POWERTRAIN TRENDS CO2 DRIVING THE CHANGE Brett C. Smith, Co-Director, Manufacturing, Engineering & Technology Group, Co-Director, Conferences and Chair, The Business of Plugging In Conference, Center for Automotive Research (CAR) Fuel Economy has been the driver for powertrain regulation for decades. In the coming years, CO2 emissions regulation will drive the change. This seemingly minor change in policy may have enormous impact on powertrain technology strategy for OEMS and suppliers Brett C. Smith is the Co-Director, Manufacturing, Engineering and Technology Group at the Center for Automotive Research. He joined CAR in 2 after 12 years at the University of Michigan s Office for the Study of Automotive Transportation (OSAT). Much of Mr. Smith s work in recent years has been in the area of advanced powertrain technology. He has authored several reports on this the subject, including Positioning the State of Michigan as a Leading Candidate for Fuel Cell and Alternative Powertrain Manufacturing, a report prepared for the Michigan Automotive Partnership and the Michigan Economic Development Corporation (MEDC). Mr. Smith also worked with the National Institute of Standards and Technology to begin the development of a Roadmap for the High Volume Manufacture of Fuel Cells and authored a report for Argonne National Laboratory on an analysis of vehicle fuel efficiency. Current powertrain activities include several projects on Plug-in electric hybrid vehicles, including a recent report for the DOE entitled Benefits and Challenges of Achieving a Mainstream Market for Electric Vehicles, and the NextEnergy-CAR PEV working Group. He is the chair of the Advanced Powertrain Forum at the CAR management Briefing Seminar (24-current), and the Chair of the Business of Plugging In, a Plug in Electric Vehicle conference in Detroit, MI (29-211). While at OSAT, Mr. Smith co-authored four iterations of the Delphi Forecast and Analysis of the North American Automotive Industry: Materials Volume. He also coauthored the Automotive Interiors Delphi Forecast and Analysis, and the Delphi X Marketing Volume. Other reports co-authored by Mr. Smith include the Canada-U.S. Border An Automotive Study, Creating Shareholder Value in the Supply Base a Case Study of the Gentex Corporation, and The Future of Modular Automotive Systems: where are the Economic Efficiencies in the Modular Assembly Concept. Other activities have included a monthly column and a series of articles on vehicle launch performance and human resource issues in the automotive industry for Automotive Manufacturing and Production Magazine, (1997-21), as well as numerous articles for other publications. He was also an instructor for the U.A.W-GM Paid Education Leave Program since 1992. Mr. Smith is a member of the Society of Automotive Engineers. He received a B.S. in economics and an M.B.A. from Eastern Michigan University. Center for Automotive Research 35 Boardwalk, Suite 2, Ann Arbor, Michigan 4818 Telephone: 734-929-491 E-mail: bsmith@cargroup.org www.cargroup.org
1/11/213 Center for Automotive Research Ann Arbor, MI Brett Smith, Co-Director, Manufacturing, Engineering and Technology The Center for Automotive Research conducts leading-edge research that impacts the future of the global automotive industry. Automotive industry contract research and service organization Formerly part of U of M, CAR is a standalone Non-Profit 51(c)3 since 23 Based in Ann Arbor, MI - 3 Employees CAR forecasts industry trends, advises on public policy, and sponsors multi-stakeholder communication forums Enable private and public sector decisionmakers to foster a sustainable and viable automotive industry www.cargroup.org 1
1/11/213 CAR s Funding FY 212 CAR operates under a mixed portfolio of funding from a variety of sources to maintain an unbiased approach. www.cargroup.org CAR s Automotive Industry Affiliates 2
1/11/213 Industry Collaboration & Partnerships The Center for Automotive Research brings together industry stakeholders for thought leadership and industry education. CAR collaborative working groups Automotive Communities Partnership (ACP) Electric Vehicle Working Group Connected Vehicle Working Group Program for Automotive Labor and Education (PALE) United Tooling Coalition (UTC) Advanced Automotive Information Technology Solutions Consortia Coalition for Automotive Lightweighting Materials (CALM) Fuel Economy and Emissions Regulatory Discussion 3
1/11/213 29-218: A Decade of Regulation Notice of Intent Public Hearing Notice Notice of Proposed Rulemaking Final Rule Signed Implemented Hearing Action and Supplemental 15-Day Notices Final Rulemaking Package Submitted to OAL Final Approval/OAL Action 28 29 21 211 212 213 214 215 216 217 218 219 Notice of Intent Initiated Notice of Proposed Rulemaking Final Rule Signed MY 212-216 MY 217-225 LEV III Tier 3 NPRM: Published in FR NPRM: Received by OMB NPRM: Sent to OMB for Regulatory Review Implemented Review Final Decision Review Technical Assessment Report Source: EPA, NHTSA, CARB 218: Steady Course, Off Ramp or On Ramp? 4
CAFE (MPG) 1/11/213 CAFE Requirement and Actual for Passenger Car and Light-duty Truck: 1978-225 6 5 4 3 2 1 1978 1983 1988 1993 1998 23 28 213 218 223 Truck Achieved Truck Standard Passenger Car Achieved Passenger Car Standard Source: NHTSA 212 Required Rate of FE Improvement 5
CAFE Target (MPG) EPA Estimate gco 2 /Mile Standard Equivalent Fuel Economy Standard (MPG) 1/11/213 Measured in Grams per Mile 31 29 27 25 23 21 19 17 15 6 55 5 45 4 35 3 25 2 Standard with only fuel economy technology and no credits Standard with EPA estimated A/C and off-cycle credits Munroney sticker Source: EPA, NHTSA Footprint Based Fuel Economy Regulations 8 7 Toyota Prius 6 5 4 3 2 Honda Fit Chevrolet Malibu Ford Fusion Chrysler 3 225 221 216 1 3 4 5 6 7 8 Footprint (ft 2 ) 6
CO 2 Tailpipe Emissions (gco 2 per mile) 1/11/213 GHG Standards and Fuel Economy Performance of Various Powertrain Options (ex. Ford Fusion) 3 25 2 15 1 5 $28,655 $27,95 $28,2 $3,89 $39,495 3 4 5 6 7 8 Footprint(sq. ft.) 217 221 225 PHEV HEV 1.6L w/stop Start 1.6L 2.L Observations and Implications GHG and Fuel Economy: Fines, Penalties, Fuels and Powertrains 7
1/11/213 Credits and Incentives Differing objectives from NHTSA and EPA dictate how they apply credits and incentives to different technologies NHTSA is focused on petroleum reductions EPA is focused on CO 2 reductions Both agencies give credits to technologies that are not fully recognized during testing Off-cycle credits A/C efficiency credits Alternative fuel incentives EPA counts fuel efficient alt fuel vehicles as multiple vehicles Electric charging is considered a zero emission vehicle (until sales cap is met) NHTSA Fuel efficiency of alt fuel vehicles are divided by.15 (e.g., 3 MPG measured = 2 MPG rated) Regulatory Penalties MY 211 to MY 225 CAFE gap would result in fines between $1 and $15 per vehicle through NHTSA EPA penalties may far outweigh those from NHTSA Certificate of conformity challenges Up to $37,5 per non-conforming vehicle 8
CAFE Miles Per Gallon 1/11/213 Non-Compliant Vehicle Fleets (CAFE) 25 2 15 1 5 MY 28 MY 29 MY 21 MY 211 MY 212 MY 213 A fleet is defined as domestic passenger car, import passenger car, or light truck for a manufacturer Credits earned through compliant fleets may be used to offset non-compliant fleets from the same manufacturer Credits can be carried forward or backward from the MY earned Credits can be sold from one manufacturer to another Source: NHTSA - SUMMARY OF FUEL ECONOMY PERFORMANCE, Oct 212 MY 211 CAFE vs. 225 Estimated CAFE for Passenger Car (Domestic + Import) 7 6 55.6 55.6 53.3 55.3 55.6 57. 57. 56.7 57. 56. 58.9 57.4 58.2 5 4 3 2 29.7 29.9 27. 32.4 31.8 36. 35.7 34.6 33.4 34. 3.6 38.3 33.4 1 MY 211 CAFE Actual CAFE 225 After AC Leakage Credit FleetWide Average CAFE 225 MY 211 CAFE based on NHTSA March 212 Summary of Fuel Economy Performance MY 211 CAFE based on sales weighted harmonic average of domestic and import vehicles MY 225 CAFE estimates based on EPA/NHTSA 217-225 NPRM (Table III-9, Table III-1, Table III-11) AC Leakage Credit applied to CAFE 225 targets (13.8 g CO2/mile) 9
1/11/213 Compliant Vehicle Fleets (CAFE) Manufacturer Vehicle Type Compliant until MY (if no change in fuel economy and footprint) FORD LT 212 GM DP 212 MAZDA LT 212 VW LT 212 HYUNDAI LT 213 NISSAN IP 213 VW DP 213 FORD DP 214 KIA LT 214 MITSUBISHI IP 214 NISSAN DP 214 SUBARU IP 214 SUBARU LT 214 HONDA LT 215 KIA IP 215 MAZDA IP 215 MITSUBISHI LT 215 TOYOTA DP 215 VPG LT 215 HYUNDAI IP 216 HONDA DP 218 HONDA IP 219 TOYOTA IP 22 TESLA DP 225 Source: CAR Research, NHTSA - SUMMARY OF FUEL ECONOMY PERFORMANCE, Oct 212 Observations and Implications Fuel Options 1
Consumption Reduction EPA CO 2 Requirements EPA CO 2 Requirement Expressed in MPG CO 2 Emissions Reduction 1/11/213 Alternative Fuels: Emissions (CO 2 ) to MPG Conversion 3 7 25 6 CO 2 Penalty 2 15 1 5 21 215 22 225 = 5 4 3 2 1 21 215 22 225 CO 2 Advantage Gasoline Diesel CNG E85 Does not include A/C, off cycle, or other credits Source: USDOE/EPA Consumption vs. CO 2 Emissions For consumption, diesel and HEV have a similar bang-for-the-buck For CO 2, diesel is disadvantaged by the higher carbon content of the fuel and has a worse bang-for-the-buck 5% 5% 4% CNG* HEV 4% HEV 3% 3% 2% 1% % Conv. Tech. Consumption 2% 1% % Conv. Tech. CNG CO 2 Emissions Incremental Variable Cost Incremental Variable Cost 11
User Reported Fuel Economy (MPG) 1/11/213 User Reported Fuel Economy How do the alternatives compare Reported Fuel Economy: Gasoline 7 6 5 4 3 Gasoline 2 1 1 2 3 4 5 6 7 EPA Rated Fuel Economy (MPG) Source: Fuel Economy.gov 12
User Reported Fuel Economy (MPG) User Reported Fuel Economy (MPG) 1/11/213 Reported Fuel Economy: Diesel 7 6 5 4 3 Diesel 2 1 1 2 3 4 5 6 7 EPA Rated Fuel Economy (MPG) Source: Fuel Economy.gov Reported Fuel Economy: Hybrid Electric Vehicles 7 6 5 4 3 Hybrid 2 1 1 2 3 4 5 6 7 EPA Rated Fuel Economy (MPG) Source: Fuel Economy.gov 13
User Reported Fuel Economy (MPG) User Reported Fuel Economy (MPG) 1/11/213 Reported Fuel Economy: Compressed Natural Gas (CNG) 7 6 5 4 3 CNG 2 1 1 2 3 4 5 6 7 EPA Rated Fuel Economy (MPG) Source: Fuel Economy.gov Reported Fuel Economy: Gasoline, Hybrid, Diesel and CNG 7 6 5 4 3 2 Gasoline Hybrid Diesel CNG 1 1 2 3 4 5 6 7 EPA Rated Fuel Economy (MPG) Source: Fuel Economy.gov 14
Annual gallons saved per MPG improvement 1/11/213 The Fuel Economy Illusion Not all MPG gains are equal 12 1 8 6 4 2 Gallons of gasoline saved for incremental improvement in fuel economy (area under curve represents total fuel saved for that increment per year at 12, miles per year) 14 6 Gallons 2 Gallons 1 Gallons 6 Gallons 4 Gallons 28.5 Gallons 1 2 3 4 5 6 7 Miles Per Gallon 6 gallons $3.5/gal = $2,1 $6./gal =$3,6 2 gallons $3.5/gal = $7 $6./gal =$1,2 1 gallons $3.5/gal = $35 $6./gal =$6 6 gallons $3.5/gal = $21 $6./gal =$36 4 gallons $3.5/gal = $14 $6./gal =$24 28.5 gallons $3.5/gal = $1 $6./gal =$171 Source: CAR Research 15
1/11/213 Fuel Economy Illusion in Practice Chevrolet Volt Window Sticker Baseline fuel economy and gasoline cost affect 5 year fuel savings MY 212 MY 213 Fuel Economy Illusion Implications Value of fuel savings diminishes as fuel economy increases Consumers will experience greater fluctuations in fuel economy Potential for lack of faith in fuel economy label Further devaluation fuel savings Independent of any particular powertrain technology However, it has less of an influence on actual fuel savings But the consumer doesn t care. They want what the sticker tells them they should get Errors in regulatory testing will become more apparent Improperly labeled sticker creating consumer dissatisfaction Increased scrutiny from regulators Potential for legal action 16
1/11/213 General Observations Certification based test results expected to achieve an average fleet wide fuel economy of 54.5 MPG Average sticker fuel economy is expected to be closer to 4 MPG to meet the standard in MY 225 Sticker fuel economy is significantly less than certification test results An OEM s standard is dependent on that particular manufacturers average vehicle footprint Smaller footprints yield a higher standard Standard is now heavily weighted toward CO 2 reduction as well as petroleum reductions Can have significant impact on fuel choices Implications on up stream emissions EPA and NHTSA differ on how they apply credits and incentives Fuel Economy and Emission Regulation Thank You Brett Smith Co-Director, Manufacturing, Engineering and Technology 17