Interview with Dr Christoph Ballin, founder and CEO of Torqeedo, about the future of mobility on the water.
The whole story began in a small boathouse on Lake Starnberg: when the qualified business economist and former McKinsey consultant, Dr Christoph Ballin, accepted his new job as CEO at Gardena, he moved to the Munich area.
By chance, he came across a holiday home with the aforementioned boathouse – it was located on a canal that gave access to Lake Starnberg, so it was natural to explore his new surroundings in a boat. Dr Ballin had actually imagined gliding about in a sleek motorboat – but he then discovered that the use of combustion engines is strictly regulated on Lake Starnberg. He therefore bought a small wooden boat, renovated it and “tacked”, in his own words, a conventional electric motor to it. However, when Friedrich Böbel, who was the Chief Technical Officer at Gardena at that time, visited Dr Ballin for afternoon tea, his opinion was clear and concise: “That’s all old technology – you can do that much better nowadays.” No sooner said than done – the two men founded Torqeedo in 2005 and are now the global market leaders in water-borne electromobility.
What convinced you to give up your lucrative jobs and set up a start-up for electric boat motors?
Dr Christoph Ballin: We simply believed that we could build the best product on the market. If you believe something like that as a market outsider, then it usually means that you have overlooked something. But we were absolutely certain. In addition, we were convinced that electric mobility was bound to become more important in the future. After all, even though terms such as “electromobility” and “clean tech” had not yet been coined back then, the underlying drivers were as familiar then as they are today: consistent global population growth, the doubling of the middle classes around the world in a decade, global warming and air pollution in cities …
What was the state of the art in those days?
C.B.: It was a different world. Electric boat motors were actually only built for regulated waters. An extremely small market, and there were no industrially built products available. Generally, the motors used lead-gel or AGM systems. In the Torqeedo systems nowadays, we use lithium-battery technology. By way of comparison, in my first boat, I had a battery bank with an output of
4 kilowatt hours. I now have one with 40 kilowatt hours …
Even so – wasn’t it a very bold decision to give up your secure jobs?
C.B.: At the end of the day, it wasn’t particularly bold. We simply invested the money that we had earned up to then into the company, and didn’t get ourselves into too much debt. In the worst-case scenario, we would have lost our savings and we would have had to look for a new job again after three years. Of course, we didn’t get very far with just our own funds, and we had to raise more capital for Torqeedo relatively soon via angel investors and venture capitalists. We also had strong partners who helped us to finance the company sensibly and to turn it into what it has become today.
What do you mean by strong partners?
C.B.: Well, on the one hand, of course – financially strong. Electromobility is a topic for people with long-term tenacity: you need investors who will remain faithful even if you sometimes run into difficulties for a month or two. After all, starting up a company can often be a rather bumpy ride, and an investor needs to stay on track even then.
What makes electric motors on boats so attractive for you?
C.B.: We are defining the future of mobility on the water – that is what it is all about at Torqeedo. The boating lifestyle in its various aspects enriches the lives of many people. If we want to protect this lifestyle for future -generations, we need to do so in a different way from in the past. And we are the spearhead, showing how it can be done. That is the great fascination about our work.
Is the idea of nature conservation enough to convince boat owners about your electric motors?
C.B.: Nobody buys a motor just because it is more environmentally friendly. I always need an additional aspect where the electric system is better than a combustion motor. The fact that it is also more environmentally friendly on top of that makes it a real winner. The benefits of electric motors vary from segment to segment: the motors for small day sailors or dinghies are already electric because they are better than combustion motors in every way. They are smaller, lighter, easier to use, more convenient – and they are even more environmentally friendly as well. That is why they sell extremely well in this segment.
Or take the area of racing sail boats. You need an electric motor in them to sail out to the regatta route. And it is much lighter than a comparable combustion motor, and will hamper the sailing performance far less.
What about the area of commercial use?
C.B.: The area of ferries and taxis is a core segment for us. We can score points here with two particular arguments: on the one hand, the avoidance or reduction of air pollution is an issue in all cities around the world. On the other hand, electric motors in these applications are far more cost-effective in terms of the total cost of ownership. After all, taxis and ferries are used intensively, and always within a predefined duty cycle. That is perfect for electromobility – although you have higher initial investments than with a combustion motor, the costs per operating hour are lower. So electromobility always pays off when a vehicle has particularly high mileage. The break-even- point generally comes after three or four years.
What do “old salts” think about electric motors?
C.B.: Generally, most people are now responding very positively – even though we cannot yet supply brilliant products for every segment. Our focus is therefore always on finding and serving the right segments where electromobility is superior at present. In those areas, the response is correspondingly positive.
„Before Torqeedo entered the market, nobody talked about the overall efficiency of a boat drive“
Dr Christoph Ballin, Founder and CEO of Torqeedo
How sophisticated is the technology nowadays?
C.B.: In terms of the battery technology, we are moving in the slipstream of the automotive industry, especially with the large power classes. Thanks to the cooperation with BMW, we have been able to bring the state of the art in the automotive industry to our boats. As far as the battery technology is concerned, we are at the same level. In terms of the motor technology, we use slightly different motor concepts because the boat motors have to be designed differently, but of course there are components available from the automotive industry with excellent qualities and at good prices that we can use effectively in the boat industry.
Research is now being carried out on electric motors for large ships. What do you think about that development?
C.B.: Electric motors where the energy is supplied by batteries are actually only really advisable for comparatively short routes and low outputs. Ferries that cross a fjord and are recharged at both of the opposite ports – those are the sort of applications that can be implemented very well, even on large ships. However, overcoming long distances in a climate-neutral way – that’s a different matter entirely. You will probably need hydrogen or biofuels for that.
What is special about Torqeedo motors?
C.B.: We use brushless motors from the outset and only employ lithium-battery technology. The drivetrain engineering is also a central factor for us: we look at the entire drivetrain and optimise the overall efficiency of the motor, the motor electronics, the gear unit and the propeller. Before Torqeedo reached the market, nobody had talked about the overall efficiency or looked at the propulsion output. As a result, overall efficiency rates of under 10 % are still absolutely typical in small, outboard combustion motors, even today. In contrast, we achieve overall efficiency rates of 44 to 56 %.
The second point that sets us apart: we develop fully integrated traction systems – from the propeller through to the helmstand. After all, the more complicated the systems become, the better all the components have to be coordinated with each other and be able to communicate with each other.
What role does digitalisation play for you in the drive technology?
C.B.: In general, digitalisation is a huge topic in the boat industry. Our customers want to be kept informed about the boat systems and monitor them remotely, just like it is possible nowadays with cars and with households. Our Blue Hybrid motors for ferries or sailing yachts have a software component that accounts for well over half of the development resources during the development phase. On the one hand, that makes it possible to create a flexible and modular system, where I can combine the components together like Lego building blocks in various configurations. At the same time, the system is also completely consistent, and all of the components can communicate with each other.
As the systems are being used all over the world, issues such as remote monitoring, remote software updates and remote diagnosis are also relevant, of course.
Are digitalisation and networking also opening up new business models for you?
C.B.: Yes, they are. But that isn’t really a proper business area yet because the servicing and maintenance for electric vehicles is far less complicated overall than for combustion motors. As such, those sorts of services do not offer as much sales potential for us as for manufacturers of combustion motors.
So you are not considering the concept of changing the sales model, and no longer selling the motors but simply having customers pay for the propulsion?
C.B.: We did actually consider that at one time. But to do that, you have to regard yourself in part as a financier – which we are not doing at the moment. But the idea is certainly on our radar and is also in demand from the customers. It is precisely because electromobility calls for higher initial investments and low operating costs that leasing or other alternative financing types would be a logical step.
That is where your new parent company could play its part. What were your reasons for bringing Deutz on board?
C.B.: We originally set the company up with our own money; then we introduced angel investors for the first time at the end of 2006, and venture capital in 2009. So we always had the possibility of a sale to a larger industrial company or a flotation on the stock market at the back of our minds. With an industrial company like Deutz, we are now part of a larger and more powerful eco-system, and I’m delighted.
And why was Deutz interested in Torqeedo?
C.B.: At the moment, there isn’t actually any electromobility in the segments where Deutz is active – construction and agricultural machinery. But it will break into that segment, too, and Deutz wanted to take on the leading role. To press the fast forward button on that, Deutz was looking for a company that, on the one hand, can cover all the aspects of electromobility – motors, inverters, electronics – and, on the other hand, already has experience in terms of the supply chain, marketing and service. In Europe, that only leaves a select few companies… Our team is now working together with the Deutz team on also offering electromobility solutions in the Deutz segments – a couple of prototypes have already been unveiled. On the other hand, Deutz is now the industrial parent company of Torqeedo, which offers us advantages in terms of industrialisation and, in the long term, also in terms of jointly used components that can be used in construction equipment and boats alike.
Electric motors are often referred to as a bridging technology – what are your thoughts on that?
C.B.: Mobility has to be climate-neutral. If you accept that, then you can begin to consider how it might work. We still need to find answers to a number of questions: firstly, energy needs to be generated in a climate-neutral way. We need to clarify how to supply the energy to the consumers. On that point, hydrogen could well be an attractive energy carrier.
Even so, electromobility is not a transitional technology; rather, I see it as a piece of a mosaic creating climate-neutral mobility. For Torqeedo, it does not matter whether the energy comes from lithium batteries or from a hydrogen fuel cell. The important point is simply that every new product is a little cleaner than the previous one it supersedes so that, step by step, we can achieve the goal of overall climate-neutral mobility.