Vehicle Energy Technology Leads Automotive Industry Disruption

Automakers are paving the way for “disruptive” applications and technologies to become mainstream. These center on battery electric cars (BEV), traditional hybrids, plug-in hybrids (PHEV) and extended range electric vehicles (EREV).

Battery electric cars (BEV), plug-in hybrids (PHEV) and more are challenging the auto industry.
Battery electric cars (BEV), plug-in hybrids (PHEV) and more are challenging the auto industry.

The race is on. Global automotive companies are hurtling at top speeds toward conforming to the Corporate Average Fuel Economy (CAFÉ) mandate handed out by the Obama administration in 2012, which requires all automakers selling into the U.S. to average 54.5 miles per gallon (mpg), in total, for their entire fleet by 2025. California also saw an update to its Zero Emissions Vehicle (ZEV) regulation in 2012, and it requires automakers to “roadmap” their alternative power train strategy sooner rather than later, or see stiff financial penalties from the state of California.

So with the drivers now in place, automakers are paving the way for “disruptive” applications and technologies to become mainstream.  These center on battery electric cars (BEV), traditional hybrids, plug-in hybrids (PHEV) and extended range electric vehicles (EREV). The need to scale these new technologies and plan for production changes is creating new opportunities for design, automation and information technology engineers.

To some degree, these technologies have been gaining momentum since the 2008 downturn; California, for example, already has 30-plus hydrogen fuel cell stations that Toyota will leverage in 2015. But some automotive OEMs like the disruption more than others. Recent statements to the Detroit News made by C.J. O'Donnell, group marketing manager for electrification for Ford, seem to point to less BEV R&D in the future, even though U.S. customers have had limited market access to all-electric vehicles up to this point.

At a recent Society of Automotive Engineers (SAE) symposium in late February on the topic of hybrid cars and electric vehicles, Ford’s Michael Tamor, executive technical leader for energy systems research, echoed that position and pointed to some new Ford consumer research: “Because PHEV achieves breakeven at realistic battery cost, its potential is vastly greater than that of an all-electric vehicle,” Tamor concluded.

While some may call the government mandates heavy-handed, a consistent vehicle energy policy does provide clear challenges to the auto industry. And in this case, Ford doesn’t see any lithium-ion (Li-ion) battery breakthrough, battery pack design pack efficiencies or big enough consumer acceptance to warrant a BEV marketing push at this point—even though they just released the all-electric.

Disruptive technologies for the automotive industry, such as lithium-ion batteries and battery pack design, are not known quantities at this point. “If you double the energy density of lithium-ion battery technology by 2020, it still won’t be enough to drive down the vehicle cost for mainstream adoption,” said Tom Watson, vice president of vehicle systems for Milwaukee, Wisc.-based Johnson Controls (www.johnsoncontrols.com) and an ex-Ford employee.

The SAE symposium included a Li-ion battery track on day two with suppliers and analysts. Li-ion is the base chemistry for battery cells in electric vehicles—also in computers, smartphones, and other consumer electronics. During the panel discussion, the overall conclusion was that the Department of Energy’s benchmark of $200 KwH price for a battery pack was not low enough for auto OEMs to make an all-electric vehicle more affordable.

Currently, most automobile OEMs design the battery packs in house. However, Toyota looked outside for its battery pack development in 2010 and partnered with Freemont, Calif.-based Tesla Motors. The all electric start-up company, led by CEO Elon Musk, provided battery pack development resources to Toyota for its RAV4 electric vehicle. The electric RAV4 has approximately 100 miles to a charge and is the first SUV to appear in the BEV category.

General Motors was first in the extended-range electric vehicle (EREV) category in 2011 with its Chevy Volt—they created the category.  The car’s electric battery can hold a 40-mile charge and has a separate traction engine that powers the electric battery after its depleted. The Volt can average triple-digit mpg figures, and solves the consumer issue of range anxiety. 2012 Volt sales tripled and came in at 23,461 units, outselling the similarly priced Corvette by a 2:1 ratio. Total EV-based sales increased by three times in 2012 over 2011, putting some 53,000 units on the road. 

Disruptive trickle-down
The need to scale these new technologies is the new reality for global automotive OEMS and, at the SAE symposium, most pointed to Kaizen-inspired thinking that helped drive the profitability of Toyota’s Prius and its dominance of the hybrid vehicle sector. Seeing this example, other OEMs are roadmapping production of multiple alternative powertrains. In October 2012, GM announced its intention to in-source 10,000 new Information Technology (IT) professionals to support these rapidly changing technologies and operation challenges.

As part of the announcement, GM is opening four new IT Innovation Centers and just recently announced the third location near Atlanta, Ga. “We look to the Innovation Centers to design and deliver IT that drives down the cost of ongoing operations, while continuously increasing the level and speed at which innovative products and services are available to GM customers,” Mott said. “The IT Innovation Centers are critical to our overall GM business strategy and IT transformation.”

For the last 30 years, Ross Perot’s Electronic Data Systems (EDS) provided out-sourcing strategies for GM. EDS was eventually acquired by Dell and some speculate Dell’s underperformance helped make the decision to an in-sourcing model easier.

“GM is executing an IT best practice by in-sourcing IT services and making them a strategic part of assuring GM remains a fast-moving leader,” said Rob Enderle, principal analyst at the Enderle Group (www.enderlegroup.com) in San Jose, Calif. “This is also one of the best opportunities for IT professionals to work in the automotive industry."

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