Light Duty Vehicle Technology: Opportunities & Challenges

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Light Duty VehicleTechnology:Opportunities & ChallengesJohn GermanAmerican Honda Motor Co., IncAugust 23, 2007Asilomar Conference on Transportation and Climate Policy

3 Issues for the FutureAutomobile:Energy Supply & DemandSustainabilityClimate ChangeUrban Air Quality

Emissions & Energy Issues& Technology DirectionsImportance of issuesEnergy concerns(Sustainability )Fuel cellFlexible fuel vehicleTodayCNGClimateClean dieselchangeHybridGasoline engine improvement(CO2、GHG )PZEVULEVLEVAir pollution( VOC, NOx, CO)CVCC19901995200020052010201520202030

Honda’s Powertrain Progress for CO2 reductionReserchfor mass productionCO2 reductionFCVFleet testFCV development for futureCivic GXCNGInsightIMAHEV ne GasolineDIHCCICylinderdeactivationV6i-DS I i-DS Ii-VTECClean dieselHigh efficientgasoline engineBase engineimprovement

Technology

Honda VTEC Combustion:(Variable valve Timing and lift, Electronically Controlled) HIGHER EFFICIENCY LOWER EMISSIONS GREATER PERFORMANCE100%50%0%1991 1995 2003 2006Near-Term Market Introduction - Advanced VTEC withcontinuously variable intake valve timing and lift

New Variable Cylinder ManagementAll6 CylindersRear rocker shaft(4 channels)A4 CylindersB3 CylindersARear rocker shaft(4 channels)ARear rocker shaft(4 channels)BBRear BankFront ew Active ControlEngine MountDrive byWireActive NoiseControlTorque Converter LockupLong Torsion Spring

Transmission AdvancesComputer controls are enabling a varietyof 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), hugeinvestment Improved shift points and lock-up strategies– Low investment Lapillier 6- to 8-speed automaticsNot 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 materialsLow drag coefficientLow resistance tiresLower accessory lossesCost and value issue These technologies arecontinuously beingincorporated into vehicles. However, consumers valueother attributes more highly,such as performance,safety, utility, and luxury. Putting in technologies justto improve fuel economymay not be valued bycustomers.Fuel Economy Improvement - ?Depends on how much is alreadyincorporated into fleet and synergies (orlack of synergy) between technologies

Honda Catalyst - Tier 2 Bin 5 Diesel①②③Rich-burn operationLean-burn operationNOxCONOxH2ONH3COPtN2NH3H2ONOxNox AdsorbentN2O2NH3NH3 AdsorptionLayerNOxLean-burn operationPtNOx AdsorbentH2NOx AdsorbentNOx Adsorption LayerNOx1. During lean burn operation, the NOx adsorbent in the lower layer adsorbs NOxfrom the exhaust gas.2. As needed, the engine management system adjusts the engine air-fuel ratio torich-burn, wherein the NOx in the NOx adsorption layer reacts with hydrogen (H2)obtained from the exhaust gas to produce ammonia (NH3). The adsorbentmaterial in the upper layer temporarily adsorbs the NH3.3. When the engine returns to lean-burn operation, NH3 adsorbed in the upper layerreacts 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 CharacteristicsCIVIC HYBRID(1.3L Engine only)

Attractive Hybrid FeaturesIntegratedElectric MotorLow 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 of100,000 units Target price significantly lower than thecurrent Civic Hybrid

Hybrid Synergies More efficient electric pumps and compressors– Beltless engine Part-time 4wd Extend operating windows for Atkinson cycle andcylinder deactivation Provide quasi-steady-state load conditions forHCCI/CAI operation (especially with CVT) E-turbo– High electric power – supercharger boost– When power is not needed, use exhaust energyto drive e-turbo and recharge battery

Plug-In Hybrid PaybackTable 8, Plug-In Hybrids, ACEEE, Sep 2006CalculatedHybridPlug-In, 40Mile rangePlug-In vs.HybridBattery 2,000 17,500 15,500Other incremental costs 1,500 1,5000 480 705 2257.327.068.9 600 3,500 2,900 1,000 1,0000 480 705 2252.96.412.9Near-term Incremental costsAnnual fuel savingsPayback (years)Long-term Incremental costsBatteryOther incremental costsAnnual fuel savingsPayback (years)Assumptions include:12,000 miles per year, hybrid FE of 50 mpg, conventional vehicle FE of 30 mpg, 50% ofplug-in miles on electricity, 3.00/gal, no discounting of fuel savings, no FE penalty foradditional weight of plug-in batteries, no battery replacement for plug-in

Next-generation Gasoline EnginesCamless Valve ActuationHCCILift sensorImprovement infuel economy:Upper springdQ/dθ[J/deg]Lower spring2020Æ [J / de g]dQ / d Hydraulic tappet30%Honda Prototype Engine Base( Electro-magnetic valve )CoilArmatureYokeEngineH ear release rateHeat release rateHCCISISIHCCI101000ConventionalEXINNegative valve overlapEXNOLIN-2002040- 10-40- Crank40- 2002040angleC rank A[ATDCngle [A T D C deg]deg]Requires increasing theself-ignition region60

Potential Operating ModesAssumes camless valve actuation, direct injection, e-turboEngine IMEP (bar)Boosted – Otto cycleboosted – AtkinsoncycleNA –boosted - AtkinsonHCCIcycleNA - HCCIElectric Motor OnlyEngine Speed (rpm)Boosted –2-strokeNA –Ottocycle

Civic GX Natural Gas VehicleRange 200-240 miCO2 reduction 20%Performance GasolineNear Zero EmissionsDemonstrated reliability and durabilitySatisfied customersCARB 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 freeQuietCertified for home useEasy to use110 voltGas detection

Next FCX Model DirectionTiming: 2008model year Low Floor Compact Fuel CellComponents V-flow stacktechnology 270 mile range(concept car)

Home Energy StationHome Refueling with Co-generation of Heat and Electricity HeatFuel cellNatural gas ElectricityInverterReformRefineCompress StoragetankHydrogenReformated GasHome Refueling with Co-generationCooperative development with Plug Power

Crystal Ball is Unclear Improved conventional engines keep raising the bar– Lower fuel consumption reduces the benefit from alternativetechnology 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 urbanareas and smaller vehicles? CNG may appeal to a segment who dislikes refueling Multiple transmission designs likely

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

Real Gasoline PriceReal Gasoline Prices(2007 per gallon) 3.50Jun-07 3.05 3.00 2.50 2.00 1.50 1.00 0.50 0.00195019601970198019902000Motor Gasoline Retail Prices, U.S. City Average, adjusted using CPI-U

Fleet Fuel EconomyReal Gasoline Prices and In-Use Fleet MPG(2007 per gallon) 3.5035 3.0030Car mpg25 2.0020 1.5015Car Light Truck mpg 1.0010 0.505 0.000195019601970198019902000In-Use MPG from Transportation Energy Data Book: 2007MPGReal Gasoline Price 2.50

Gasoline Cost per MileReal Gasoline Cost for Cars - Cents per Mile(2007 per gallon) 0.22 0.20 0.18 0.16Jun-07 3.05 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.0019701975198019851990199520002005

Real Fuel Cost - % of Disposable Income% of Per Capita Disposable IncomeReal Fuel Cost of Driving a Passenger Car 10,000 Miles% of Per Capita Disposable Income10.0%9.0%8.0%7.0%6.0%5.0%Jun-07 00BEA, Table 2.1, Personal Income and It's Disposition2005

In-depth interviews of 60 California households’vehicle acquisition histories found no evidenceof economically rational decision-making aboutfuel economy. (Turrentine & Kurani, 2004) Out of 60 households (125 vehicle transactions) 9stated that they compared the fuel economy ofvehicles in making their choice. 4 households knew their annual fuel costs. None had made any kind of quantitativeassessment of the value of fuel savings.

Consumer Payback Period – Fuel Savings3.0Saves 400Costs 1,2002.5YearsA randomsample ofconsumersgavegenerallyconsistentanswers tothe samequestionaskedfrom twodirections.Inferred Payback Periods for Responses toSaves 400/yr. v. Costs 1,200 QuestionsMay 20, 20042.01.51.00.50.0MeanMedianMean w/o "none"Median w/o "none"Measure of Central TendencyDavid 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 - CarsCar Data from EPA’s 2006 FE Trends ightMPG2724MPG - Car1981 wts, accel,& % manual% 1991260-60 time198915001519872819851800198318actual data198121Fuel efficiency has increased by about 1.3% per year since 1987However, this has all been used to increase other attributes more highly valued bythe customer, such as performance, comfort, utility, and safety

Effect of Attribute Tradeoffs - LDTLight Truck Data from EPA’s 2006 FE Trends Report5555005030MPG5000weight4545001981 wts, accel,& % manual2840400035350030% manual3000252500202000MPG1500actual 221987100019850-60 time1983102419811526Fuel efficiency has increased by about 1.5% per year since 1987However, this has all been used to increase other attributes more highly valued bythe 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 MPGPrice and Value of Increased Fuel Economy toPassenger Car Buyer, Using NRC Average Price Curves 2,500Constant 2000 2,000 1,500Greatest net valueto customer atabout 36 MPG 1,000Fuel SavingsPrice IncreaseNet Value 500 028303234363840424446Assumes cars driven 15,600miles/year when new, decreasing at4.5%/year, 12%discount rate, 14 yearvehicle life, 2.00/gallon gasoline,15%shortfall between EPA test andon-road fuel economy.- 500Miles per GallonDavid 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 improvementsConsider manufacturer’s risk in redesigning all product to increase MPGPrice and Value of Increased Fuel Economy toPassenger Car Buyer, Using NRC Average Price Curves 2,500Constant 2000 2,000 1,500Fuel Savings 1,000Price IncreaseNet Value 500Greatest net valueto customer atabout 30 MPG 028303234363840424446Assumes cars driven 15,600miles/year when new, decreasing at4.5%/year, 12%discount rate, 14 yearvehicle life, 2.00/gallon gasoline,15%shortfall between EPA test andon-road fuel economy.- 500Miles per GallonDavid L. Greene, Climate Change Policy Initiative, Washington, DC, Oct. 5, 2006

Incentives/Mandates are Needed Fuel price is a good lever for vehicle choiceand 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 andemotional purchase decisions Role of Federal government is to reflect fullfuel 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 selectedtechnology ultimately proves to be more expensive– Even worse is widespread adoption of a technology that does notmeet 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 costsbefore committing to a single technology– Spread across fleet – 5-year minimum product cycles Costs increase dramatically if normal development cyclesare not followed– Greatly increases development costs, tooling costs, and the risk ofmistakes

The Ignored NAS Finding2002 NAS Study - EFFECTIVENESS ANDIMPACT OF CAFE STANDARDSFinding 15. Technology changes require very long leadtimes to be introduced into the manufacturers’ productlines. Any policy that is implemented too aggressively(that is, in too short a period of time) has the potential toadversely affect manufacturers, their suppliers, theiremployees, and consumers. Little can be done toimprove the fuel economy of the new vehicle fleet forseveral years because production plans already are inplace. The widespread penetration of even existingtechnologies will likely require 4 to 8 years. Foremerging technologies that require additional researchand development, this time lag can be considerablylonger.

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 whencustomers value other features more highly– How to get customers to care about fuel economy whenfuel costs are so low– Rate at which technology can be introduced withoutincreasing costs and adverse consequences You can push beyond 2% per year improvements,but the potential for adverse consequences,increased cost, and consumer backlash risesexponentially –Do you want to live with the consequences?

Annual fuel savings 480 705 225 Payback (years) 7.3 27.0 68.9 Long-term Incremental costs Battery 600 3,500 2,900 Other incremental costs 1,000 1,000 0 Annual fuel savings 480 705 225 Payback (years) 2.9 6.4 12.9 Assumptions include: 12,000 miles per year, hybrid FE of 50 mpg, conventional vehicle FE of 30 mpg, 50% of

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