* New standards will force an overhaul of design
* Suppliers, automakers eyeing more exotic raw materials
* Auto cos eyes faster ways to "cure" or prepare materials
By Deepa Seetharaman
TRAVERSE CITY, Mich., Aug 1 New fuel economy rules unveiled by the Obama administration last week will push the auto industry to explore more lighter materials and faster, cost-efficient ways of preparing them for vehicle production.
Automakers and suppliers are already using materials that are lighter than traditional steel to help cars and trucks wring out more mileage from each gallon of gasoline.
Costs of those materials are high, but finding a swifter way to "cure" or prepare these materials can help make those materials less expensive to use, executives and analysts said at an industry conference on Monday.
Such improvements can help the industry achieve the new corporate average fuel economy (CAFE) standard of 54.5 miles per gallon by 2025, a figure that one auto industry executive called "daunting."
"Many suppliers, as we now face this 54.5 coming down the road, are going to have to change a little bit the way they look at the business model going forward," said Lyle Otremba, head of commercial and product development for Cooper-Standard Automotive, during a panel discussion.
The industry is already using high-strength steel, aluminum and magnesium to cut weight and boost fuel efficiency in future vehicles to meet 2016 CAFE standards that call for an average fuel economy of 35.5 mpg.
Finding cheaper ways of processing these materials can help lower the overall cost of using them and make them more viable options for 2025, analysts and executives said.
It would also allow the industry to expand use of materials like carbon fiber and silicon. Otremba said the price of silicon, used as a braking lubricant because it can withstand high temperatures, would have to come down around 50 percent for it to be used elsewhere in the vehicle.
SGL Automotive Carbon Fibers, for example, was able to cut costs of making carbon fiber by switching to a lower-grade material that took less than half the time to prepare and was just as effective, Joerg Pohlman, the managing director of SGL Automotive said.
This material is one-third the cost per-kilogram of the carbon fiber currently being used on the roof of BMW's (BMWG.DE) M3 coupe. Pohlman said the reduced time to prepare the material was "the biggest driver" of cost reduction.
"There's still a lot of potential in the future to bring it down even further," Pohlman said, during the panel at the Center for Automotive Research Management Briefing Seminars conference.
CAN'T SQUEEZE EVERY PENNY
Since 2009, Obama has been tightening fuel economy standards, which remained unchanged for decades. The CAFE target does not take into account some factors that can lower fuel economy for drivers in real-life driving conditions.
The new standards have forced automakers and suppliers to overhaul their approach to vehicle design, a process that typically begin many years before those cars and trucks make it on the dealer lot. Among the challenges is creating vehicles that appeal to the American sensibilities.
"Americans still want large vehicles," said Mary Foster, vice president of supply chain management for Inteva Products.
"So we're not going to get there by all running around in subcompacts because that's not what the American consumer is interested in," said Foster, a 30-year veteran of Ford Motor Co (F.N). "So weight's got to come out."
Automakers are also making improvements to the traditional combustion engine and developing aerodynamic designs. These strategies, coupled with lighter materials, will help boost fuel economy, analysts and executives said.
"Sometimes you got 10, 20 percent weight reduction just by putting the material in a different place," said Jeffrey Brennan, chief marketing officer for Altair Engineering.
Automakers initially will have to spend more on developing upcoming generations of vehicles as the industry finds ways to meet the new standards, analysts and executives said. The industry will also have to prepare for the potential drawbacks of streamlining the preparation process.
For example, in the last several months, the industry has been scrambling to find alternatives to as PA12, a high-end nylon that is the byproduct of another material.
The process to cure that material has grown more efficient, which has led to less byproduct and a global shortage of PA12, which Cooper-Standard uses in some fuel lines.
Such "unintended consequences" may crop up over the next several years as the sector invents new processes and products to meet heightened fuel economy standards, Otremba said.
"We don't have time to squeeze out every penny," Otremba said. "We'll never make 54.5 miles per gallon in a broad way unless there is cooperation."
(Additional reporting by Bernie Woodall;editing by Sofina Mirza-Reid)