2009 04 Automotive Tech Innovation In The Downturn Frost & Sullivan

Automotive Innovation in the

2009 Downturn

Sivam Sabesan

Technical Insight’s Industry Analyst,

Automotive & TransportationApril 8, 2009

2

The Auto Industry Today

� Traditionally, the price and availability of fuel had a direct influence on consumer vehicle choices.

� Fuel security had ranked highest on critical factors that affected global economies. Today the global recession is a more critical factor.

� Consumer confidence is the biggest influencer on car sales today. As a result the global crisis has caused a huge drop in consumerconfidence and car sales.

3


Nissan Racetrack converted into a parking lot

Source: Jalopnik.com

4


Ford F-150s sit on a lot in

Dearborn, Michigan

Source: Jalopnik.com

5

The Auto Industry Today – U.S. Figures

March 2009 Sales Figures:

� Sales declined across the board

� BMW sale the most modest decline of 22.9%

� General Motors dropped by 44.7%

� Ford 40.9% decline

� Chrysler 39.3% decline

� Toyota’s 39.0% decline

� Nissan 37.7% decline

� Honda 36.6% decline

Overall Sentiment: Low Consumer Confidence = Low Car Sales

6

The Auto Industry Today - Global

� Spain saw a 38.7% drop in sales

� South Korea sales dropped by 18.8%

� Japanese domestic market sales were down 25.3%

� India, Germany and France saw an increase in domestic sales in March

7

Research Initiatives Today

Today’s research is seen broadly divided into the following areas:

� Conventional:� Emission regulations compliance

� Safety regulations compliance

� Gas mileage improvement

� Passenger comfort improvement

� Alternate Propulsion:� Biofuels/alternative fuels in automobiles

� Hybrid electric drivetrains

� Electric drivetrains

� Battery research

8

Automotive Technology Trends Critical Drivers

Technology Adoption

Changing Fuel Scenario

Government Regulation

Consumer Expectations

Environment Consciousness

9

Technologies with Immediate Impact

� Volatile crude oil prices ranging from the mid $30s to $147 a barrel cause products to became dated more quickly.

� Companies loose market share rapidly when the commuter cars they produce are sold when oil pieces are low and SUVs are being sold when gas sales for $4 a gallon.

� While a variety of technologies are being developed by the automotive industry to meet short and long term needs, there arealready some technologies that are available and can provide differentiation in the market with tangible benefits to the consumer.

10

Technologies with Immediate Impact

� Engine Downsizing

� Mild Hybrid Technology

� Full Hybrid Technology

� Battery Electric Vehicles

11

Engine Downsizing

� Maintaining performance while engine downsizing is critical

� Downsizing replaces larger engines with smaller ones without compromising performance

� Downsizing technologies:

� Combustion engineering approaches like HCCI

� Turbo charging

� Supercharging

� New approach - hybrid electric drivetrain with a smaller than engine and electric motor that assists

� Methanol/water injection or nitrous oxide injection - have been seen in racing and aftermarket usage, though mainstream usage remains limited

12

Engine Downsizing – Why is it Attractive?

� A smaller engine has lower pumping losses

� More fuel efficient at lower rpm

� Lesser mass, translating to lower weight and raw material use

� Improved suspension handling and fuel economy

� Less material costs

13

Engine Downsizing Complications

� Downsized engines with their higher specific power will require reinforced rotating components.

� Engine blocks will need to be reinforced and in turn this may affect choice of material for block and liner.

� The higher state of tune also requires sophisticated electronic control to ensure that detonation does not occur. Momentary leanconditions if not handled properly can result in catastrophic failure.

14

Engine Downsizing – Common Technologies Used

� Involves increasing the volumetric efficiency above 100%

� Has volumetric efficiency of 150%, for instance, would make a 2000cc engine behave like a 3000cc engine

� Turbocharging involves using wasted heat from the exhaust to compress the incoming air

� Supercharging uses power off the crankshaft to compress the incoming air

� Turbocharging and Supercharging have pros and cons

15

Engine Downsizing - Homogeneous Charge Compression Ignition

� Combines the characteristics of both gasoline and diesel engines

� Combustion initiates at several points automatically without anyspark ignition as is common in gasoline engines

� The lower peak temperatures result in very low NOx emissions butHC and CO are high

� Provides diesel like efficiency with gasoline like emissions

16


� Timing control in HCCI remains a major problem

� Conventional engine designs with HCCI exhibit limited power range

� A variety of approaches are being tried to overcome such restraints found in early stages

� Mercedes has demonstrated a ‘DiesOtto’ Concept and GM has demonstrated versions of HCCI to journalists

17


Frost and Sullivan’s take on HCCI:

� Extremely hard to implement in production units

� Will match with requirements of hybrids

� Extra efficiency achieved will probably be negated by a variety of factors including a limited power range and heavier mass of the engine (to cope with higher peak pressures)

� Knock control needs to be foolproof or the engine can destroy itself in a short amount of time

� This is true for all engines, but HCCI has a higher propensity to knocking if the control system should fail

� Commercialization potential in the next five years – Very Low

18

Hybrid Electric Vehicles

� Hybrid Electric Vehicles use a combination of IC engine and electric motor power for propulsion.

� Electric motors provide good acceleration and also allow for regenerative power.

� IC engine can be sized for average load, not maximum load with the electric motor used to improve performance.

� Combination of battery power and engine operating at efficient rpm makes for extremely frugal city driving.

19

Hybrid Electric Vehicles

� Hybrids are slowly moving into the mainstream from the environmental conservative niche. Increases in oil prices have accelerated adoption.

� Hybrids are expensive.

� Hybrids are more complicated than conventional vehicles. As theymove into the mainstream, these issues will slowly be sorted out.

� There is high potential for mass commercialization. However, consumer acceptance during the current low oil market is yet to be seen. Heavy duty applications like hybrid tractor trailers will have a high acceptance from fleets because of lower running costs.

20

Electric Vehicles

� Electric Vehicles are the simplest and most efficient form of automotive transportation.

� They predate the internal combustion engine, but EVs limiting factor has always been energy storage.

� In contrast with liquid fuel’s high energy density, electrical energy storage has been limited by weight of batteries. (Flywheels are not an option on automobiles).

� Today’s Lithium-ion cells promise a new generation of automobiles that are both light and energy dense.

21

Electric Vehicles

� A number of electric vehicles are being introduced into the market

� Long term issues with electric vehicles still remain to be seen

� Battery life, issues in weather extremes, range reductions are factors that will impact the adoption of these vehicles

� Battery research and recharging infrastructure are two ways to significantly improve the practicality of electric vehicles

22

Electric Vehicles

� Current generation EVs will never be as affordable as conventional vehicles, but EVs will get more affordable over time.

� The mass commercialization potential is very high, especially insegments like urban delivery vehicles where very low running costs can result in a fast break even period.

23

Technology Adoption Roadmap

Present 20202010 2015

TIMELINE

Focus on fuel efficiency and tuning for ethanol, biodiesel

Increased adoption of Hybrids and electric vehicles

Alternate fuels and combustion technologies

Tech

no

log

ies

24

The View Forward

As a result of fluctuating oil prices, there will be a continuous focus on:

� Energy efficiency technology for existing drivetrains

� Alternate drivetrain technologies like electric and hybrid automobiles

� Renewable fuels sources like ethanol and biodiesel

� Hydrogen economy, though it remains more hype than hope

25

The View Forward

� Advances in engine technologies will come from technologies thatcan quickly and affordably be brought into production. For manufacturers to choose a particular technology, the return has to be quick and the technology needs to be sufficiently mature.

� Simple evolutionary changes or additional components are preferred over radical changes in existing components. Some examples are aStart/Stop system, waste heat generators and intelligent alternator controls.

26

The View Forward

� Turbocharging and Supercharging are still the cheapest methods to downsize and both will continue to improve.

� Plug and Play technologies like the forced induction will be preferred to advanced technologies that might require a costly redesign of the whole engine.

� An area to look for improvements is in better combustion engineering – though control remains a problem.

� When you have a higher state of tune, reliability and robustness would have to be ensured.

27

Conclusion

� Remember the Wankel – Manufacturability Matters!

� Historically, most technological advances have come from individuals and small companies. Therefore, it is quite possible that some of the biggest advances in tomorrow’s engines are not on today’s radar.

28

Next Steps

� Obtain a Frost & Sullivan Strategic Approach document for a Growth Partnership Service or Consulting Service to support you and your team to accelerate the growth of your company. ([email protected]) 1-877-GoFrost (1-877-463-7678)

� Join us at Frost & Sullivan’s GIL 2009: North America - Growth, Innovation and Leadership: A Frost & Sullivan Global Congress onCorporate Growth, September 13th – 16th, 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ. (http://www.frost.com/gil)

� Register for a complimentary Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities in your industry (www.frost.com/news)

29

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other?

What would you like to see from Frost & Sullivan?

30

Contact Us

If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.

Alvin Chua

Account Manager

Automotive, Transportation & LogisticsDID: +65 6890 0997

Mob: +65 9199 4566

eMail: [email protected]

Documents

2009 04 Automotive Tech Innovation In The Downturn Frost & Sullivan