EXCLUSIVE: 2012 C.A.R. Management Briefing Seminars Day 2 - Fuel Efficiency

CENTER FOR AUTOMOTIVE RESEARCH MANAGEMENT BRIEFING SEMINARS 2012

DAY 2

By Steve Purdy
TheAutoChannel.com
Michigan Bureau

Our MBS Day Two morning panel explored, in great depth, trends in powertrain development. We heard from the R&D guys from the Detroit Three and a really smart guy from the contract-engineering firm FEV. Government regulations around the world define what, at first blush, might seem to be pie-in-the-sky goals for fuel economy and emissions limitations, but all our panelists expressed optimism that they could meet the requirements. Each went through what they were doing to advance powertrain technology, but I heard nothing new. They are all working on the same technologies, essentially, and putting them into practice in similar fashion. I expect this will be a central theme of these CAR conferences for many years to come. And, I wait in great anticipation to hear about something really new.

All agreed that the internal combustion engine burning fossil fuels will be with us well into the future, accounting for a significant portion of the market. They also agreed that many technologies offer the potential of squeezing more efficiency out of them. We’ll be seeing more direct injection, turbocharging, creative valve management, combustion enhancements, integration of electricity (all levels of hybridization), start/stop systems, more alternative fuels, cooled EGRs, more 7-, 8- and 9-speed transmissions and on and on. I did not hear any mention of technologies that we’d think of as new or groundbreaking. Some of us still believe we’ll also be relying more on diesels to meet some of these new fuel mileage requirements as well.

While the panelists agreed that government mandates – particular CAFE - can be reached they also agreed that they would have to be integrated into automobiles in a way that the customer will still want to buy them. It will do no good to offer such efficient cars if they are too small, too slow or too ugly to succeed in the market. We could end up like Cuba with an older and older fleet on the road as people keep, and continue to repair, the cars they like that suit them better. Of course, in Cuba the survival of the old fleet was for different political reasons.

We are reminded by this discussion of the global nature of auto business. While customers in different parts of the world demand different amenities, styles and types of vehicles, governments around the world are imposing emissions, safety and mileage standards. To a question about whether a change in U.S. political leadership after the November elections may change the game by backing off on CAFE standards, the panel agreed that because they are designing to a world full of stringent standards, it would make little difference.

I guess we saw something fairly new here - I hasten to admit – though it may not have much applicability to common passenger cars. Have you ever heard of a hydraulic hybrid? A company called NRG Dynamix brought one to show us all. They’ve been working on the system since 2004 and it is designed primarily for commercial vehicles. Eaton also has a similar system now in real world testing in a garbage truck fleet in Ann Arbor. We had a look at that one a couple years ago at the Hybrid Truck Users Forum. The generator and regenerative brakes feed a hydraulic accumulator where the energy is stored, perhaps more efficiently than electric energy in a battery. The system uses no expensive or complex materials, as do battery systems. Because of the ability of the system to immediately and efficiently use the stored energy it is amenable to frequent starts and stops like city trucks.

Among other techniques for making cars more lightweight we heard about here in Traverse City is the use of carbon fiber, long used in race cars, space ships and other exotic vehicles. Mansour Mirdamadi, chief engineer for Dow Automotive, admits it may be too expensive so far for widespread application but it’s extremely light weight, has amazing strength and is impervious to corrosion. Those qualities make it fascinating to look at, perhaps in limited applications.

In another note of optimism, Jeff Schuster, senior vice president of forecasting at LMC Automotive, predicts we could see a sales rate of very close to 16 million by 2015. He expects the 2012 rate to be 14.3 million, which is on the higher end of most analysts’ predictions. This comes in spite of fewer incentives, lower fleet sales and somewhat higher prices. He also opined that even by 2017 hybrid vehicles might be as much as 7% of the market. That’s considerably higher than we’ve heard any others predict.

Contributing to the analysis of hybrid and electric cars may be the cost of lithium-ion batteries. A study by consulting firm McKinsey & Company predicts the cost will drop precipitously by 2020 from the current $500 to $600 per kilowatt hour to around $200. By 2025 it could drop to $150 by. Most of these saving will come from manufacturing efficiencies and spreading costs over more volume. We heard no discussion of the availability of the raw materials.

Some might contend that the real work of the conference begins after the days sessions are done. Each day a networking event fills a huge tent behind the conference center where attendees crowd around the bars and buffets and intensively network. In fact, throughout the day we find huddles of folks everywhere in deep conversion. There is no question that more work gets accomplished in these informal sessions than in the presentation forums.

Finishing a hard-working day we took advantage of this spectacular Northern Michigan location with a nice drive. My pretty blonde and I, along with another couple, took a drive up into the Mission Peninsula that separates East Traverse Bay from the West Bay. Miles and miles of orchards, vineyards and beautiful homes overlook the big waters. A friend owns one of the vineyards and is building a winery there and we found it, spending some time yearning for that kind of pastoral life.

Stay tuned for more from the 2012 Management Briefing Seminars. Michigan’s governor will be here for a pep talk and update on the State’s support of the auto industry.