Articles in Category: Automotive

Two of the (several) fundamental problems of all electric cars is they have limited range and are generally slow particularly if you want to optimize the limited range. Accepted the technology is at an early stage, although electric motors have been in use for a hundred years or more the lithium battery technologies have been in development first for small appliances and more recently for vehicles realistically for some 15-20 years. They will get better but as a Financial Times article observes batteries follow the rules of chemistry rather than the rules of physics that have allowed computer processing power to double every two years. It has taken almost 15 years for the capacity of consumer lithium-ion batteries to double. A kilogram (2.2lbs) of gasoline contains about 13,000 watt-hours of chemical energy of which an internal combustion engine might capture about 4,500 watt-hours. But a kilogram of today’s lithium-ion battery stores only 100 watt-hours of electricity. Cost apart, for the same amount of energy, today’s lithium-ion batteries are 45 times heavier (and 16 times bigger) than gasoline even if lithium-ion makes rapid progress, the theoretical upper limit on the chemistry is between 400-500 watt-hours per kg still only a 10th of petrol and the practical limit is likely to be much lower.

So electric car manufacturers are faced with two (among many) challenges. First, they have to develop batteries capable of storing, releasing and quickly recharging much greater densities of power that is largely a challenge for battery manufacturers and they are pouring millions into research. The other is making the most of what is currently produced by the batteries available. And this is where an interesting project in Japan is showing the way.

SIM-Drive (Shimizu In-Wheel Motor-Drive) a company set up between Toyo’s Keio University and a group of investors including 34 car (including Mitsubishi and Isuzu) and electric power companies to develop the ideas of Hiroshi Shimizu the professor in charge of the research at Keio and now CEO of the company. As the company name suggests the direction of SIM-Drive’s research is in developing electric motors that directly drive each wheel rather than the conventional approach, which is to merely replace the gas engine with an electric motor and largely work through existing drive trains.  Each wheel has its own dedicated electric motor mounted adjacent to the wheel and controlled electronically rather than mechanically. Eliminating the conventional transmission system saves huge amounts of power otherwise lost by gears, shafts and mechanical joints making SIM-Drive’s approach 30-50% more efficient than other electric cars according to this article by the Financial Times.

Living up to its futuristic looks the prototype car, called the Eliica (short for Electric Lithium-Ion battery Car), has two significant differences for the user experience from a conventional electric car. First, because there is no front or rear mounted motor and transmission system all the batteries, motors and controls are mounted within the chassis making the center of gravity very low (good for handling) and freeing up everything above the chassis for the passenger cell and luggage. As a result, cars could look fundamentally different with the possibilities more restrained by public acceptance then the limits of no holds barred design options. The second issue, certainly in the case of the Eliica, is in addition to an exceptional (for electric cars) 300 kms (180 mile) range is the performance. According to the car is blisteringly quick, in fact faster than a Porsche 911 Turbo with the 8 x 100bhp electric motors capable of accelerating the car from 0-60mph in 4.1 seconds and 0-100mph in 7 seconds in almost total silence. Top speed is 370kph or 230mph in spite of a prototype vehicle weight of about 2.4 metric tons (5300lbs). Production models would be lighter and almost certainly optimized for range, unit cost and a wider sales market than the technology development test-bed that Eliica represents. SIM-Drive believes that with the backing of a major car company bringing mass production techniques and economies of scale they could produce a four wheel version for five people and with a 180 mile range for US$16,500 plus the cost of the battery, which would probably be leased.

Where do I sign up?

–Stuart Burns

Platinum, Further to Go?

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Automotive, Precious Metals

Gold, the darling of 2009 appears to be the ugly duckling of 2010 as investors’ focus switches to platinum and palladium. In spite of incessant broker promotion the gold price has stagnated over the last month after reaching a peak of nearly $1220/oz in December before becoming range bound either side of $1120/oz.

Gold Price

Investor interest has shifted to platinum and palladium as automotive manufacturing has finally come out of the parking lot in North America and Europe. Sales are predicted to pick up some 5-7% according to supplier to the industry Alcoa in their 4th quarter earnings report but some boosters are predicting an even stronger rebound. Automotive will expand output by 20% this year, Evan Smith, who helps manage $2 billion at U.S. Global Investors is quoted as saying in this blog.

One of gold’s principal supporters over the last two years have been Electronic Traded Funds, but this year ETF Securities launched their metal backed platinum and palladium funds and saw a surge in demand lifting their holdings to a record 594,465 ounces. Standard Bank called out the upside for platinum late last year in their Commodities Daily reports, largely on the back of the stronger fundamentals of restricted South African supply and returning automotive demand.

So far the price has risen strongly this month only to be knocked back by President Obama’s comments about the banks, few seem to think that set back will be enough to slow platinum’s rise.Platinum Chart

There seems to be no end to some supporters enthusiasm Joerg Ceh, head of commodity trading at Landesbank Baden- Wuerttemberg in Stuttgart, Germany’s biggest state-owned lender is reported to have said prices could reach $2,400/ounce one wonders just what kind of a long position he is sitting on.

–Stuart Burns

We may, as this decade unfolds, find out. The internal combustion engine is far from dead. In fact, the competition of alternative propulsion systems and the spur of higher fuel costs has created a quiet revolution in engine design and economy. New diesel and even petrol engines are coming onto the market with fuel economy figures that would have been considered phenomenal just ten years ago. And not just fuel economy, levels of refinement in modern diesel engines and small four cylinder petrol engines are the equivalent of smooth six or eight cylinder engines of the late 90’s.

The industry has yet to decide where it is heading. Some 2.2 million Prius Hybrids have been built since their launch by Toyota in 1997 and the trend is rising (with the exception of last year’s recession inducing contraction in the US market). Toyota sold nearly 473,000 hybrid cars globally in the January to November period last year so while numbers are currently small compared to regular autos the numbers are rising fast according to the FT. But while some other majors like Ford, GM and Honda have all brought out their own hybrid cars with mixed reviews the question remains how big will this market become when the primary objective of greater fuel efficiency in large part calculated on gas per mile is constantly being raised by conventional engine design?

Some car manufacturers are by-passing the hybrid model and going straight into electric vehicles. Renault has cut back on research and development spending in the face of the industry crisis but they have continued to invest in all electric vehicles. In China, manufacturers are coming at it from the other end of the supply chain. Battery manufacturer BYD makes both plug in hybrids and all electric vehicles and may launch a car in the US this year with superior electric range to the GM Volt. In China they already sell a plug in hybrid for half the price of a Volt and while a few years ago Chinese cars would have been considered a joke in the US from a quality standpoint standards are now rising fast. The move to electric vehicles is also making car makers re-think their whole approach to the market, driving some unusual alliances. Because their fixed costs are considerably higher than those of traditional vehicles while their running costs are significantly lower, Renault believes electric vehicles will be leased rather than sold and battery supply could be part of that lease package possibly in a four way relationship between car maker, battery supplier, user and finance organization. And where finance is often provided for traditional vehicles by a purely financial company, we may see the entrance of different types of companies into the electric vehicle market. Renault for example is forging links with EDF, the French state owned energy group, in what could be a whole new market for both energy suppliers and other businesses with shared interests. McDonald’s for example could install charging points at its restaurants and sell power at the same time it sells Big Macs.

Of course widespread adoption of electric vehicles is still a long way off, if it will ever happen. Many car makers, including Toyota, believe electric vehicles will only ever be small urban commuter vehicles. Nevertheless the company is investing in next generation Lithium ion battery technology for its next generation of Prius hybrids due in 2012. Working with Panasonic, Toyota has 50 engineers working solely on battery technologies in recognition that the key to both hybrids and all electric vehicles is the range and power provided by the battery.

–Stuart Burns

China looks like it will be going through its own kind of post cash for clunkers hangover in 2010 that Europe and the US has experienced in the 4th quarter of 2009. Sales surged in 2009 by an average of 40% to some 13.6 million cars and trucks boosted by a halving of the tax on vehicles with engine sizes less than 1.6 liters. Sales of car with sub 1.6 liter engines made up 85% of the growth in the overall vehicle market according to the China Association of Automobile Manufacturers quoted in Bloomberg. But such sales growth cannot continue forever and the government’s plans to withdraw the stimulus have already had a profound effect on projections for 2010. Miao Wei, vice minister of industry and information technology said China’s vehicle sales growth may slow to 15% this year although some analysts are forecasting even lower growth of 5-6% according to Marketwatch.

SAIC Motor Corp’s. stock price, China’s biggest automaker, has tumbled 12% this year, (after the stock more than quadrupled in 2009) when the car-maker forecast an increase for 2010 of less than 15% in industry wide sales this year. Ford seems to agree. After seeing sales at their passenger vehicle joint venture, Changan Ford Mazda Automobile Co., rise 55% to 315,791 units in 2009 and sales at their commercial vehicle joint venture, Jiangling Motors Corp., total 114,688 units, a 21% rise in 2009, Ford is only predicting an industry-wide rise of 10% according to Nigel Harris, general manager of Changan Ford Mazda. Even so, Ford is predicting their share of the market will rise and following the introduction of new models is predicting double digit growth for the company in 2010.

Growth of 5 to 15% depending on who turns out to be correct is still respectable for what should remain the largest auto market in the world. At 10.6 million in the US and 13.6 million in China, growth in both markets of this magnitude will only increase the gulf between them. Good news for GM and Ford’s Chinese subsidiaries but let’s hope the phenomenal growth in sales during 2009 hasn’t spurred excessive investment in domestic component suppliers. Such dramatic swings in growth have lead in the past to over-investment in other industries. After such a surge in growth and filled with confidence for the future the last thing the Chinese auto industry needs is to follow so many other Chinese industry segments into over investment.

–Stuart Burns

With the exception of a post we ran on Spiderman’s new titanium webs (satirical), few posts have generated as many readers as our posts covering the auto sector. The industry, for all practical purposes, still makes up between 18-25% of overall domestic steel demand along with substantial aluminum and copper demand as well. But besides the “big 3 industrial metals of steel, copper and aluminum, MetalMiner received thousands of visitors on our coverage of new electric vehicles, lithium-ion batteries and new product introductions.

Just last week, we published some forecasts and commentary on where the automotive industry may be headed in 2009 along with our thoughts on the product mix (small vs. large, electric/hybrid vs. gas). We re-post some of the most popular ones here:

Renault Announces the Line-up All Electric Vehicles

Segway and GM Unveil Two Wheel Electric Car of the Future

All Electric Nissan Leaf Unveiled

A Different Take on the GM Volt Announcement

We will endeavor to cover the automotive space in even greater detail in 2010. We’ll examine monthly sales numbers including the make/model of what sells and of course all of the metals information pertaining to those product developments. As a key economic indicator, automotive demand will tell us much about the overall health of the US economy.

–Lisa Reisman

Yesterday my colleague Stuart penned a piece following on a report released by suggesting US consumers might not buy all of the small cars currently in production from US auto makers. Yet despite that report, the analysts have gone on record in recent days suggesting that auto sales, “may rise 20% on enormous pent-up demand. And one analyst firm, the highly respected Center for Automotive Research (CAR), suggested a number of 12.4m cars for 2010. Other industry analysts including CSM Worldwide Inc, JD Power & Associates, and IHS Global Insight Inc also project auto sales of between 11.3 11.8m units in 2010.

All of this sounds like a rose garden compared to 2009 with a projected meager 10.3m units expected to sell. We have seen conflicting reports though about the automakers own forecasts. In this article, Ford suggests, “we’re not planning for a huge pickup next year. If we get one, great, we’ll ride it(puns intended I’m sure) but in a meeting with President Obama, Bill Ford, suggested the company would move conservatively, albeit with its smaller car fleet to include the Fiesta and the Focus. Yet the CNN Money article quotes Ford as projecting 12.5m units for 2010, closer to the CAR projection. According to the Bloomberg article, however at 11.3m 11.8m light vehicles for 2009, both GM and Chrysler would make money. The break-even point for GM requires sales of 10.5m units (of course we don’t know the specific market share assumptions used by each of the Big 3 to determine absolute break-even).

So, assuming these analyst firms are correct and demand reaches the low end of the range 11.3m units in 2010, will the Big 3 reach profitability based on their current product mix? (Isn’t that the billion-dollar question?) Arguably, the next issue becomes one of cost and product selection. I’d contend (and I know that I have been very wrong in the past, particularly for the Cash for Clunkers program) that people still make buying decisions based on total life cycle costs. True, the Prius, when it came out, carried a higher price tag than other cars in its class (though no other hybrid vehicle initially compared) and attracted the early adopters. Since then, the buzz factor created a superstar, sales remained brisk and costs eventually came down. After all, one can purchase a Prius for $22,400 today. But how will costs impact plug-in hybrid electrical vehicle adoption?

According to a a recent study conducted by the National Research Council, “hundreds of billions of dollars in government subsidies will be needed over many years to make plug-in hybrids cost-effective for consumers. The report also indicated it would “take several decades before the fuel savings offset the higher initial costs. In all fairness, the Prius has nearly “made it (check out this total cost of ownership with a few vehicles I selected).  The Prius does not do too badly I have to say. The question becomes how quickly will other OEM makes and models reach mass market economies of scale and cost structures that make those types of cars the consumer’s Ëœbest’ buying decision? I’m not sure but if that “enormous pent-up demand” gets released in 2010, we’ll sure get a good idea. 

–Lisa Reisman

There has been an awful lot of coverage, both here and in more famous columns (you notice I didn’t say better just more famous) about commodity price increases. You can’t open a newspaper or turn on the TV without seeing yet another record high price for precious metals, or agricultural products, or steel. But we have not reported so regularly on the effect these price increases are having so it was interesting to come across various sources discussing the impact on the US automotive industry.

The struggling big three automakers are being hit by about $350 raw material cost increases per vehicle compared to the average for 2007 and $421 per vehicle compared to February of last year according to Lehman Brothers. Read more

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