterprise owners. We need risk capital and entrepreneurial thinking again. Countries like China and Singapore demonstrate strong entrepreneurial behavior. We must reintegrate risk-taking into European industry.

Sasan Hashemi: Maybe it’s not about reinventing but rediscovering that entrepreneurial mindset. Rainer, thank you very much for this insightful conversation. If you have questions for Rainer, he is very active on LinkedIn. From personal experience, if you bring him into a complex situation, he brings clarity and structure. This conversation was very insightful for me, and I hope it was for you as well. That’s it for today. See you next time.