Diesel engines, which have long been neglected, are back in the reckoning in North America.
Hybrids are the future of the US market, was the consensus outlook for light vehicle sales in North America, until May 2007. But a very different picture of the future US automotive scene is emerging - a picture in which the diesel, all but ignored for 20 years, has a pivotal role to play. The conclusions of an extensive research project into the future of the US automotive market, carried out by Ricardo and analysts from the Global Equity Research team of UBS, upset some widely cherished views on the future of the US automotive market.
While considered conjecture over the last twenty years, it is now widely accepted that the emission of greenhouse gases (GHGs) such as CO2 resulting from human activity is the main contributor to global warming. This concern is leading to a growing public and political appetite for measures aimed at limiting CO2, not least in the US, and while the transportation sector generates only around a quarter of the total manmade GHG emissions, it is perhaps the most visible target for action.
In the US, this emerging consensus for action is in part driven by parallel concerns over national energy security. In December 2007, President Bush signed into law the Energy Independence and Security Act of 2007, boosting fleetwide CAFE to 35mpg by 2020. This has been brought into focus amid concerns regarding the perceived over-dependence on imported oil from politically volatile parts of the world, and the issue of long-term energy supply as finite oil resources are subject to increasing competition from the rapidly developing parts of the world such as China and India. Ten US states, comprising 30 per cent of US vehicle demand, have already acted to regulate CO2 emissions and are drafting new rules calling for a 30 per cent reduction in CO2 output (corresponding to a 30 per cent improvement in fuel economy) by 2016.
With regulation and with a growing appetite among consumers for fuel efficiency (driven by the ever-increasing pump price of gasoline, widely expected to reach US$ 4 per gallon by summer), a key question being asked by automotive OEMs and component suppliers alike is "Which technology will win in the US - hybrid gasoline-electric or diesel powertrains?" However, the relative fuel efficiency benefits of these two technologies are something of a controversial subject. Diesels and hybrid gasoline powertrains actually provide very similar fuel efficiency results. Published fuel economy statistics suggest that hybrids offer greater savings than diesels, but many automakers argue that the official test cycle in the US benefits hybrids with unrealistic driving techniques (such as very slow acceleration periods).
Gasoline-hybrid powertrains already benefit from some regulatory and commercial advantages. They are fully compliant with strict tailpipe emissions regulations (such as particulate and NOx emissions); perhaps equally important is the fact that, hybrids also allow owners to visibly demonstrate their green credentials- thanks to the positive publicity of the technology. Hybrids also avoid the stigma of 'dirty diesel' in the minds of US consumers and can be filled at many existing gas station pumps.
One of the aspects of hybrid technology that is potentially confusing to the buyer is the fact that different types of systems are available. At the simplest level are the stop / start systems as offered on a number of smaller European models as well as the Saturn Vue where the engine will switch off automatically whenever the car is brought to a standstill and will restart automatically as soon as it is required. The next level of complexity involves the microhybrid systems. These work in the same way as stop / start systems but offset the energy requirement for successive restarts via regenerative braking. The new 'Efficient Dynamics' BMW models are examples of this type of system. Mild hybrids such as the Honda Accord and Civic IMA (Integrated Motor Assist) use a small flywheel-mounted electric motor to supplement engine power and provide potential fuel savings by allowing a smaller gasoline engine to be fitted-the technique known as downsizing.
Finally, the most sophisticated level of commercially available hybrid system is represented by full hybrids such as the Toyota Prius, Camry and Highlander, Lexus RX400h and GS450h, and the Ford Escape hybrid. In these vehicles, one or more electric motors provide significant power and in some instances, an electric-only ZEV mode. All of these types of hybrids have one over-arching common operating principle- all of the energy required to move the car forward will have ultimately been derived from its gasoline fuel tank. In essence, the hybrid system is enabling the gasoline engine to operate more efficiently. One further type of hybrid, not yet on the market, breaks away from this total reliance on energy being derived from its combustion engine; the so-called 'plug-in' hybrid can charge its batteries from a domestic electric socket.
The typical operation, or duty cycle, of the vehicles in question is the key determining factor in the selection of the most efficient technology. For example, a delivery vehicle engaged in stop-andgo traffic will benefit greatly from a simple stop / start system and may not reap the full benefits of a full hybrid powertrain. This was demonstrated by the Ricardo HyTrans project in which a micro-hybrid delivery vehicle generated savings in fuel consumption of up to 21 per cent based on a recorded 'real world' drive cycle typical of this type of operation. For a more varied pattern of usage, a mild-or full-hybrid powertrain may be more appropriate, whereas for predominantly high-speed freeway operation hybridisation may have little or no benefit. This sensitivity of fuel efficiency to duty cycle is at least in part the reason for some of the controversy surrounding unfulfilled public expectations of gas mileage.
While the poor image of diesels among American consumers-due largely to the unrefined and underpowered products of previous decades-is a clear obstacle, meeting the stringent tailpipe NOx emissions standards is perhaps a much greater challenge. These standards apply at both a federal level in terms of the standards set by the Environmental Protection Agency (EPA) which are followed by 45 US states, and at an individual state level for those states which follow even stricter standards set by the California Air Resources Board (CARB).
The Tier 2 standards being phased in over 2004-2009 at the federal level are weighted by vehicle size (so that they can, for instance, be averaged across each OEM's fleet), but the California regulations require compliance by all vehicles on sale. These standards are significantly more challenging than those proposed by the EU for 2009 and in certain respects are even stricter than those currently suggested for Euro VI in 2014.
However, as research and development work by Ricardo and others has shown, the US Tier 2 standards are achievable for diesels using the latest generation of fuel injection systems, advanced air handling such as two stage inter-cooled turbo-charging, and NOx aftertreatment such as lean NOx trap (LNT) or selective catalytic reduction (SCR) technologies. While there is considerable debate as to which NOx aftertreatment system will take precedence in the US market, it appears clear that the challenges of each (including, for example, the implementation of a urea distribution network for the SCR technology currently favoured in Europe) can be overcome.
The modern diesel powertrain offers consumers some significant advantages over its gasoline counterpart. Diesels deliver similar fuel economy to gasoline hybrids and actually outperform hybrids in high-speed highway driving. Diesels also have superior torque characteristics, resulting in sportier performance and improved towing characteristics, particularly important for trucks and SUVs. If recent trends continue as expected, this performance gap with gasoline may well increase further.
The US is the key battleground for diesels and gasoline hybrids. It appears certain that Japan will focus on advanced gasoline technologies and hybrids, while in Europe it appears that the focus will be on advanced diesel engines and upgrades to gasoline technology. Given the broadly equivalent real-world fuel economy and CO2 emissions of diesels compared to gasoline hybrids, there is little commercial potential for the latter in Europe other than as image vehicles. Instead, many in Europe are looking beyond current product offerings to the prospect of hybridised diesel vehicles. In the US, however, opinions still vary widely on which technology will have the greatest penetration and at what pace.
The current political and legislative climate in the US generally favours hybrids over diesel, particularly in California and the other CARB states, but a shift in the direction of diesel is possible, particularly if its economic advantages can be showcased. Already, some of the technology-specific incentives for hybrids are beginning to be phased out, but perhaps the greatest advantage of diesel over gasoline hybrids is cost. Based on Ricardo analysis, the cost of a bare V8 gasoline engine of approximately 4.0 litres of capacity, without transmission and having of US emissions compliance, is approximately US$ 2000. The incremental cost of a current European diesel without complex exhaust aftertreatment is circa US$ 1000-2000, whereas a US compliant clean diesel would have an incremental cost of around US$ 3000- 4000 depending on the aftertreatment technology used. Against this, the report estimates that the incremental cost of a hybrid powertrain of the type fitted to the Lexus RX400h is US$ 7000-8000, approximately double the cost penalty of a fully compliant clean diesel. For smaller vehicles, the report estimates that the cost penalty would be smaller for both the powertrains, but the advantage of diesel would remain. In the US, a consumer paying the full upfront cost of either a clean diesel or a gasoline hybrid is unlikely to recoup the extra cost in fuel savings quickly, due to the comparatively lower fuel tax. However, it is possible that perceived savings (every time the consumer fills up), consumer attitudes (preference for driving a more fuel-efficient vehicle) and automaker pricing decisions will improve the prospects for fuel-efficient vehicles.
Ricardo believes both the powertrains will be successful and gain significant share in the US. Growth is predicted from the current level of 800,000 (545,000 diesel and 255,000 hybrid) to 2.7 million units in 2012 (15 per cent market share). Of this total, diesel sales (1.5 million) are expected to exceed hybrids (1.2 million) purely for cost reasons, with clean diesel's cost penalty being about half that of a gasoline hybrid. The pace of uptake is likely to depend on several factors and will be strongly influenced by fuel prices and other macro-economic developments. In this particular battleground, therefore, it looks as if both low-carbon powertrain technologies will emerge as winners.
