6 February 2014
Automobiles and Eco-Innovation
About two and a half years ago, an agreement was reached on mandatory corporate average fuel efficiency (C.A.F.E.) standards for automobiles and light trucks. At that time, a post to this blog pointed out that compliance with the new regulations would require nothing less than “a revolution in how cars and light trucks are made”.
This post repeats the earlier post, then upcycles it by providing an update on progress toward working this mother lode of eco-innovation.
A Mother Lode of Eco-Innovation
From: 11 August 2011
In the midst of Washington’s recent public debt ceiling circus, the President signed an agreement with thirteen major automobile makers that will increase fuel economy in cars and light trucks to an average of 54.5 miles per gallon for model year 2025 vehicles. This extends the current rules, which require an average 35.5 miles per gallon for model year 2016 vehicles.
This agreement has the force of law and a defined compliance schedule, so it is not just Washington hot air.
For manufacturers, this means nothing less than a revolution in how cars and light trucks are made. The new rules double fuel economy from current levels over less than 15 years. This isn’t incremental improvement. This changes almost everything about the design and manufacture of cars and light trucks.
These changes will be global in scope and they will affect almost all firms that supply (or want to supply) the automotive industry, throughout the value chains of all of the supplier tiers. Further, these changes provide a market of scale for successful new technologies. Given that market of scale, the cost structures for new technologies will change dramatically, hence making those technologies much more competitive in industries outside of automobiles. Take, for example, light weight carbon fiber reinforced composite materials. Today, these are specialty materials, compared to, say, aluminum. Given access to the volume a huge market like the automotive industry, what happens to the relative cost of carbon fiber composites, compared to that of aluminum?
Auto manufacturers need to design and assemble very high mileage vehicles across the product range. These need to be safe, reliable, durable, attractive, affordable vehicles that Americans will actually buy. And make a profit by doing so.
Suppliers to the auto industry will need innovations in production methods, production equipment, technology sources, materials sources, human skills, and everything else necessary to produce to the auto makers’ changing requirements. These include serious changes, including technologies that don’t even exist today (in a commercial sense). All on tight time schedules, with auto industry quality requirements.
Other manufacturers may find that they have capabilities that traditional auto industry suppliers don’t have. The new cars will be very different from their predecessors. Further, the technologies necessary to produce the new cars will also find applications in other industries. The opportunities are enormous.
An Update on Progress
The automotive industry is on a roll in America, with 15.7 million cars and light trucks sold in 2013. Scores of eco-innovations have been announced, demonstrated and, for a surprisingly large number, on their way to market. Here are some examples:
>> Engines: New engine technologies allow significantly better fuel efficiency at comparable performance (horsepower and torque). For example, Ford’s EcoBoost line of gasoline engines promises about 20% better fuel efficiency than the performance – comparable engines they replace. Ford has found that models about 80% of buyers choose EcoBoost engines over conventional alternatives, even though the initial price may be higher.
Further, there are an increasing number of diesel engine high mileage / high performance options becoming available. About 50% of the passenger cars sold in Europe are diesel powered, so major automobile manufacturers already have proven technology available.
>> Drive Trains: Internal combustion engines offer optimal fuel consumption and power output within a narrow range of engine rotation speeds (r.p.m.s). Many automakers are introducing new automatic transmissions with more speeds — five, six, eight or more — compared to today’s usual four. More transmission speeds means that engine rotation speed stays within the optimal r.p.m. range while the speed of the car or truck varies.
>> New Materials: The 2015 Ford F-150 light truck line made headlines recently by announcing a change to aluminum bodies. This change is expected to reduce vehicle weight by around 700 pounds per vehicle. Reduced vehicle weight equals better fuel mileage and better performance for a given engine and drive train. Those who are familiar with how fuel consumption and vehicle performance change when a truck is loaded can appreciate how much difference 700 pounds will make.
>> Entirely New Automobiles: Much has been said about the Tesla Model S sedan, a rechargeable electric automobile. The Model S is a big automobile (room for 7 people + luggage) that offers spectacular performance at very low operating costs and environmental impact. There is a lot of eco-innovation in the Tesla.
Speaking of eco-innovation, BMW recently introduced the BMW i3 electric automobile — a smaller car intended for urban drivers — with pricing that will compare to BMW’s standard 3 series automobiles. Along with very low operating costs and environment impacts from operation, the BMW i3 offers several very Green features. The vehicle’s body is carbon fiber, which is lighter and stronger than aluminum (think Boeing 787, as compared to older aircraft). Sustainable materials are used throughout the vehicle. The BMW i3 is designed for end-of-useful-life disposal — it is said to be about 95% recyclable. And the manufacturing facilities that produce the BMW i3 are almost as Green as the car.
>> And More: There is a lot more. At least one major automobile manufacturer is reported to be opening an R&D facility in Silicon Valley — software and communications technologies are now critical to automobiles. Toyota has announced a fuel cell variant of its Prius hybrid line, bringing hydrogen fuel technology into the mainstream automobile mix. In his recent State of the Union address, President Obama reminded the world that C.A.F.E. – style fuel consumption is coming to heavy trucks. For heavy trucks, there is natural gas fueling infrastructure now building out. There is also a lot new in second and third generation bio-diesel fuels close to commercialization. And the beat goes on…
The real point here isn’t automobiles. Rather, the point is that eco-innovation generates opportunities. All of the technologies mentioned above need suppliers, and those suppliers need new technologies, all the way down the food chain. And innovation in one industry provokes innovation in other industries. It may not be easy being Green, but it could be quite profitable.
Thoughtful comments and experience reports are always appreciated.
… Chuck Harrington (Chuck@JeraSustainableDevelopment.com)
P.S: Contact me when your organization is serious about pursuing Sustainability … CH
This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on Wednesday evenings.
Disclosure: Joan and I hold shares in both Ford and Tesla.
 For more on the 2015 Ford F-150 truck see The Courage to Innovate, this blog: http://blog.jerasustainabledevelopment.com/2014/01/15/the-courage-to-innovate.aspx
 Peter Detwiler did a nice article on the BMW i3 for Forbes magazine. Check it out at: http://www.forbes.com/sites/peterdetwiler/2014/01/29/bmws-i3-a-new-kind-of-electric-vehicle/?ss=business:energy