The Royal Society of Canada is pleased to announce the publication of a new Expert Panel report from its sister academy, the National Academies in the United States. The full report can be accessed online.
Dr. Peter Frise, FCAE, FEC, P.Eng, has kindly provided a Canadian perspective on this report and its relevance to Canada and Canadians. Based in Windsor, Ontario, Dr. Frise works with numerous automotive companies in his present capacity as the Scientific Director and CEO of the AUTO21 Network of Centres of Excellence, Canada’s automotive R&D program.
Since 2001, AUTO21 has partnered more than 500 top Canadian researchers with more than 450 industry and public sector companies and organizations. AUTO21 and its partners have completed approximately $140M worth of automotive research and generated nearly 315 patents, licenses and commercialization agreements.
Cost, Effectiveness and Deployment of Fuel Economy Technologies for Light-Duty Vehicles: A Canadian Perspective
Concerns about greenhouse gas (GHG) production and global warming, depletion of non-renewable resources and energy security have propelled a huge effort to reduce the fuel consumption of vehicles. Because the vehicle market is globally integrated, this effort is embodied in government mandates to reduce carbon dioxide (CO2) emissions and resulting reductions in fuel consumption in virtually every industrialised nation (see Figure 1).
Evolution in the Global Auto Industry – New Environmental and Safety Standards
All industrial sectors compete to provide more value to their customers at lower cost. The three key influences which drive the global auto industry are:
- consumer desires – what kind of vehicles do people want to buy;
- government regulations – demands placed on the industry to be market-eligible;
- industry imperatives – factors crucial for a given company to be competitive.
These pressures have always been present, but during the 2010-2025 period a unique set of challenges faces the automotive sector. To be sold in a given market, vehicle models must meet certain safety criteria and exhaust emissions standards. In addition, an automaker’s offerings must comply with increasingly stringent greenhouse gas (GHG) emission requirements. The US mandates for fuel economy and GHG emissions, (which are closely related by basic combustion chemistry) are embodied in a fuel economy standard widely known as corporate average fuel economy or CAFE .
Progress toward meeting the ultimate 2025 standard is on-track at the time of writing (summer 2015) and going forward for a couple of years in the future. However, many industry experts have pointed out that the “low hanging fruit” in terms of reducing fuel consumption has already, or will very soon have been plucked and the path to achieving of the next stage of improvements from 2022-2025 is much less certain. For that reason, the US government has undertaken a major mid-term review of the fuel economy standards in conjunction with industry to finalize the 2022-2025 regulations.
The NHTSA - US National Academies Studies on Vehicle Technologies
The United States National Academies have been commissioned by the US Department of Transportation through the National Highway Traffic Safety Administration (NHTSA) to do a series of studies to assess the impact of vehicle technologies on fuel economy. The purpose of these studies is to help inform the design of CAFE regulation and ensure that public support of R&D is correctly targeted and adequate to ensure the competitiveness of the US automotive industry.
A study was published in 2011  and more recently an update (June 2015)  has been produced by a panel of 18 experts from industry and academe to study the full range of vehicle technologies. Included are powertrains (including engines of all types, fuel cells, electric and hybrid propulsion systems, transmission technologies and ancillary systems such as low energy climate control systems and start-stop fuel saving add-ons to existing vehicles) and structural materials to reduce weight along with the requisite manufacturing methods and supply chain aspects of such enhancements. The studies also include estimates of the cost of the R&D effort required to bring the technologies to market and the eventual cost to consumers of purchasing these new advanced vehicles. While a great deal of effort has gone into developing these cost estimate, the fact is that such estimates are often incorrect and also, the actual values can change over time as a result of changes in the pricing of key commodities (such as for example, aluminium, platinum and magnesium as well as battery materials such as lithium and other rare earths). Meeting the new CAFE standards will require a great deal more of these advanced materials, the price of which is often beyond the control of the automotive manufacturing industry.
The other and possibly more important factor is engineering progress in finding ways to produce superior new technology goods at lower cost. Engineers in every industry are constantly working to improve productivity and few sectors have seen greater gains than the auto industry over the decades. This is easily verified by comparing the cost of a typical family vehicle of today versus the cost of a similar vehicle even as long as 25 years ago. The price is close to the same in terms of the number of dollars but the modern vehicle has evolved to include many more safety, comfort and performance features and is much more durable and efficient.
However, this trend may be difficult to sustain as the auto industry struggles to bring radical new technologies to the market due to the profound improvements required to achieve the full 2025 CAFE standards. Over time the prices will possibly abate, but it is widely expected that the next generation (i.e. 2025-compliant) vehicles will cost substantially more than present generation offerings. The magnitude of the price increases are hotly debated between the government and the industry – but everyone agrees that vehicle prices will go up as a result of complying with CAFE standards .
Major Conclusions of the 2015 US National Academies Study
The key findings of the most recent study by the US National Academies  can be summarized as follows:
- The cost of future vehicles will increase and while some US government estimates appear to be realistic, others do not and so a substantial range of views exist about the precise magnitude of the price increases of fully compliant vehicles;
- Gasoline fuelled internal combustion engines will continue to dominate the light vehicle market for the foreseeable future (certainly beyond the 2025-30 study period);
- Sales of the various forms of electrified powertrain vehicles (battery, hybrid etc.) will continue to grow, likely depending on the prevailing price of gasoline, but will remain a relatively small proportion of the market compared to more conventional types;
- A key variable in electric powertrains is the cost, performance and durability of battery technology and so a great deal of effort should be expended on these issues;
- The recent trend toward transmissions with a larger number of reduction ratios (i.e. 6-7-8 and even 9-speed transmissions) will likely not continue as 7 speeds is felt to be the optimal number. However, an increased emphasis on reducing internal friction and parasitic losses will yield useful fuel consumption reductions;
- Vehicle structural weight will decrease through the use of advanced design methods, stronger, lower density materials (metals and non-metals) and new manufacturing methods. This effort is very important because it will reduce the fuel consumption of all vehicles regardless of their size or the type of powertrain they employ.
The Canadian Angle – how does CAFE affect us?
As part of an integrated North American vehicle market, Canada has aligned its new vehicle emission standards with those of the US Environmental Protection Agency (EPA). Due to this alignment, and the comparative size of the US market, vehicles sold in Canada are essentially bound by the US requirements. The latest GHG standards will become more stringent through 2016 after more than 20 years of virtually unchanged requirements. After 2017, the next phase of standards will become tougher each year to 2025 . These standards are highly complex and different values apply to different types of vehicles and there are credits for inclusion of various types of technologies, but the key regulatory targets for passenger vehicles are summarized below.
- 2010 standard ~ 8.5 l/100 km (33 mpImp.g) – current standard;
- 2016 standard ~ 5.5 l/100 km (51 mpImp.g) - a 35% change from the 2010 standard;
- 2025 standard ~ 4.2 l/100 km (~ 67 mpImp.g) – a potential further 23% decrease from 2016.
These dramatic fuel economy improvements between 2010 and 2025 thus result in more than a 100% change (i.e. a doubling) in terms of l/100 km or miles per gallon. Changes of this magnitude can only be achieved through the development of an entirely new generation of technologies across the complete spectrum of vehicle design. Every facet of the future vehicle must embody new technologies in powertrains, lightweight structures, electrification and other advancements to reduce energy usage.
Equally important are the demands of consumers, safety advocates and governments for improvements in occupant protection and reduction in driver workload to reduce the health and social costs of road crashes. New safety regulations and public domain vehicle testing will continue to drive the need for stronger, yet lighter vehicle structures. Automakers must accomplish this difficult task and fulfill consumers’ desires for advanced passive and active driver assistance systems such as lane departure and forward collision warning. Consumers also demand advanced vehicle information systems that reduce driver workload through route guidance, road reports and emergency alerts that are enabled by vehicle-to-infrastructure and vehicle-to-vehicle communication technologies and systems. This progress must be achieved without compromising occupant comfort, vehicle durability or driving pleasure and it must occur in the fiercely competitive arena of the global vehicle sector in which constant pressure on cost and quality prevail.
The major effect on Canada and the Canadian auto industry of all these influencers is due to the following facts:
- 70-85% of the components of a modern vehicle - and the technologies that underpin these components (particularly non-powertrain components) – are developed and manufactured by the auto parts segment and not the automakers themselves;
- it can take up to 10 years for a new technology (particularly a major application of a new structural material or manufacturing technology) to move from an R&D lab to a retail showroom and thus only two of the typical 5-year product development cycles remain before the full impact of CAFE standards is applied in 2025.
Thus, while few if any of the major decisions affecting fuel economy from the standpoint of powertrain technologies (including electric vehicle batteries) will be made by the Canadian subsidiaries of the global automakers, the input of Canada’s large sophisticated auto parts segment could have a significant effect on the future vehicle but only if these companies can develop new technologies sufficiently quickly. The major effect of Canadian technology is likely to be in the realm of lightweight materials and the necessary manufacturing innovations that can be incorporated though the automotive parts segment of the auto industry.
It must be noted that these developments must be globally competitive due to the integration of the Canadian auto industry with its counterparts abroad and the imperative to achieve global economies of scale. Thus, any effort to develop unique Canadian standards or technologies would be ill-advised and would simply drive up vehicle purchase prices for Canadian consumers thus hindering the adoption of cleaner, safer new technology vehicles.
- Cost, Effectiveness and Deployment of Fuel Economy Technologies for Light-Duty Vehicles, National Research Council of the National Academies, The National Academies Press, Washington DC, ISBN 978-0-309-37385-2, 2015. http://www.nap.edu/catalog/21744/cost-effectiveness-and-deployment-of-fuel-economy-technologies-for-light-duty-vehicles
- Kasab J.J. and N. Jackson 2012, Greenhouse Gas Reduction Potential. Estimations for Light-Duty Vehicle Technologies in 2020–2025, ICCT International workshop, Brussels, 1 Feb 2012, www.theicct.org/sites/default/files/Ricardo_presentation_1feb12.pdf;
- Corporate Average Fuel Economy for MY 2017-MY2025 Passenger Cars and Light Trucks – Final Regulatory Analysis (FRIA) document, US National Highway Traffic Safety Administration (NHTSA), Office of Regulatory Analysis and Evaluation, Washington DC, August 2012. www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/FRIA_2017-2025.pdf
- Assessment of Fuel Economy Technologies for Light-Duty Vehicles, National Research Council of the National Academies, The National Academies Press, Washington DC, ISBN 978-0-309-15607-3, 2011. http://www.nap.edu/catalog/12924/assessment-of-fuel-economy-technologies-for-light-duty-vehicles
- CAFE 2025: Finding Robust Alternatives to Weather Unexpected Technology Costs, industry report on technology costs of meeting 2025 CAFE standards, Scenaria Incorporated, Plymouth Michigan, 2012. http://www.slideshare.net/JoelWenger1/scenaria-perspective-2025-cafe-costs