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03/2025

The Relevance of Investments in Energy and Resource Efficiency

Andres Gujan explains the significant impact of these investments:

“The capital market is essential. Massive investments in improving energy and resource efficiency are needed to steer the world toward a CO₂-neutral circular economy. On a corporate level, these investments are crucial for maintaining competitiveness and enhancing sustainability. At Carnot Capital, we have the expertise to assess the impact of individual products and technologies.”

1. Energy Savings

Energy savings are a key aspect when evaluating the impact of energy efficiency measures. The amount of energy saved is typically measured in kilowatt-hours (kWh). Another important indicator is the percentage reduction in energy consumption compared to industry standards. These figures provide insight into the effectiveness of the measures.

2. Cost Savings

Financial savings in energy consumption are a major incentive for energy efficiency measures. The return on investment (ROI) is a key indicator here, measuring the return as the ratio of energy cost savings to the investment cost of the measure. The ROI indicates how quickly the investment pays off.

3. CO₂ Emissions

Reducing CO₂ emissions is another critical driver of energy efficiency measures. CO₂ savings are essential due to legal requirements, customer expectations, or corporate sustainability strategies. The carbon footprint of products—especially electric vehicles—is gaining importance. The footprint reflects the total greenhouse gas emissions generated throughout a product’s lifecycle. Reducing this footprint is crucial for advancing climate change mitigation efforts.

4. Resource Efficiency

Resource efficiency focuses on the sustainable use of natural resources such as water, energy, agricultural land, food, or metals. The goal is to reduce consumption and minimize waste. This is essential to ensure long-term resource availability and prevent severe environmental damage to natural ecosystems. Key indicators include the amount of materials saved and waste reduction through more efficient use and recycling of materials.

5. Productivity Improvements

Productivity improvements are a significant benefit of energy efficiency measures. Metrics such as output per unit of energy used and production process optimizations—leading to lower operating costs and increased efficiency—are essential. These enhancements help boost competitiveness and streamline business operations.

6. Social and Economic Indicators

Investments in energy and resource efficiency also bring social and economic benefits. They create jobs and improve working conditions through sustainable transformations. Key indicators include the number of jobs created or maintained and improvements in working conditions and public health due to reduced pollution and safer technologies. These measures contribute to social and economic development while enhancing quality of life.

7. Long-Term Sustainability

Long-term sustainability is a core objective of energy and resource efficiency initiatives. Detailed sustainability reports that document the long-term impact of investments on the environment, society, and the economy are essential tools. Compliance with sustainability standards and obtaining certifications are further indicators of long-term sustainability.

8. Monitoring and Evaluation

Continuous monitoring and evaluation are crucial for the success of energy efficiency measures. The use of energy management systems and other technologies for real-time tracking and analysis of energy and resource use enables ongoing assessment and optimization. Benchmarking—comparing efficiency measures with industry standards or best practices—helps identify progress and potential improvements.

“By combining these methods and indicators, companies and investors can comprehensively evaluate and continuously improve the impact of their investments in energy and resource efficiency. These measures not only contribute to cost and emission reductions but also promote sustainable and future-oriented development.”
Andres Gujan, Founder of Carnot Capital & Portfolio Manager

Andres Gujan, March 3, 2025

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Automotive Industry in Transition: Innovations Driving the Future of Mobility

Automotive Industry in Transition: Innovations Driving the Future of Mobility

Innvations in the Automotive Industry

The automotive industry is currently undergoing major developments in numerous areas:

  • ‘Connected Cars’: The vehicle as a digital platform
  • Autonomous Driving: First robotaxis, then personal vehicles
  • Electromobility: On the rise, especially in China
  • Alternative Fuels: A complement to e-mobility

Mobility is fundamentally shifting toward connected and autonomous vehicles. These changes are not only revolutionizing transportation but also influencing urban design, the working environment, and quality of life.

Digitalization and Sensor Technology as Key Success Factors

At the core of innovation lies the combination of sensor technology and computing power (including AI). Data-driven services and connected mobility are becoming the norm. Technology providers that successfully integrate sensors and digital technologies hold a particularly strong market position.

Electromobility and, above all, the increasing autonomy of vehicles free up space for passengers to pursue various activities—entertainment, work, comfort, relaxation… This, in turn, drives additional demand for sensors and chips. Expected growth rates by 2030 vary by application, reaching over 22% in some cases.

Implications for Carnot Capital

Despite these developments and attractive valuations, we are maintaining a relatively low allocation in automotive suppliers. Our semiconductor and sensor technology positions in Melexis, LEM, Infineon, and Xfab account for around 10% of our portfolio. In addition, Ems-Chemie contributes as a manufacturer of high-performance polymers that make vehicles lighter and safer. With Sandvik, we also participate in the electrification of mining: electric loaders and transporters reduce the carbon footprint of metals while increasing productivity.

We will increase our automotive allocation once we gain confidence in rising car sales and see renewed momentum in electromobility, particularly in Western markets.

Rolf Helbling / Andres Gujan, February 5, 2025

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Stagnant Markets and Rising Competitive Pressure: Europe’s Car Manufacturers in Crisis

Stagnant Markets and Rising Competitive Pressure: Europe’s Car Manufacturers in Crisis

Reorganisation in the Automotive Industry:

VW reported record results in 2022 and 2023, but barely a year later the mood is one of crisis – there is talk of plant closures and redundancies. The other European manufacturers are not faring much better and are also facing capacity adjustments and restructuring. This has a lot to do with the planned switch to electromobility, which has stalled in 2024. Global EV sales rose by 22% in H1 2024, but the market in Europe is stagnating. Fiat, for example, had to reduce production of the 500e by 60% (DW.com).

A Competitive Edge

The blame for the crisis is universally attributed to poor policy: Too little support, too much support, pending ban on combustion engines, purchase premiums, CO2 limits, import tariffs, Chinese subsidies, etc. In our eyes, this perception is not wrong.

However, we believe that the main cause of the crisis is the eroding competitiveness of European car manufacturers, regardless of the type of drive. Asian competitors have become technologically equal, if you believe the (European!) test reports. In terms of production efficiency, they have an advantage anyway: at VW, employees generally work (only) 35 hours a week, but enjoy 6 weeks’ holiday and are sick for more than 5 weeks on average. So it’s easy to understand why, for example, VW employees work more than 5 weeks a week.

Unattractive OEMs, Waiting for Entry Opportunities

The transport sector is responsible for around a third of global energy consumption and is therefore an important fund theme. Nevertheless, we have kept our exposure to the automotive sector below the target level for years (currently approx. 12%). Automobile manufacturers (OEMs) and suppliers such as Continental are unattractive due to their high capital intensity. We are looking for opportunities primarily in the electrification of road and commercial vehicles (Lem, Infineon, Melexis, X-Fab, Sandvik). The electric drive plays an important role here, and new safety and comfort components are also increasing the demand for silicon. However, we are still holding off on acquisitions.

Rolf Helbling / Andres Gujan, 5. November 2024

 

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