Light Duty Vehicle Technology: Opportunities & Challenges

Light Duty Vehicle Technology: Opportunities & Challenges

John German American Honda Motor Co., Inc August 23, 2007 Asilomar Conference on Transportation and Climate Policy

3 Issues for the Future Automobile: Energy Supply & Demand Sustainability

Climate Change

Urban Air Quality

Emissions & Energy Issues & Technology Directions

Importance of issues

Energy concerns (Sustainability )

Fuel cell Flexible fuel vehicle

Today CNG

Climate

Clean diesel change Hybrid Gasoline engine improvement (CO2、GHG ) PZEV ULEV

LEV

Air pollution ( VOC, NOx, CO)

CVCC

1990

1995

2000

2005

2010

2015

2020

2030

Honda’s Powertrain Progress for CO2 reduction

Ｒｅｓｅｒｃｈ for mass production

CO2 reduction

ＦＣＶ Fleet test

FCV development for fｕｔｕｒｅ

Civic GX CNG

Insight ＩＭＡ

HEV expansion

Civic ＩＭＡ

Accord ＩＭＡ

Diesel Gasoline Gasoline DI HCCI Cylinder deactivation Ｖ６

ｉ-ＤＳ Ｉ ｉ-ＤＳ Ｉ ｉ-ＶＴＥＣ

Clean diesel

High efficient gasoline engine

Base engine improvement

Technology

Honda VTEC Combustion: (Variable valve Timing and lift, Electronically Controlled)

• HIGHER EFFICIENCY • LOWER EMISSIONS

• GREATER PERFORMANCE 100%

50%

0% 1991 1995 2003 2006

Near-Term Market Introduction - Advanced VTEC with continuously variable intake valve timing and lift

New Variable Cylinder Management All

6 Cylinders Rear rocker shaft (4 channels)

A

4 Cylinders B

3 Cylinders A

Rear rocker shaft (4 channels)

A

Rear rocker shaft (4 channels)

B B

Rear Bank

Front Bank

#1

C

#4

#2

#5

#3

BA

#6

#1

C

#4

#2

#5

#3

#6

BA

#1

C

#2

#4

#5

#3

BA

#6

New Active Control Engine Mount

Drive by Wire

Active Noise Control

Torque Converter Lockup Long Torsion Spring

Transmission Advances Computer controls are enabling a variety of improved transmission designs • Dual-clutch automated manual – Smooth shifting and potentially cheaper – But launch concerns (no torque converter), huge investment

• Continuously Variable Transmission (CVT) – Excellent city efficiency and extremely smooth – Can deliver steady-state engine speeds to facilitate HCCI – But torque limited, highway efficiency lower (belt friction), huge investment

• Improved shift points and lock-up strategies – Low investment

• Lapillier 6- to 8-speed automatics

Not yet clear which is most cost-effective – all may co-exist

Incremental FE Technology • Engine technology – High specific output (including 4 valve/cylinder) – Variable valve timing/lift – Cylinder deactivation – Direct injection – Precise air/fuel metering – Lower engine friction – Turbocharging

• Transmission efficiency – 5/6/7/8 speed – CVT – Dual-clutch automated MT

• Reduced losses – – – –

Lightweight materials Low drag coefficient Low resistance tires Lower accessory losses

Cost and value issue • These technologies are continuously being incorporated into vehicles. • However, consumers value other attributes more highly, such as performance, safety, utility, and luxury. • Putting in technologies just to improve fuel economy may not be valued by customers.

Fuel Economy Improvement - ??? Depends on how much is already incorporated into fleet and synergies (or lack of synergy) between technologies

Honda Catalyst - Tier 2 Bin 5 Diesel ①

②

③ Rich-burn operation

Lean-burn operation NOｘ

CO

NOx

H2O

NH3

CO

Pt

N2

NH3

H2O

NOx Nox Adsorbent

N2

O2

NH3

NH3 Adsorption Layer

NOｘ

Lean-burn operation

Pt

NOx Adsorbent

H2 NOx Adsorbent

NOx Adsorption Layer

NOx

1. During lean burn operation, the NOx adsorbent in the lower layer adsorbs NOx from the exhaust gas. 2. As needed, the engine management system adjusts the engine air-fuel ratio to rich-burn, wherein the NOx in the NOx adsorption layer reacts with hydrogen (H2) obtained from the exhaust gas to produce ammonia (NH3). The adsorbent material in the upper layer temporarily adsorbs the NH3. 3. When the engine returns to lean-burn operation, NH3 adsorbed in the upper layer reacts with NOx in the exhaust gas and reduces it to harmless nitrogen (N2).

Diesel Market Potential in US • Diesels good for towing, low rpm power, and highway efficiency – Hybrids get better fuel economy in city driving

• Diesels are currently cheaper than hybrids, but are not cheap – $1500 for 4-cyl., $2000-$3000 for V-8 – Tier 2 emission standards will add cost – Hybrid costs will come down in the future

• Will public recognize improvements in noise, vibration, smell, starting, and emissions? • Pickup customers want a “tough” diesel, not a wimpy quiet one • Must compete with improved gasoline engines and hybrids • Europe refineries already shipping unwanted gasoline to US – Can refineries adjust output if US also shifts to diesels? • Market split? – Diesels for larger vehicles and rural areas – Hybrids for smaller vehicles and urban areas

Hybrid Output Characteristics CIVIC HYBRID

(1.3L Engine only)

Attractive Hybrid Features Integrated Electric Motor

Low Operating Cost: Best “Idle” Quality:

Fuel Savings! Beats any Luxury Car!

Superior Driving Range: Fewer Trips to the Station! Pride of Ownership:

Social Benefits!

Dedicated Honda Hybrid • All-new, more affordable, dedicated hybrid car • Launched in North America in 2009 • Annual North American sales volume target of 100,000 units

• Target price significantly lower than the current Civic Hybrid

Hybrid Synergies • More efficient electric pumps and compressors – Beltless engine • Part-time 4wd • Extend operating windows for Atkinson cycle and cylinder deactivation • Provide quasi-steady-state load conditions for HCCI/CAI operation (especially with CVT)

• E-turbo – High electric power – supercharger boost – When power is not needed, use exhaust energy to drive e-turbo and recharge battery

Plug-In Hybrid Payback Table 8, Plug-In Hybrids, ACEEE, Sep 2006

Calculated

Hybrid

Plug-In, 40Mile range

Plug-In vs. Hybrid

Battery

$2,000

$17,500

$15,500

Other incremental costs

$1,500

$1,500

0

$480

$705

$225

7.3

27.0

68.9

$600

$3,500

$2,900

$1,000

$1,000

0

$480

$705

$225

2.9

6.4

12.9

Near-term Incremental costs

Annual fuel savings Payback (years)

Long-term Incremental costs Battery

Other incremental costs Annual fuel savings

Payback (years)

Assumptions include: 12,000 miles per year, hybrid FE of 50 mpg, conventional vehicle FE of 30 mpg, 50% of plug-in miles on electricity, $3.00/gal, no discounting of fuel savings, no FE penalty for additional weight of plug-in batteries, no battery replacement for plug-in

Next-generation Gasoline Engines Camless Valve Actuation

HCCI

Lift sensor

Improvement in fuel economy:

Upper spring

dQ/dθ[J/deg]

Lower spring

20 20 Æ [J / de g] dQ / dƒ

Hydraulic tappet

30%

Honda Prototype Engine Base ( Electro-magnetic valve )

Coil Armature Yoke

Engine

H ear release rate

Heat release rate

HCCI SI SI HCCI

10 10 00

Conventional EX

IN

Negative valve overlap

EX

NOL

IN

-20 0 20 40 - 10-40 - Crank 40 - 20 0 20 40 angle C rank A[ATDC ngle [A T D C deg] deg] Requires increasing the self-ignition region

60

Potential Operating Modes Assumes camless valve actuation, direct injection, e-turbo

Engine IMEP (bar)

Boosted – Otto cycle boosted – Atkinson cycle NA – boosted - Atkinson HCCI cycle NA - HCCI Electric Motor Only Engine Speed (rpm)

Boosted – 2-stroke

NA – Otto cycle

Civic GX Natural Gas Vehicle Range = 200-240 mi CO2 reduction ~20% Performance = Gasoline Near Zero Emissions Demonstrated reliability and durability Satisfied customers

CARB AT-PZEV, EPA Bin2 ILEV

The Home Refueler / Civic NGV • “Phill” : Home Refueling • World debut in California (Honda with Fuelmaker) • Expands AFV marketability with home refueling device

• • • • • •

Maintenance free Quiet Certified for home use Easy to use 110 volt Gas detection

Next FCX Model Direction

Timing: 2008 model year

• Low Floor • Compact Fuel Cell Components • V-flow stack technology • 270 mile range (concept car)

Home Energy Station Home Refueling with Co-generation of Heat and Electricity ～ ～ ～ ～ ～

Heat

Fuel cell

Natural gas

～ Electricity

Inverter Reform

Refine

Compress Storage tank

Hydrogen

Reformated Gas Home Refueling with Co-generation

Cooperative development with Plug Power

Crystal Ball is Unclear • Improved conventional engines keep raising the bar – Lower fuel consumption reduces the benefit from alternative technology

• Ultimate goal is fuel cells, but timing unclear (not near term) – Plug-in hybrids might prolong fossil fuel era

• Hybrid technology is progressing rapidly – Costs coming down – Synergies with other technologies developing – Consumer features will develop

• Diesels for rural areas and larger vehicles, hybrids for urban areas and smaller vehicles? • CNG may appeal to a segment who dislikes refueling • Multiple transmission designs likely

Challenge is customer’s low value of fuel economy • Real cost of driving very low • Performance, utility, comfort, safety valued more highly • Most only consider fuel savings during ownership period

Real Gasoline Price Real Gasoline Prices (2007 $ per gallon)

$3.50 Jun-07 $3.05

$3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1950 1960 1970 1980 1990 2000 Motor Gasoline Retail Prices, U.S. City Average, adjusted using CPI-U

Fleet Fuel Economy Real Gasoline Prices and In-Use Fleet MPG (2007 $ per gallon)

$3.50

35

$3.00

30 Car mpg

25

$2.00

20

$1.50

15 Car + Light Truck mpg

$1.00

10

$0.50

5

$0.00

0 1950

1960

1970

1980

1990

2000

In-Use MPG from Transportation Energy Data Book: 2007

MPG

Real Gasoline Price

$2.50

Gasoline Cost per Mile Real Gasoline Cost for Cars - Cents per Mile (2007 $ per gallon)

$0.22 $0.20 $0.18 $0.16 Jun-07 $3.05

$0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 1970

1975

1980

1985

1990

1995

2000

2005

Real Fuel Cost - % of Disposable Income % of Per Capita Disposable Income

Real Fuel Cost of Driving a Passenger Car 10,000 Miles % of Per Capita Disposable Income 10.0% 9.0% 8.0% 7.0% 6.0% 5.0%

Jun-07 $3.05

4.0% 3.0% 2.0% 1.0% 0.0% 1970

1975

1980

1985

1990

1995

2000

BEA, Table 2.1, Personal Income and It's Disposition

2005

In-depth interviews of 60 California households’ vehicle acquisition histories found no evidence of economically rational decision-making about fuel economy. (Turrentine & Kurani, 2004)

• Out of 60 households (125 vehicle transactions) 9 stated that they compared the fuel economy of vehicles in making their choice. • 4 households knew their annual fuel costs. • None had made any kind of quantitative assessment of the value of fuel savings.

Consumer Payback Period – Fuel Savings

3.0 Saves $400

Costs $1,200

2.5

Years

A random sample of consumers gave generally consistent answers to the same question asked from two directions.

Inferred Payback Periods for Responses to Saves $400/yr. v. Costs $1,200 Questions May 20, 2004

2.0 1.5 1.0 0.5 0.0 Mean

Median

Mean w/o "none"

Median w/o "none"

Measure of Central Tendency David L. Greene, IAEE/USAEE Meetings, Washington, DC, July 10, 2004 – “Why don’t we just tax gasoline? Why we don’t just tax gasoline”

Effect of Attribute Tradeoffs - Cars Car Data from EPA’s 2006 FE Trends Report 36

3600

40

33

3300

38

30

3000

36

2700

34

2400

32

2100

30

weight

MPG

27 24

MPG - Car 1981 wts, accel, & % manual

% manual

2005

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

2003

22 2001

900

1999

9

1997

24 1995

1200

1993

12

1991

26

0-60 time

1989

1500

15

1987

28

1985

1800

1983

18

actual data

1981

21

Fuel efficiency has increased by about 1.3% per year since 1987 However, this has all been used to increase other attributes more highly valued by the customer, such as performance, comfort, utility, and safety

Effect of Attribute Tradeoffs - LDT Light Truck Data from EPA’s 2006 FE Trends Report 55

5500

50

30

MPG

5000

weight

45

4500

1981 wts, accel, & % manual

28 40

4000

35

3500

30

% manual

3000

25

2500

20

2000

MPG

1500 actual data

2005

2003

2001

1999

1997

1995

1993

1991

20 1989

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

0 1985

0 1983

500 1981

5

22

1987

1000

1985

0-60 time

1983

10

24

1981

15

26

Fuel efficiency has increased by about 1.5% per year since 1987 However, this has all been used to increase other attributes more highly valued by the customer, such as performance, comfort, utility, and safety

What matters to the consumer is NET VALUE “Economically rational” consumer (14 year payback) – net value is $500 or less for up to a 60% increase in MPG Price and Value of Increased Fuel Economy to Passenger Car Buyer, Using NRC Average Price Curves $2,500

Constant 2000 $

$2,000 $1,500

Greatest net value to customer at about 36 MPG

$1,000

Fuel Savings Price Increase Net Value

$500 $0 28

30

32

34

36

38

40

42

44

46

Assumes cars driven 15,600 miles/year when new, decreasing at 4.5%/year, 12%discount rate, 14 year vehicle life, $2.00/gallon gasoline, 15%shortfall between EPA test and on-road fuel economy.

-$500 Miles per Gallon

David L. Greene, Climate Change Policy Initiative, Washington, DC, Oct. 5, 2006

Most consumers value only 3 years of fuel savings – broad range of indifference to FE improvements Consider manufacturer’s risk in redesigning all product to increase MPG Price and Value of Increased Fuel Economy to Passenger Car Buyer, Using NRC Average Price Curves $2,500

Constant 2000 $

$2,000 $1,500 Fuel Savings

$1,000

Price Increase Net Value

$500

Greatest net value to customer at about 30 MPG

$0 28

30

32

34

36

38

40

42

44

46

Assumes cars driven 15,600 miles/year when new, decreasing at 4.5%/year, 12%discount rate, 14 year vehicle life, $2.00/gallon gasoline, 15%shortfall between EPA test and on-road fuel economy.

-$500 Miles per Gallon

David L. Greene, Climate Change Policy Initiative, Washington, DC, Oct. 5, 2006

Incentives/Mandates are Needed  Fuel price is a good lever for vehicle choice and VMT  Gas taxes “should” be raised  Fuel price is NOT a good lever for technology  Technology cost and fuel savings balance  Little influence on highly complex and emotional purchase decisions  Role of Federal government is to reflect full fuel savings and externalities in performancebased requirements or incentives

The Real Barrier - Leadtime • Market is very competitive: new technologies = huge risks – Manufacturer at a competitive disadvantage if the selected technology ultimately proves to be more expensive – Even worse is widespread adoption of a technology that does not meet the customer expectations for performance and reliability. • Hurts manufacturer’s reputation • Sets back acceptance of the technology for everyone (GM diesel)

• Must allow time to ensure quality and reliability – Rigorous product development process – 2-3 years – Prove in production on a limited number of vehicles – 2-3 years – Assess impact of higher volume and further development on costs before committing to a single technology – Spread across fleet – 5-year minimum product cycles

• Costs increase dramatically if normal development cycles are not followed – Greatly increases development costs, tooling costs, and the risk of mistakes

The Ignored NAS Finding 2002 NAS Study - EFFECTIVENESS AND IMPACT OF CAFE STANDARDS Finding 15. Technology changes require very long lead times to be introduced into the manufacturers’ product lines. Any policy that is implemented too aggressively (that is, in too short a period of time) has the potential to adversely affect manufacturers, their suppliers, their employees, and consumers. Little can be done to improve the fuel economy of the new vehicle fleet for several years because production plans already are in place. The widespread penetration of even existing technologies will likely require 4 to 8 years. For emerging technologies that require additional research and development, this time lag can be considerably longer.

FE Mandates in Japan and Europe • Europe 1995-2008: – CO2 reduced from 185 gCO2/km in 1995 to 140 in 2008 – Annual FE improvement rate: 2.2% per year

• Europe 2008-2012 goal: – Further reduce CO2 emissions to 130 grams/km by 2012

– Annual FE improvement rate: 1.9% per year

• Japan 2005-2016: – Increase economy from 13.6 km/l in 2005 to 16.8 in 2016 – Annual FE improvement rate: 1.9% per year

Summary • Benefit and cost of individual technologies is not the real issue – Technology clearly can dramatically improve efficiency • Real concerns are: – How to get technology applied to fuel economy when customers value other features more highly – How to get customers to care about fuel economy when fuel costs are so low – Rate at which technology can be introduced without increasing costs and adverse consequences

• You can push beyond 2% per year improvements, but the potential for adverse consequences, increased cost, and consumer backlash rises exponentially – Do you want to live with the consequences?