Obama’s 2010 mandate that obligates car manufacturers to double new-car average fuel economy by 2025 has pushed the car industry to produce more fuel efficient cars at a faster rate. Ford’s next F-150 — the US’s largest selling vehicle — is currently being redesigned and rebuilt with an all-aluminum body, a huge helping hand to both Obama’s fuel efficiency mandate and the aluminum industry.
Two big players in the Ford’s aluminum round-up are Alcoa and Novelis, the nation’s top aluminum sheet producers. In 2013, both companies spent $1 billion in opening new aluminum sheet factories, tailored to the auto industry. Raw aluminum prices have dropped by more than a third since 2011 — Alcoa and Novelis are hoping their new investments increase their profit margins.
The aluminum industry is making a huge bet. While aluminum is lighter, and better for fuel efficiency and the economy, it might not be better for pocketbooks — aluminum costs almost three times more than steel, the traditional metal used to manufacture cars. Moreover, using aluminum to produce vehicles requires new machinery; machinery used to manufacture cars from steel isn’t compatible with aluminum.
Only Audi and Jaguar — cars that a majority of the public can’t afford — have created all-aluminum vehicles. Ford’s new endeavor will likely trim 700 pounds from the currently-5,000-pound truck; this reduction will allow for a 7% growth in the truck’s fuel economy.
The aluminum market is now only valued at almost $300 per year. If more car companies choose to manufacture all-aluminum cars, then the market can skyrocket to $7.5 billion by 2025, a huge blessing for the aluminum industry, which is undergoing oversupply and low raw aluminum price issues.
The car industry is urging every aluminum company to invest, asking different manufacturers to produce different parts so there isn’t one that could dominate pricing. There is more than enough business for everyone: one contract for a mass-produced part can be valued at more than $50 million.
The question is, will there be enough raw aluminum materials and fabrication capacities to successfully undertake this venture, even though time has come to further enhance recycling and production of recycle-friendly automotive aluminum alloys in commerce? See a publication on this subject by Dr. Das – “The Development of Recycle-Friendly Automotive Aluminum Alloys“.
Developed and Written by Dr. Subodh Das and Tara Mahadevan
January 13, 2014
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