0100 Cars of the Future Mvse20050771 Final Report 210705

8/3/2019 0100 Cars of the Future Mvse20050771 Final Report 210705

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The Nether lands Society for Nature and

Environment

F i n a l r e p o r t

Cars of the future

A journey past prospect ive susta inabletechnological innovat ions forpassenger cars

J u l y 2 0 0 5


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The Nether lands Society for Nature and

Envi ronment

F i n a l r e p o r t

Cars of the future

A journey past prospect ive susta inabletechnological innovat ions forpassenger cars

file W2867.01.001

registration number MV-SE20050771

version 1.0

J u l y 2 0 05

DHV Environment and Transportation

No part of these specifications/printed matter may be reproduced and/or published by print, photocopy, microfilm or by any other means, without the prior

written permission of DHV Environment and Transportation; nor may they be used, without such permission, for any purposes other than that for which they

were produced.

The quality management system of DHV Environment and Transportation has been approved against NEN-EN-ISO 9001.


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STATEMENTS / APPETIZERS

1. Innovation demands pressure - therefore the (European) government constantly needsto bring ambitious end-of-pipe limit values into force!

2. The ultimate future car does not exist - cars of the future do!

3. Hybridisation is the way to go forward!

4. Small and decreasing margins force car manufacturers to shift their production

process - volume manufacturing is not the only answer!

5. Clustering and articulating demand may be the best way to speed up the introductionof more sustainable cars - after all the customer is always right!

6. The automotive branch has to start thinking like the computer branch: plug and drive!

7. Increased use of the 2nd generation of biofuels can have a powerful booster effect onthe innovation of the Dutch Economy!

8. While ringing out the Internal Combustion Paradigm the automotive branch now

embraces the E-Paradigm! (E stands for Environment, Electronics, and Energy)Revolution?

9. Intelligent vehicles increase the intelligence of drivers - this improves thesustainability of car transport!

10. It is still better to wear a diesel than to drive one!

The Netherlands Society for Nature and Environment/Cars of the future 20 July 2005, version1.0MV-SE20050771 - 3 -


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20 July 2005, version1.0 The Netherlands Society for Nature and Environment/Cars of the future

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CONTENTS PAGE

PREFACE 7

EXECUTIVE SUMMARY 9

1 INTRODUCTION 131.1 Car transport: a built-in part of society 131.2 Content of this study: promising concepts towards sustainable car transport 141.3 Aim of this study: learn about, encourage and influence sustainable car transport 15

1.4 Report Structure 15

2 CONTEXT WHAT IS HAPPENING? 162.1 What is happening? A characteristic abstract 162.2 What is happening in terms of demand? 172.3 What is happening in terms of the environment? 182.4 What is happening in terms of policy? 20

3 UNDERSTANDING THE PROCESS OF BUILDING AND SELLING CARS 253.1 The automotive sector develops 253.2 Car design and production 283.3 Car sales and consumers 30

4 VEHICLE TECHNOLOGY INNOVATIONS 364.1 General introduction 364.2 Energy sources and energy carriers 374.3 Power trains 394.4 ICT 414.5 Design 43

5 OPENING THE HATCHES TOWARDS THE FUTURE 485.1 Prospects: future concepts 485.2 Introduction accelerators for sustainable cars 55

6 COLOPHON 57

APPENDICES

1 Vocabulary and abbreviations2 Literature3 Technology Fact Sheets4 Genetic origin of future cars



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PREFACE

This report is a short and comprehensive overview of the potentials within the automotiveindustry to cope with today and tomorrows environmental problems. The underlyingbackground research was conducted by DHV consultants, in close cooperation with theNetherlands Society for Nature and Environment (Natuur en Milieu).

In the past, topics like car technology, power trains, car design and integrated computertechnology have not exactly been a primary focus of Natuur en Milieu. It was mainlyconcerned with transport policy, setting the right challenging and inevitable standards forcars and facilitating and promoting alternative modes of transport. Nowadays the car is

inextricably bound up with our need to move. The car has led to the emancipation of oursociety. Unfortunately this has often had adverse effects on the environment. It is to beexpected that the car will remain an important and functional mode of transport for manyyears to come. However, it is vital that cars will become much cleaner and have lessimpact on the environment (zero emission, energy-efficient, safe and silent) than todaysgeneration of automobiles. This report, titled Cars of the future, suggests ways in whichthis might be achieved.

The development of future cars starts today. It is therefore encouraging to see that somecar manufacturers have taken the initiative to come forward with hybrid technology, orare investing in fuel cell technology. The automotive industry is gradually coming round

to the idea that different strategies are needed to cope with environmental problemsrelated to cars. Traffic in Europe has major impact on emissions of carbon dioxide,particulate matter and nitrogen dioxide and as such has a considerable impact on globalwarming and public health.

Rather than focusing on the past and the present, this report aims to look forward andwants to point out promising paths of development. With it, we hope to highlightimportant developments which we think will help us to tailor the car to the needs ofsociety, instead of the other way round.

We hope the automotive and oil industry will recognise this need for transition and will

take up the challenge.

Mirjam de Rijk

Director of the Netherlands Society for Nature and Environment



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EXECUTIVE SUMMARY

A journeys destination: learn, encourage and influence car transport

The Netherlands Society for Nature and Environment (Natuur en Milieu) wants to bepro-activeand inspiring to stimulate developments towards sustainable cars. In order tobe pro-active and inspiring, Natuur en Milieu requires more insight in potentialtechnological innovations that meet the needs of society. For that purpose three key issuesneed answering: Issue 1 (technology): what are promising technical innovations (present and future)

that can contribute to more sustainable cars in the future? Issue 2 (process): what are key factors and key actors that influence the

implementation of these promising innovations? Issue 3 (strategy): what is the best way to accelerate these innovations?

This study of these three issues doesnt have the intention of being exclusive. It is ajourney for Natuur en Milieu in which a lot is yet to be learned. As a result Natuur enMilieu wants to encourage the public thinking and influence the speed and direction ofrelevant innovations.

Issue 1: Technology

Vehicle Technology InnovationsThere are many new technologies on the block, especially when it comes to power trainconfiguration and ICT functionality. Technology can contribute a lot to sustainability. Itis technologically possible to change the car as we know it. This report elaborates severaltechnologies in detail. The most important categories are: Energy sources and carriers - cleaner fuels slowly conquer the market. Engines

grow more and more independent from fuel types, which means future fuels will belooked at as energy carriers. In order to use energy carriers on a large scale,infrastructure is needed to distribute them - which takes up long introduction times.Bio fuels, ethanol, hydrogen and electricity gain importance, next to gasoline anddiesel. They contribute heavily to the sustainability of future cars.

Power trains - The propulsion system of a car is often called the power train. Overthe last 100 years the Internal Combustion Engine (ICE) propulsed cars. ICE isexpected to evolve in the coming 30 years, but alternatives are on the rise. This goesfor Electric Engines, Hybrid Engines and Fuel Cells.Hybridisation is an importanttransition technology towards future engines; a no-regret way to go. By combiningthe strengths of various engines into one hybrid concept, the energy management in acar is optimised. The long-term future for car engines approaches zero-emission; thisis achieved by fuel cell technology.



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ICT - Information technology in cars is an area of significant interest and impact. Allmajor car manufacturers are looking to incorporate some level of ICT functionalityinto their vehicles. The fully networked car for example, is a goal of manufacturers,seeking to offer improved safety and a better driver experience. Generally ICTfunctionality can be subdivided into a few categories; technology to (1) directlyimprove characteristics of the car, to (2) influence the behaviour of the driver, to (3)better integrate cars into the transport system, and to (4) enable drivers to use theirtime spent in their car in many other ways. Especially the last three categories arefavourable in terms of environment.

Design - Design characteristics can have a big influence on the sustainability of a car.The most important design aspects of a car which influence the environment are (1)weight and (2) aerodynamic- and roll-resistance. Then of course, there is the (3)material use within cars, which has a big influence on weight as well but also on thetotal volume of consumption of materials and recyclability of materials. Where carmanufacturers compete for the hearts and pocketbooks of consumers on the basis ofenvironmental impact, they will quickly be forced to build lighter and smoothervehicles. Vehicles with these characteristics require less power to accelerate, climbhills, cruise, and stop. Lower power requirements mean smaller, lighter, lower-costdrive trains and more efficient operation. In order to meet the environmental demandsof consumers, car manufacturers are already looking to new materials to reduceoverall vehicle weight. Advanced composites offer new opportunities in thatperspective.

Opening the hatches towards the futureIf the technologies as described above are applicated in new car models, it becomes clearthat there are many interesting prospects for the future. Perhaps the most importantconclusion of this survey is that ICEs may lose their dominant position in the future -

there will be many options. Now it is time to re-think and re-design the car as we know it.Prospective sustainable cars will cover a spectrum of combinations. Many options arealready available or under construction. All of these options are necessary in order toachieve policy objectives. Future car designers will go through the process of combiningmodules and concepts in order to achieve the right fit.

As a result of this study the most important future concepts, which absolutely need

combining, can be distinguished. If the hatches are opened we look at the followingprospective car model categories:1. Cleaner ICE cars, for example Fords Flexi Fuel;2. Hybrid cars, for example Toyota Prius 2+ (and further);3. Fuel Cell vehicles, for example Opels;4. All Electric Cars, for example GMs Hy-Wire Concept - due to its independence

from linkages (drive by wire) a big leap forward in terms of functionality change;5. Ultra light, advanced material cars, for example Lovins Hypercar;6. Integrated, advances vehicles, for example Volvos Tandem Concept;7. Other


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Issue 2: Process

Society and the automotive sector

Several macro trend lines in terms of demand for cars, environmental consequences ofcars and government policies influences the being of the car industry. In terms ofdemand the number of potential car consumers rises and their consumption per capitaincreases. In short: more people buy more cars and use them more often. Whenconsumers buy cars they demand for image and quality. Sustainability is not yet animportant selling point for consumers. If looking at the environment, this volume growthis not yet compensated enough by a cleaner car fleet. This means environmental problemsare still increasing. Especially in dense urban areas noise and gas emissions exceed limitvalues more often. As a consequence health issues both increase and deteriorate.In termsofpolicies now is the time to decide and to set the right standards. Unfortunately the EUis not too decisive yet. Although there is still much discussion on the subject, there is alsoincreased consensus on the weight of sustainability. Public health is an importantdriving force.

Understanding the process of building and selling cars

In order to contribute to the sustainability of future cars it is important to at leastunderstand the basic characteristics of dominant processes in the automotive sector.The industry teams up to achieve scale-economic advantages. Emission limit valuesspeed up the sustainability performance of car manufacturers. Nevertheless incrementalchange fits the industry best.Radical change only takes place if many circumstances are

met. An important driving force for innovation is stringent and challenging regulation.Other circumstances are availability of technology, involvement of entrepreneurs andhealthy competition between car manufacturers. There are a few principal priorities thatdrive Research & Development. Most decisive are cost reduction, safety, performanceimprovement and environmental issues and regulations.

The car market shows more and more symptoms of a displacement market. An importantcharacteristic of a displacement market is its sensitivity to economic trends - car sales goup and down together with these trends. In such a market marketing is vital. In generalthere are two important sales strategies: diversificate and market. In Europe the brand - orthe badge - is still the number one criterium to buy a car, in the United States price is

selling point number one. This has a big influence on marketing strategies.

Issue 3: Strategy

If marketing is vital for car manufacturers, then how to sell green cars?

An intriguing question is how to sell environmentally friendly cars. This subject came upquickly for discussion when Prius-2 sold much better then Prius-1 or for example GMsEV-1 electric car. There are a few basic rules of green marketing. The first rule of greenmarketing is the first rule of marketing in general: Focus on the customers. Carmanufacturers have to meet with the primary needs that customers seek in buying cars inthe first place. (saving the planet is not a primary need!) If manufacturers do this right

and they will motivate consumers to switch brands, adopt new technologies, and maybe



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even pay a premium in the process which is also very important from the margin pointof view. Next, in order for green marketing efforts to work, consumers have to at least: Be aware of and concerned about the environmental issues Feel that by using that specific car they will make a difference (empowerment); Believe manufacturers claims; Feel the car will be just as good as the non-green alternatives they are used to; Be able to afford any premiums.

In the process of selling green cars it is crucial to know the target group and to focus onits primary benefits. This is not a stereotypical tree huggers type group that wants to savethe planet. The target group has to be educated and empowered in a credible way.Clustering and articulating demand for greener cars could also contribute to the

introduction of green cars - if non-automotive organisations would take up this

challenge.

Time to accelerate

Innovation calls for both evolution and revolution. There are several bumps in the roadtowards introduction of future sustainable cars. In order to successfully speed up theintroduction of sustainable cars of tomorrow, several introduction accelerators(evolutionary and revolutionary) can be distinguished:1. General basic knowledge with consumers;2. A competetive market for car manufacturers;

3. Clever government regulations to promote radical change;4. Room for small enterprise funds and research questions to survive;5. A continuous experimental garden;6. Focus on the consumers primary needs;7. Aim at fully integrated and networked cars to jump forward;8. A positive government approach;9. Cost internalisation of environmental effects;10. Coherent and consistent government policy on transport and environment;

11. Micro Factory Retailing from mass-production tot small, market related factories.Natuur en Milieu could adapt several roles in order to contribute to the acceleration of

introducing green cars.


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1 INTRODUCTION

1.1 Car transport: a built-in part of society

Society both benefits and suffers from cars

Car transport plays an important role in everyday life activities. Society adapted to cartransport and built its patterns around it. Therefore it is likely that cars will keep theirposition in the near future. Nevertheless we all know individual and collective interestsare on bad terms. Whereas car transport presents individuals with a lot of advantages interms of freedom and flexibility, the negative consequences for society are also widelyaccepted. Important consequences are greenhouse effects, air and noise pollution, public

health risks, ecological side effects and eminent spatial occupancy.

Figure 1 Society adapted to car transport and built its patterns around it

Objective: to reduce the ecological footprint of cars

The Netherlands Society for Nature and Environment (Natuur en Milieu) recognizes theimportance of car transport in modern society, to which car transport is inherently linked.Therefore Natuur en Milieu wants to bepro-activeand inspiring in order to stimulatedevelopments towards a more sustainable car transport system1. The focus point forNatuur en Milieu is to reduce the ecological footprint of cars. The time frame on whichNatuur en Milieu focuses, is 2030, meaning that technological innovations fromtomorrow to 2030 are included in the scope of this survey.

Question: which innovations are promising in this perspective?Many automotive innovations promote sustainable car transport, like ICT developments,fuel alternatives and modern engines. Although extensive research aims at this type ofinnovations, Natuur en Milieu lacks insight in most likely to be successful innovations.An intriguing question is which innovations are likely to be successful both in terms ofeffects and social basis? Effective innovations that connect to trends in society and takecollective interests into account, deserve the full attention of Natuur en Milieu.Promoting these types of innovations contributes to the adaptation of car transport tosociety instead of the other way round; as it is the case at present.

1

Natuur en Milieu always recognized the importance of policy making and alternative transport. Natuur en Milieu willnot pay less attention to these issues car technology only widens the scope of Natuur en Milieu.



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1.2 Content of this study: promising concepts towards sustainable car transport

In order to be pro-active and inspiring Natuur en Milieu requires more insight inpotential technological innovations that meet the needs of society. For that purpose threekey issues need answering: (1) technology, (2) process and (3) strategy. (see fig. 2)

Issue 1 (technology): what are promising present and future technical innovations

that can contribute to more sustainable cars in the future?

What are most important and promising concepts in terms of vehicle technology? What are the pros and cons of these technologies in terms of (1) sustainability and in

terms of (2) market? (buyers, sellers, producers) What are the resolving effects of these innovations in the matter of decreasing

negative effects?

Issue 2 (process): what are key factors and key actors to influence the

implementation of these promising innovations?

What are the chances these promising concepts will be introduced on a large scale? What influences the chances of implementation for various innovations? Which parties are key actors in the innovation- and production process and what are

their interests?

Issue 3 (strategy): what is the best way to accelerate these innovations?

What are future needs of society and how can they be translated into desired

automotive functionalities? How do they compare with the most promising innovations?

Figure 2 three coherent key issues

Tech

Tech

Tech

Tech

Tech

Tech

Proces

s(actor

s,factor

s)

Strategy

Tech

2005 2015 2030


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1.3 Aim of this study: learn about, encourage and influence sustainable car transport

Learn

The first aim of this study is for Natuur en Milieu to gain insight in technologicaldevelopments for car transport. Natuur en Milieu has been focusing on policy mattersmainly yet recent studies point out technology contributes equally tot sustainability. Inorder to be able to promote sustainable technologies Natuur en Milieu decided to go inand study.

Encourage

Secondly Natuur en Milieu wants to encourage the public thinking and opinion formingon sustainable transport. The result of this study will be input for a design contest onfuture cars. The general public will get involved in this contest, (1) to judge designs and(2) to absorb ideas about sustainable car transport.

Influence

In the end Natuur en Milieu wants to influence the implementation speed and directionof relevant innovations. Natuur en Milieu will contribute to this by means of lobbytowards key actors on national and European level. The results of this study and theoutcome of the design contest should deliver Natuur en Milieu a running start.

Figure 3 aim of this study

(1) Learncontent & processfacts & opinions

(2) Encouragespeed up

Public thinking

Sustainable choices

(3) Influencespeed up

Policy makers

Industry

Goal:more sustainable

car transport

1.4 Report Structure

Chapter two of this report deals with major trends concerning car transport; this gives acontextual idea of what is happening in terms of demand, environment and policies.Chapter three goes into understanding the process of building and selling cars. It iscrucial for Natuur en Milieu to understand this in order to contribute to future cardevelopment. Chapter four summarizes technological innovations subdivided inenergy related technology, power trains, ITS and design. Chapter five opens the hatchestowards the future and presents future car models. It concludes with the most decisive

accelerators for innovation.



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2 CONTEXT WHAT IS HAPPENING?

2.1 What is happening? A characteristic abstract

Technological developments take place within a societal framework. Car volumes andusage for example increased rapidly over the last decades. This has firm consequences forthe environment, especially in terms of air quality and greenhouse effects. The EuropeanGovernment sets emission standards for cars in order to decrease air pollution. European,National and local governments set out policies in order to conduct transport. Thischapter touches on the most important macro trend lines within these societalsurroundings of car technology development.

Figure 4 Societal surroundings of car technology

Demand(2.2)

Environment(2.3)

Policy

(2.4)

The contextual information in this chapter can be summarized and characterised asfollows:

Demand The number of potential car consumers rises and their consumption percapita increases as well. In short: more people buy more cars and use them moreoften. When consumers buy cars they demand for image and quality. Sustainability isnot yet an important selling argument for consumers.

Environment Volume growth is not yet compensated enough by a cleaner car fleet.This means environmental problems still increase. Especially in dense urban areas

noise and air emissions exceed limit values more often. As a consequence healthissues increase.

Policy It is time to decide and to set the right standards. Unfortunately the EU hasnot been very decisive yet. However, there is some increased consensus on theweight of sustainability. Public health is an important driving force.


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2.2 What is happening in terms of demand?

As the world develops, the demand for mobility, and therewith cars, increases. Populationgrowth (1), economic growth (2), increase in personal income (3), consumption (4) andurban expansion (5); all these factors add up to an increase in transport demand and carownership. The figure below shows the projected growth in car ownership.

Figure 5 Projected growth in car ownership (source: Mobility 2030)

Personal transport activity increases as well. As a consequence of strict daily time tablespeople tend to use their car more often. As a result, global traffic volumes expandheavily, as shown in the figure below.

Figure 6 Projected growth in passenger kilometres per year (source: Mobility 2030)

The increase of greenhouse gasses, conventional pollutants, noise pollution, injury ratesand health risks are inherently linked to these expanding traffic volumes which havebeen expanding heavily since 1970.



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Car ownership increases, but the composition of the fleet changes as well influenced byconsumer preferences. The list below shows an overview of consumers selling argumentswhen buying the car of their preference. In order of importance:1. Affordability2. Attractiveness, image, performance3. Functionality, practicality, comfort4. Reliability, safety5. Fuel efficiency6. Cleanliness7. Recyclability

Development frame: mass individualisation

The ownership and use of passenger cars has a strong image of individual freedom. Inmodern society the passenger car symbolises independency, personal branding andimaging. At the same time car use in highly populated areas has growing collectivecharacteristics; congestion turns car transport into collective transport. The freedom ofchoice decreases. Opposite to car buyers, car suppliers do make a lot of individualchoices, which strongly influences the individual-collective behaviour of car buyers andowners. Effective change in the behaviour of car users is more and more enabled bymaking cars smarter, safer and cleaner. This process is increasingly independent from theresponsibility of the individual car consumer and car owner.

2.3 What is happening in terms of the environment?

The Natuur en Milieu way of assessing sustainability ofindividual cars focuses on a few important environmentalaspects of transport. This certainly includes: Greenhouse gas emissions Noise emission and health Air quality and health

Greenhouse Gas emissions (CO2)

The European Commission has stated they want to reduce the limit value for passengercars to 120 gr/km. To achieve this new technologies have to be put into place.

Weather-related damage in Europe amounted to approximately $100 billion over the1999-2003 period, representing a doubling compared with earlier periods.Transport accounts for about one third of human-induced global warming in the EU, andgreenhouse gas emissions from transport have been increasing by 2% per year since1990. Road (17%) and air (approx. 12%) transport are the most important contributors.

The figure below presents the share and development of passenger cars in total CO2emissions. Volume wise CO2 emissions are expected to grow.


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Figure 7 - Transport-related Well-To-Wheels CO2 emissions by mode (gigatonnes CO2 per year)

Noise emission and health

Especially in dense urban areas noise emissions exceed limit values more often. Theimpact of noise on public health becomes more and more apparent as traffic volumesgrow. Table 1 points out the relationship between health issues and noise.

Table 1 - Estimated effect of noise pollution on health (Health Council)

Effect Situation Number of people dB(A) value

High blood pressureHousing conditions: road and

air transport

1.000 - 10.000 individual

cases70

Heart disordersHousing conditions: road and

air transport

100 - 1.000 individual

cases70

Serious psychosocial discomfort

(sleep, stress, performance)Housing conditions: transport

Over 1.000.000 individual

casesfrom 42

Air quality and health

NO2 concentrations in the Netherlands are amongst the highest in the world as provenby Envisat satellite images. Ozone is formed via exhaustion of less damaging NO2 andcauses Smog. Satellite images for particles and PM10 concentrations would probablypresent a similar view. Two third of the exhaustion of NO2 is explained by traffic

mainly due to trucks and passenger cars. Due to cleaner cars, against the trend ofincreasing traffic volumes, NO2 exhaustion has decreased by 30% over the last ten years.Nevertheless health issues are severe, due to the locality of transport. Table 2 points outthe relationship between health and air quality.



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Table 2 - Effects of air pollution on human health, including proof, gravity of the effects and the size ofthe targeted group (Health Council)

Proof Gravity Target group

Immediate exposure

Premature death *** *** *

Hospitalisation for bronchi or heart and vascular diseases *** *** *

Reduced long function *** * ?

Increased bronchi complaints ** **

Asthma deterioration ** ***

Chronic exposure

Premature death *** *** *

Reduced long function *** ** **Origination of chronic bronchi complaints with children ** ***

Deterioration of chronic bronchi complaints with adults *** ** **

Asthma deterioration and allergic complaints * **

Proof: * inadequate / inconsistent, ** limited, *** sufficient for causal connection

Gravity: * light, ** moderate, *** severe

Target group (if sufficient proof): * sensitive group, ** special groups, *** majority

2.4 What is happening in terms of policy?

First EU White Paper (1992)In December 1992 the European Commission presented its first White Paper on the futuredevelopment of the common transport policy. The guiding principle of the document wasthe opening-up of the transport market. Over the last 10 years or so, this objective hasbeen generally achieved. This common transport policy brought a significant drop inconsumer prices, combined with a higher quality of service and a wider range of choices,thus actually changing the lifestyles and consumption habits of European citizens.Personal mobility increased, but by means of unequal growth in the different modes ofTransport. Car transport has adapted better to the needs of a modern economy, it is also asign that not all external costs have been included in the price of car transport and certainsocial and safety regulations have not been respected, notably in road transport. Thisinequity has lead to congestion on the main road, in towns, and at airports. Then there are

harmful effects on the environment and public health, and of course the toll of roadaccidents.

Second EU White Paper time to decide (2001)

The second White Paper (2001) comes to grip with these warning signals. It states thatEurope must bring real change in the Common Transport Policy. The time has come toset new objectives for it: restore the balance between modes of transport, developintermodality, combat congestion and put safety and the quality of services at the heart ofthe EU efforts, while maintaining the right to mobility. One of the main challenges is todefine common principles for fair charging for the different modes of transport. This newframework for charging should both promote the use of less polluting modes and less

congested networks. It paves the way for new types of infrastructure financing.


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The second White Paper relies on several relevant principalmeasures, among which: Revitalising the railways Developing high-quality Urban Transport Turning intermodality into reality Building the Trans-European Transport Network Adopting a policy on effective charging for transport Improving Road Safety Recognising the rights and obligations of users R&D at the service of clean and efficient transport Developing medium and long-term environmental

objectives for a sustainable transport system.

Many principle measures relate to this surveys subject. Ironically the last principlemeasure is the most difficult to achieve. Time to decide refers to the choice betweenaccepting the Status Quo or being pro-active in order to develop in a sustainable way. Theoutcome of this debate strongly influences the medium and long-term environmentalobjectives.

The Dutch Policy Document Nota Mobiliteit (2004)

The Nota Mobiliteit focuses on stronger economy and feasibility. The economicstructure must be reinforced. This calls for properly functioning infrastructure networks

and streamlined government interventions. The Netherlands wants to enable traffic &transport growth. In view of its social and economic importance, this growth is beingfacilitated within statutory and policy-based frameworks for the environment, safety andquality of life. For travellers the Dutch government wants to improve reliability and door-to-door accessibility. This is put into practise by an integrated network approach.

The Nota Mobiliteit states that innovation is a must. It isseen as the engine of economic development and canimprove accessibility, safety and the environment at a betterprice-quality ratio. The State will look to pursue aninspiring innovation policy in an effort to improve the

innovation performance. Driving force is the VenW-Beraad Kennis en Innovatie, a knowledge and innovationconsultation platform of the Ministry of Transport, PublicWorks and Water Management.

Road pricing is seen as necessary, nevertheless it is still uncertain where and when andhow road pricing will take place. There is no extensive attention for Public Transport.The National Government states that given a higher reliability and local utilisationmeasures (depending on demand), the existing rail network can cope with demand.Therefore no further decisions are necessary for expanding the rail capacity throughadditional infrastructure during this government period.



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The Nota Mobiliteit wants to improve the quality of life. All national and internationalarrangements concerning emission reductions relating to transport by rail, road and waterwill be complied with. According to the Nota Mobiliteit innovation and measures atsource are required to achieve this. For the longer term, a transition to more sustainableforms of transport is necessary to reduce all emissions, but above all CO2. Realising theEuropean standards for local air quality (NO2) for existing situations by 2010 represents agreat challenge. Together with other member states a study will be carried out to establishwhether and how these standards can be achieved by 2010. As regards noise, nationalstandards will be applied to new situations while bottlenecks on national motorwaysabove 65 dB(A) and railway routes above 70 dB(A) will be tackled, with priority beinggiven to residential areas.

EURO standards for air pollution

Since the early 1990s, the EURO emission standards for passenger cars and othervehicles have initiated a significant reduction in air pollution per driven kilometre.They describe the maximum exhaust pipe emissions for all new cars sold in the EuropeanUnion. Nevertheless, the overall traffic growth and the tax standards for diesel engineshave limited the environmental success of the EURO standards. On the 1st of January2005 EURO-4 standards came into force for new cars.

In 2003 the discussion of new EURO standards began, which might enter into force by2010. Diesel emissions are the crucial elements. Emission control technologies (particlefilters, catalytic converters) are available but expensive. Proposed EURO-5 standards

differ from previous standards; key points are: Limit values should be fuel neutral; Reduction of the mass-based particulate limit values by a factor of ten is sufficient in

principle to achieve the objective of protecting health; NOx limit values for diesel cars should be set at the level for Euro 4 petrol cars, i.e.

0.08 g/km; The summation limit value HC + NOx for diesel passenger cars is omitted; HC limit value of 0.05 g/km for both petrol and diesel passenger cars.

EURO-6 standards have been proposed for heavy-duty vehicles only.


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Table 3 Development of EURO-standardsStandard Euro-1 Euro-2 Euro-3 Euro-4 Euro-5

Entry Year 1992 1996 2000 2005 2010

Passenger cars gasoline gr/km

CO 2.72 2.7 2.3 1 1

HC+NOx 0.97 0.59 0.35 0.18 -

HC - 0.34 0.2 0.1 0.05

NOx - 0.25 0.15 0.08 0.08

Passenger cars diesel gr/km

CO 2.72 1.06 0.64 0.5 1

HC+NOx 0,97-1,36 0,71-0,91 0.56 0.3 -

HC - - - - 0.05

NOx - 0,63-0,81 0.5 0.25 0.08

PM10 0,14-0,19 0,08-0,1 0.05 0.03 0.005?

Note: The Netherlands have noted a limit value of 0,005 gram per km for PM10 as a

technical regulation. An effective particulate filter is needed in order to achieve this limit

value. The Dutch government has recently announced to support particulate filters by

cutting back 600 on diesel car purchase taxes, starting from the 1st

of June 2005.

Nevertheless this measure is not expected to have great effects, since the extra costs of

particulate filters often exceed 600 and only one third of the car manufacturers offer

vehicles equipped with particulate filters.

CO2 limit values

There is no such thing as European CO2 limit values for cars. The EU has chosen avoluntary route towards Kyoto targets by setting up the ACEA2-covenant with theEuropean car industry. ACEA agrees upon an average CO2 emission of 140 gr/km forevery manufacturer. This means manufacturers have to provide for such a mix of fuelefficient and less fuel efficient vehicles that they achieve the agreed average. A ToyotaPrius for example has a CO2 emission of 104 gr/km compared to an Opel Astra 170 gr/kmand an Astra Diesel 140 gr/km. Larger models normally emit correspondingly higher CO2values.

Since diesel engines emit considerably less CO2, the industry has chosen for a strategy torapidly increase the development and sales of diesel cars. The diesel share in Europeclimbed over the last few years. This has a negative trade off with air quality and health.Nevertheless it is not expected that he industry can keep up this strategy. The EuropeanCommission wants to reduce the limit value to 120 gr/km. To achieve this newtechnologies and other fuels have to be put into place.

In this perspective the State of California is a very progressive example. California hasthe most strict regulations, due to the ZEV (Zero Emission Vehicle) standard 3. Thisimplies that, in the future, law can ban conventional combustion engine cars.

2

European Automobile Manufacturers Association3 California Code of Regulations Title 13



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Energy in motion (October 2004)

At the initiative of the Dutch EU Presidency, leading officials from 25 EU member statesmet in October 2004 in Amsterdam with representatives from industry, NGOs and theresearch community to discuss the question: How can Europe bring about a clean andclimate-neutral road transport system in such a way as to secure our future energy supplyand boost the innovativeness of our economy? The aim was to help reach betterunderstanding in Europe of the implications of these challenges, their urgency and therole of the transport sector.

The Presidency concluded broad consensus on the following: There is an urgent need for short-term action on regulated emissions of PM10 and

NOx, in particular for reasons of peoples health in urban areas. Improvement ofcurrent technology offers the prospect of the introduction of near-zero emissionpassenger vehicles by 2015.

Reducing CO2 emissions is considered to be the most persistent and urgent long-termproblem for the transport sector. The European Commissions post-Kyoto strategymust offer a clear and inspirational long-term perspective to promote innovation andprovide industry with a stable framework in which to develop their products.

There is no single solution to solving the CO2 problem; all routes under discussionwill be needed to achieve the goals. Therefore there is a preference for indicative EUtargets, without indicating a fuel of choice.

The potential of renewable energy sources calls for a realistic approach. Fossil fuels

will continue to dominate the market over the next two decades. Optimisingconventional petrol and (clean) diesel engines will have to make the biggestcontribution to reducing CO2 emissions, securing energy supply and improving airquality.

Governments, industry and consumer organisations should shoulder theirresponsibilities to support market uptake of clean low carbon fuels and vehicles. It isnecessary to close the loop between product development, policies to encourage takeup, and consumer demand.

Cities are the best places to kick-start markets for clean low carbon vehicles.

There is a strong need for new kinds of partnerships at a strategic level, in which

governments, industry and other stakeholders take the lead in making the EUs transportsector more sustainable, attractive, innovative an competitive.


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3 UNDERSTANDING THE PROCESS OF BUILDING AND SELLING CARS

In order to contribute to the sustainability of future cars it is important to understand the

basic characteristics of dominant processes in the automotive sector. In one of the

interviews Toyota mentioned to Natuur en Milieu never to forget the value of direct

discussion. Yet, in order to be of most value in direct discussion, Natuur en Milieu

needs to go in and study for itself in order to get insight in the most relevant topics and

discussions. That about summarizes the need for understanding. This chapter addresses

some of these key factors of understanding.

3.1 The automotive sector develops

The industry teams up to achieve scale-economic advantages. Emission limit values speed

up the sustainability performance of car manufacturers. Nevertheless incremental change

fits the industry best. Radical change only takes place if many circumstances are met.

The current automotive industry is rooted in the early 20th century. Between 1960 and1980 the industry internationalised which lead to the conquest of Japanese car industryin the US and EU market. Between 1980 and 1990 the vehicle production processindustrialised due to which it became mass-oriented and capital-intensive. This meansthere are very high entry barriers for newcomers. The last decade shows consolidation.The table below gives an overview of the evolution of the automotive industry system.

Table 4 - Automotive Industry System Evolution4

4

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Many mergers and acquisition reduced the number of individual carmakers by numbers.The automotive industry has become the largest manufacturing sector in the world salesstill increase (see figure below).

Figure 8 Total global automotive sales5

Different manufacturers

Three types of vehicle manufacturers can be distinguished: High volumes, full range producers at the centre of the industry, large market

shares, competition based on cost-reduction, production in various segments,appealing to a large public, profit margins between 2 and 5% (for example: GM,Toyota, Volkswagen)

Specialist producers upper market segments, relatively high prices, lower volumes

and higher margins (>5%), competition on differentiation, quality, value addingtechnology or exclusivity. (for example: Mercedes, Volvo, Audi, BMW) Niche producers exclusive and extremely performing cars, sometimes offset by

limited practicality and high cost, mainly sports cars (for example: Porsche, Ferrari)

The table below shows an overview of production by manufacturers and brands. Thisillustrates the mergers and acquisition in the last decade.

Table 5 Production by manufacturers of cars in 1999 (Automotive World 2000)

Group Brands Veh. prod.

General Motors Buick, Cadillac, Chevrolet, GMC, GM, Oldsmobile, Pontiac, Holden, Saab, Opel, Vauxhall 8,360,000

Ford Motor Co. Ford, Lincoln, Mercury, Jaguar, Volvo, Aston Martin, Th!nk 7,220,000

Toyota Motor Corp. Toyota, Lexus, Daihatsu, Hino (33% share in Mazda) 5,401,000

Volkswagen AG VW, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini 4,853,192

DaimlerChrysler AG Mercedes Benz, Chrysler, Dodge, Jeep, Smart, Plymouth 4,827,100

Renault SA Renault, Dacia, Samsung, Alpine, Nissan, Infiniti, RVI, Mack 4,719,945

Fiat Auto SpA Fiat, Alfa Romeo, Lancia, Ferrari, Maserati, Iveco 2,598,000

PSA Peugeot, Citron, Talbot 2,496,000

Honda Motor Co. Honda, Acura 2,423,000

Hyundai Hyundai, Kia, Asia Motors 2,081,146

5

Source: http://www.autoindustry.co.uk/statistics/sales/world.html#cars, downloaded April 17, 2003


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Group Brands Veh. prod.

Suzuki Suzuki 1,440,000

Mitsubishi Motor Co. Mitsubishi 1,190,000

BMW AG BMW, Rover (sold in 2001) 1,147,420

Daewoo Motor Co. Daewoo, Ssangyong, FSO 1,090,920

Mazda Motor Corp. Mazda 931,456

Porsche Porsche 22,000

Research & Development drivers

6

Different types of manufacturers have different Research & Development (R&D)

priorities. The principal priorities are: Cost reduction In general manufacturers will have to balance the development of

individualized cars for fragmented consumer demands with the use of a limitedamount of production platforms so they can benefit from scale-economicadvantages.

Environmental issues Emission limit values, end-of-life regulations and plantemissions require new technologies. Large parts of R&D budgets are spent on moreefficient engines, aerodynamics, lightweight materials and water-based coatings.

Safety The third major driver focuses on a big selling argument for customers:safety. It relates to air bags and safety handles, but also the design (weight, size andshape) of the vehicle. Especially passive safety features increase the weight of thevehicle. This is often contra-productive in terms of environmental improvement ofcars (see paragraph 4.6).

Performance Improvement Acceleration, driving characteristics, quality andcomfort is included in the performance of a car. A large share of R&D budget goes tocomputerization of cars such as navigation, climate control and communication. Anincreasing amount of budget is spent on intelligent vehicles. (see paragraph 4.5)

Cost reduction is most important tofull range producers.Niche producers focus onperformance improvements.Environmental issues get the biggest priority withfull rangeproducers and specialist producers. Safety has been a focus point for specialist producersover the last decade.

Development of radical technologiesAs mentioned before the automotive industry is difficult to enter for newcomers. Butnewcomers and entrepreneurs make an important contribution to radical new practises such as battery and fuel cell technology. Nevertheless newcomers and entrepreneurs needthe institutional support of the industry to stay alive or to make a difference. Bythemselves they cannot make a change in the power structures. This means the industryitself is largely responsible for the technology to lead.

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The following conditions

7

promote radical change within the existing industry:1. Stringent regulation challenges (shock);2. The availability of technological opportunities (for example fuel cells);3. The involvement of entrepreneurs in providing (technological) alternatives;4. The competition between carmakers enhancing the adoption rate of change.

The future industry system: E-paradigm8

When many people consider the automotive industry, they initially think that the industryis stagnant, an old traditional system. A closer look indicates that such an analysis is notall true. For the past ten years, the auto industry has begun a transition from a vehicleviewed as a less-harmful electro-mechanical system to an E Paradigm system, whereE stands for Environment, Electronics, and Energy. The Environment portion of thenext industrial revolution involves a slow transition from making vehicles less harmful tonot harmful at all for the environment.

3.2 Car design and production

The current industry is rational and heavily locked in. This means that, at present, it is

difficult to speed up change in the industry. Nevertheless this rationality may just as well

end in the upcoming decennia. Keeping the margins is the most important driving force

for the industry. As margins will continue to decrease, this may well lead to production

change in the future.

Rationality: essential for car production and developmentThere is no industry that is more heavily locked-in as the car industry. This is connectedwith the rationality of car production. In order to keep margins, manufacturers cultivatelean manufacturing, Just in Time production and Toyotatism9. Ultimately they limitstocks, have no buffering and face enormously complex business logistics.

Before setting up a production line or a platform manufacturers need the guarantee ofsufficient sales (hundreds of thousands of cars). Even then margins are somewhere inbetween 3 and 4 percent which is mediocre. Creating enough volume is always veryimportant to optimise this rational process. This is what makes it very difficult to adapt tootherwise desirable changes. A few illustrations:

Business wise it is not viable to invest heavily in a small group of vehicles. On theother hand it is business reality that large-scale production is difficult to afford andonly available for a limited group of businesses. Therefore manufacturers team up toachieve scale-economic advantages. The end result is a limited number of platforms

7 Source: Driving Fuel Cell Vehicles Robert van den Hoed, May 2004 (conclusions)8 Futuring the Next Industrial Revolution, Boris Zlotin and Alla Zusman, Ideation International Inc. and Larry R. Smith,

Ford Motor Company9 The fundamental characteristics of this system are: autonomation, just-in-time management of supplies, team working,

management by stress, flexibility of the work force, use of sub-contractors and participatory management. Some of these

are well known, others less so.


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and production lines which produce related car models, for example Citroen C5and Peugeot 406. A car can be seen as a large number of components assembled into one complex

product. Yet it is still not plug and play in a hierarchical way, which means it is noteasy to take one component out and replace it by a new and improved version. Thismeans even componential changes in cars need fundamental production line changes.

Especially European manufacturers are used to continue building on tradition.Models tend to have a longer life cycle then their Asian and American competition 10.The way to innovate in Europe is often as follows: create a successful platform (forexample Peugeots 307), continue selling until the market is satisfied, then addtechnological features and test new innovations. This both extends the life cycle of asuccessful model and provides the opportunity to check innovations in practise. Theparadigm is: never change too much at the same time.

Therefore: incremental innovation, or?

This paradigm is wrapped up in a business innovation rule: never change too much atonce it just might not sell, risks are too high! Nevertheless it should also be noted thatvolume-wise innovation of course has the potential to contribute a lot to sustainability.

As a conclusion, maybe 95% of the car manufacturing business is locked-in. In order topromote changes there has to be (a) volume and incremental innovation and (b) focus onthe other 5%. Wells and Nieuwenhuis nevertheless make a subtle distinction if it comes torationality and incremental innovation. Every 10 years half of the margins of car

manufacturers fade away. This is due to heavy competition on the market. If thiscontinues car manufacturers may just as well take their money to the bank. In here maylie an important driving force for change. Possibly decentral development (or MicroFactory Retailing) of car production is an interesting way to go. Existing industry growsby producing more and selling more. This in itself is not sustainable, while the actualgrowth patterns are severely disruptive. MFR can be relatively small-scale andincremental, either by adding (subtracting) more units or by the expansion (contraction)of existing units - and thereby supply can expand or contract in line with the market. Theconcept of Micro Factory Retailing (MFR) is a relative new vision or idealization of theautomotive industry. It is in essence a business model for the automotive industry in adistributed economy which attempts to define a transition to a more sustainable future. At

organizational level, todays vehicle manufactures are at some extent trapped within theirown paradigm. MFR can therefore provide a radical reshaping of the relationshipsbetween product technology, process technology, business organization and the purchaseand use of cars.

MFR disproves the logic of the traditional mass-production within the automotiveindustry (high-volume, low unit cost approach) by placing small factories in the marketsthey serve. This will eliminates the distinction between production and retailing.

10Japanese and US culture often follow the latest craze. Yet Japan is often the first to innovate. The reason US follows

second is because of the sueing culture in the US. On the US market it is important to knw that new products are viablein common practise.



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For example, rather than having one large plant producing 250,000 cars per annum (anaverage break-even point in traditional car manufacturing) the MFR approach wouldinvolve 50 plants, each assembling 5,000 cars per annum (i.e. 250,000 in total) anddistributed spatially to match concentrations in population. This approach makes feasiblealternative materials and design concepts that are only viable at low volume, and whichin many ways allow significant improvements in the industrial ecology of the automobile,but which in traditional business model thinking are not economically viable at highvolume. It does so through the mechanism of multiple low volumes generatingeconomies of scale. There would be no separate distribution channels or sales outlets: thefactory is also the sales, maintenance, service and repair location. Powertrain componentsand other generic items could be centrally produced in conveniently located highlyautomated facilities for distribution to the decentralised assembly plants, thus allowingsmall scale assemblers to benefit from externalised economies of scale. In particular, thesocial value of production and work is of importance.

Wells and Nieuwenhuis state that Micro Factory Retailing may lead to a cost reduction of20-30 percent, increased usage of new and advanced materials, etcetera. Micro FactoryRetailing could also restrict the indebtedness of car manufacturers who - at present - needto set up new production lines.

Interesting examples of MFR are: TH!INK: radical innovations in manufacturing (http://www.pivco.no/) MDI Air Car: a new business model for card design, production and distribution

(http://www.theaircar.com/) Ridek: Sharing vehicle parts (http://www.ridek.com/)Apparent Siamese twins: the oil and car industry

The oil and the car industry often team up and sometimes seem like Siamese twins.Nevertheless their reality is somewhat different. The car industry always focusses on theirlatest production line, while the oil industry has to supply the entire car fleet of fuels.Thats why regulations and directives are often more strict for car manufacturers. Yet intheir turn, the car industry dedicates the oil industry to their standards.

Together, the oil and the car industry achieved large reductions in emissions of gasoline

and diesel cars. If looking at the EURO standards I to IV (see table 3) it becomes clearthat in between 1992 and 2005 the industry succeeded in reducing emissions of individualvehicles by twentyfive to eighty percent.

3.3 Car sales and consumers

Market driven competitiveness: how to stay ahead?

The car market shows more and more symptoms of a displacement market. This meansthe growth market slowly gets saturated. Europe accounts 450 cars per thousands people.Only when the population grows, the number of cars will increase. An importantcharacteristic of a displacement market is its sensitivity to economic trends - car sales go

up and down together with these trends. Under these circumstances marketing is vital.


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As already mentioned before, the automotive branch exists of a limited number ofextremely large conglomerations (see table 5). Within these conglomerations it isimportant to find specific market shares, to obtain them and - of course - to keep them. Ingeneral there are two important sales strategies:

1. Diversificate products. (spread out sales and risks) Every car manufacturer willfocus on several client groups and wants to offer a range of models and classes. As aconsequence, no large car manufacturer will focus on one specific selling point orissue only, for example environmental friendliness. This would be in dispute withbusiness continuity.

2. Marketing. Within the bigger conglomerations marketing is the most important rolefor individual brands. For example VW, Audi, Seat and Skoda use similar platforms,nevertheless the way these brands bring their (in many ways similar) car models tothe market is very different. In terms of the marketing-mix (product, price,promotion, people, place) brands focus on different prices and different ways ofpromoting. Product variations within similar platforms and car classes are limited, butare often marketed as discriminating and unique. The car market becomes more andmore global so place is not decisive. Yet home markets tend to thrive the most, forpeople feel connected to the brand.

A few illustrative marketing examples:

Audi A3 - The Perfect Match: a recent trend in car marketing is personalized carmarketing which is nowadays possible through Internet media. This is apersonalised link sent to Audi customers as part of a mail-out in 2004.(http://www.audi-a3-sportback.com/audi_dna.html?id=50973) A short film showingtechnicians discovering a match between his DNA and the VDT of Audi (VorsprungDurch Technik). In addition, people on the initial list were sent a personalised DMpiece, but only if they clicked the link and saw the movie. So the DM was onlymailed out to individuals receptive to an Audi message.

Toyota Prius 2 So advanced it makes the future seem obsolete: Toyotapresented the Prius at the Los Angeles Auto Show in 2004. The Prius was 11 thehighlight of the entire Toyota area. Toyota had designed an entire display around the

advanced technology of the car, gave regular presentations on it, and had technicalstaff in the crowd to be able to answer whatever geeky questions might come up aswell as simple questions such as: Do I have to plug the car in at night to make it goin the morning?. Each presentation attracted a healthy and diverse crowd. Toyotastaff were outgoing, knowledgeable about their products, and treated their customerswith respect. Everyone that left the Toyota area had learned something about thetechnology, the car, and the company. Moving over to the Ford area resulted in theopposite experience. A few people chatted among themselves in the informationbooth. There was some vague recognition of the term hybrid, but that was about theextent of it. Keep in mind that Ford announced the Escape Hybrid in 2000. Four yearslater, mere months before the actual production launch, and theres no emphasis, no

11Visitors impression

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info, and no one to deliver a persistent, substantive message at a major event in one ofthe largest auto markets in the country. Toyota is building a new market, and itsbrand with it. If that linkage lies uncontested for too long, the brand becomessynonymous with the market. Other car manufacturers have the technical and productwherewithal to do it; they need to make the marketing and business changesnecessary. (http://www.toyota.com/prius/)

VW Fox The maximum vehicle for the minimum money: Volkswagen broughttheir cheapest city car up till now to the market. For Volkswagen it is important tounderline this car is still a Volkswagen (decent) and not just another small car.Volkswagen markets it as the maximum vehicle for the minimum money. Theminimum money is an objective figure, but the maximum vehicle is not. Bypromoting the car as artistic and lifestyle it makes a small car seem hot: ProjectFOX is a gift to the new urban generation. Project FOX brings together young

artists, designers, cooks, hotel industry professionals and managers to develop and

implement their own ideas. Project FOX aims at re-designing the way of life and

mobility. Project FOX supports and promotes young talent.(http://www.volkswagen.de/vwcms_publish/vwcms/master_public/brand_portal/de30

/models/fox.html)

Consumers: how to commit them?

Many car buyers are somewhat emotionally attached to a brand. This is the summit ofwhat car manufacturers can achieve with their clients. If consumers are bonded to a brandit is easier to explain to these clients what are the advantages and selling points of a

specific product. The figure below shows the so-called loyalty index of consumers, whichillustrates this.

Figure 9 Loyalty-index (source: http://www.ogilvy.com)

Over the last decade it becomes clear that the degree of emotional attachment diminishes,as a consequence of increased similarity and decreased quality differences in cars. InEurope the brand - or the badge - is still the number one criterium, in the United Statesprice is selling point number one. In the end the balance between price and quality (1),the proven level of service (2) and the peer group (circle of acquaintances) of consumers(3) are the most decisive factors for brand loyalty.


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Another very important aspect for consumers to buy a specific car is the purpose they seefor it. It is a well known phenomenon that people tend to buy their car for holidaypurposes, which only cover two or three weeks a year. Practical factors such as mileageand family size follow closely. In the future the usage of cars may change dramaticallydue to ageing of the population and increased urbanisation. This is expected to be animportant trigger for car production alteration. In terms of the loyalty index carmanufacturers have to start again from the second bottom step relevance.

Future car: how to sell green cars?

Thus, an intriguing question is how to sell environmental friendly cars. This subject cameup quickly for discussion when Prius-2 sold much better then Prius-1 or for exampleGMs EV-1 electric car. Many explanations have been written since - as a result one canset out the rules of green marketing12.

The first rule of green marketing is the first rule of marketing in general:focus on thecustomers. Car manufacturers have to meet with the primary needs that customers seek tobuy cars in the first place. (saving the planet is not a primary need!) If manufacturers dothis right, they will motivate consumers to switch brands, to adopt new technologies, andmaybe even to pay a little extra in the process. Of course the latter is very important fromthe margin point of view.

Next, in order for green marketing efforts to work, consumers must: Be aware of and concerned about the environmental issues a car addresses -

Consumers must be aware of the links between energy production and air pollutionand global climate change? Not many consumers are;

Feel that by using that specific car they will make a difference (empowerment); Believe manufacturers claims - something thats a bit challenging considering the

backlash to environmental claims from days gone by; Feel the car will be just as good as the non-green alternatives they are used to - In that

perspective remember the days when natural laundry detergents left clothes dingy andfluorescent lightbulbs sputtered. Unfortunately, all new green products andtechnologies carry the curse left from these early substandard products;

Be able to afford any premiums - Some cant afford extra costs for any kind ofproduct, green or not. Of course, the more car manufacturers offer, the more

consumers may be willing to pay.

The strategies below help car manufacturers and interest groups to play by these rules.

Strategy 1: Know the target group

Come clean with any perceptions of green consumers as stereotypical open sandals andwoolly socks type consumers. Wake up to the fact that the green market has maturedfrom a small niche into a large market composed of several distinct groups of consumers,each representing their own "shades" of greenness.

12Source rules of green marketing (http://www.nesea.org/publications/NESun/green_rules.html)

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According to several industries, the mass consumer market can be divided into fivesegments, representing gradually increasing levels of commitment to green causes andbehaviors. The most willing consumers, sometimes called the True Blue Greens, may bewilling to spring for a solar power system for their homes, while the less initiated, such asthe Sprouts, may be more comfortable simply buying an Energy Star-labeled television.Individual consumers may also be influenced by just one or two of the manyenvironmental issues that exist, and they are most apt to be concerned and acting uponlocal neighborhood-centric, rather than global, issues. Be careful to adress globalwarming if it isnt on consumers radar screens. Car manufacturers have to tailor theirmarketing efforts accordingly.

White fabrics manufacturer Whirlpool learned this lesson the hard way. It introduced thefirst CFC-free refrigerator back in 1992 - and won a $30 million Golden Carrot award inthe process when it found that consumers wouldnt pay a 10% premium because theywerent really aware of or concerned about CFCs.

Strategy 2: Focus on primary benefits

In stark contrast to marketing efforts behind GMs EV-1 electric car, which focused onenvironmental benefits and a futuristic sensibility, ads for Toyotas hybrid-technologyPrius highlighted the cars quiet ride, with a secondary emphasis on fuel savings. Thisapproach drew in upscale drivers who can afford superior performance and expanded themarket beyond the "deep green" consumers who Toyota pursues via a special campaigndirected just to them. The best way to attract consumers is by focussing on their primary

benefits.

When it was first introduced, Philips underscored the environmental benefits of itsEarthlight compact fluorescent light bulb. It has since been brilliantly restaged asMarathon, reflecting the key benefit that consumers appreciate about CFL technology: itslonger life and the fact that the lightbulb doesnt have to be changed so often.

Strategy 3: Educate and empower

Consumers need to feel that the green cars they are buying - and likely paying a premiumfor - will, in fact, help the environment. With awareness of environmental issues quitelow, it is necessary to expand the market for green energy products beyond an aware

niche. This is first done by creating awareness for the basic issues, and then, importantly,to make the link between the issue and how a specific product or technology actuallyhelps to solve it. In here lies an important role for NGOs.

For example energy-labelling is not enough on itself. It is important to position theseenergy labels as descriptions of solutions. An approach like that could extend the currentfunction of energy labelling and really educate consumers.


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Strategy 4: Be credibleCredibility is critical to all marketing activity. Consumers simply trust that familiarbrands like Coca Cola or Pepsi will perform as promised, time after time. But since greenmarketing claims that occured in the early 1990s - which portrayed these brands productsas degradable trash bags and ozone friendly aerosols - lack of credibility rates high onthe list of reasons that consumers cite for not doing more for the environment. Carmanufacturers have to project credibility through their own good name - Toyota andVolkswagen illustrate this. Extra reassurance can be given through third-parties such astrusted environmental or consumer groups, or certification systems, by openly supportinggood initiatives within the car market. NGOs could act out the part as an independentcounsellor for consumers to raise the credibility of trusted products.

Complementary cordinating strategies: buyers consortia and news groups

The concept of buyers consortia for green cars may be interesting for both consumers andcar manufacturers, even though past experiences have not been so positive. A buyersconsortium is a group of purchasers that is dedicated to the commercialization of greencars. This group cultivates the desire and demand for greencars by giving credibleinformation and by focussing on primary benefits. This asks for an independent andtrusted organisation to set up such a group.

If succesful in doing this, the consortium shows major manufacturers the demand formore energy efficient, cleaner vehicles by issueing an early production purchase order.Car manufacturers state that, in order to be successful, the demanded volume needs to be

big. But, in any case, many manufacturers will be interested to come to grips with buyerconsortium initiatives.

Another strategy to educate and empower consumers and to increase market informationon the green car market is to start a news group and discussion forum on the internet. Forentrepreneurs in the market this could be a useful strategy in order to be a catalyst forgreen car innovation.



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4 VEHICLE TECHNOLOGY INNOVATIONS

4.1 General introduction

There are many new technologies on the block, especially when it comes to power train

configuration and ICT functionality. Technology can contribute a lot to sustainability. It

is technologically possible to change the car as we know it.

Car technology in this report is subdivided as described in the table below.

Table 6 Division of car technology

Main category Sub category

Energy carriers (and sources) 4.2Power train related

Power trains 4.3

ICT 4.4Non power train related

Design (materials, shape, weight, size) 4.5

Category 1: power train related

The first main category rests on the invention of the internal combustion engine (ICE), ahundred years ago. Todays car principally uses this initial technology; nevertheless todayand tomorrow we can recognize more sustainable alternatives. Paragraph 4.2 and 4.3 dealwith these power train related technologies, which of course form the heart of the car.

Category 2: non power train related

The second main category describes everything else, which is non power train related.ICT hardware and software gain importance as components of passenger cars. The futurecar will change significantly due to ICT developments as cars integrate more and moreintelligent technology. Design in terms of material use, shape (aerodynamics), weight andsize significantly influences sustainability characteristics of a car. Technologies in boththese subcategories are dealt with in paragraph 4.4 and 4.5.

Contents: technology assessment sheets

This chapter gives an introduction on each particular technology category. The

introduction goes into general aspects such as history, the need for innovation and a list ofdescribed technologies in this category. The introduction is accompanied by technologyassessment sheets, which describes the technologies as mentioned in the list. Thesetechnology assessments are reported inappendix 3 and present the following information:

Name Category Applicability (time frame, scale) Description, functionality (image) Pros and cons in terms of sustainability and market

- Sustainability arguments: greenhouse gasses, health issues, noise, safety issues- Market arguments: regulations, competitiveness, availability, demand issues


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4.2 Energy sources and energy carriers

There are several primary energy sources that can be used to produce energy carriers suchas gasoline, diesel, gaseous fuels, electricity and hydrogen. The most important primaryenergy sources are: Coal mainly used to produce electricity; Crude Oil primary food stock for transport fuels (95%); Natural Gas good alternative for crude oil, but often stranded which means the

costs are too high to make it profitable on the current market; Renewable energy such as wind, solar and water, very adequate but often very

expensive. It can produce fuels from biomass or deliver direct renewable electricity; Nuclear energy limited development due to nuclear waste en social acceptance

issues.

The figure below gives an outline of energy related technologies. This helps tounderstand which more sustainable technologies can influence todays car.

Figure 10 Use of energy sources and -carriers for transport power trains (source: Mobility 2030)

The first column shows the primary energy sources to be transformed into energycarriers. Energy sources can be subdivided into four major categories: fossil fuels,biomass, renewables and nuclear energy. The second column presents energy carriersmainly used for transport today and in the future. In order to be used for transportenergy carriers either fit into existing infrastructure, are relatively easy to adapt or arerelatively easy tot distribute. The last column shows the two most important power trains.Inappendix 3 several of these energy carriers are elaborated in fact sheets.



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In order to use energy carriers on a large scale there has to be an infrastructure todistribute them. That is why alternatives for crude oil based fuels can be successful on alocal scale but will take up long introduction times on a large scale.Nowadays fossil fuels are the dominant technology used in the world and it is mainlybased on a liquid fuel infrastructure. Major industries still focus on the furtherdevelopment of fuel and power train related technologies. Nevertheless the variety inpossible technologies expands. According to Shell fuel cell hydrogen and directelectricity are potential future discontinuities. They offer high performance and cleanenergy from a variety of fuels, but still have severe weaknesses. Major technology wavescome about a period of 50 years. It seems like we are at the bridge of a new wave. Withmore engineers and scientists, and new ways of analysing and sharing information andknowledge. This coming wave promises to be a strong promoter of innovation.

Energy breakdown of a regular passenger car

Table 7 presents an overview of the energy breakdown of a traditional European midsizefamily car. A conventional combustion engine converts chemical energy into mechanicalenergy. Mechanical energy is used to overcome inertion and air-/roll resistance. A caralso uses energy on electricity for electrical components. Only a limited amount of theentire energy capacity (11%-20%) is used on propulsion. The larger share of energyconverts into heat. More efficient engines pay off.

Table 7 Energy breakdown passenger car (source: TNO, 2003)

Road category Built-up area Highway

Energy capacity fuel 100 [%] 100 [%]

Thermodynamic losses 60 60

Engine losses 12 3

Transmission losses 4 5

Total power train losses 76 68

Additional losses 2 1

Accessories 1 1

Air conditioning 10 10

Total component losses 13 12

Air resistance 2 11

Roll resistance 4 7

Kinetic resistance 5 2

Available for propulsion 11 20


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Life cycle impact of passenger carsThe Castro et al study Life Cycle Impact Assessment of the Average passenger Vehiclein the Netherlands (2003) presents a Life Cycle Analysis (LCA) in relation to carproduction, car distribution, car usage and waste disposal during the entire Life Cycle.This helps to understand the importance of car usage in terms of energy and environment.The study concludes that the phase of car usage is responsible for over ninety percent ofthe environmental impact of cars. This means focus in terms of environment and energyusage should lie with the user phase of cars.

Appendix 3 describes the following energy carriers in fact sheets: FT Diesel Bio diesel Ethanol DME Natural Gas Hydrogen

4.3 Power trains

The propulsion system of a car is often called the power train. There are four importantcategories of power trains in the market:

Internal Combustion Engines (ICE) Over the years much has been done to

improve the efficiency of the ICE; but losses have not been fully overcome.Nevertheless the development of conventional ICE is far from fully exploited. Thisexisting technology is expected to continue to improve over the next 30 years. Sparkignition engines and direct injection engines will reduce future fuel consumptionsignificantly (up to 20%) mainly due to downsizing and advances injectiontechnology. But these require low sulphur petrol which is, for example, currentlyunavailable in the US. Diesel engines become more dominant. Although theseengines are already very efficient they are also expected to reduce fuel consumptionby 20%. Particulate filters and NOx traps should prevent health risks due to theincreased number of diesel engines. Other, more advanced categories of alternativepower trains may contribute to a further reduction of energy loss and reduced

environmental impact.

Hybrid Electric Vehicles (HEV) Hybrid Electric Propulsion Systems cover a widerange of possible power train arrangements. All combine an ICE with a generator,batteries and one or more electric motors. There are 2 types of HEVs; (1) the seriesHybrid EV, which uses electricity from a small diesel generator to power the vehicleat low speed with additional power for starting and accelerating, provided bybatteries; and (2) the parallel Hybrid EV, which employs a combination of batterydriven electrical and combustion driven mechanical drives. HEVs can reduce energyin several ways due to which they have a very substantial fuel consumptionreduction effect:



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- Start-stop function;- Electric mode at low speeds;- Optimal engine operation due to Continuous Variable Transmission (CVT) in

combination with an electric motor;- Highly efficient engine during hybrid operation (battery power);- Regenerate energy during braking.

Battery Electric Vehicles13

(BEV) Over the last few years many electric vehicleshav

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0100 Cars of the Future Mvse20050771 Final Report 210705