Navigant Research Blog

Differing Diesel Views Sow Auto Industry Confusion

— February 17, 2015

During January’s North American International Auto Show (NAIAS), several manufacturers announced new diesel models to help them meet increasingly stringent fuel economy standards. Nissan unveiled a second-generation Titan XD that straddles the line between light and heavy duty pickups. Nissan will initially build the Titan XD, scheduled to launch this fall, with only a diesel engine; gas trucks with V6 and V8 engines will come later.

GM will be introducing a diesel engine in its Chevy Colorado and GMC Canyon later this year that could potentially increase fuel economy from the current 27 mpg to 30 mpg. Fiat Chrysler announced it will be increasing production of the Dodge Ram 1500 EcoDiesel pickup from 10% of models to 20%.

In the world of diesel cars, Volkswagen will unveil the Golf Gran Turismo Diesel (GTD) car at the upcoming Geneva Motor Show in March. Later this year, Suzuki will add an automatic transmission and several other updates to its SX4 S-Cross.

A Particular Problem

Diesel cars and trucks usually attain higher fuel economy ratings than their gasoline counterparts. According to Navigant Research’s report, Automotive Fuel Efficiency Technologies, the share of diesel cars and light trucks in North America is expected to increase from 1% in 2015 to 2.8% in 2025 as automakers continue to introduce more fuel-efficient models.

However, across the Atlantic, cities are looking to decrease the number of diesel vehicles driving in urban areas due to concerns that diesel vehicles’ higher levels of particulate emissions are causing environmental and health problems.

Not in My Town

Paris Mayor Anne Hidalgo has designs on eliminating diesel vehicles from her city by 2020. Mayor Hidalgo recently announced a ban on some diesel delivery trucks and buses, beginning by July 2015. According to Paris24.com, Hidalgo will provide significant financial incentives for investing in less polluting vehicles. London Mayor Boris Johnson has similar concerns around particulate emissions and is doubling the congestion charges for driving diesel vehicles in the city center to £20.

One solution to reduce the amount of diesel emissions is to add a hybrid drivetrain to a diesel vehicle. Hybrid vehicles reduce the use of the diesel engine by relying on battery power during low speeds and when idling, thus reducing particulate emissions. According to Navigant Research’s report, Electric Drive Trucks and Buses, the currently small market for medium and heavy duty diesel hybrid trucks will grow by a 2014–2023 compound annual growth rate (CAGR) of 28.5% to nearly 95,000 units worldwide by 2023.

 

Truck Fuel Economy on the Rise

— October 20, 2014

The U.S. Environmental Protection Agency (EPA) has just published its 2014 fuel economy trends report, and though the news is generally positive, some potential storm clouds remain on the horizon for manufacturers.  While the overall average fleet fuel economy hit a record 24.1 mpg for the 2013 model year, the monthly update from the University of Michigan Transportation Research Institute (UMTRI) showed a 0.5 mpg drop in September 2014, equal to the 2012 to 2013 annual increase.

The long-term trend has definitely been upward.  Last year represented the eighth increase in the past 9 years for the American new vehicle fleet.  Automakers will have to maintain this momentum if they expect to hit the 2025 corporate average fuel economy target of 54.5 mpg.  Fortunately, attendees at a fuel economy technology showcase at the EPA emissions testing lab in Ann Arbor were all publicly confident that the targets were achievable.

As for the sudden drop in September, that can be explained by what are likely temporary market conditions that led to a significant uptick in full-size truck sales at General Motors (GM) and Chrysler.  As the 2014 model year drew to a close, combined sales of the Chevy Silverado and GMC Sierra jumped 46%, aided by incentives of up to $4,500.  Ram sales were also helped along by retail incentives of up to $3,000, as well as the popularity of the new Ram 1500 EcoDiesel.

From Steel to Aluminum

Sales of Ford’s F-series trucks were essentially flat, as the automaker began the transition to its all-new, aluminum-bodied 2015 F-150.  It appears that GM and Chrysler are hoping to grab some market share in the financially lucrative big truck segment in hopes that Ford would stumble in the complicated transition from steel to aluminum trucks.

At this point next year, even if truck sales continue to climb, we’re unlikely to see a similar drop-off in fuel economy, thanks to new technology in the segment.  The weight savings and new power plants for the Ford trucks are projected to deliver up to 20% better fuel efficiency than the steel-bodied versions.

Chrysler and GM also have to meet the new fuel economy standards.  Ram pickups are already available with ZF 8-speed transmissions, and GM is adding its first 8-speed automatic transmission to 2015 pickups with a 6.2-liter V8.  As GM ramps up production of the new 8L90 transmission, it will probably get paired with other engines as well.  GM and Ford also have a joint development program to produce 9- and 10-speed transmissions for trucks and other vehicles in the next few years.

Diesel Debuts

Chrysler is also building on the success of the 28 mpg Ram 1500 EcoDiesel by doubling production to 20% of its total production volume of trucks in 2015.  Ford is still awaiting final EPA certification on the 2015 F-150, but the 2.7-liter EcoBoost V6 is also expected to get a highway rating in the upper 20s.  GM’s new midsize Colorado and Canyon pickups are already rated at up to 27 mpg with a gasoline V6, and a diesel version is coming some time in 2015.  Ford is also offering a diesel engine option in the new Transit full-size vans that replace the E-series this year.  Ford will likely be closely following the sales trajectory for diesel engines in the Chrysler and GM trucks, as well as the next-generation Nissan Titan and Toyota Tundra, which will both be available with a Cummins-sourced 5.0-liter diesel V8.

With the huge sales volumes of pickup trucks in North America, lightweighting, advanced powertrains, and automatic stop-start, trucks will make a big contribution to reducing fossil fuel use in the next decade.

 

Diesels Set for Surge in the United States

— April 17, 2013

Automotive analysts – including this one – have been predicting a comeback for diesel cars in the United States for several years.  Demand in the United States has indeed been steadily rising in recent years.  According to the HybridCars Dashboard, sales rose from just over 58,000 in 2009 to 125,522 in 2012, a compound annual growth rate of 29%. Despite these rising sales, though, diesel’s share of total passenger car sales has persistently remained well below 1%.  In 2010, diesels captured 0.7% of U.S. passenger car sales, while in 2012, diesels captured 0.87%.  So why the hype over clean diesels in the United States?

First, the reality is that all alternatives to conventional gasoline cars are but a tiny portion of the total U.S. car market.  Hybrids are selling around 3 times the number of diesel cars – which means that, more than 15 years after the Prius was introduced, hybrids still only capture 3% of the market.  Plug-in vehicles are receiving a huge amount of attention, as they represent the potential to be a disruptive technology.  However, while we’ve seen a significant uptick in sales in the United States, from roughly 18,000 in 2011 to 53,000 in 2012, PEVs are an even smaller percentage of the U.S. car market than diesels.

Annual Sales of Clean Diesel and Hybrid Passenger Cars, United States: 2009-2012

 

(Source: HybridCars Dashboard)

Second, as has been discussed in this blog, automakers must come up with an array of fuel-efficient options to meet the stringent federal Corporate Average Fuel Economy (CAFE) standards for 2017 and beyond.  While automakers will primarily focus on modifications to conventional gas cars, diesels may well appeal to a different demographic than small, fuel-efficient gas cars.  The diesel Chevrolet Cruze, to be introduced for model year 2014, offers an example.  The diesel Cruze gets 42 mpg on the highway.  While this is the same highway mpg as the gasoline-powered Chevrolet Cruze Eco, the Eco is equipped with a manual transmission, and U.S. drivers are not big fans of manual transmissions.

Volkswagen (VW) just released the results of a survey that found that the likely clean diesel customer is also different from the average hybrid customer.  VW’s survey indicated that, while both groups are concerned with fuel efficiency, diesel buyers tend to be more concerned about torque and acceleration, while the hybrid drivers are more motivated by the car’s eco-friendliness.  These results suggest that the soon-to-be-introduced hybrid Jetta will not compete with the diesel Jetta – the best-selling diesel in the United States – but will expand VW’s appeal to a different type of efficiency-conscious consumer.  This survey will be heartening to automakers as they marshal a combination of diesel, hybrid, start-stop, plug-in technology, and other options to meet the CAFE standards.

 

Diesel Hybrids Arrive at Last

— December 11, 2012

More expensive than their gasoline counterparts,  diesel engines deliver significantly better fuel economy and are vouched for by taxi drivers the world over.   Some 15 years ago, Toyota and Honda introduced the world to the hybrid drive car, adding an electric motor and a large battery, making stop-start driving more efficient by storing and reusing kinetic energy.

With both technologies established, it was then logical to think about combining the two to make an even more efficient drivetrain, but the double premium (both diesel and hybrid drives are more expensive than conventional gasoline models) made OEMs think that the incremental cost was too much for the market even though the long-term benefits would be very attractive.   Finally, PSA in France decided at the end of 2011 that the time was right and launched its Hybrid4 system, first in the Peugeot 3008, followed by the new Citroën DS5, and then in the Peugeot 508.  In this system, the diesel engine drives the front wheels while the electric motor drives the rear wheels.  A choice of four different modes allows the driver to choose when to use the technology: to be clean, frugal, 4WD, or sporty.  More importantly, the official emissions figure of 91 g/km of CO2 and 80 mpg (Peugeot 3008 Hybrid4 Active model) makes the vehicle attractive to both individual and company car buyers in many European countries, thanks to taxation policies that emphasize fuel efficiency.

PSA’s Hybrid4 technology uses a 1.1 kWh NiMH battery pack that gives an electric-only range of about 2.5 miles.  The premium for hybrid drive on the 3008 is £4,200 ($6,700), or about 18% extra.   The Peugeot 508 with Hybrid4 drive retails at £31,450 ($50,100), which represents a premium of about £7,000 ($11,150) over the non-hybrid version.

The only other production announcement has come from Volvo, which takes things up a notch by including a much bigger battery and the ability to recharge it without the engine.  With a Li-ion battery pack rated at 11.2 kWh, the upcoming V60 diesel hybrid will be capable of about 30 electric-only miles.  On average, the V60 Hybrid official fuel economy is 148.6 mpg and it emits 49 g/km of CO2.

The Price Premium

It’s interesting to note that Volvo chose to use a similar architecture to the PSA design, with the diesel engine driving the front wheels and the electric motor driving the rear.  Again, the driver gets to choose driving mode, in this case from Pure, Hybrid, and Power.  There’s also a ‘Save’ button that prevents the electric drive from being used and saves battery power in advance of entering a low emission zone where all-electric mode is best.

Volvo made its announcement just as PSA was bringing its diesel hybrid to the market, and there has been some fanfare about the first-year production run of 1,000 units being sold out, so it must be worth the £47,000 ($74,900) price tag to the European early adopters.  That is £12,780 ($20,400) more than the R-Lux version of the V60 with the same diesel engine, an increment of about 37%.  These numbers are softened in some markets where rebates and government incentives apply; for example in the United Kingdom, PHEV and EV buyers get a £5,000 ($8,000) rebate from the government.

So the diesel hybrid is finally with us and showing solid, if not spectacular, sales performance in its first year of production.  Both companies have chosen a design that appeals to buyers thinking about an electric vehicle but concerned that it will not meet all their needs and would only be practical as a second vehicle.

The popularity of the diesel engine in Europe will work in favor of this new flavor of hybrid, especially with its tax advantages and significant economy improvements.  Accounting for the total cost of ownership, eliminating congestion charges, and low or zero annual registration costs, it probably will be a cost-effective alternative to a similarly-priced conventional vehicle.  Also, OEMs know that most people decide to buy a new car based on their financial calculations, and then justify the purchase to other people in terms of saving the planet.  The diesel hybrid can do both without sacrificing performance or functionality.

 

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