Bosch's 'innovative' mild hybrid system for Mercedes proves costly for supplier

Bosch's 'innovative' mild hybrid system for Mercedes proves costly for supplier

Automotive News Europe — 2023-11-14

Automotive Industry

Robert Bosch is expecting a big profit hit because of manufacturing problems with its latest 48-volt mild hybrid system used in the new Mercedes E Class and GLC.

Mercedes has been forced to reduce output of the two high-margin models because Bosch has been unable to ramp up production of the system fast enough to meet demand.

The automaker cannot build enough GLC and the E-Class models to meet demand because of supply issues with the 48-volt system, finance chief Harald Wilhelm said on the automaker's third-quarter earnings call last month.

Mercedes lost around 5% of its projected sales, equivalent to 100,000 cars, during the third quarter.

Bosch said it has now significantly increased output of the 48-volt batteries and it expects to be able to catch up with demand.

Bosch Mobility CEO Markus Heyn said manufacturing the new, second-generation mild hybrid system caused the company greater challenges than expected.

"Overall, the costs of the 48-volt battery are many times higher than initially assumed," Heyn told Automotive News Europe sister publication Automobilewoche.

"This is a very innovative battery that is unique on the market in this form," he said. A lot of electronics are integrated into the battery.

"This complexity has presented us with major challenges in terms of industrialization," Heyn said.

The project was also launched under difficult conditions during the coronavirus pandemic and involved a rapid ramp-up, Heyn added.

"If you want to bring innovative products to the automotive industry, you have to be prepared to take a certain amount of risk," he said.

Bosch invested  €70 m ($75 million) in readying its factory in Eisenach, Germany, to produce the mild hybrid system, which is due to be used in other new Mercedes cars to help reduce Carbon Dioxide emissions and to provide the higher voltage needed to power advanced processors.

Bosch sent teams of experts from other locations to Eisenach to help bring the output volume up to the planned level.

"We brought together the most capable people in a short space of time to solve the problems. We will learn from this for the future," Heyn said.

The supplier increased output of the system by 25% between September and October after adding a production line at its factory in Stuttgart-Feuerbach.