1. Automotive Analysis Division Powertrain Strategies for the 21st Century: 2007 Results University of Michigan Transportation Research Institute Automotive Analysis Division (formerly OSAT) Bruce M. Belzowski Associate Director and Assistant Research Scientist Sponsored by: Denso Corporation U.S. Environmental Protection Agency

2. Automotive Analysis Division Powertrain Strategies for the 21st Century A research project focused on providing the global automotive industry with insights into the future of powertrains A continuing study measuring expert opinions over many years A global study measuring experts opinions separately across North America, EU, and Asia

3. Automotive Analysis Division Powertrain Strategies for the 21st Century What makes this study unique? Global panel of powertrain experts Annual updates of forecasts and deep dives into current topics All electronic survey administration and report out. Weighted responses based on expertise of respondent and new methods to measure point estimates for forecasts

4. Automotive Analysis Division 2007 Expert Survey Sample Respondents: 36 managers 20 CEOs, presidents, and vice-presidents 28 chief engineers and directors 14 researchers and scientists 25 engineers and technicians Sample Respondents: 29 manufacturers 45 suppliers 44 other experts

5. Automotive Analysis DivisionCAFE

6. Mandates and tax incentives are considered the most feasible, while gas taxes and mandates are considered the most successful Mandates (e.g. CAFE) Tax Incentives Gas Taxes Feebates Policy Instruments Less Feasible/Successful More Feasible/Successful

7. Automotive Analysis Division Experts in 2006 reported the CAFE standard for passenger cars would increase 20% by 2015 and 38% by 2020 Miles Per Gallon 2020 2015 2006* *Source:NHTSA CAFE Standard

8. Automotive Analysis Division Miles Per Gallon 2020 2015 2006* In 2006, the CAFE standard for light trucks was expected to increase 25% by 2015 and 44% by 2020 *Source:NHTSA CAFE Standard

9. Automotive Analysis Division Foreign-owned manufacturers are considered more likely to meet the new CAFE goals Foreign Owned Manufacturers Less Likely to Meet CAFE goals More Likely to meet CAFE goals US Manufacturers

10. Automotive Analysis Division Fuel Prices (Influenced by a fleet CAFE of 35 mpg using an attribute-based System)

11. Automotive Analysis Division The predicted price of unleaded regular gas for 2020 has increased by 8% in one year Price Per Gallon 2020 (2007) 2020 (2006) 2006* *Source:Energy Information Administration (Jan~Dec ’06)

12. Automotive Analysis Division The predicted price of unleaded premium gas for 2020 has increased by 8% in one year Price Per Gallon 2020 (2007) 2020 (2006) 2006* *Source:Energy Information Administration (Jan~Dec ’06)

13. Automotive Analysis Division Dollars per Gallon Unleaded Experts report a wide range of possible prices for fuel in 2020 Lower Bound Upper Bound Premium Lower Bound Upper Bound

14. Automotive Analysis Division Consumer Fuel Sensitivity in 2006 was rated close to current fuel prices in 2007 Consumer Fuel Sensitivity At $3.95 per gallon, consumers will make fuel economy a primary concern in vehicle purchase.

15. Automotive Analysis Division In 2006, experts predicted growth in diesel and ethanol fuel for passenger cars for 2015 and 2020 Percent Penetration Type of Fuel Diesel/Biodiesel Ethanol (>10% ethanol) Unleaded LPG/CNG Hydrogen 2015 2020

16. Automotive Analysis Division The dominance of unleaded fuel in light trucks is expected to decrease with the increase of diesel and other fuels 2015 2020 Type of Fuel Diesel/Biodiesel Ethanol (>10% ethanol) Unleaded LPG/CNG Hydrogen Percent Penetration

17. Automotive Analysis Division In 2007, experts see continued growth in diesel and ethanol fuel use for light duty vehicles to reach CAFE goals for 2020 Percent Penetration Type of Fuel Diesel/Biodiesel Ethanol (>10% ethanol) Unleaded LPG/CNG Hydrogen

18. Automotive Analysis DivisionPowerplants (Influenced by a fleet CAFE of 35 mpg using an attribute-based System)

19. Automotive Analysis Division In 2006, the share of diesel and hybrid powerplants in passenger cars was expected to gain share from spark-ignited powerplants Type of Powerplant HCCI Hybrid (plug-in/mild/diesel/full) Fuel Cell Electric Advanced Diesel Spark-Ignited 2015 2020 Percent Penetration

20. Automotive Analysis Division In 2006, the decrease in spark-ignited powerplants in light trucks was represented in the increase in hybrid and advanced diesel powerplants 2015 2020 Type of Powerplant HCCI Hybrid Fuel Cell Electric Advanced Diesel Spark-Ignited Percent Penetration

21. Automotive Analysis Division In 2007, experts report continued growth of hybrid and diesel powertrains for light duty vehicles for 2020 Type of Powerplant HCCI Hybrid Fuel Cell Electric Advanced Diesel Spark-Ignited Percent Penetration

22. Automotive Analysis Division What would the 2020 powertrain distribution in light duty vehicles look like based on a sales year such as 2007? ~ 16 million Light Duty Vehicles in 2007 Fuel Cell 2% (320,000) Electric 2% (320,000) 16% (2,560,000) 52% (8,320,000) HCCI 3% (480,000) 24% (3,840,000) Spark-Ignited Engine Hybrid Advanced Diesel

23. Automotive Analysis Division Strategies and Technologies: Weight Reduction and Battery Life

24. Automotive Analysis Division In 2006, experts reported a significant increase in the use of lithium-based batteries by 2015 and 2020 Type of Energy Storage Zinc-Air Ultracapacitors Nickel-Metal Hydride Nickel-Cadmium Lithium Polymer Hydraulics Flywheels Lithium Ion Lead-Acid 2015 2020 Percent Penetration

25. Automotive Analysis Division Experts expect advanced batteries to last at least 7-8 years by 2020 Type of Energy Storage Nickel-Metal Hydride Lithium Polymer Lithium Ion Lead-Acid Years of Life

26. Automotive Analysis Division Taking out 20 percent of the weight of a vehicle by 2020 will be difficult 20% 15% 10% 5% Less Likely to be Able to Reduce Weight More Likely to Able to Reduce Weight

27. Automotive Analysis Division Powertrain Strategies for the 21st Century Other areas of analysis from 2006 study: Alternative powerplants development challenges Powertrain development cycles Engine re-designs Powertrain and Drivetrain Technologies Number of cylinders Diesel and spark-ignited engine technolgies Super-charged and turbo-charged engines Transmission mix Drivetrain configurations Electrical and electronic costs Human resource issues

28. Automotive Analysis Division Powertrain Strategies for the 21st Century Other areas of analysis from the 2007 study: Advantages and disadvantages of E85 ethanol Because of CAFE, the changes manufacturers must make in powertrain, design, and product strategy The state of charge swing for advanced batteries Additional costs of alternative powertrains Globalization of powertrains After-treatment technology penetration

29. Automotive Analysis Division Powertrain Strategies for the 21st Century NEW Research Program: Powertrain Innovation in the 21 st Century A National Science Foundation Grant Studying the powertrain innovation process How do companies develop the capabilities to create new products? How do they partner with other companies in the R&D process? How do companies manage their R&D portfolio to sustain competitive advantage?

30. Automotive Analysis DivisionUMTRI-AAD Upcoming Event: UMTRI-AAD Automotive Luncheon Monday, April 7, 2008 Noon to 1:30pm University of Michigan League Topic: The Cost of Improving Fuel Economy for CAFE

31. Automotive Analysis DivisionUMTRI-AAD Upcoming Event: Inside China: Understanding China’s Current and Future Automotive Industry Tuesday, April 8, 2008 9am to 5pm University of Michigan, Rackham Auditorium, 1st Floor Recent Research on: The changing manufacturer landscape Near term buyer preferences New labor developments Manufacturing capabilities R&D and intellectual property developments Vehicle and road safety statistics Trends in imports/exports

32. Automotive Analysis Division Powertrain Strategies for the 21st Century Bruce Belzowski UMTRI/AAD 734-936-2704 bbl@umich.edu