Drivers for Growth in Automotive Aluminum Demand

Jack Pell and JD RuttHydro

on behalf ofThe Aluminum Association,

Aluminum Transportation Group (ATG)

The Aluminum Association’s Aluminum Transportation Group

(ATG)

www.aluminumintransportation.org 2

Aluminum Growth Factors to Consider:• Existing aluminum applications

• Impact of federal regulations

• Weight reduction and fuel economy improvement

• Weight reduction and energy consumption

• Benefits to alternative/electric vehicle technology

• A future with automotive aluminum

11.3%

10.0%8.8%

7.8%6.9%

6.1%

5.1%4.5%3.9%

2.1%2.0%

0%

2%

4%

6%

8%

10%

12%

1970 1975 1980 1985 1990 1995 2000 2005 2010F 2015F 2020F

Aluminum Share as Percentage of Curb Weight

Auto Aluminum ContentNorth America - Percent of Curb Weight

Calendar Year

77 Pounds

394 Pounds

Historical Forecast

50 Years of Uninterrupted Automotive Aluminum Growth

334

Pounds

Existing Aluminum Applications

• Today’s vehicle contains about 10% by weight• Many vehicles in the U.S. fleet use 400-500 pounds of aluminum• More than 95% of automotive aluminum is recycled

Body Holds the Largest Weight Reduction Opportunity

6

0

2,000

4,000

6,000

8,000

10,000

12,000

Currently AluminumAluminum Opportunity

•Shift to aluminum saves 550 lbs. direct and secondary weight

•10% better fuel economy

•No compromise to safety

•No downsizing required

•Better performance

•Lower lifetime CO2

KM

T A

lum

inum

Source: The Aluminum Association

• April 2010: the Obama Administration established regulation that, starting with 2012 model year vehicles, requires automakers to reduce fleet-wide greenhouse gas emissions by approximately 5% every year and strengthen fuel economy each year, reaching an estimated 34.1 mpg for the combined industry-wide fleet for model year 2016

• October 2010: the Obama Administration announced next steps toward establishing tighter fuel economy and emissions standards for 2017 through 2025 model-year vehicles

7

U.S. Faces Stricter Fuel Economy Regs

• Weight reduction will be part of the solution to meet the new regulation bench marks– Nissan recently announced plans to start

reductions at 15% – GM recently announced plans to trim 500 lbs. from

its light trucks by 2016, and by the early 2020s, may cut as much as 1,000 lbs. per truck

• Aluminum already offers great weight saving for less CO2 than competing materials

8

Down Weighting Key to Solution

Weight Savings Translates to Fuel Economy Improvement

Kilo

gram

s

Mass of Body-in-White Fuel Economy Improvement

Mile

s pe

r Gal

lon

0

50

100

150

200

250

300

350

400

Steel (baseline) High Strength Steel Intensive

Aluminum Intensive

Source: ika - University of Aachen and the European Aluminium Association (EAA)

Source: The Aluminum Association calculated based on ika mass reduction data; assumes 23% secondary weight savings

0

0.5

1

1.5

2

2.5

3

Steel (baseline-30 mpg)

High Strength Steel Intensive

Aluminum Intensive

2.7 MPG Improvement

9

• The aluminum industry has cut greenhouse gas factory emissions per ton of aluminum produced by 30% since 1990, and aims to be carbon neutral by 2030

• Aluminum has lower life cycle CO2 emissions than steel or high strength steel

• 20 lbs of CO2 is saved for every pound used

Greatest Potential with Smallest CO2 Footprint

10Source: Magnesium Industry Life Cycle Study

Down Weighting Creates Value for Alternative Powertrains

$0

$50

$100

$150

$200

$250

$300

Baseline Diesel Hybrid

Steel Body Aluminum Body

Cost per 1 MPG Increase

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Baseline Diesel Hybrid

Steel Body Aluminum Body

Percent Increase in MPG

Source: IBIS Associates 11

12

Objective:• Evaluate the impact of vehicle weight reduction on electric

vehicle performance, range and battery size

Results:• Reduced battery cost: $900 - $1,950 (@ $750/KWh)• EV weight reduction potential: 19%• 10% mass reduction: 4 - 6% reduction in battery size• Expected aluminum structure cost premium: $630

20% reduced vehicle mass yields a 20% range increase

$3 Battery Cost Savings Per $1 Invested in Electric Vehicles

PEV and PHEV Study

Source: Ricardo

Time for Down Weighting is Now• A necessity in the holistic approach to meeting U.S.

and global regulations without sacrificing safety or functionality

• The only fuel saving technology that complements advanced powertrains

• Offers more CO2 and fuel savings than other materials

• Transition can happen faster than alternative powertrain breakthroughs while preserving U.S. jobs

Drivers for Growth in Automotive Aluminum Demand

Thank You

www.aluminumintransportation.org