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Automakers seek partners for new technology

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Automakers seek partners for new technology

Christine Tierney / The Detroit News

Automakers are still digging out of the worst downturn in decades, and they're already coming up against another, perhaps greater, challenge: the start of the biggest transition in engine technology in nearly a century.

Making the kind of ultra-clean, high-tech cars that automakers will have to sell to meet strict emission rules coming into force in the United States and other regions will be very expensive. Most carmakers won't be able to cover the costs by themselves -- and that will spur many to seek new partnerships, say industry executives and experts.

Even for the biggest companies, the costs of new technologies and materials are daunting.

Consider:

• A hydrogen-powered fuel cell SUV costs four times as much to build as a conventional SUV.

• A transmission for a hybrid SUV costs three times more than a transmission for a regular SUV.

• Batteries large enough to power cars without assistance from a gas engine cost from about $12,000 to as much as $50,000 for a performance car.

• A hydrogen station costs upwards of $2 million to build.

An added burden for automakers is that they can't concentrate on a single technology because it might fall by the wayside. "We can't say what the prevailing technology will be," said Carlos Ghosn, chief executive of Renault SA and its partner Nissan Motor Co.

The Renault-Nissan Alliance is betting heavily on battery-powered electric cars, but many experts question whether batteries can ever provide the range and reliability that drivers expect.

Plug-in hybrids, with motors to charge the batteries, allay drivers' "range anxiety," but they're heavy and expensive to build.

A few automakers are moving forward with fuel cell cars and plan to market them by 2015.

"Every car manufacturer has to develop very different technologies," Ghosn said during a stop in Detroit last month. "No one with volumes under 8 or 9 million vehicles (a year) can afford to develop them (all)," and that will drive a new round of consolidation.

It may be starting. In a number of recent tie-ups, automakers are seeking partners to share expertise and pool the costs of developing new technologies.

Renault-Nissan and Germany's Daimler AG announced a partnership in April to share some conventional engines and platforms, and to jointly develop batteries and technologies for all-electric vehicles.

Daimler also announced plans to produce an electric car for the Chinese market with BYD Auto Inc., a Chinese carmaker with advanced-battery expertise.

Toyota Motor Corp. teamed up with Silicon Valley startup Tesla Motors Inc. to develop an electric car. Toyota also is talking to Daimler about working together on fuel cell cars, though neither company will comment publicly.

GM seeks partners

General Motors Co. signaled this month that it was looking for partners when it formed a venture capital unit and at the same time put a powertrain expert, Dan Hancock, in charge of strategic product alliances.

Hancock says automakers will be looking to share not only costs but also intellectual property, notably patented technologies, where appropriate. "Otherwise, you have to go and develop something different."

Hancock also expects automakers to forge links with players outside the auto industry, such as firms specializing in energy production and distribution.

Nissan and Renault have been busy establishing partnerships with national and local governments and utilities to ensure that electric car drivers will be able to recharge or swap their batteries.

The two carmakers have 60 partnerships with governments and other entities, including 25 in North America.

In addition to working on the fueling infrastructure, governments are helping to cover the cost of developing ultra-clean cars with grants and loans, such as the U.S. Energy Department's loan program for advanced technology vehicles. The federal government also is offering tax credits up to $7,500 for clean-car purchases, and some states are offering credits, as well.

Previous electric cars, such as GM's innovative EV1 introduced in the mid-1990s, were too expensive to build and limited in their capabilities to succeed. But automakers are persevering now to produce zero- or very low emissions cars to fulfill environmental requirements.

They have to meet a 35 percent rise in U.S. mileage standards by 2016. In Europe, that mileage target goes into effect in 2012.

Automakers won't be able to exceed those standards without radically downsizing their vehicles or adding significant numbers of alternative-technology cars and trucks to their fleets, say auto executives.

According to one automaker's internal study, the cost of complying with European standards alone by just improving conventional technology would run between $1,500 and $2,000 per vehicle in the next decade. For each 1 million vehicles a company sells, that represents an additional cost of between $150 million and $200 million a year.

'A new trend'

The pressure has forecasters expecting a slow but steady rise in alternative-vehicle sales. J.D. Power and Associates predicts U.S. sales and leases of hybrids and plug-in hybrids will rise from 318,000 this year to 1.56 million in 2016. During that period, it expects electric vehicle sales to grow from 2,500 to 95,000.

"I don't think it's a blip," said J.D. Power analyst Mike Omotoso. "It's a new trend."

The last time the U.S auto industry embarked on radical technological changes in a short time was in the 1970s and 1980s -- and it was under pressure then, too, from new regulations.

Tough safety and anti-pollution rules pushed U.S. automakers to re-engineer vehicles, build more front-wheel-drive cars and develop electronic engine controls and expensive catalytic converters.

That era serves as a cautionary tale: The big changes in auto technology led to a drop in vehicle quality that dogged Detroit's automakers for years.

This next transition will be even more challenging because of the proliferation of new technologies, auto executives say.

At this stage, car companies are still figuring out which technologies and components they can share without compromising their competitiveness, and which should remain proprietary.

Engineers say the electronics directing how the systems operate and most of the fuel cell stack in fuel cell cars would be closely held proprietary information.

Some companies are keeping their electric motor and battery technology close to the vest, but others are willing to share to reduce costs.

"I don't think the customer will give a hoot what the brand is on the battery," said Lawrence Burns, an engineering professor at the University of Michigan.

For most customers, what will matter more than the technology is the vehicle's driving range, real-world performance and sticker price -- the same things that matter today. That's not likely to change.

From The Detroit News: http://www.detnews.com/article/20100623/AUTO01/6230379/1148/Automakers-seek-partners-for-new-technology#ixzz0rgB8Lb4Q

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