Aptera three-wheeled electric vehicle (TEV)
The Auto Industry Isn't Quite Dead--Far From It (I)
June / July 2009
Volume 7 Number 3
Will innovation save the automotive industry? The industry is today one of the most innovative in the U.S. According to the National Science Foundation, R&D spending by the industry in 2006 was the third largest of any industry at $16.5 billion, after pharmaceutical ($48.3 billion) and semiconductor ($18.5 billion). This level of spending is not necessarily surprising when one considers that the automobile is the most complex consumer product in existence. It is sold in large volumes (typically 50,000 vehicles per nameplate per year). In 2007, North American production was nearing 17 million units. Projections for 2009 are hovering between 9.5 million and 10 million due to the global recession.
It is also a fiercely competitive industry. The number of models sold in North America has grown tremendously over the last 10 years. And the rise in globalization has led to a business complexity in terms of production and distribution, as well as R&D that was heretofore unimaginable.
Added to the economic disruptions of the world recession are concerns regarding changing regulatory environments, changing consumer sentiments in response to rising petroleum prices and global climate concerns, currency fluctuations, technology uncertainties due to rapid development of new powertrain technologies and geopolitical instability generated from global threats of terrorism and government interventions, be it in military or economic form.
Thus, the automotive industry produces technically complex consumer products in high volume in a hypercompetitive, highly regulated and extremely volatile economic ecosystem. This means product innovations must be usable without training, always function with a high degree of reliability in any environment, be manufactured extremely cost competitively in high volumes—€”despite the products' rich technical complexity—€”and conform to multiple differing government regulations across the globe. These requirements have also lead to technically innovative design and manufacturing methods, such as global vehicle platforms and flexible manufacturing.
And the industry continues to innovate. At the 2008 Consumer Electronics show, Rick Wagoner, then chief executive officer of General Motors, said the automobile is changing from being:
—€ Mechanically driven to electrically driven
—€ Energized by petroleum to energized by electricity
—€ Powered by internal combustion to powered by electric motors
—€ Mechanically and hydraulically controlled to electronically and digitally controlled
—€ Operated in isolation to fully connected
Leading these changes has been an explosion of powertrain technology development. This has been partially driven by technology advancements and government support of advanced powertrains (PNGV and FreedomCAR for example), but it is mostly driven by fuel prices, which soared to over $4 per gallon in 2007. The environmental, security and dependence on foreign oil arguments, while fair and justify the government's continued involvement, were and remain secondary to economic forces. In other words, if the economics are not right, the market will not accept change and change will not happen.
Powertrain Developments
There are four major developments in powertrains: hydrogen fuel cells, biofuels, pure electric vehicles and hybrid electric vehicles.
Hydrogen Hydrogen has been touted as the fuel of the future because it emits only water vapor. There are two primary directions: fuel cells and hydrogen used as a fuel in combustion engines. It was very popular, and heavily government-sponsored in the late 1990s and early 2000s with GM, Toyota, and Honda working on it most. In 2005 GM declared they would have a marketable fuel cell vehicle by 2010; in 2007 it announced fuel cell vehicles in showrooms by 2012; now there is no formal announcement. However, there have been tremendous gains made in developing fuel cell vehicles, and most of the major automobile manufacturers continue to invest in its technology development and demonstration fleets. The biggest challenge is the infrastructure. It will be expensive and technologically difficult to find an economic method of hydrogen generation, storage and distribution. This is the reason there are no fuel cell vehicles in the Progressive Automotive X Prize Challenge, because one of the requirements is there be a fueling infrastructure available for the vehicle. This may be also one of the reasons Steven Chu, the Secretary of Energy, recently announced curtailing DOE spending on fuel cell R&D.
Biofuels Biofuels, such as E85 are touted because much of the CO2 emitted is absorbed by the plants used to produce the fuel, which is a renewable fuel source. Additionally, it is a minor incremental cost to produce a vehicle that can burn E85, it can be distributed and stored just like gasoline (although there are not many E85 pumps at the moment), CAFE regulations support E85 and it would reduce dependence on foreign oil. Brazil, which is often mentioned as a model of a biofuel economy, uses E25 generated from sugar cane, which in 2008 had a 50 percent market share. For biofuels to be economical in the U.S., they must be made from non-food sources, for example, cellulose from switch grass and waste products from the agricultural and lumber industry. There are numerous research and commercial projects that are publicly supported to develop better methods of producing ethanol. Mascoma, a cellulosic ethanol manufacturer, is experimenting with genetically modified yeasts and bacteria to create ethanol with fewer processing steps and without using enzymes. This could lead to a 20 to 30 percent reduction in costs. The technology will require further development before it could be implemented in production volumes.
Electric Vehicles EVs run only on electricity stored in batteries. EVs exist primarily in three forms: Neighborhood EVs (NEVs) are limited range (20 to 30 miles) and speed (less than 40 mph) vehicles that are used in residential communities and European urban centers; three-wheeled commuter vehicles (TEV); and low-volume, full-function vehicles (FEVs) with prices generally over $90,000. NEVs and TEVs generally do not follow the federal car safety standards, because they are either speed-limited or they classified as three-wheeled motorcycles. This greatly reduces the weight of vehicles, making EVs more viable.
NEVs suffer from an image problem of being glorified golf carts, which are for many how they began. However, much has been done commercially to improve these vehicles and many car companies are also developing independently or in partnership with other companies their own NEVs. NEVs typically seat two to six passengers and all are powered by lead acid batteries. There exist a plethora of small companies that are researching and producing TEVs, which typically seat two passengers and are also powered by lead acid batteries. FEVs can run on highways, must meet federal safety standards, have good performance and speed (over 100 mph), and good range (over 200 miles). They also tend to be costly, although a couple of manufacturers are taking preorders on sedans priced below $50,000 that are to be ready by 2012. These vehicles run on lithium-ion (Li-ion) batteries, which are far superior to lead acid and nickle metal hydride NiMH batteries in terms of energy storage and weight.
The major manufacturer of FEV's in the U.S., Tesla, uses about 6,800 Li-ion cells, which are similar to the ones used in consumer electronics, for their Tesla Sport. A critical consumer issue will be the availability of charging stations and the time it takes to charge the battery.
Hybrids Hybrid electric vehicles (HEVs) show the most promise in the near future. First, the term hybrids has come to encompass many things, but at its core a hybrid uses both electrical and mechanical energy from an internal combustion engine to directly or indirectly propel the vehicle. The engine may use any fuel: gasoline, diesel, biofuels, CNG or hydrogen. There are two major types of HEVs: series and parallel hybrids. Series hybrids use the electric motor only to propel the vehicle and the engine only to generate electricity. The GM Volt is a series hybrid vehicle. Parallel hybrids use both the electric motor and the engine to power the vehicle.
The Toyota Prius, Honda Insight, Ford Escape and all other hybrids by the major manufacturers on the road today are parallel hybrids and all use NiMH batteries. A plug-in hybrid (PHEV) is simply a HEV (series or parallel) that allows one to charge the battery from a wall socket (the grid). Some HEVs can run only on battery power for a period of time or below certain speeds (EV mode). Others use the battery to support high-power needs, such as acceleration. The exact time when the battery is powering the vehicle or is being charged is part of the power electronics. For both series and parallel HEVs, when the battery is drained, the engine takes over and powers the car. For this reason and because of the confusion around PHEVs, the industry is touting the term "extended range" HEV to ease public concern around lack of a charging infrastructure.
The two major technologies surrounding the electrification of the vehicle, be it EV or HEV, are batteries and power electronics. Much research has been devoted to Li-ion batteries, because NiMH batteries cannot store enough charge to provide adequate range, given vehicle space and weight constraints. But Li-ion batteries are technologically challenging. Battery packs large enough to power a vehicle consist of one to several hundred cells. Besides the cell material challenges, each cell has to be thermally and electrically controlled, meaning each cell has to have individual sensors and control mechanisms to ensure proper function, reliability and durability in any environment. All the sensor and control data is computer controlled by the "power electronics."
While the technology is available, manufacturers are hesitant to produce PHEVs without the charging infrastructure because it is unclear whether the public would be willing to pay the additional incremental cost of a PHEV without a charging infrastructure. But this is a chicken and egg problem. Utilities, landlords, companies, apartment complexes, governments and so on may be hesitant to invest in charging stations without better knowledge of consumer demand for HEVs. But, consumer demand cannot be properly measured if the product does not exist. Further, utilities are also driven by customer demand. Given that vehicle adoption rates are measured in years, it could be some time before we see widespread adoption of PHEVs. Even today, 10 years after the U.S.
introduction of the Honda Insight and 9 years after the Toyota Prius, HEVs represent only 2 percent to 3 percent of the vehicle market, despite government incentives. Further, the consumer is only interested in fuel efficiency so long as gasoline prices are high. When the price of gasoline dropped from $4 to $2, truck and SUV sales again rose relative to small-vehicle sales. Thus, the technology developments into producing fuel efficient vehicles are in jeopardy from low fuel prices.
Internal Combustion The internal combustion engine will remain the major powertrain for the foreseeable future for four major reasons:
—€ The energy density of gasoline is much higher than for any alternative technology being considered
—€ The infrastructure for gasoline exists and is widespread
—€ Most of the alternative technologies are either too far away from full implementation and adoption (e.g., hydrogen), or require internal combustion engines of some kind to operate (HEVs, PHEVs).
—€ Internal combustion technology is continuing to improve through the use of turbo-chargers, direct injection, high-compression charge ignition and other innovations, which improve the power of smaller engines so they may be used in larger vehicles, resulting in overall fuel efficiency gains.
New Materials
Another area of automotive advancement is in materials. Material developments include bio materials for seating (soy based), nano materials for self-healing paint, and smart materials that can change their properties with the controlled application of electricity or heat. But this article focuses on the significant efforts underway to lighten the automotive body. The body is a significant vehicle system because it is critical to vehicle function, changes frequently to satisfy consumer expectations, is second in cost only to the powertrain and is always on the critical path to vehicle launch. While bodies are primarily made from steel, other materials such as aluminum, magnesium, plastics and graphite/carbon composites are gaining popularity. Titanium sheet is still expensive and in the research phase. In response, the steel companies have developed and continue to develop advanced high strength, ultrahigh-strength, boron and TWIP (Twinning Induced Plasticity) steels. The main issue surrounding body materials is formability, joining process and cost. Steel is the least expensive, is typically well understood and can be welded with the existing infrastructure. Ultrahigh-strength and even higher strength steels pose forming difficulties and have resulted in new press technologies, such as hydroforming, hot rolling and super plastic forming. Aluminum sheet cannot be welded to steel, and therefore finds most application in closure panels (doors, hoods and trunk lids), which are mechanically joined to the vehicle structure. Aluminum and magnesium extrusions require the vehicle sections be redesigned from several sheet metal pieces to the extrusions and reanalyzed for crash, strength, and vibration. Plastics come in a variety of materials and show great promise, but the industry is accustomed to working with steels. This means the supply structure, equipment, vehicle design and personnel are accustomed to working with sheet metal. Thus plastics are finding applications on a limited basis.
An interesting development is the potential use of polycarbonates to replace glass to lighten the vehicle, much like the material has replaced glass in eyewear. Carbon composites are generally only found on luxury sport vehicles. The material is expensive and the forming processes are still slow and in their relative infancy. Ultimately the industry will move toward the multi-material body, optimizing material use for performance and cost. This transition will occur gradually because of the existing design, supply, manufacturing and assembly infrastructure.
Electrification
The electrification of the vehicle has also led to the third major area of automotive technology development: the broader adoption of vehicle electronics. According to Rick Wagoner, the electronics content of the typical automobile has increased by almost 50 percent over just the last five years. It is expected to account for 35 to 40 percent of its cost by 2010, and the electronics and software will represent 80 to 90 percent of vehicle innovations over the same period. We are already seeing much of that today with communication technology such as On-Star, voice activation such as Synch, safety technology such as electronic stability control, and video imaging and sensing technology for automated parking assistance.
But the major excitement in the industry surrounds telematics—€”the ability for vehicles to communicate information to a central location, with each other and with the road itself. This breakthrough is possible, not only because of advancements in electronics and communication technology and the electrification of the vehicle, but, more important, because the Federal Communications Commission has set aside specific frequencies and bandwidth for automotive communications. Vehicle communication has the potential to improve vehicle life through better on- and off-board diagnostics. GM already claims to have saved over $100 million annually in reduced warranty and recall costs because of the vehicle information passed on to them through their On-Star system.
Suppliers are also developing new electronic safety technology based on vehicle telematics, such adaptive cruise control, lane departure warnings, automatic braking systems and so on. Some of these systems merely inform the driver of impending danger, others actively change a vehicle state (brake) based on vehicle data, including vehicle-to-vehicle communication, and road and traffic conditions (vehicle-to-road communication).
Developments in vehicle electronics, whether from power electronics or telematics or infotainment are not only going to continue but accelerate. One can see this in the number of chips that are being used in modern vehicles. These chips and their loaded software have to be extremely fast, robust and function correctly every time under all conditions. The industry is adopting new software and electronics development processes, called model-based design, to improve quality, increase speed and reduce the cost of developing, testing and producing these systems.
Will innovation save the industry? Not by itself. Innovation is required for competitive reasons, but it is very expensive. Before globalization in the 1990s, manufacturers conducted the majority of their R&D efforts in-house. With global outsourcing, approximately 20 percent of the R&D effort was transferred to their suppliers. Now, the largest manufacturers and suppliers are being very strategic about where they spend their internal R&D resources, and all manufacturers and suppliers are forming partnerships to ensure they cover the remaining innovation spectrum. These partnerships are notable because they are not only the traditional customer-supplier partnerships, but more often cooperative partnerships with competitors—€”"coopetition."
But innovation is necessary. It truly is "innovate or die!" And the automotive industry realizes this as evidenced by its continued investment in innovation even during these turbulent economic times. For example, GM announced at the 2009 Detroit Autoshow a $30 million investment in Li-ion battery production facilities and a $5 million investment in battery education and research.
The future is not clear and one cannot predict winners and losers at this time. One should note that many of the technologies are not mutually exclusive. It is possible we will see lightweight, connected, biofuel plug-in hybrid vehicles in the next five years. Also, given the global economics and market fragmentation, it is likely that no single technology will be a clear winner, but that all these technologies will be available as options in the market. This is already happening with the availability of gasoline, flex fuel, diesel and hybrid powertrain options. And while many outside the industry often shake their heads, trying to understand why their vision of the technological future is not more forcefully embraced, consumer and market forces will ultimately determine what the future will look like. We can also be sure of one other thing: it will be different, exciting and completely amazing.
Richard Gerth, Ph.D., is a consultant to the automotive and aerospace industries. He was senior research scientist at the Center for Automotive Research. His expertise is in innovation and product development, quality engineering and lean manufacturing, dimensional control in body manufacturing and assembly and virtual engineering.
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