Exploding Demand

The world's auto makers sidestepped a regulatory minefield when President Obama announced new corporate average fuel economy standards May 19 in the White House Rose Garden.

The old CAFE standards had achieved little beyond inspiring lawsuits, pigheadedness and seething distrust between auto makers and, ironically, coastal states that sell the most vehicles.

All that changed when the new president arrived in January with a “yes we can” spirit and a ramrod mentality that forced all parties to accept a new framework to dramatically reduce fuel consumption and resulting greenhouse-gas emissions.

At Obama's insistence, the stakeholders went from gridlock to 35.5 mpg (6.6 L/100 km) in less than five months. Thirty years of opposition and political bluster by the industry faded as quickly as an analog TV signal.

By 2016, every auto maker's lineup must achieve this fleet average, or face severe penalties. That's four years earlier than the target would have been achieved under the old CAFE legislation, which was approved in December 2007 after much acrimony.

Getting there by 2016 will not be easy. The market's lifeblood long has been hulking pickups and SUVs that fell far short of 35 mpg in fuel efficiency but were profitable enough to offset years' of losses on small cars.

Thankfully, the new standard does not catch the industry flat-footed. Product-development teams at auto makers, parts producers and raw-material suppliers have spent more than a decade removing mass and smoothing aerodynamics in a broad-brush attempt to improve fuel economy.

Now, those efforts are accelerating. Many suppliers say auto makers suddenly are showing interest in technologies that have been shopped for years to a relatively unenthusiastic audience, proving that nothing sharpens resolve like a federally imposed deadline.

To say the new mandate is sparking a gold rush of new fuel-saving technologies is an overstatement, but several well-positioned suppliers say they view this wave of innovation as one of the few bright spots as they cope with volumes cut roughly in half by the depressed economy.

One of the biggest winners will be turbochargers, whose use is expected to skyrocket in the U.S. The outlook for turbochargers and efficiency-enhancing dual-clutch transmissions has BorgWarner Inc. CEO Tim Manganello upbeat.

“We've got companies knocking on our door. We'll be doing a lot with Ford (Motor Co.) focused on fuel economy,” Manganello says. “Suppliers that innovate and have technology in the right areas are really going to do well.”

Hella Electronics, a division of Hella Corp., is seeing significant demand for components that improve fuel efficiency: electronic throttle control, electric vacuum pumps and mild-hybrid stop/start systems.

The product expertise has won warm receptions for Hella at both Ford and General Motors Corp., says Mark Brainard, vice president-program management for Hella Electronics.

Ford counts on direct-injection turbocharged EcoBoost engine strategy for greater efficiency.

“We're fortunate because most of our portfolio is really geared to carbon-dioxide reduction and more efficient use of energy within the vehicle,” he says. “We're well lined up for the North American trend right now. They are pulling us in fast and furious.”

Brainard says CO2 reductions can reach as high as 15 g/km for electronic throttle control and 6 g/km for electric vacuum pumps.

But the technology he sees with the most potential is stop/start systems, which allow an engine to shut down at stop lights and instantly restart when the brake is released.

Hella supplies integrated battery sensors and voltage stabilizers for the systems, which can deliver a 10% gain in fuel economy. The technology is appearing in a growing number of European cars.

“In the U.S. market, there's a lot of interest with the domestic OEMs,” Brainard says. “We have a lot of experience in Europe. We've compiled a lot of data, and our focus right now is transferring all of that to North America so we can provide it to our local customers.”

By 2016, he expects a penetration rate for stop/start systems as high as 50% — including many vehicles lacking full hybrid capability. “The technology is there,” Brainard says. “It's a matter of getting it into the market here.”

He admits stop/start systems until recently were a hard sell in the U.S., because auto makers “didn't see enough benefit. But suddenly there's a lot more interest in the last five to six months.”

Even if the market growth is politically driven, Brainard doesn't mind. If the government requires better fuel efficiency, the debate is settled.

“For me as a supplier, that's the best security I can get that it's going to happen,” he says. “The OEMs are being forced to do it.”

Technologies Are Converging

U.S. auto makers now are latching onto some of the more expensive technologies, such as direct-injection gasoline, electric-powered accessories and, to a lesser extent, diesel.

Direct injection and turbocharging have combined over the past decade to deliver a potent technology package that has driven the penetration of modern common-rail diesel engines in new European vehicles past 50%.

A similar trajectory is possible with new turbocharged direct-injection gasoline engines, which have arrived in luxury cars and now are filtering into more moderately priced high-volume vehicles, especially in the GM portfolio.

By itself, a turbocharger can increase fuel economy between 5% and 10%; add in direct injection, and the gain can reach 20%, says David Paja, global vice president-marketing for Honeywell Turbo Technologies, maker of Garrett turbochargers.

By improving turbocharger bearings and turbine designs, Honeywell hopes to improve fuel efficiency another 2% to 4%, Paja says.

At the current pace, he sees 50% of new vehicles turbocharged by 2016 in the U.S. The European market already has achieved 55%, and Paja expects massive growth for turbochargers in the developing markets of India and China, as well.

Honeywell's major rival in the turbocharger market has been BorgWarner. But such explosive growth was anticipated three years ago that auto makers began courting other suppliers to join the fray.

At least three have done so already: Continental Automotive (through its acquisition of Siemens VDO Automotive), Mahle GmbH and Robert Bosch GmbH.

Mahle and Bosch have created a joint venture that plans to launch its first turbocharger in 2011.

Bernd Bohr, chairman of Bosch Automotive Group, says the first customers for the Bosch Mahle Turbosystems JV are “high-volume programs” for diesel and gasoline engines.

Within three years of the 2011 launch, Bohr expects the JV to achieve a volume of 1.5 million turbochargers annually. “And we're looking for further contracts,” he says.

Bosch Target: 78 MPG

The world's largest auto supplier, Bosch has remained steadfastly focused on fuel efficiency to serve the demands of its home market in Europe.

Bosch executives say hitting the 35.5 mpg target in the U.S. should not be difficult. The enabling technology isn't far in the future but instead already exists today in production vehicles or those soon to launch, Bosch officials say at a press briefing at the supplier's proving grounds in Boxberg, Germany.

All that is necessary is the resolve to further cultivate current tools such as higher-pressure direct injection, diesel, extended-range electric powertrains, downsized engines, selective catalytic reduction and increased exhaust-gas recirculation rates.

“By 2015, a gasoline-driven car will consume only 5.5 L/100 km (42.7 mpg) — 29% less than our standard engine in 2009,” says Rolf Leonhard, executive vice president-engineering for Bosch diesel systems.

“A diesel-powered car in 2015 will only burn 3.6 L/100 km (65.2 mpg) — a third less than our diesel in 2009,” Leonhard says. Meanwhile, hybrid-electric vehicles can reduce the consumption of gasoline engines 39% and of diesel engines as much as 40%.

“All in all, an automobile which is fully optimized in these ways will consume 50% less fuel than today — fuel consumption under standard conditions of around 3.8 L of gasoline per 100 km (61.8 mpg), or 2.6 L of diesel (90 mpg) can be achieved,” he says.

To hear Leonhard describe it, overshooting the 35.5 mpg by 2015 might be easy.

“We expect in a few years, a standard-series car will be available in the compact to midsize range that can drive 100 km (62 miles) on 3.0 L (0.8 gallons) of fuel,” he says. “To put it another way, this will be a car that can drive 33 km on 1.0 L of fuel, 78 miles on one U.S. gallon or 94 miles on one U.K. gallon.”

Such a vehicle would weigh 1,200 kg (2,640 lbs.) and generate CO2 emissions of 70 g/km, “well within environmental policy targets,” Leonhard says.

Electric vehicles will not “hit the road in massive numbers and not overnight, but (they) will come,” Bohr says, particularly as cities grow more dense. By 2015, he predicts, more than 60 cities worldwide will have populations above 5 million — almost twice as many as in 1995.

“These megacities will make the limited distances battery-powered cars can cover more acceptable,” he says, forecasting annual sales volumes of about 500,000 EVs worldwide by then.

To get there, he says Bosch will join the effort to reduce battery weight and cost, targeting a lithium-ion battery with a 321-mile (200-km) range at 550 lbs. (250 kg). “Even in several years' time, such a battery will still cost somewhere between E8,000 and E12,000 ($11,200-$16,700) — about the price of a compact car.”

Meanwhile, Bosch will continue to help advance the HEV market as a supplier of complete hybrid systems, as well as individual components such as power electronics, DC/DC inverters and Li-ion batteries (through the SB LiMotive joint venture with Samsung SDI).

Bosch's first hybrid system will be featured on the new Porsche Cayenne and Volkswagen Touareg HEVs arriving in the U.S. in early 2010.

Gearbox Solution

Multi-speed transmissions also will nudge vehicles closer to the new fuel-economy target.

Transmission specialist ZF Friedrichshafen AG is debuting a new 8-speed automatic on the BMW 760 Li, and the supplier says such advanced gearboxes will move into more affordable segments.

“I would say there is a freshened appreciation of the technologies that ZF can offer, not only on the transmission but electric steering and lightweight suspension components,” says Paul Olexa vice president-driveline sales and marketing for ZF North America.

“With our European heritage, fuel economy has never been out of fashion with us.”

ZF's 8-speed will boost efficiency 6% over an upgraded 6-speed automatic, 14% over a 5-speed and more than 16% over a 4-speed, Olexa says.

Switching from a 5-speed to a 6-speed transmission delivers about 5% better fuel economy, he adds. “We introduced our 6-speed in 2001, and two years ago we upgraded it and improved efficiency another 3%.”

In the future, Olexa says he believes automatic transmissions will remain more cost-effective than increasingly popular dual-clutch transmissions.

Meanwhile, many North American vehicles still have 4-speed transmissions, including GM's fullsize pickup trucks.

The base transmission in the Chevrolet Silverado and GMC Sierra is the aged Hydra-Matic 4L60 4-speed automatic. The Environmental Protection Agency's best highway rating for 2-wheel-drive versions of the truck is 20 mpg (11.7 L/100 km).

GM is transitioning some of its lineup toward 6-speed automatics, but the auto maker likely will continue offering 4-speed automatics in 2016, Barbara Kiss, GM's manager-fuel economy/emissions policy, tells Ward's.

“GM's 4-speed transmissions are more efficient than many of our competitors',” Kiss says.

Reinforcing the trend seen at other auto makers, Kiss says GM is betting big on downsized, turbocharged, direct-injection engines, while continuing to explore new applications of variable-valve timing and cylinder deactivation.

Supplier technology becomes even more important to OEMs such as GM trying to rightsize their organizations while meeting the new environmental code. Despite staff cuts, GM spokeswoman Sharon Basel says the auto maker continues hiring skilled engineers, particularly in powertrain.

“We've been extremely careful to not deplete those skills that leave us vulnerable, because that's what we need,” Basel says.

Cross-town rival Ford is counting on its direct-injection turbocharged EcoBoost engine strategy and on DCTs to drive the auto maker closer to a fleet average of 35.5 mpg.

Burt Jordan, Ford's executive director-global powertrain purchasing, says the auto maker welcomes innovative fuel-saving ideas from suppliers, particularly in the area of turbocharging.

“The world has changed significantly over the last 12 months,” Jordan says. “We're open to understand what's available.”

Looking Inside

Interiors also will play a vital role in taking mass out of vehicles.

At Faurecia North America, Rob Huber, vice president-design and marketing, says OEMs are showing great interest in the supplier's Light Attitude concept, a collection of innovations capable of reducing weight by up to 66 lbs. (30 kg).

Other technologies now gaining a more receptive audience at auto makers include:

Market Question

The biggest variable facing the industry isn't technology but whether consumers will embrace the smaller cars and electric vehicles sure to emerge in the drive to meet the 35.5-mpg code.

“I would say that our task is to persuade Americans to give smaller cars a chance,” says Uwe Krueger, Behr America's vice president-product and process development, engine cooling, North America.“The point is not to force people to buy small cars when they need a bigger one,” Krueger says.

Karina Morley, global vice president-control and electronics at engineering specialist Ricardo Inc., is more bullish than many about the potential of EVs. She says a surprising number of consumers may find that having at least one EV in the garage suits their needs, while they have another larger, conventional family vehicle for larger groups and trips.

Paul Williamsen, national manager of Toyota Motor Corp.'s Lexus College dealer training network, says all major auto makers already have multiple vehicles capable of at least 33 mpg (7.1 L/100 km), and that technology is not a hurdle that will prevent the entire fleet from reaching the new mandate.

“The challenge is not to make vehicles that get 35 mpg. The challenge is to get the American car-buying public to buy a fleet full of them,” he says.

When the time comes for Americans to consider smaller vehicles for their next purchase, President Obama wants to hear three words: “Yes we can!”

Suppliers already have responded by demonstrating that yes, they can deliver the technologies necessary for the fuel-efficient cars of the future.

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