Summit New Directions Dr. Jay Baron President & CEO Center - - PowerPoint PPT Presentation

2014 South Carolina Automotive Summit

New Directions

• Dr. Jay Baron

President & CEO Center for Automotive Research February 19, 2014

Name a product … ?

• Which consists of nearly 30,000 parts,
• Is from the largest manufacturing sector in the U.S. economy.

This accomplishment by the auto industry to execute mass production has become the norm.

• Can be assembled at the rate of

1 per minute,

• 16 hours a day - 200 days a year
• Runs for several years, most of

the time without a single manufacturing defect?

Manufacturing Efficiency Excellence is now the Standard

Taiichi Ohno: Toyota Production System Global Supply Chains Flexible Manufacturing & Industrial Robotics Global Platforms Digital Engineering & Manufacturing Interchangeability

Average Vehicle Age

6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 1970 1975 1980 1985 1990 1995 2000 2005 2010 Average Age in Years

Average Age of the Light-Duty Vehicle Fleet

Vehicle quality and reliability have risen steadily

New Vehicle Price Changes (YOY Change)

Automotive Impact – 50 States

(why states want the auto industry in their backyard)

• 8 million private sector jobs
• $500 billion annual compensation
• $70 billion personal tax revenue

U.S. automotive industry’s total U.S. operations, including:

• Vehicle development
• Production
• Parts manufacturing
• Sales and service of new vehicles

Source: CAR 2010

Distribution of the North American Automotive Industry

Estimated 470 automaker facilities, and 7585 supplier facilities in the United States 2012

Source: CAR / BLS 2012

Southern Automotive Research Alliance (SARA)

The Southern Automotive Research Alliance (SARA), administered by CAR will examine the critical success factors necessary for continued global automotive investment growth within the southern U.S. automotive manufacturing region. This study will seek to address the common challenges and identify actionable recommendations in order to attract new foreign investment.

Southern Automotive Research Alliance (SARA)

Alabama Kentucky Louisiana Mississippi South Carolina Tennessee

Announced Automaker Investments in the SARA Region and Mexico: 2011-2013

Automotive Compensation

(Hourly)

USA: $37.38 (2012) MEX: $7.79 (2012)

Investment Totals South: $6,176 Million Mexico: $9,476 Million

Nissan, Aguascalientes - $2,057M

United States

(14 FTAs, 20 Countries)

• NAFTA
• CAFTA
• Agreements with

Australia, Bahrain, Chile, Columbia, Israel, Jordan, Korea, Morocco, Oman, Peru, Singapore, and Panama

Free Trade Agreements

Mexico

(13 FTAs, 45 Countries)

• NAFTA
• EFTA
• Northern Triangle
• Agreements with

Central America, Chile, Colombia, Costa Rica, European Union, Israel, Japan, Nicaragua, Peru, and Uruguay

Sources: CAR, BLS, CRS, USTR, SICE

Ford, Hermosillo - $1,300M Chrysler, Saltillo - $1,249M GM, San Luis Potosi - $251M GM, Silao - $549M Mazda, Salamanca - $500M Honda, Celaya - $1,270M GM, Toluca - $751M VW (Audi), San Jose Chiapa - $1,300M Elio, Shreveport - $100M Toyota, Huntsville - $230M Honda, Lincoln - $373M Mercedes, Vance - $2,070M Hyundai, Montgomery - $173M Nissan, Decherd - $50M GM, Spring Hill - $443M VW, Roane - $40M BMW, Spartanburg - $900M Toyota, Pendergrass - $350M Porsche, Atlanta - $100M Kia, West Point - $100M VW, Silao - $118M Nissan, Canton - $73M Hyundai, Tijuana - $131M GM, Roswell - $26M GM, Bowling Green - $135M Toyota, Georgetown - $392M Ford, Louisville - $621M

What Companies Want:

SARA – Highlights

• Mexico: pros and cons
• Growth opportunities: capacity
• Tooling
• Decision making

– Global, U.S., North/South – Need for speed – non-political entity in south

• Costs - Incentives, training, taxes,
• Workforce

– Work skills – Pipeline, internships

• R&D - Synergies, basic (home) vs. development (de-centralized)

Challenge: Logistics emerging as a primary factor for location decisions

• Developing and enhancing freight and logistics industries has become a leading edge

economic development strategy

• Added network capacity has not kept pace with demand for trade
• Over the past 30 years, highway miles have increased by 5% while VMT has doubled; rail

line track has decreased by 35% though railroads haul 70% more freight than trucks haul

• Other parts of the country are planning or already operating logistics hubs
• The Alliance (Texas)
• Columbus Heartland Corridor – Norfolk Southern Rickenbacker Intermodal Terminal
• North Baltimore, Ohio – CSX Northwest Ohio Terminal
• Will County, Illinois – CenterPoint Intermodal Center
• Kansas City – BNSF Intermodal and Logistics Park

Source: Gateway Cities Council of Government

What’s coming next ? Automotive Innovation

• Manufacturing efficiency
• Competitive costs
• Technology generator
• Quality products
• Cool products
• Economic development

Old News:

Fleet Average (approx.):

• 1980: 23 mpg
• 2012: 28 mpg

Historical Trends: Horsepower, Weight and Fuel Economy

• Comfort/convenience

(music, powered accessories)

• Safety (crashworthiness, airbags)
• Emissions reduction
• Increased power

Volcanic Eruption of Epic Proportions

• New Technologies = Huge Risk
• Ironically, there are too many technology options

Powertrain Technology Dilemma

CAFE & Safety driving innovation Goal: 0 fatalities due to crash Mobility concerns (congestion)

Non-Compliant Vehicle Fleets (CAFE)

5 10 15 20 25 MY 2008 MY 2009 MY 2010 MY 2011 MY 2012 MY 2013

• 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

• ffset non-compliant fleets
• Credits can be carried forward or

backward from the MY

• Credits can be sold from one

manufacturer to another

The New Big-3 Technology Shock !

Materials

Powertrain

Connectivity

Potential growth of 100,000 jobs for mobility by 2025

An average vehicle contains around 60 microprocessors to run electric content – four times as many as a decade ago. More than 10 million lines of software code run a typical vehicle’s sophisticated computer network.

Growth in Electronics (>40%)

Intelligent Mobility

Convergence and Automated Vehicle Forecast

• Significant research for 5

years

• Converged applications

using both sensors and communications more likely in 10 years

• Automated vehicles likely in

10 to 20 years

Source: CAR, 2012

Source: Center for Automotive Research

Lightweighting Material Architectural Strategy

• Future Steel Vehicle

– 35% reduction in body mass

All technology pathways anticipate lightweighting The “monolithic” car with one dominant material is: – Easier to design, and – Easier to manufacture, but – Not optimum for reducing mass and cost

• Aluminum Intensive

– 45% reduction in body mass

• Composite Car
• 55% reduction in body mass

Ford 2015 F-150 Aluminum body & bed Steel frame

Source: Center for Automotive Research

Mass Reduction Cost of Competing Material Implementations

• Small levels (1%) of mass reduction may

be achieved through material substitution at little to no cost penalty

• 20% mass reduction potential with AHSS

BIW structure and Al closures and chassis

• 25% mass reduction is possible with an

aluminum intensive vehicle – Largest potential for mass reduction is in BIW and closures

• CFRP BIW structures combined with

aluminum can achieve a 35% reduction in vehicle mass – CFRP at today’s price (~$12 per pound) comes at a considerable cost penalty – A reduction of CF price (~$5 per pound) could present an

• pportunity for CFRP (excluding

manufacturing constraints)

NOTE: Assumes no reduction in vehicle size

Lightweighting High Strength Steel, Aluminum & Composites Take on the Heavyweights

Key Material Trends (Next 10 years)

• Increased use of ultra high strength steel

for structural components around the “safety cage” to prevent intrusion

• Aluminum use for chassis and exterior

panels is increasing

• Fiber reinforced plastics (glass and carbon)

for structural components are still several years away from high volume production

• Joining complexity: more laser welding,

fasteners and adhesives

Structural Adhesive

26

Powertrain Diversity and Convergence



gasoline

Source: Robert Bosch LLC

gasoline gasoline diesel HCCI diesel Alternative fuels diesel hybrid Alternative fuels hybrid

EV / range extender EV / range extender

EV - battery EV / fuel cell EV (battery / fuel cell)

HCCI = homogeneous-charge compression ignition

today evolving future (electric)

Powertrain Forecast

Advanced gasoline engines & transmissions dominate thru 2020 (95%)

• Gasoline direct Injection, forced induction,

discrete and continuous variable valve lift

• 8/9 speed transmissions, CVTs

But…

• Diesel will increase from 1% in 2012 to 2.5%
• HEV will also grow slightly from 3 % to approximately 4%. PEVs will struggle
• Alternative fuels will continue to be niche
• Conventional SI technologies are only effective until about 2020. Then

diesel and electrification have to play a key role to meet standards. Diesel emissions will limit them.

• Electrification will require infrastructure and government incentives. These

are declining in Europe right now and uncertain in the U.S.

Gallons of Gasoline Saved for Incremental Improvement in Fuel Economy

20 40 60 80 100 120 140 10 20 30 40 50 60 70 Annual Gallons Saved per MPG Improvement Miles per Gallon

40 Gallons

600 gallons $3.50/gal = $2,100 $6.00/gal =$3,600 200 gallons $3.50/gal = $700 $6.00/gal =$1,200 100 gallons $3.50/gal = $350 $6.00/gal =$600 60 gallons $3.50/gal = $210 $6.00/gal =$360 40 gallons $3.50/gal = $140 $6.00/gal =$240 28.5 gallons $3.50/gal = $100 $6.00/gal =$171

600 Gallons 200 Gallons 100 Gallons 60 Gallons 28.5 Gallons

Summary: Technology Implications

• Greater influence of regulatory agencies affecting

products, costs and performance – NHTSA and EPA and CARB affecting products and customer demand – Enhanced crashworthiness and crash avoidance (ADAS) – Uncertainty over electrification and advanced technologies (fuel cells) requiring incentives and infrastructure

• Customer acceptance of specific technologies

– Stop/start, coasting – DCT – NVH tradeoffs (materials, LRR tires) – ADAS – Acceleration – turbo lag, higher RPMs – Rate of obsolescence increasing due to technology

• Vehicle complexity and vehicle “packaging” (of

technologies) – Powertrain (and fuels) diversity. Downsizing and boosting. – Designing vehicles for the drive test cycle (highway, city, off-road, towing, …) – Electronics (ADAS, telematics, HMI) – Complexity over hybrid technologies, PHEVs and BEVs

• Fuel economy labeling inaccuracy

– Variation of performance increases as FE increases

• Costs and complexity to repair and recycle

– Higher cost vehicle and technologies – Greater software content (powertrain controls, ADAS, etc.) – Specialty repair stations (more certification) – Longer repair times

2014 South Carolina Automotive Summit Thank You

• Dr. Jay Baron

President & CEO Center for Automotive Research February 19, 2014