BASF CEO Bock says EVs could be next big thing for chemicals

Source: ECN


The nascent electric vehicle (EV) market could bring significant opportunities for the chemical industry, according to BASF CEO Kurt Bock.

With startling growth rates forecast and a string of auto companies planning to switch production over to EVs, chemical companies may be able to capture a lot of new business from this sector, Bock said on 3 October at New York’s Metropolitan Club.

Bock was in New York City to accept the ICIS Kavaler Award, for which he was selected for outstanding leadership in a ballot vote of the ICIS Top 40 Power Players.

The chemical industry will need to adapt to EVs in the same way it did to the shale gas revolution and the collapse in oil prices from $100/bbl to $50/bbl, Bock said.

“So what’s happening next? I don’t know, but here is another example – electrical mobility,” the chairman said. “General Motors and other car companies are making a lot of noise about this. Currently, market share in the US is 1%. Projections are skyrocketing, and it’s a big opportunity for our industry.”

Bock speech

Bock pointed out that for chemicals the EV market is about battery technology and electrical chemistry, which is one of BASF’s strengths.

But, he cautioned, nobody really knows how fast and in what direction the EV market will develop: “Everyone believes this is a gold mine, but very few people are making money out of it right now. I think this will be a very good business for BASF, but at the same time there are lots of uncertainties, and I can’t tell you what is hope and what is real.”

Bock said it is important for chemicals executives to reflect about what they do not know and cannot foresee and to be prepared to adjust business models. “Ten-year business plans are created which are then set in stone,” he said. “However, our ability to forecast events is limited to maybe two to three years. Beyond that it is guesswork, frankly.”

He pointed out that no one predicted the shale gas revolution or the oil price collapse. “With shale gas, the US gained competitiveness whilst Europe lost it,” Bock said. “But with the oil price collapse, Europe regained competitiveness.”

He said there would be many more surprises to come that could be opportunities for the industry. “We have been constantly renewing and reinventing ourselves and our companies, so I feel very positive about the future,” Bock said. “For that reason I’m very thankful about receiving this award.”


Bock said consolidation is an ongoing trend in the chemical sector, with companies buying and selling assets with relative ease. Businesses are changing even if they look from the outside as if they are the same. A company can still have the same name and size, but when you look at the details beneath the surface a lot has been changing, he added.

“You can buy and sell relatively quickly, but what is more difficult is changing the DNA of a company as this is deeply embedded,” Bock said. “Yet, even the DNA can change – we have to constantly renew ways of doing business. Going digital will help us reshape the way we do business.”

Bock believes that what drives much mergers and acquisitions activity is the quest for growth and a perception that growth rates are declining. Businesses are looking for growth by increasing market share because this – combined with synergies – creates more market and pricing power, plus growth.

“Chemicals is a growth industry,” he said. “Not all businesses are growing everywhere, but by-and-large our industry is growing around the globe for the simple reason that the population is growing and people want better standard of living, better health, better food and better transportation.”

He said that it is up to the industry to provide new and better chemistries to serve these growing markets.

“If we innovate, then we will be successful and continue to grow the top line,” Bock said. “Without growth, there is no successful business in my view. We have to pay attention to growing businesses – not just taking out costs and consolidating.”


Bock urged the chemical industry not to rely too much on driving growth and shareholder value by cutting costs, taking advantage of the current low interest rate environment.

“There is currently quite a lot of financial engineering going on which you put on top of what you are doing operationally and strategically,” he said.

“You should create shareholder value long and short-term but find the right balance between pure financial engineering and creating growth and operational excellence.”

Bock said that it is not sufficient to have earnings-per-share accretion just in year one or two – value must be created in the long term.

“That’s a much more demanding task than just beating down the cost of debt which is currently one to two percent for a company like BASF,” he said.

The 2017 ICIS Kavaler Award, sponsored by The Chemists’ Club, and in association with The Valence Group, was awarded to Kurt Bock, chairman of the board of executive directors of BASF, for outstanding achievement as voted on and recognized by his peers.