* 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
"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
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
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