Get Your Green Motor Running
- From: Jim Higgins <gordian238@xxxxxxxxxxx>
- Date: Mon, 08 Sep 2008 14:06:38 -0400
Get Your Green Motor Running
http://www.newsweek.com/id/157508
Honda's new FCX clarity feels like a perfectly ordinary car—which may
well be the most shocking thing about it. It looks and drives like a
run-of-the-mill four-seat sedan. Slip behind the wheel and press the
pedal with your foot, and the car accelerates with satisfying punch. But
after a few minutes of cruising, you'll notice that something is
missing. The only audible engine noise is a faint whir, so faint that
you can actually hear the tires swishing along the asphalt.
That's because the Clarity is a hydrogen-fuel-cell car, one of the most
advanced in the world. The once bulky fuel-cell stack that supplies
energy to the engine has been reduced in size by half over the past
decade while increasing the power output by 50 percent. It's the first
to be certified by the U.S. Environmental Protection Agency, and the
first to be delivered to retail customers (albeit on a leasing basis).
As for CO2 emissions, the only exhaust it produces is a trickle of
water. And perhaps most important of all is what stands behind it: A
state-of-the-art factory that's ready to produce thousands of the
vehicles once the market's ready. Most of Honda's competitors, by
contrast, are still bringing concept cars to the auto shows.
The Clarity is also just one of a number of next-generation green
automobiles that are beginning to come off assembly lines in Japan.
These vehicles, whether powered by fuel cells, long-lasting batteries or
renewable biofuels, have been around for years, but almost always as
one-off utopian designs or experimental models that were designed mainly
to attract good green press. Now Japanese automakers are going to the
next level, entering the green-car mass market, in many cases years
before their competitors. Nissan plans to introduce an electric vehicle
to the United States and Japan by 2010, with a global rollout in 2012.
Toyota is road-testing a plug-in hybrid in Japan, the United States and
Europe and plans to launch it in 2009 (there's a buzz, unconfirmed by
the company, that this hybrid car could use solar power as well). Honda,
a distant second to Toyota in the hybrid market, is preparing for the
launch of a new car highly anticipated for its innovative green
technologies, including its state-of-the-art battery. Mazda will offer
the world's first hydrogen-gasoline hybrid in Japan by next March. All
of these companies are benefiting from close cooperation with
electronics manufacturers, component makers and suppliers that are
helping to push Japan to the forefront of green-car technologies.
"Globally, Japanese companies are definitely at the top right now, and I
expect them to remain No. 1 in the future," says Mike Omotoso, an auto
analyst for California-based J.D. Power and Associates. "It's definitely
having a positive impact on the Japanese economy."
In large part, Japan's lead in green-car technology is an outgrowth of
its old austerity. Japan was obsessed with energy efficiency long before
global warming made it a worldwide obsession. For decades Japanese
companies have struggled to cope with their oil-poor country's sky-high
energy costs by placing a premium on energy-saving technologies, and it
has paid off. Even old Japanese industries are cutting-edge in cutting
energy costs. Japan continued to make batteries long after U.S. rivals
quit, and now makes the most efficient batteries in the world. Japanese
steelmakers have ceded ground to cheaper emerging-market rivals but are
still unsurpassed in the fine niche art of making superlight steel for
car bodies. The hidden strength of Japanese smokestack industries helped
create its green cars, and now the success of those cars is pushing more
and more Japanese industries—electronic-motor and control-unit
producers, all sorts of material companies—to innovate faster.
It's impossible to tally the direct economic effect of the green-car
race at this point, but it's huge and likely to grow. The Prius is
already the most popular green car in the world, and Toyota plans to
raise domestic output of the Prius by 60 percent to 450,000 a year by
2009. By 2015, Goldman Sachs expects the hybrid-vehicle market
(including plug-in hybrids) to grow to 2.5 million, up from half a
million in 2007, with Toyota and Honda in the lead. Analysts say plug-in
hybrids, which run on a battery alone for a short range, are the
vehicles that will gradually ease drivers out of the gasoline age and
into the electric era. Goldman analyst Kota Yuzawa says hybrid vehicles
could account for 5 to 10 percent of operating profits for Honda and
Toyota in 2010. And the potential markets look likely to grow as oil
prices hit new highs and environmental regulations get tighter.
The focus on green cars reveals the kind of industrial vision that Japan
is often criticized for having lost decades ago. Toyota launched the G21
Project, which ultimately produced the Prius, back in the 1990s, when
oil prices were low and America's love of SUVs was still growing. The
idea was to create a model car for the 21st century, and counter
Toyota's reputation for "boring" vehicles. Toyota simply saw the long
view before others, assuming that the petroleum-based economy was
becoming unviable for a variety of environmental and economic reasons,
according to Noriyuki Matsushima, analyst at Nikko Citigroup in Tokyo.
Toyota has since dramatically cut the costs of producing the Prius by
achieving economies of scale. Toyota has already reached the break-even
point on sales of its hybrids; by contrast, its foreign competitors,
like GM, still have years of bleeding red ink ahead of them. Toyota says
the parts in its next line of hybrids, due for release next year, will
cost about half the current bunch, allowing it to drop prices and raise
profits. While the company is estimated to have lost about $10,000 on
each car produced when the line was launched back in 1997, "the new
Prius is going to be hugely profitable," says Nikko's Matsushima,
bringing in thousands of dollars per car. And Toyota aims to cut hybrid
production costs over the next decade. With so much more manufacturing
experience than its rivals, Toyota will be "the price leader" for the
next generation of hybrid vehicles, says Matsushima.
To be sure, virtually every car company in the world is ramping up
intriguing green-car projects. Even slow-moving GM plans to debut the
plug-in hybrid Volt in 2010, but it is racing from behind against
Japanese rivals that work in often exclusive national supply networks,
as they have for decades.
Japanese carmakers aim to protect their edge by joining forces with
makers of electronics and batteries, the key to the next generation of
high-tech cars. Toyota's joint venture with Panasonic (which is
majority-owned by the car company) has already made it one of the
world's leading battery companies. Similarly, Nissan recently increased
its stake in its own battery joint venture with NEC, investing in a big
new factory with the aim of marketing its lithium-ion batteries to other
carmakers. Japanese battery companies have a big lead in design and mass
production, which will make their prices hard to match. A.T. Kearney's
Eiji Kawahara says that, even if Japan does not come up with the next
big breakthrough in battery design, the technology for putting it into
mass production will likely be Japanese.
Mitsubishi's new electric car, the i MiEV, offers another nice
illustration of the factors underlying Japan's lead. Until now, many
electric vehicles have been limited by range, meager acceleration and
long charging times. The four-door i MiEV boasts a range of 160
kilometers per each full charge (compared with 40 for a GM Volt), and,
as a recent test-drive around Tokyo demonstrated, its pickup in urban
traffic differs in no notable way from a gas-powered car. Other new
electric vehicles—like Tesla's much-hyped roadsters—may offer even
better performance. But in stark contrast to Tesla—an innovative but
tiny start-up—Mitsubishi is reaping the benefits of a tie-up with
leading Japanese battery maker GS Yuasa that has the two companies
preparing for mass production of state-of-the-art batteries by the end
of 2009.
Already the i MiEV's battery weighs in at a mere 204 kilograms (compared
with 454 for Tesla's model), and the effect on cost is palpable.
Mitsubishi plans to start selling i MiEVs in Japan at the end of next
year for a price of about $28,000 after planned subsidies of about
$10,000—compared with a cool $100,000 for a Tesla. Meanwhile, thanks to
its work with Japanese power companies, Mitsubishi says it's close to
perfecting "quick charge" devices that would bring the battery up to 80
percent of capacity in half an hour—thus opening up the prospect that
you could recharge your car in the supermarket parking lot while picking
up the groceries, for example.
Japanese companies have been plugging away at the green-car challenge
for years, in a slow and steady way that plays to the strengths of their
manufacturing tradition. While U.S. automakers have spent as much on R&D
as top Japanese makers do, the former have been pursing totally
different priorities—still sticking money into bulky SUVs while the
Japanese were already well down the hybrid road. That money is filtering
into other areas of Japanese industry, reinforcing technological
progress. "We are now seeing the result of numerous companies' ferocious
effort to innovate technologies" to meet carmakers' demands, says
Masahiro Ohta, analyst at Fuji Chimera Research Institute.
The secret to making better batteries lies less in blazing
transformations than in incremental innovation—something the Japanese
are traditionally good at. Japanese battery makers and automakers have
been collaborating since the late 1990s. Both sides use the word
suriawase, meaning "coordination and integration." Indeed, car-industry
observers took note last year at the Detroit Motor Show when Toyota
president Katsuaki Watanabe adorned his company's stage with a huge
PANASONIC sign (Panasonic supplies batteries for the Prius). The fact
that car manufacturers and suppliers have such close relationships in
Japan facilitates speedy experimentation and innovation. "It's not like
assembling personal computers," says Tatsuo Yoshida, analyst at UBS
Securities. "When you're making cars, you just can't put a set of
components together to make a perfect product. A car is made of
tailor-made parts and tailor-made components."
Slowly but surely, these relationships come together to give Japan an
edge. Nissan is also working to develop a next-generation battery,
partnering with NEC in an effort to begin mass production next year.
A.T. Kearney's Kawahara says, "Those [Japanese] manufacturing
technologies are the most confidential of the confidential." Though Ford
and GM have been loudly touting hybrid vehicles of their own, those are
estimated to be much more expensive, and U.S. manufacturers are already
finding themselves compelled to turn to the Japanese for batteries that
offer the necessary staying power.
Since the batteries that power cars could also someday be used to heat
homes, a lead in the area has vast implications for the broader Japanese
economy. Nobuaki Yoshioka is a senior executive at Automotive Energy
Supply Corp. (AESC), a joint venture between Nissan and NEC. His company
has been pushing the envelope of battery technology by developing
lithium-ion batteries with manganese components—something NEC has been
working on since 1990. "I think [the potential of this technology] is
enormous," says Yoshioka. "We know that oil is going to be depleted, and
that's going to make it indispensable to somehow store energy that is
generated. Today we're focused on cars. But it's clear that the number
of possible applications as storage of energy is huge."
For example, superefficient batteries might store electricity generated
at times of low demand for use during peak hours. Batteries could be
used to change the infrastructure of the energy industry not just in
Japan but also throughout Asia. Fumikazu Kitagawa, an auto-sector
consultant at Nomura Research Institute, believes that combining the new
generation of batteries with solar-power generators will completely
revolutionize household energy systems. "This sort of system will be
available at reasonable cost, and fairly soon," says Kitagawa.
Batteries are only one part of a green automotive-components industry,
including electric motors, inverters and the like, which Japan already
dominates. Nomura estimates that the market for hybrid components alone
could triple to $5 billion by 2012, and reach $9 billion by 2015. "Japan
now has a huge potential to become a world supply center," says Yozo
Hasegawa, author of the book "Clean Car Wars," which details the
competition for green-car technology among Japanese carmakers and their
foreign rivals.
Japan's push for the ultimate green car will also spill over into the
materials sector. Consider the steel industry (steel is the main
ingredient in automotive bodies). Amid intensifying global competition
and consolidation, Japan's steelmakers have kept their edge,
increasingly focusing on high-end innovative products coveted by the
auto industries (about 80 percent of Japanese production is in this
area, which yields the highest profit margins). Yasuhiro Daisho, a
professor at Waseda University, says Japanese steelmakers have been
leaders of ultralight and high-strength steel for years. "Nippon Steel
and JFE Steel have the technologies that ArcelorMittal is very anxious
to have," he says. Asian makers, in particular the Chinese, are also
trying to catch up with Japan's lead in steel innovation.
Other materials makers are also scampering to develop new products for
high-tech cars. Toray, a pioneer of high-tech materials like the carbon
fiber it puts into aircraft wings and into the fuselage of the Boeing
Dreamliner, too, is just one of them. The company recently set up a new
automotive research-and-development center for advanced materials in
Nagoya, just down the road from Toyota and suppliers. Toray holds 34
percent of the world carbon-fiber market, and aims to develop a carbon
fiber cheap enough for use in car bodies. It hopes to more than double
its sales to the auto sector to $3.5 billion by 2015. Teijin, another
high-tech-materials maker, aims to "cut the weight of a car by half" by
using a variety of new materials like polycarbonate resin, and a
bubble-shaped prototype is on display in its Tokyo showroom. Meanwhile,
a superlight sports car produced by Ken Okuyama Design is set for sale
this fall in Japan. Using carbon fiber and aluminum generously, the
model weighs only 750 kilograms.
Another potential growth industry: bioplastics, which have been
attracting R&D money from Mazda and Toyota, among others. Because these
materials are derived from plants rather than from petroleum (as most
plastics are today), bioplastics are carbon-neutral and require much
less energy to make. These companies are experimenting with a range of
items, including installment panels and floor mats.
Of course, by betting heavily on all the green-car technologies, Japan
could easily find itself getting a couple of calls badly wrong. It's
certainly missed forecasts in the past—when, for example, Japanese
mobile-phone companies ended up backing the wrong standard in the early
1990s, largely shutting themselves out of the global cell-phone boom
that followed. The lithium-ion batteries that Japanese companies are
investing in right now have plenty of limits, and it's always possible
that nimble non-Japanese entrepreneurs could figure out an even better
technology.
So far it's unclear which of the new green-car technologies will triumph
in the race for "sustainable mobility." Hydrogen-powered fuel-cell
vehicles like Honda's Clarity still face some serious challenges if
they're ever to break though into the market: not only are they costly,
but the fuel stations and infrastructure to power them would have to be
built from the ground up. While electric vehicles have the huge
advantage of being able to tap into existing power networks, they, too,
remain costly, and even the best batteries still don't offer the same
range as a full tank of gasoline. Lithium-ion batteries hold some safety
concerns. The batteries have a tendency to overheat, potentially causing
fires; some manufacturers have had to recall lithium-ion laptop
batteries for just this reason. Don Hillebrand, director at Argonne
National Labs in Chicago and a leading researcher who has testified
before the U.S. Congress on battery technology, warns: "This is a time
of great potential and huge risk. Those leaders today may not stay
leaders, because rules are going to change quickly."
Even the popular hybrids are still a niche product. But as far as
Japanese carmakers are concerned, gasoline is no longer where the action
is. Hillebrand believes that green technologies are changing the
industry in an unprecedented way. If Ford invented modern car
manufacturing when it built the first assembly line for the Model T,
says Hillebrand, then the emerging green technology represents "the
second invention of the auto industry. And it's the Japanese who are
leading the charge."
Ecofriendly cars are leaving the auto shows and the design exhibitions
and taking to the streets. Honda, for one, has already started leasing
the FCX Clarity to a select group of high-profile customers in southern
California. As American actress Jean Harris, one of those chosen as a
Clarity user, says: "I love that it's not a huge leap from what we're
already used to. It feels like a space-age regular car." If Japanese
managers have their way, that simple phrase could well provide the key
to a new economic boom.
--
Civis Romanus Sum
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