The automotive industry is investing in the development of electric vehicles and hybrids as it moves to meet NAFTA environmental standards that come into effect in 2016.
March 14, 2012
by KIM LAUDRUM
Al Cormier has a vision. The president and CEO of Electric Mobility Canada, a not-for-profit in Mississauga, Ont. that would like to see the combustion taken out of transportation, dreams of a day when people from coast to coast will choose to drive cars with zero harmful emissions. The key to doing that and achieving more sustainability in transportation, he says, is to promote the development of electric vehicles.
That raises some interesting questions for manufacturers. Who’s going to make them and what’s in it for Canadian assemblers and auto parts makers?
Not that replacing full-on combustion vehicles won’t be a challenge, given the infrastructure needed to recharge vehicles that run purely on battery power for a trip of more than 35 kilometres is almost non-existent. True, electric vehicle owners can plug in their cars at home – even using the existing 110-volt grid standard in most Canadian homes – and charge the car battery at off-peak time within about 12 hours, depending on the size of the battery pack. That would be enough for most commuters.
Cormier notes the average Canadian daily trip to work is less than 30 kilometres. Installation of higher voltage systems would lessen the time. Anything from an upgrade to a 220-volt system, which is the same needed to run a clothes dryer, to 660 volts, which is what it takes to run a hot tub, would reduce charging times to between three and four hours.
But charging stations along the highway, say from Montreal to Toronto, will be needed to travel farther than 30 kilometres. North American standards for charger plugs were recently put in place. He says soon it will be possible to charge an electric vehicle in just five minutes, about the same time it takes to fill a conventional car tank with gasoline.
It’s important for people to switch to electric vehicles, says Cormier. It won’t affect their lifestyles, but it would reduce emissions, hence global warming; hydro electricity is cheap, clean and abundant in most provinces; and we’re running out of cheap oil as growing industries in India and China ratchet up the price pressure on oil and gas.
Since 65% of Canada’s electricity is generated by hydro compared to just 20% in the US, he contends it just makes sense for Canada to push for electric vehicles.
There is another, pragmatic reason for the automotive industry to look beyond internal combustion.
“We need to develop electric vehicles and hybrids to hit the 2016 environmental standards in NAFTA,” says Steve Rodgers, president of the Automotive Parts Manufacturers’ Association (APMA).
That goal requires automakers to reach corporate average fuel economy (or CAFE) standards of 35.5 miles per gallon (mpg) by 2016. Last July, an increasingly tighter CAFE goal of 54.5 mpg by 2025 was announced. There is some consensus that reaching such a goal with the existing internal combustion engine technology alone would be difficult.
Governments are providing incentives to ignite sales. Ontario offers a cash rebate for grid-connected EVs purchased or leased after July 1, 2010 of between $5,000 and $8,500 based on the vehicle’s battery capacity. The Quebec government offers similarly generous tax credits.
Now that the standards for the plug-in to electric cars are in place, the Canadian government is kick-starting the development of a potential network. In September 2011 the feds announced the Eco Energy Innovation Initiative, a $97-million fund for renewable and clean electricity demonstrations – including infrastructure needs, such as charging stations for electric transportation.
Auto parts maker Magna International Inc. and Magna E-car, which is a partnership between the Stronach group and Magna International, is investing $432-million to develop EV technology over the next six years. Of this total, the province of Ontario is providing $48.4 million to bring to market emission-reducing cars such as battery-electric vehicles (BEV); plug-in hybrids (PHEVs), which combine battery-electric power with a traditional internal combustion engine; and hybrid vehicles (HEVs) powered by electric motors and gasoline. No wonder Magna head Don Walker commented, “There’s a lot of activity going on in the hybrid and electric space.”
IDC Energy Insights is predicting global production of lithium-ion batteries will almost quadruple in 2012 to feed growing demand greatly helped along by plug-in vehicles.
An IDC Energy report, Business Strategy: Lithium Ion Manufacturing Global Buildout – Supply and Demand Forecasts expects worldwide growth in manufacturing capacity of 390% from 6,689 megawatt hours (MWh) in 2011 to 26,149 MWh in 2015.
The Farmingham, Mass. research firm says plug-in electric vehicles will require more than seven times the 2011 production level, rising to 17,331 MWh by 2015. North America will lead the demand in the coming year; however, Asia will quickly eclipse North America.
A lithium ion battery costs about $7,500. If battery costs fall as expected, IDC Energy sees global demand for batteries rising 447% from 5,411 MWh in 2011 to 24,191 MWh in 2015.
To meet this demand, manufacturers worldwide are engaging in one of the largest factory build-outs in world history, which IDC Energy says is led by a combination of existing battery giants, such as Panasonic in Japan, Samsung SDI in South Korea, and Johnson Controls in the US, as well as emerging players, such as A123 Systems in the US, Electrovaya in Canada and BYD in China.
Steve Rodgers points out there are emerging opportunities for auto parts makers who can provide critical EV technology such as lightweight panels and advanced composite structures – anything that can help improve lightweighting. Stamping companies could see new work here. Firms with expertise in heating, ventilation and air conditioning (HVAC) could also benefit by providing systems for cooling batteries. And low rolling resistance tires will be needed because the weight distribution is different in battery-run cars.
Cormier anticipates electric vehicle sales will stimulate work for power conditioning systems, chargers, transformers, electronic and electric equipment.
“No doubt (EV is) an important technology,” Rodgers says, although based on current battery technology, “it remains true that it will have a more limited impact on production volumes in the short term simply because the range is not where it needs to be yet and the cost-benefit ratio just isn’t positive overall at this point. But that’s not to say we won’t continue to see improvements going forward.
Not everyone is keen on the market potential of electric vehicles. Automotive consultant Dennis DesRosiers says he doesn’t buy the hype. It’s not because of the lack of infrastructure or even the technology itself that he’s not keen. He acknowledges the infrastructure is possible and the technology does meet the environmental requirements of the future. He just doesn’t see the consumer buying such low range vehicles, citing declining sales of hybrid electric vehicles over the past decade and the consumers’ lack of enthusiasm for electric vehicles in general.
DesRosiers notes that car manufacturers have made inroads into improving fuel consumption per gallon. He cites Ford’s Ecoboost program as demonstrated in the new Ford Explorer, Chrysler’s Pentastar technology on its Grand Cherokee, and BMW’s diesel-fuelled, light-weighted X1 as examples.
“I believe all roads lead to electric vehicles,” says DesRosiers. “But I don’t think we’ll have 10% market penetration until at least 2040.”
Consumer affordability is key. Ford plans to roll out more electric vehicles in the near future but expects the higher price sticker will mean a smaller, niche market for these cars. While that market is developing Ford is concentrating on technologies like the EcoBoost engine that will help improve the fuel efficiency of its existing fleet. So notes Steve Ross, product marketing manager for sustainability and electrification for Ford Motor Co. Canada Ltd.
The Ecoboost engine, Ford boasts, can deliver 10% to 20% better fuel economy and 15% fewer CO2 emissions. It offers similar performance to the larger-displacement engines; can be applied to existing gasoline engines; and will be implemented across Ford’s vehicle fleet, “bringing fuel-efficiency benefits to a wide range of customers,” according to Ross.
“We are on track to equip as much as 80% of our global line-up and 90% of our North American line-up with EcoBoost engines by 2013,” Ross wrote: “That’s about 1.5 million engines.”
In addition to new engine and transmission technologies, Ford is introducing new electrical system improvements, weight reductions and aerodynamic improvements to deliver improved fuel-economy benefits for millions of drivers in the near term.
Between 2008 and 2013, Ford will have introduced 60 new or upgraded engines, transmissions and transaxles globally to meet more stringent environmental standards, Ross said.
In the US Ford is investing billions of dollars in advanced technology vehicles thanks to a $25-billion federal incentive program offered through the United States’ Department of Energy (DOE). Not to be confused with the auto bailout Troubled Asset Relief Program (TARP), the DOE program makes direct loans to eligible applicants to produce advanced technology vehicles that meet tough new fuel economy standards. Ford, Nissan and Tesla were among the first companies selected to participate in the program.
Ford expects to receive $5.9 billion through these loans. This is funding the transformation of the Michigan Assembly Plant where the plant once made SUVs but is now a flexible, small-car plant. The Michigan plant is producing the Ford Focus and three new EVs including the Focus Electric, and later this year, the next-generation C-MAX Hybrid and the C-MAX Energi – Ford’s first commercially available plug-in hybrid.
As well, Ford announced it expects to roll out the Fusion Hybrid, Fusion Energi (PHEV) and Transit Connect Electric by the end of the year.
With the world’s population reaching 7 billion this year, a car population growing five times faster than before, the expanding economies of India and China raising living standards and enabling even more people to own cars, Cormier says oil prices will be pushed only further in the coming years.
“Obviously we can’t cut back on oil everywhere. Air Canada wont’ be able to fly electric planes,” he says. “But where it makes sense to make the switch, let’s do it.”
Kim Laudrum is a Toronto-based business writer who specializes in manufacturing issues.
This articles appears in the January/February 2012 issue of PLANT.