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green@work : Magazine : Back Issues : Winter 2004 : Special Section


Industry at a Crossroads

Change is nothing new in the automotive industry. But some changes underway show that the industry's present business model is unsustainable for the next 50 years, putting it at a critical crossroads for the future.

by Dr. Gerhard Schmidt

Note: The special sections included in each issue of green@work investigate recent developments and progress within a specific market segment. In this issue, we turn our attention to the automotive industry, but have departed from our normal reporting process by excerpting remarks by Gerhard Schmidt, vice president, research and advanced engineering for Ford Motor Co., to the International Motor Press Association this past July. In his address, Schmidt offered candid insights on where the industry has been, where it is today and, most importantly, the direction it needs to head for the future.

I have come today to talk about the future of the automobile—what it will look like, how it will operate and what will power it. One might say we are at the crossroads from which a number of alternatives may emerge. I will try to cover a number of the possibilities.

There is no doubt that what our children will be driving in the decades ahead will be quite different from what’s in the garage today. Change is nothing new in the automotive industry.

If you go back to the start of the last century, the automotive fleet was 40 percent electric, 40 percent steam and less than 15 percent powered by gasoline. In the 20th century, gasoline won the fight for supremacy. But no one would have been able to predict that as the century began. So now, I am going to gaze into my crystal ball and tell you what I think the future of the car and truck will look like in the next century.

Forecasting the future is a big part of my job as leader of Ford Research and Advanced Engineering. Twelve hundred researchers in the U.S. and Europe are focusing on developing the next big thing in such areas as infotronics, powertrain, safety and materials.

We have a lot to brag about—on how far the car has progressed. Cars have become more fuel efficient, using half the fuel they did 30 years ago to go the same distance. What comes out of the tailpipe of a vehicle today—in terms of NOx, carbon monoxide and hydrocarbons—is 99 percent cleaner than would have come out in the early 1970s.

The fatality rate from automobile accidents is down more than 70 percent from the mid-1960s in terms of million miles driven. But in the U.S. we are driving much more, so the total number of fatal accidents has somewhat flattened out on an annual basis.

With the introduction of such things as advanced electronic engine controls, catalysts, smart air bags and seat belts, and advanced simulation technology—today’s vehicles are cleaner and safer than would have ever been imaginable 50 years ago.

But there are changes underway that show that our present business model is unsustainable for the next 50 years. We simply can’t go on like this.

Worldwide population growth will almost double from where it was in the 1970s over the next decade. And with that growth—and the growth of the middle class in the developing world—comes a growth in the demand for cars and trucks. And with more vehicles, comes more demand for fuel. Worldwide energy usage for cars and trucks has more than doubled in the last 30 years. With all that growth comes an increase in the output of carbon dioxide and other greenhouse gases.

There is no indication of stopping, or even slowing down, this trend. We are already seeing the effects of man and his machines on the environment. The experts tell us the world is getting warmer. Average global surface air temperature is rising. Over the past 100 years, it has gone up about one degree on average.

It’s expected to rise at least a couple more degrees over the next 50 years, and more after that. The growing scientific consensus is that climate change is real. And with it, glaciers melt, sea levels rise, ocean temperatures go up, arctic seas ice retreats. Snow cover decreases.
Tax Incentives Renewed
In early October, President Bush signed into law H.R 1308, the “Working Families Tax Relief Act of 2004,” which eliminates the phase-out of a tax deduction for electric drive vehicles for 2004 and 2005, and also eliminates the phase-out deduction for clean-fuel vehicle property for 2004 and 2005.

Under the previous law, qualified hybrid electric vehicles were eligible for a tax deduction of $2,000 in the year 2003; $1,500 in the year 2004; $1,000 in 2005, and $500 in 2006. Under the new law,
qualified hybrid electrics are eligible for the full $2,000 tax deduction in 2004 and 2005; the deduction remains at $500 in 2006.

The bill also includes measures designed for the use of qualified heavy-duty battery electric and hybrid electric vehicles used by fleets and other businesses. Qualified clean-fuel vehicle property includes motor vehicles that use certain clean-burning fuels such as electricity and hydrogen. The maximum amount of the deduction is $50,000 for a truck or van with a gross vehicle weight over 26,000 pounds, or a bus with seating capacities of at least 20 adults; a deduction of $5,000 is available for a truck or van with a gross vehicle weight between 10,000 and 26,000 pounds. A $2,000 deduction is available for any other motor vehicle. The bill provides that a taxpayer who purchases a qualifying vehicle may claim 100 percent of the otherwise allowable deduction for vehicles purchased in 2004 and 2005 (there was a phase-out
specification under the old law.) For vehicles purchased in 2006, the deduction remains at 25 percent of the otherwise allowable amount as under present law. The effective date for vehicles placed in service is after December 31, 2003.

The leading greenhouse gas culprit is carbon dioxide. The level of CO2 in the pre-industrial atmosphere was approximately 280 parts per million. Since the industrial revolution the concentration of CO2 has risen to 370 parts per million and is increasing at a rate of approximately two parts per million per year. This is already driving policy and will continuously shift market and regulatory pressures toward reducing CO2 output from our powertrains. Taxes on carbon output could be as common tomorrow as taxes are on income today. How much is the automobile involved in the problem of global warming? It is not the major player—but cars and trucks do play a significant role.

Emissions from light-duty vehicles account for approximately 12 percent of global fossil fuel emissions of carbon dioxide. And while output of CO2 from cars and trucks continues to rise in North America—other parts of the world like China and Latin America are catching up quickly.

Demand for crude oil makes the world dependent on one part of the world—the Middle East—because that’s where most of the proven oil reserves are.

Meanwhile worldwide vehicle sales are expected to double in 50 years—putting even more strain on those oil reserves. Most of that sales growth will take place in the developing world. And in those regions, traffic fatalities are expected to increase over the coming decades. In the developed world, they have leveled out or decreased. So while we have gone far making vehicles cleaner and safer, much more needs to be done.

If our vehicles in the future will be safer and more intelligent, they will also be cleaner. In fact, our goal at Ford is to eliminate the motor vehicle from the environmental debate. The way to do that is to design them to have no impact on the environment. They emit no pollution, no greenhouse gases, consume little fuel (and what they do consume is made from renewable sources), producing them creates no waste—and at the end of life, they are completely recyclable.

The gasoline powered internal combustion engine is not going away any time soon. But for the first time, there are potential alternatives, such as hybrid-electric and fuel cell vehicles, hydrogen internal combustion engines and advanced clean diesel. No single global technology solution has yet emerged.

Hybrids will play a greater role in our energy future. Later this summer the Escape Hybrid goes on sale. In 2007, the Mercury version, the Mariner Hybrid goes on sale—and after that a sedan hybrid will be added to the Ford fleet. The combination of a battery/electric powertrain with a gasoline engine provides fuel efficient driving. Regenerative braking captures energy. And emissions are reduced. This market is still emerging, and we are interested in seeing how customers appreciate the benefits of a hybrid vehicle.

The diesel engine has a bad reputation in United States. But because of its efficiency, low fuel consumption, low CO2 emissions, favorable power and torque characteristics and low cost of ownership—it is an engine under the hood of almost 50 percent of the vehicles sold in Europe, and diesel’s popularity continues to grow.

Today’s diesel does not have the smoke of the past. It has lower emissions when you fill it up with low-sulfur fuel. It’s quiet. And with high pressure direct injection and fast glow plugs, it starts as fast as every other engine. Tomorrow’s diesel will be even cleaner due to advanced particulate filters and after treatment including catalyst and urea injection technology. At Ford, we are working on developing the cleanest diesel ever developed—meeting today’s Partial Zero Emission Vehicle, or PZEV, standards.

Our gasoline engines are improving too, both in terms of emissions and efficiency. The PZEV Focus, introduced nationwide last year, meets California’s stringent emissions standard in a no-compromise vehicle. A PZEV Focus has to drive 6,700 miles to produce the same tailpipe emissions as a 5.4-horsepower lawnmower used for one hour. Our engineers did this through careful design of the I-4 engine’s combustion chambers, coupled with sophisticated electronic controls.

Emission actions also include close placement of the catalytic converters to the exhaust manifold to allow them to reach operating temperatures more quickly, and electrically controlled exhaust gas recirculation that recycles inert gas into the combustion chamber to reduce NOx emissions and improve fuel economy.

There is a future for direct injection in gasoline engines. After proving its success in diesel applications, we introduced direct injection technology in a gasoline engine with the introduction of the 1.8 liter Duratec SCi engine last year in Europe. The Duratec SCi uses less fuel, especially under low engine speeds or low load conditions, which makes it ideal for improving fuel economy in everyday, real-world driving. Similar to a common-rail direct-injection diesel engine, a direct-injection petrol engine injects fuel directly into the combustion chamber instead of into the intake port.

But as we move ahead, powering vehicles by hydrogen is the ultimate long-term course—eliminating tailpipe emissions, except for water. CO2 emissions are eliminated if hydrogen is obtained from renewable resources. Production of hydrogen can be sustainable. And the production and use of hydrogen—the most abundant element in the universe—would reduce our dependence on imported oil.

Hydrogen powered internal combustion engines are a good bridge to fuel cells, which are, by our estimation, still a decade away in terms of mass retail sales. Hydrogen “ICE” engines produce near zero CO2, near zero hydrocarbons, up to a 25 percent increase in fuel efficiency versus gasoline, leverage existing manufacturing assets, and use familiar technology compared to a fuel cell.

A H2ICE engine is modified to burn hydrogen by increasing the compression ratio, installing hydrogen compatible fuel injectors, modifying the ignition and electrical systems, adding a supercharger or turbocharger, and using a unique control strategy. Hydrogen fuel storage and safety systems are similar to fuel cell vehicles. While other systems are similar to conventional gasoline-powered vehicles.

Fuel cells are the ultimate long-term solution—the ideal and sustainable propulsion system of the future.

We already have more than 25 fuel cell vehicles on the road—most in Detroit, a couple in Sacramento, undergoing testing. The Ford Focus Fuel Cell Vehicle takes a regular Ford Focus four-door and adds a Ballard Mark 902 fuel cell stack, a regenerative braking system and a 5000 psi hydrogen storage system. It produces no emissions except for water and a little heat. Later this year, we plan to put four more of these vehicles into service on the streets of Vancouver, British Columbia. And, as part of a partnership with BP and the U.S. Department of Energy, we will put up to 30 additional Focus Fuel Cell Vehicles in fleets in Orlando, Detroit and a couple more in Sacramento. BP is building the fueling infrastructure to support these vehicles.

By testing fuel cell vehicles in everyday conditions and applications, Ford is moving the industry toward commercialization. Projects like these will provide the data we need to engineer improved performance, reliability and durability of fuel cell vehicles, and prepare the market for wide spread commercialization.

Ford supports California Governor Schwarzenegger’s Hydrogen Highway Network initiative—to set up a network of more than 200 fueling stations across the state. In fact, I am the auto industry representative on its advisory panel.

Where do we get the fuel? If we create the hydrogen from fossil fuels (which is today the cheapest method) by steam-reforming methane, and releasing the C02 into the atmosphere, then we are not any better off than we are today. But if you can make hydrogen from coal or methane and sequester the CO2 in the ground, that is one solution. But solar, wind, hydroelectric, geothermal biomass and nuclear create no residual greenhouse gases.

So looking ahead: zero emissions fuel efficient propulsion systems will be the powertrains of the future. Active safety systems will complement passive safety technology to provide new levels of customer safety. Powertrain controls, electronics, active safety and intelligent transportation systems will merge and deliver new levels of comfort and convenience.

We are indeed at a crossroads. It’s up to us to go in the right direction.

UPS Expands Real-World Testing
Buoyed by initial road-test results and significant technological advancements, UPS will deploy its first three large package delivery vehicles utilizing hydrogen fuel cells for power. The first fuel cell Dodge Sprinter was deployed in Los Angeles, CA. The remaining two Sprinters will be deployed in Sacramento and Ann Arbor, MI.

In May 2003, UPS, the U.S. Environmental Protection Agency and DaimlerChrysler announced a collaborative project to advance the state of hydrogen fuel cells by harnessing the technology to power the first commercial delivery fleet in North America. Starting in March 2004, DaimlerChrysler provided an “F-Cell,” a fuel cell-powered Mercedes-Benz A-Class car, which UPS modified for early-morning package deliveries in southeastern Michigan. The car is fueled daily at the EPA’s hydrogen fueling station at its National Emissions Testing Laboratory in Ann Arbor. DaimlerChrysler and UPS concurrently began testing a medium-duty vehicle in Germany. The new Dodge Sprinters were built in part on information gathered during these road tests.

According to DaimlerChrysler, compared to the first Sprinter, the new fuel cell Sprinters feature a 20 percent increase in powertrain efficiency; a 40 percent increase in range to 155 miles; and a 45 percent increase in peak engine power. They now have similar acceleration as a gas- or diesel-powered UPS vehicle.

The trucks will feature UPS’ signature brown color and logo, but special graphics on the sides feature concentric circles rippling outwards, representing water.


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