Kim Hill, Managing Director & President, HWA Analytics (Automotive Site Guide 2012)
The automobile is the most complex item most consumers will ever purchase. Correspondingly, the automotive industry, originally created by inventors, remains an industry that uses cutting-edge innovation and demands constant creativity and high-technology inputs. Industry adoption of new vehicle technologies relating to emissions, vehicle electronics, connectivity, fuel economy, safety, and powertrain represents opportunities for companies located near knowledge centers to take advantage of the innovation synergies inherent in these clusters.
Sixty percent of motor vehicles made in North America are produced in the Midwest.1,2 Just as the heart of the auto industry is in the American Midwest, auto-related innovation and knowledge clusters are prevalent there as well. Approximately three-fourths of the U.S. industry's annual investment of $20 billion in R&D funding is spent in the Midwest.3 The Michigan automotive R&D industry, for example, employs an estimated 65,000 professionals and is home to more than 330 automotive R&D companies or research facilities.4 The Midwest's automotive R&D facilities include automaker facilities, automotive supplier facilities, the EPA National Vehicle and Fuel Emissions Laboratory (NVFEL), and the U.S. Army Tank Automotive Research, Development and Engineering Center (TARDEC). The EPA lab, established in the 1970s, was an important establishment for attracting further investment in R&D facilities to the area because automakers had to prepare vehicles for emissions testing nearby.
Also in the region, Ontario is home to AUTO21, a university-industry automotive research partnership that fosters practical automotive research in several areas. Ontario is also where the Ontario BioCar Initiative and the Ontario BioAuto Council are located, making the province a hub for bio-based automotive materials.
Other vehicle-related clusters are located in Virginia, Tennessee, and the Carolinas, which host several major automotive safety research centers such as the National Crash Analysis Center, Virginia Tech Transportation Institute, Oak Ridge National Lab, and Clemson University's International Center for Automotive Research.
Thanks to its strong university system and Silicon Valley heritage, California is a high-tech research hub and conducts a significant amount of research into alternative fuels and powertrain technologies as well as intelligent transportation systems. California is a key state conducting connected vehicle research, much of which is done by California Partners for Advanced Transportation Technology (PATH) and the California Department of Transportation (Caltrans) along with federal, private, and university partners.
Greenhouse Gas and Fuel Economy Regulation
Recent and proposed changes to federal automotive Green House Gas (GHG) and fuel economy legislation are poised to have a significant impact on the design of the automobile. Corporate Average Fuel Economy (CAFE) legislation was first enacted by Congress in 1975 as a policy to increase fuel economy of passenger cars and light-duty trucks. By 2016, the combined required CAFE for light-duty truck fleets and passenger car fleets will be 35.5 miles per gallon (mpg), approximately double the initial 1970s requirements of 18 mpg for passenger cars only. The increase in CAFE has already had an impact on the fuel economy of vehicles. For the first time, the fleetwide CAFE for passenger cars and light-duty trucks exceeds 30 mpg (see accompanying chart). While increases in CAFE through 2016 have had an impact on the design and performance of vehicles, proposed GHG and CAFE regulations for 2017-2025, requiring vehicles to achieve an estimated CAFE of 54.5 mpg, stand to have an even greater impact on vehicle innovation.
The proposed regulations of California's Advanced Clean Cars (ACC) program are demanding new research to achieve zero-emission technologies through full battery electric cars, newly emerging plug-in hybrid electric vehicles, or hydrogen fuel cell cars. The regulations, when finalized, are likely to be adopted by more than a dozen other states. The state of California estimates there could be 500,000 zero-emission vehicles - either battery electric or fuel cell electric vehicles - on the road in California by 2025.
Fuel economy and GHG emission regulation has created a pocket of investment in proximity to the California Air Resource Board laboratory in California. It has also led to clustering of vehicle manufacturer emissions testing facilities surrounding the EPA
mobile sources laboratory in Michigan.
and Alternative Fuels
Ongoing developments and improvements in various powertrain technologies will be essential to meet federal and state environmental regulations. There remains uncertainty among vehicle manufacturers as to which technologies will best meet GHG/CAFE standards while also being accepted and purchased by consumers. Powertrain technologies can be grouped into three broader categories: advanced internal combustion engine development (gasoline and diesel), vehicle electrification, and alternative fuels. Each of these categories presents a wide range of technology options and cost considerations.
The internal combustion engine (ICE) has undergone remarkable change in the past decade and newly developed advanced internal combustion engines are expected to improve ICE environmental impacts and also have a cost advantage vis-à-vis other powertrain options.
Electric vehicles hold both promise and uncertainty. The Tesla Roadster and Nissan Leaf, two highly visible battery electric vehicles, have entered the mainstream - but certainly not mass market. Vehicle electrification - including mild hybrid, hybrid electric vehicles, plug-in hybrid electric vehicles, extended range electric vehicles, or battery electric - is highly dependent upon further battery development.
Alternative fuels will also have a place in the advanced powertrain mix. Natural gas has been used for light-duty vehicles for many years, but has been mostly limited to fleet applications. Promoters of natural gas suggest that its abundance and relatively clean burning characteristics make it an ideal candidate for increased usage in motor vehicles. Hydrogen is another alternative fuel. Toyota has announced it will market a fuel cell electric vehicle in 2015. Other manufacturers (Honda, General Motors, and Mercedes) continue to develop hydrogen-powered fuel cell technology. In addition, there is much research involving biofuels.
Significant research in alternative drive trains is being performed in Michigan by automakers and major suppliers. In California, the Lawrence Berkeley National Laboratory does work on hydrogen and biofuels. Tennessee's Oak Ridge National Laboratory performs research related to hybrid, battery-powered, or fuel cell vehicles as well as biofuels. Similarly, Argonne National Lab in Illinois conducts research on hydrogen electric vehicles, plug-in hybrid electric vehicles, and alternative fuels such as clean diesel, butanol, ethanol, hydrogen, natural gas, and synthetic fuels. Each of these research centers has attracted interest from nearby universities and companies involved with alternative drive trains and fuels.
Next: Advanced Materials for Lightweighting
Vehicle weight is a considerable factor in vehicle fuel economy; it is estimated that a 10 percent reduction in vehicle mass results in 6 percent to 7 percent fuel economy improvement. Weight reduction is also appealing to automakers because it tends to increase other performance factors valued by consumers: ride and handling; noise, vibration, and harshness; braking; and acceleration. Up to a 250- to 750-pound reduction in average vehicle mass is expected by the year 2025 according to some forecasts. Michigan and Ohio are states leading the research efforts in materials lightweighting.
Bio-based materials are industrial products made from renewable agricultural and forestry feedstocks, which can include wood, grasses, and crops, as well as wastes and residues. These materials may replace fabrics, adhesives, reinforcement fibers, polymers, and other more conventional materials. Flax, sisal, and hemp are used in door interiors, seatback linings, package shelves, and floor panels. Coconut fiber and bio-based foams have been used to make seat bottoms, back cushions, and head restraints. Cotton and other natural fibers have been shown to offer superior sound proofing properties and are used in interior components. Corn-based plastics have been used in several applications, including demanding under-the-hood applications where components are exposed to heat and chemicals; soy-based foams are becoming common in seats and headliners.5
These materials provide a number of benefits, and the use of bio-based materials by the automotive industry has been gradually accelerating over the last several years. The industry's new emphasis on environmentally friendly materials and technologies has been spurred by government regulations, consumer preferences, and, in some cases, financial savings that can be realized from the adoption of these materials and technologies. After years of research, bio-based plastics are now closer to meeting or exceeding performance and cost parameters of conventional plastics than ever before.
Bio-based materials present a unique opportunity for the localization of both the supply chain of this emerging technology and the feedstock from which the materials are developed. In order to fulfill the full promise behind its premise, bio-based materials technology needs to use feedstock from plants sourced as locally as possible. This way, the cost and environmental impact of using petroleum from the Middle East for plastics production is mitigated. As a region rich in both agricultural and manufacturing capacity, the Midwest is perfectly poised to take maximum advantage of the emergence of bio-based materials.
Connected Vehicle Technology
The vehicle electronics market is growing rapidly. An average vehicle might contain about 60 microprocessors to run its electrical content, as compared to about only 15 microprocessors in a vehicle just 10 years ago. As companies increasingly rely on vehicle electronics to comply with environmental and safety requirements, the automotive electronics market is expected to expand even more rapidly.
Development of vehicle electronics is expanding beyond features for the vehicle itself into connected vehicle technology. Connected vehicle technology targets safety, mobility, and environmental improvements. The promise of these technologies has induced vehicle manufacturers, auto suppliers, government agencies, and others to work collaboratively to test and develop connected vehicle systems. Michigan and California are centers of connected vehicle technology development and testing.
Advantages of Locating
in Auto Tech Cluster
These are but a few of the changes to motor vehicles that are causing a demand for new technologies. Thus, technology clusters have become an important factor in location decisions. Just as the automotive manufacturing industry is widespread across large areas of the country, automotive R&D clusters are located in many regional pockets throughout the Midwest, the Southeast, and California. For automotive firms, there are several advantages to locating near one or more of these clusters. A knowledge cluster attracts workers with skills and training related to that industry, allowing all firms within that industry to benefit from a labor force that is both larger and more specialized.
Firms and their suppliers further benefit from the effects of a cluster on the nature of the supplier base. If several firms with similar needs are situated in close proximity to one another, businesses that provide those goods, services, and materials will enter that cluster. These suppliers benefit from a larger pool of potential customers to which they can sell their products. Those customers, in turn, benefit from lower search costs associated with locating suppliers, a more competitive supplier base, and improved access to specialized goods, services, and facilities.
Firms located within clusters may be more productive and innovative. Proximity enables the flow of ideas and may provide firms an opportunity to glean the best practices of other companies. Productivity within a cluster can also benefit from shared use of specialized public goods and the availability of specialized infrastructure.
The Center for Automotive Research (CAR) is a nonprofit organization based in Ann Arbor, Michigan. Its mission is to conduct research on significant issues related to the future direction of the global auto industry, as well as organize and conduct industry forums. The CAR's Automotive Communities Partnership (ACP) brings together communities, international partners, auto companies, educational institutions, and government agencies to advocate for continuing investment in communities that are integral to the North American auto industry.