Filling the Gaps in the U.S. Automotive Future

Filling the Gaps in the U.S. Automotive Future

By Stephen Metzger, PhD, Senior Editorial Advisor

Aside from the ever-present concerns with the business cycle, perhaps the most headline grabbing issue is that of transportation.  The oft-quoted statistics of 60% of our oil needs imported and 70% of that devoted to gasoline production and consumption pretty much capsulate the energy dilemma in which our nation finds itself.

Thus, there is an inordinate, though understandable focus on automobiles and the fuels which drive them.  Most major global automobile manufacturers have announced plans for electric-enhanced vehicles of one type or another.  Typically, they are categorized as micro hybrids, mild hybrids, full hybrids (HEVs), and plug-in hybrid electric vehicles (PHEVs).  Beyond hybrids are pure electric vehicles.  Virtually all these technologies are either in production, are to be commercially introduced in the next two years, or are on the drawing boards.

Interesting to note that the stop-start and regenerative braking features of on-road micro and mild hybrids have been incorporated in golf cars and NEVs for quite some time now.  The power storage sources for micro and mild hybrids and, of course, golf cars and their derivatives have been adequately handled by relatively cheap and available lead acid battery technology.

In moving to the more advanced hybrid technologies, however, the demands for energy storage are increased, and conventional lead acid technology is superceded, in HEVs, by NiMH batteries.  So far, lithium ion batteries have not met the cost- benefit thresholds provided by NiMH.  Toyota, for example, has tested lithium ion batteries in the Prius and has rejected them.

The realities of a cleantech age,
driven by lithium energy storage

Lithium ion technology continues to be the poster-child of the dawning cleantech age. It is the recipient of billions of dollars of private and public funding. In fact, the hope behind the realization, is some time in the future, there will be large volumes of PHEVs and pure EVs.  While there is considerable hype regarding this technology, there is a school of thought that emphatically contends that lithium-based batteries are not only too costly in the short-to-medium term and are unproven in transportation applications, but that they may never play a significant role in the transportation sector for the next half-century.

One of the outspoken opposition leaders is John Petersen, the author of two dozen or more articles on “Seeking Alpha”, a website forum for many diverse subjects in the realm of business and economics, including the battery industry.   While citing the various obstacles to an all-lithium future, Petersen also references U.S. government studies which project a largely ICE (internal combustion engine) future. (The same government that is throwing billions of taxpayers’ money at lithium battery development.)

For example, the Annual Energy Outlook 2009, published by the DOE, charts the course of new car and light truck sales by fuel type, and by 2030, two decades hence, the gasoline ICE vehicle still predominates.  In 2030 gasoline ICE is forecast to have 64% of the market, compared to 91% of the market in 2010.  Is the big percentage drop in share due to lithium-driven PHEVs?  No, the primary gap-filler is the HEV (gasoline-electric), moving from 3% of the market to 17%.  PHEVs go from zero to 3% in 2030.

 

In new light truck sales, ICE predominates with TDI diesel systems taking a significantly larger share of the market (rising from less than 2% to 17%), while gasoline ICEs decline from 5.2 million units to 3.0 million–less than 50% of the market by 2030.  PHEVs manage barely 1% of the market by 2030.

Can transportation be electrified?

Given the DOE forecast and some of the problems with cost and performance with lithium technology, one would conclude that the principal transportation modality in the United States, the automobile, could not possibly be electrified–at least not via the pure EV or PHEV routes.

Certainly one of the issues involved is the basic concept of what personal transportation consists of.  Invariably, the debate over green technologies insofar as personal transportation is concerned, focuses virtually exclusively on the performance characteristics of the on-road vehicle capable with an ICE of traveling considerable distances at a high rate of speed.  The current ICE vehicle is a multipurpose vehicle capable of meeting the demands of highly diverse uses and objectives.  To accomplish these objectives, however, it uses a fuel which because of its geopolitical nature present risks and because of its chemical makeup generates significant volumes of pollutants.

Recasting the transportation/light portage and transport paradigm

If, however, the transportation/light portage and transport paradigm is recast from a general purpose design to a task-oriented, problem-solving framework, the picture changes fairly dramatically.  The task-oriented framework focuses on solutions to what needs to be done–say, a trip to the grocery store, hauling hay or repairing a fence on a farm, going to the local eatery for take out or a change of pace dinner.  In commercial applications the special uses multiply as do the accessories mounted on what amounts to a platform with drivetrain and wheels.

Most importantly, the shift to electric power becomes vastly more feasible, because it is not dependent on some technological breakthrough to bring costs down and enhance performance to conventional, on-road levels.  To be sure, the small task-oriented vehicle will itself evolve toward greater capabilities, which it has been doing of late with AC electric motors and improvements in lead acid batteries and battery support devices and services.  NEVs now sport automotive grade glass, four wheel hydraulic disc brakes, and automotive-type instrument panels.

A number of states have now raised the LSV/NEV speed limit to 35 miles per hour, which adds incremental versatility and safety (being able to move better in the flow of traffic) to the vehicle.

It has become apparent that the STOV’s  (small task oriented vehicles) can replace the conventional automobile and light truck in a wide range of applications. Either through regulation or because of rising operating costs of large conventional vehicles, the STOV will be embraced on economic grounds and  the market for these vehicles will increase.  International Market Solutions, a market research/management consulting firm of which I am one of the managing directors, will shortly publish a market research report on the small, task-oriented vehicle industry, the fifth in a series of dating back to 2000.  Based on the research for this report, we are looking a 50% growth over the next five years.

This is where we come back to the DOE forecasts.  Although fuel economies will be realized in the ICE sector, the glittering prospects of a nearly all-electric transportation system that will make the country energy independent and close to carbon-free are clearly viewed with considerable skepticism.  On the other hand, the prospect of significant replacement of conventional automobiles and light trucks by the small, task-oriented vehicle opens up new opportunities for significant conservation of hydrocarbon resources and all the attendant benefits relating to energy independence and pollution.  Thus, if the DOE forecasts are accurate within the purview of the conventional transportation system in the United States, then a shift in the transportation paradigm from multipurpose to specific purpose will open up a significant opportunity for the STOV’s.

Market potential will be realized by broadening the market

There remains the nitty-gritty issue of how to take advantage of the current and impending opportunity for market expansion.  To a large degree the manufacturers of the generically described small vehicle, i.e., the STOV’s, such as Polaris, John Deere, E-Z-GO, and Club Car, just to name a few, are still hobbled by their traditional market niches and the sales and distribution systems which conform to serving these market segments.

IMS Enterprises, an independent division of International Market Solutions, LLC, is working on breakthrough adaptation of internet-based technology that will allow the multiple crossovers in the product arena to compete in a much broader market.  As details of the system are worked out, they will be reported in this column.  The primary objective, however, is to allow potential purchasers to compare capabilities across brands, thus allowing crossover competition which did not previously exist, and even more importantly, provide a self-educating tool whereby the buying public, both consumer and commercial, can become knowledgeable with regard to the capabilities and benefits of the STOV’s.

With a broadening of the market, changes in the framework of current distribution and sales systems should follow, with primary emphasis on efficiently moving product accross geographical sales boundaries and providing appropriate incentives for dealer cooperation in the process.

About the Author:

Stephen Metzger, PhD, is Managing Director of International Market Solutions, LLC, an internationally based market research firm. He is also Principal of International Competitive Assessments, the market research arm of IMS. ICA has produced four major studies of the small, task-oriented vehicle market since 2000. Mr. Metzger is Senior Editorial Advisor for Industrial/Utility Vehicle Magazine.