Not since the late 1970s and early 1980s has the future of the automobile industry been as murky as it is today. Back then, stagflation, gas shortages, tightening emission standards, Corporate Average Fuel Economy regulations, and a weak national economy combined with the federal bailout of Chrysler, Ford's descent into near bankruptcy, and GM's declining market share to place worry ahead of hope. Automakers began to shift from rear-drive V8-powered vehicles-cars still handily outsold trucks at this time-to unibody vehicles powered by four- and six-cylinder engines driving the front wheels. Downsizing became a household word, and safety, fuel economy, and emission regulations forced the industry to quickly move from purely mechanical systems to ones under electronic control. Computers also moved firmly into the design and engineering suites as CAD, CAM, and CAE increasingly made their presence felt.
Fast forward nearly 30 years, and the terrain ahead is surprisingly similar. The United States is dealing with a declining dollar, and the remnants of the twin shocks of the Internet and housing bubbles. Chrysler has been bought and sold by Daimler and is quickly rationalizing the number of products, production, and people it employs under private ownership. Ford is in the midst of creating a global design and development process, but remains overly reliant on trucks. And GM, in many ways the healthiest domestic automaker, is still losing share in a market with more competitors than ever, and more waiting in the wings. Gas prices are at historic highs, and fears about what rising CO2 levels might do to the environment have reached a fevered pitch. Downsizing is again part of the vocabulary, and electronics are spreading throughout the vehicle, and continue to affect the design, engineering, and production processes. Despite myriad changes in the intervening years, it's surprising how little has changed or how similar are some of the answers to these "new" problems.
In the view of AT Kearney vice president Dan Cheng, "It matters what the facts are regarding CO2, but perception has a big role in all of this. If we elect people who believe it's time to 'do something' about it, they are going to start to regulate." Though Cheng says it is unclear whether or not the federal government has the persistence to chart out something that would require at least a 5-10 year strategy on the order of the Manhattan Project, "The rhetoric of the presidential campaign sets goals that are extremely difficult to meet, especially in light of the size of the national and global vehicle parc, and the time it takes for new vehicles to penetrate it." In other terms, don't expect the regulatory deeds to follow the campaign words. Should gasoline prices consistently drop below $3.00 per gallon-if the dollar increases in value-Cheng believes, "all of the interest in alternative powertrains will evaporate at that point." It is a rational response, he says, to a world that is "probably still 50-80 years away from peak oil even at present growth rates."*
*That supply, which many oil industry CEOs currently contend won't keep up with demand past 2015, will require new recovery techniques to replace the 1960s production methods still used today. Today, the oil industry recovers only about one-third of the barrels of conventional underground oil and much less of unconventional resources (shale oil, tar sands, extra heavy crude). A 10% increase in the recovery rate would add about 1.4 trillion barrels-a 50-year supply at current consumption rates-to the world oil supply, but will demand concerted investment on the parts of oil companies and countries to make it happen.
GETTING THERE FROM HERE
"Automakers don't have the luxury of a single solution they can roll out across their vehicle platforms in order to accomplish the CAFE targets that have been set," says Sandy Stojkovski, director, Vehicle engineering, Total Vehicle Fuel Economy (TVFE), Ricardo Inc. (Van Buren Twp, MI; www.totalvehiclefueleconomy.com). That's because there are different solutions appropriate for different vehicles, different fueling strategies (e.g.: gasoline, diesel, E85, etc.) and different drive cycles. Get it wrong, Stojkovski says, and "The outcome could be lethal when you look at the health of some of the domestic automakers."
Though Stojkovski states that most of the technologies required to meet the coming standards exist today, the changeover "isn't going to be cheap or easy." For example, there are a number of low-risk, near-term valvetrain improvements that can be made to gasoline engines in the next five years to reduce emissions and improve fuel economy. Combining them with turbocharging and direct injection, and mating this engine to a dual-clutch transmission (DCT) should give significant fuel economy improvements-at a price. "It's not a question of the available technologies," she says, "but how much we can reduce the cost of the systems that we need to employ in order to reach the goal." That's because the energy bill and its implementation timing have required technologies to be pulled forward before they've had a chance to travel down the cost curve. Therefore, vehicle costs will rise in the short term before OEMs move to a vehicle-wide systems approach that increases fuel economy at a reasonable cost.
According to Stojkovski, "Typically, we find the weakest points are those that cross organizational boundaries, where different groups are separated until the vehicle integration phase." Even small items, like matching electrical power and demand with a smaller alternator, can lead to low-cost opportunities that bring a 1% to 2% fuel economy improvement, but are often missed because of those built-in boundaries. A similar strategy applied to weight reduction reduces the underperforming areas, and optimizes the blend of the most appropriate solutions based on cost and desired functionality, "without requiring a move to exotic materials, a downgrade of performance, or a loss of desired functionality," claims Stojkovski.
Wholesale substitution of European vehicles for an OEM's current offerings won't do the job, making the process more involved than some critics claim. "We won't take the European model and just import it," she says, "due to our different vehicle mix, different mindset, and different - lower - fuel prices." Nevertheless, she says that some vehicles will have to downsize in both physical and powertrain size. For large pickup trucks and SUVs, turbocharged direct-injected gasoline V6 engines will replace the bulk of the V8s now sold, and diesel options will expand to include V6s as well as large-displacement V8s. Both will be mated to wet-clutch DCTs that can handle the power and load. Similarly, vehicles that currently use gasoline V6 engines will revert to turbocharged direct-injected four cylinders, and so on down the line. They also will make use of less expensive dry-clutch DCT transmissions. Over time, most OEMs will replace their separate manual and automatic gearboxes with a single DCT.
Though some critics decry this measured response as "incrementalism," others say it is a rational approach when taking into account the industry's fixed costs, technical hurdles, and consumer desires. "You move incrementally as far as you can and as much as you can because that is what you have the most experience in doing," says former Corvette chief engineer and independent engineering consultant Dave McLellan. When GM purchased Hughes Aircraft, the Hughes executives were shown plans for a new Cadillac model that included a new engine and transmission. They were appalled at GM's willingness to do so many things at once when Hughes moved forward, "only 10% at a time" in order to avoid solutions fraught with problems. "Imagine what they would think of the Chevy Volt!," he says before recounting how the then-new Cadillac turned out to be a disaster. That is one reason McLellan doesn't anticipate a swift radicalization of the industry.
V. Sumantran, a former GM director; the former chief executive, Passenger Cars, Tata Motors; and now an industry consultant, says radicalization will confine itself to new players in a globalizing market driven by the desire for economic development. "Mobility is critical for economic development, and a key enabler for GDP growth," he says as he describes how his countrymen in India pack themselves onto busses and trains, or ride four-up on a 100-cc motorcycle as they move around the country on minimal infrastructure. It is a phase, Sumantran says, similar to that faced by post-war Europe and Japan. As happened during that period, major automakers have tried unsuccessfully to create inexpensive transportation for emerging markets like India and, to a lesser extent, China. "Though vehicles like the Chrysler CCV concept, Smart, and even a version of the GEM neighborhood electric vehicle were proposed for these markets," he says, "they did not succeed because they either misread the needs of the consumer or approached the problem using pre-conceived notions of how a mass-volume vehicle should be designed and developed."
Sumantran believes the principles behind the design of a low-cost car in the developing world are quite different and include: effective functional mapping, complexity minimization, functional consolidation, and the inclusion of only what is necessary and efficient. In addition, there is the need to consider "transformational technologies," an example of which is the use of cell phones instead of land lines in emerging economies. "They not only eliminate the traditional infrastructure associated with the precursor technology," says Sumantran, "but expand the new version's available uses." This means a basic vehicle like the Tata Nano will do without a GPS navigation option from the factory, and instead use the owner's (or a passenger's) cell phone to provide this functionality. Similarly, iPods and other portable devices will be used in place of an in-dash sound system.
Though Tata has come under fire from environmentalists and others for introducing the Nano, a low-cost car into a country with limited space and infrastructure, as well as significant air pollution, Sumantran sees these problems as part of an evolutionary cycle common to market economies. "Running out of space and infrastructure are the biggest problems facing the Nano," he concedes, "and an example of how solutions to one problem often create problems of their own." However, as the problems grow in importance, this creates demands for new solutions and innovations to rectify them. According to Sumantran, "Despite what some may say, people are rational beings. When the cost of the solution is too high, other answers are found and a natural balance emerges."
Implicit in Sumantran's argument is the idea that indigenous companies like Tata will not only do a better job of providing solutions to India's needs, but will eventually expand its operations to enter markets around the world; much like European and Japanese OEMs did in the post-war period. In fact, Tata chairman Ratan Tata has stated that his company's purchase of Jaguar and Land Rover will be used to help his engineers create better cars and trucks that are more suited to Western tastes. It is a process similar to that being followed by some Chinese automakers who hope their associations with established OEMs will teach them how to build better vehicles.
Whether those vehicles will ever get to the U.S. is another matter entirely. Despite the success of the European and Japanese automakers in North America, a task that took many decades to complete, those planning their arrival shouldn't expect the same results. "There has been a lot of talk that what the Japanese did in the U.S. market the Koreans did in half the time, and what the Koreans did the Chinese can expect to do in half that time," says AT Kearney vice president Dan Cheng. "However, the jury is still out on that, and the Koreans-as can be seen by all of the turmoil in their front offices here in the U.S.-are not as healthy as many seem to think." Nevertheless, what attracts foreign automakers to the U.S. is the fact that it is the largest single-country market in the world. This creates economies of scale that, over time, have the potential to lower an OEM's costs while increasing its profitability. Or, at least, that's the theory.
"What people forget," says Cheng, "is that the U.S. is an incredibly crowded market with a lot of barriers to entry." These include a dealer franchise system that prevents OEMs from selling and marketing directly to consumers, support requirements that act as barriers to exit from the market, and a regulatory regime so complex that Ford's director of Strategic Design Freeman Thomas exclaims: "I have to meet fewer regulations designing a chair or a building or the Space Shuttle than I have to change the seat design for a car!" In addition, questions about the safety of pharmaceuticals, toys, counterfeit brake pads and body panels, and other items have caused many Americans to reconsider their willingness to trust Chinese products. Throw in a few YouTube videos of Chinese vehicles failing crash tests, and you have a major image problem. "If you look at the brand perception of products coming from China," says Cheng, "it will be problematic for them to sell vehicles here until they fix their image."
One way the Chinese may choose to avoid this problem is by buying an existing car company, with Cerberus-owned Chrysler being the most likely target. The thinking is that the private equity company will simply tire of the losses, or have trouble raising the cash necessary to cover the costs associated with meeting new regulations and creating new vehicles. In this scenario, Cerberus gets Chrysler just healthy enough to flip it and its established dealer network to a hungry Chinese automaker willing to pay a tidy profit. It's a nice theory, but one that probably won't happen so directly. Cheng suggest that any takeover probably will happen with a major supplier first. "For Chinese suppliers looking to get an existing book of business, the answer is to buy a supplier," he says. That gives them instant access to established OEMs and their business practices, and allows them to learn what is necessary to succeed. Thus they build a base able to supply a major American OEM before actually taking the plunge. For now, Chrysler appears to be safe.
Of course, none of this matters if the infrastructure is so overloaded that adding more vehicles to the system brings about its collapse. Martin Wachs, director of RAND Corp.'s Transportation, Space and Technology Program, says the way we currently pay for infrastructure in the U.S. is outdated, and can't keep up with the scale of growth or degradation currently underway. "The motor fuel tax has been the major source of transportation revenue in the United States since 1922," he says, and this user fee doesn't cover actual road use and damage. According to Wachs, not only is the federal tax of 3.6 cents per gallon less than the equivalent tax in 1957, the average state charge of 20 cents per gallon also is below the 1957 level. Unfortunately for the infrastructure, he says, "fuel economy and vehicle miles traveled are up, and the government opposes any increase in user fees." Wachs contends that every road user should be charged for their actual road use by fitting every vehicle with a GPS-enabled in-vehicle monitoring system. "Governments could then charge for the time of day via congestion pricing, the type of vehicle, and other relevant factors," he says. Implemented through a 10-year phase-out of the current tax regime and a phase-in of the transponder system, it would include a doubling of the tax "with the increase going to public transportation." It is an idea Martin Tillman, an associate at Steer, Davies, and Gleave, a London-based international transportation consultancy, supports. Tillman suggests turning the public transportation idea on its ear by making busses, "a Business Class service with leather seats, cupholders, WiFi connectivity, and standard fees." They would be part of a multi-modal system created by a government transport ministry whose stated responsibilities are: environment, economic benefits, social inclusion, and health. In this scenario, residents would eliminate unnecessary trips by having their purchases-most of which are made online-delivered to lockers near their place of business or home by companies like Fed Ex or UPS. In that way, insists Tillman, "Dozens of individual trips in private vehicles would be replaced by a single delivery vehicle traveling from locker to locker, eliminating congestion, reducing overall fuel use, and cutting greenhouse gasses significantly."
For an idea of what this future might look like in its initial stages, one need look no farther than London where socialist Mayor Ken Livingstone, nicknamed "Red Ken" for his class warfare politics, introduced fees that cost British drivers $16 a day to drive into London. This is on top of a $50 fee for high-emitting cars (including some minivans used to take children to school, a highly efficient use of the vehicle), and a $1,000 fee for pre-2001 trucks. It is one of the reasons the U.K.'s Society of Motor Manufacturers and Traders (SMMT) says the shift to "green" car taxation has made motorists the number-one tax contributor in Europe, with those living in the U.K. contributing £45 billion per year, the bulk from fuel taxes. This is despite the fact that, as A.T. Kearney's Dan Cheng points out, "If you look at CO2 emissions on the big picture scale, electric utilities contribute something like 41% of the total footprint, while all forms of transportation are responsible for 33%. Only about 20% of the total comes from passenger cars and light trucks." So why are cars and trucks in the bull's-eye? According to Cheng, "When a regulator passes vehicle legislation he is seen as doing something because cars and trucks are so visible."
It is a problem all too familiar to Gordon Murray, former chief designer for the Brabham and McLaren Formula One teams as well as creator of the McLaren F1 road car. An engineering and design iconoclast, he chides major automakers for their rigid structures, incrementalism, and institutional thinking, but cautions critics that, "our industry has made fantastic strides in reducing CO2 emissions with the powertrain," before adding that "the rest of the car got worse and negated most of those gains." Nevertheless, Murray is convinced that governments and car makers must work together to create solutions, "based on solid scientific evidence and engineering input because these governmental decisions are more often than not ill-informed by the wrong pressure groups for the wrong reasons." When this happens, Murray says, the Big Stick replaces incentives, and freedom is denied.
While one who believes that, "public transportation needs much, much more effort to create different ideas and is lagging behind," Murray also understands individuals are not going to give up the freedom found in individual transportation. Therefore, the problem must be attacked in terms of vehicle occupancy and architecture. "Vehicle architecture will have to change dramatically in order to get smaller and lighter cars that produce far less CO2 damage while they are running, but that also take into account the lifecycle CO2, congestion, and parking harm caused." His Type 25, an idea that has been on his mind for 14 years, has been designed to answer those concerns. (See: "The Type 25.")
However, there is no one-size-fits-all solution. Says Murray, "A family of seven needs a seven-seater car, though it could be 200 kg lighter and have a 10% smaller footprint than today's," and would not be used all of the time. Twin- or single-seater city versions of the modular Type 25 will fit four to a parking space, instantly quadrupling available parking. "With a little bit of white paint, a few signs, and a government education program," he says, "you easily can triple lane usage." His plan, he believes, not only helps solve many of the problems faced by dense urban areas, it would, "create a massive opportunity for automakers to expand their business."
No one would agree with Murray's opportunity sentiment than Intrago LLC (Boulder, CO) president Dan Sturges. A former GM designer and creator of the GEM neighborhood electric vehicle, Sturges has a long history of interest in multi-modal transportation solutions. "In the information age we can easily move to the micro-rental of vehicles by the hour or by the minute, and that will have a profound effect on the transportation system," he says. Sturges is not advocating a move away from car ownership per se, but toward a system where there are fewer privately owned cars and more short-term rentals of vehicles that meet varying transportation needs. His company is starting with the development of the systems and technologies to rent small electric vehicles-cars, scooters, bikes-at train stations or in downtown urban areas, with the first site scheduled to open in Seattle, WA, later this year. Based on statistics from the Automobile Association of America, Sturges says the average American spends $7,000 per vehicle to own and operate a car that sits idle 90% of its life. "The more you move to multi-modal systems where people can do things like transit to another city, rent a vehicle that matches their needs, and drop it off on their return to the station, you free up the money from the car ownership side of the equation to make these scenarios more viable," he says. However, two problems stand in the way of movement toward such a system. First, the creation of successful multi-modal transportation systems will require the participation of OEMs and both transportation and city planners to create an integrated system. Second, consumers will need to experience it in a way that shows how it might fit into their life in a positive way. "It's a challenging process to get people to test drive the system," he says, "but the global car parc is expected to grow from today's 880 million cars to 2 billion by 2050. Even if one out of three drivers is doing something that is modal-plus, that's potentially a $1 trillion business."
Of course, there are also those like Christer Lindström, founder and board member of the Institute for Sustainable Transportation (www.podcar.org), who think the threats of climate change and congestion are so dire that, "a complete paradigm shift with new technology," is necessary. At the center of this shift is the Pod Car, an urban transportation system that would put about 50% of daily travelers in a car-size electrically powered module running on raised tracks. Not only would it take occupants from one station to another, it would switch to different tracks to access points located outside of each main loop, making it more personalized and autonomous than most rapid transit systems. "Future transportation systems have to be connected to the transportation and city planning functions," agrees Lindström, "just as they have to be connected to where we work, where we live, where we shop, and where we play." Doing so, however, requires not only a significant shift in public opinion and travel habits; it requires a significant change in infrastructure and spending priorities. Lindström sees these as inconveniences, not major hurdles. "About 70% of Los Angeles and Orange County is parking area," he claims. "That's a lot of space that can be reclaimed for housing and sold to finance these kinds of systems." He also sees the United States, not Europe, as the perfect place for a Pod Car revolution based on the speed with which the U.S. went from peace-time to war-time production in the 1940s. "In the U.S. you have shown the ability to do quite amazing things in a very short time, and a transformation like this has much more to do with will power [than anything else]."
The question remains: Will transportation in the future require tearing up the current system and replacing it with a new one? Probably not. Dave McLellan, former Corvette chief engineer and an independent engineering consultant, suggests that such radical solutions are unnecessary. "The ultimate answer to our transportation challenges is letting the marketplace work such that we make our own private decisions free from government coercion and come together collectively to make decisions." In doing so, he believes, we will discover solutions that are much less expensive to implement, and ultimately as, or more, efficient. Expanding on Gordon Murray's city car idea, McLellan forecasts lighter vehicles that are taller and more efficient, and use digital electronic signals from the infrastructure and other vehicles to control the space-fore, aft, and side-to-side-between them. "We have the ability to model these problems and solve them as dynamic fluid-flow equations that can accept a changing vehicle depth," he says. Citing a GM study, he claims that having one in eight cars in a traffic queue utilizing the full capability of adaptive cruise control can stabilize the entire line by eliminating the surge mode that leads to stop-and-go tie-ups. Over time, each vehicle in the queue would have such systems, creating an automobile-based Pod Car-like vehicle flow without the need for expensive new infrastructure. Coupled with Gordon Murray's multi-faceted personal transport vehicles and Dan Sturges' micro-rental plans, McLellan believes people in the future will be able to live and work where they please without having to succumb to living in densely populated urban areas, and retain their ability to travel where and when they want.
CHANGING THE DESIGN PARADIGM
Listen to Dassault Systemes (www.3ds.com) president and CEO Bernard Charlès long enough, and you'd swear you can see the future, which is exactly his goal. "We want to create a virtual world that is consistent with the world in which we live," he says as he describes an interactive design and development process under development. Currently, Dassault's 3D Live suite encourages web-enabled users to collaborate on projects through a common interface based on a defined structure. For example, vehicle programs start with a virtual vehicle sitting atop a turntable. Double clicking on the vehicle divides it into major subsections (body, chassis, interior, powertrain, electrical), and allows users to drill as deep as their curiosity - and clearance - allow. Charlès' next step is to apply interactive collaboration to the front of the process to eliminate paperwork, misunderstanding, and encourages the flow of relevant math data through the entire process. "Why do we have to make so many additional documents that nobody reads," he asks, "when in real life I would just show you what I wanted?"
The idea builds on the ideas put forth by Dassault's 3DVia Shape program that eliminates most of the menus used by drawing programs and replaces them with a "drag and drop" system. This lets users tug and push on an object to create the look and functionality desired with very little effort or training. The next step is to add product features that can be moved until the user is satisfied with the result. For many consumer products, Charles sees this process expanding to become "the eBay of design" where companies ask customers to help create and refine new products, customers put their own designs up for bid, and freelance designers create unique products manufacturers can buy and call their own. This, however, is only part of what Charlès envisions.
Predicting the future is a difficult thing. Though we can dream of a future where radical new vehicles inhabit the roads, powered by fuels and driven by technologies that once were the exclusive property of science fiction, the simple truth is that it will take time before such vehicles appear. Consider, for example, that the Department of Energy’s own most optimistic scenarios expect only 10% of new vehicles and 6% of total vehicle miles traveled will be accounted for by hydrogen fuel cell vehicles in the years 2025. That means 90% of the vehicles will be conventionally powered hybrid or non-hybrid vehicles. It’s why AT Kearney’s Dan Cheng expects nuclear power to be looked upon as a green technology. That’s because hydrogen, like electricity, is an energy carrier that must be produced from a primary energy source, and nuclear power is the only way currently available to make large volumes of hydrogen economically without using more energy to create it than it can carry.
Flexibility in all areas of the vehicle will be necessary to meet the demands that will be placed on the automobile industry in the coming years. It will be necessary to reduce each vehicle’s physical footprint; improve the aerodynamic efficiency; design powertrains that are lighter, more power dense, and more efficient; reduce vehicle weight without sacrificing strength, safety, or style; increase the level of digital control over systems and subsystems to provide the greatest level of operating efficiency; increase the collaboration between disciplines to cut waste, duplication of effort, and speed the time-to-market of vehicles that will be more complex than ever; and build them in a manner that allows maximum reuse of components and systems, and the flexible manufacture of a number of variants. It’s a tall order, but one that is not insurmountable. Yet, as Dave McLellan remarks, “One day we’re going to wake up and see that the engineers did it all. That’s my best guess as to what will happen. We will get it done over time.”