What will the auto industry look like in 2012? on Driving the Nation

What will the auto industry look like in 2012? on Driving the Nation

Question: Lou Ann, take a look into the future, say around 2012. What will the auto industry look like in the United States?

LAH: I believe that at least two of the Detroit 3 will still be American owned, Ford and General Motors. You may start seeing some Chrysler/Fiat cars brought into the United States. Italy’s Fiat is buying Chrysler to merge with them and use the car dealers to bring in Fiats and/or Alfa Romeos. India’s TATA motors bought Jaguar/Landrover as a stand alone business. Tata motors plans to bring it’s small nano car into the United States but won’t bring them in through Jaguar/Landrover. Tata motors will have separate dealers. China’s Geely is talking about coming to the United States sooner than 2012 with an inexpensive internal combustion engine based car. If they are successful in purchasing Volvo they will have a group of dealers to sell them.

Question: How will alternative fuels and vehicles look by 2012?

LAH: Diesel is considered an alternative fuel to some because there are so few cars in the United States that use diesel. Diesel vehicle sales will continue to rise in the United States. Just like gasoline, there is a finite supply of diesel fuel. If we see a big increase in the demand for diesel fuel we will see an increase in diesel fuel prices. This would mean an increase in retail sales price. Everything you own has been in a truck. Trucks use diesel fuel. Increasing the demand for diesel fuel without increasing the supply will increase the price of diesel fuel.

You will see more hybrids, especially in bigger vehicles. A Cadillac Escalade gets 12 mpg in the city, a Cadillac Escalade hybrid gets 20mpg in the city, an increase of 67% in mpg.
You can get even better fuel mileage if you decrease the weight of these big vehicles. Ford has a system called Eco-boost (Audi calls it FSI) that gives you high performance, less CO2 and more miles per gallon using a smaller displacement turbo-charged engine. Smaller engines mean less weight. Less weight can mean more miles per gallon.

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CNG – natural gas gives us a peek into how difficult a new fuel will be. You can buy a Honda Civic natural gas and a home refueling station, called PHILL. You can fill your CNG vehicle at home for about 50 cents less than stopping at a CNG fuel station, and Natural Gas is around 20% less emissions than gasoline. Even with those attributes CNG hasn’t caught on and the Honda Civic natural gas vehicle only sells about 1,000 vehicles a year.

Question: What about hydrogen and electric cars?

LAH: Hydrogen and electric vehicles are the only two zero emission vehicles we are studying. We need less energy partisanship and more energy policy when it comes to these two vehicles. President Obama just gutted the hydrogen budget by 67% and increased the electric vehicle budget.Both groups should get equal time.

Fuel cell vehicles have advanced technology issues to solve, but they also have hydrogen fuel infrastructure issues. Honda has a hydrogen home refueling system in the works, but it’s not ready. There are only a handful of hydrogen fueling stations. But, if the infrastructure were to be built you could fill your hydrogen car up in minutes, similar to gasoline.

Electric vehicles have an infrastructure of sorts. Everyone that lives in a house has electricity, but they may not have an electric outlet outside where they can charge their car. Think of apartment buildings. Even when there are electrical charging unit’s available it will still take 4-8 hours to charge your car. And if too many people charge their cars during peak hours for electricity demands the price of electricity will go up.

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Nissan is working with Project Better Place. Project Better Place will start in Israel. the idea allows a customer to own the car, but lease the battery. They then can change the battery when it is almost depleted, or stop in to charge it.

Question: What about the advanced battery – lithium-ion?

LAH: Both hydrogen and electric cars need lithium-ion batteries. We spend 40% of our trade deficit on oil. If we don’t build that battery in the United States we will be buying that battery from overseas. Your Federal tax dollars fund our national laboratory, Argonne National labs. Argonne creates chemistry for these batteries. Congress allows Argonne to license that chemistry to other countries. So for example, Argonne licensed chemistry to an Asian company and that Asian company is going to produce lithium-ion batteries in Canada. We will then buy that battery from the Japanese company, increasing our trade deficit.

Question: What about China coming to the United States?

LAH: China would be smart to forgo bringing the internal combustion engine into the United States and go straight for the electric automobile. Warren Buffet has invested in a Chinese company, BYD, that has 8,000 engineers working on electric cars and the batteries. BYD was on the main floor of the Detroit auto show this year showing off their electric cars. They said they are also working on capturing electricity that is not used and storing it for peak hours. That would be a benefit for the electric companies and for electric cars.

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.