“Fuel-Efficiency Rules Are Already Raising Costs in Detroit” – Wall Street Journal, 22 January 2014

Even though GM and Chrysler have paid off their auto-bailout loans, they are still under the thumb of Uncle Sam; elements of Obama’s Climate Action Plan do not only extend towards power plants, but automakers as well. According to the Climate Action Plan, car companies’ products have to average 54.5 miles per gallon by 2025. This, however, requires huge design changes that are going to be a big blow to profit margins.

America’s best-selling vehicle, the Ford F150, is getting a complete redesign. from the inside out. It will be the first truck and large-volume vehicle to have an all-aluminum body, which will lower its weight and increase its fuel efficiency. Obama’s Climate Action Plan requires full-size trucks to have a better fuel efficiency, up to 30 mpg from the current 20 mpg.

Switching to aluminum, though better for the environment, is an expensive move. As we reported last month, converting to aluminum means higher material costs and new manufacturing machinery. While the price tag is high, Ford can’t fight the new regulations, and is instead doing all it can to effectively market the innovation behind its newly redesigned products, the F150 and Mustang—the latter redesign offers a never-before-seen turbocharged four-cylinder engine. Each sale of the redesigned F150 contributes an additional $10,000 to Ford’s bottom line.

GM, on the other hand, is creating a whole new midsize truck to meet Obama’s requirements, which they believe will be less costly. Chrysler, instead, is spending more on nine-speed transmissions and diesel engines.

Obama had hoped that the market for electric cars would increase; as a bid in that direction, an element of the Climate Action Plan allows automakers to acquire mpg credits for manufacturing zero-emission vehicles. However, the demand for electric vehicles is still low, proving that that kind of car is still a niche product. Pricing for electric cars start at $40,000 and only increase from there.

While it is always painful to have a winner and loser, the “materials selection war” (steel vs. aluminum) is a long-term societal consideration and climate change mitigation, where aluminum is the ultimate winner. These trends will force America to increase the recycling of post-consumer aluminum products—as opposed to landfill and scrap export—and to also increase the design and manufacturing of recycle-friendly alloys.

There is simply not enough expensive and energy-intensive primary aluminum capacity available to meet higher aluminum demand of 100 million, and growing, cars per year.

See also:
Will All-Aluminum Cars Drive Metals Industry?
A Clean Car Boom
GM Planning Strict Diet for New Pickup Trucks

Developed and Written by Dr. Subodh Das and Tara Mahadevan

February 12, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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Novelis Sustainability Report 2013

In 2011, Novelis decided to strengthen their company by increasing their business’ sustainability and innovation. The most important component of their new vision is to use 80% recycled aluminum in all their products by 2020. Once they reach this goal, they will then halve their products’ embedded carbon.

In 2011, when Novelis set their intended goals, they used the average of fiscal years 2007-2009 as their standard. Some of their 2020 goals include:

  • Increase recycled metal content from the current 43% to 80%
  • Reduce energy usage by 39%, from the current 10 GJ/mt to 7.6
  • Reduce water usage by 25%, from the current 3.1 m3/mt to 2.7
  • Halve the absolute amount of GHG emissions, from the current 18 M mt to 11
  • Have zero landfill waste from the current 55.6 K mt

While the company is headquartered in Atlanta, George, there are also facilities in Sao Paulo, Zurich and Seoul, serving the beverage can, automotive and high-end specialty markets. There is a rising demand for aluminum in these markets, especially the automobile industry, since 2010 when Obama obligated car manufacturers to double their new-car average fuel economy by 2025. In 2013, the aluminum industry grew 25%, as aluminum allows for lightweighting vehicles, a crucial enabler in increasing fuel efficiency.

As mentioned before, another huge element of Novelis’ move to increase sustainability is to reduce the embedded carbon in their products, which can be done by boosting recycled content. By using more recycled materials and by creating fewer new materials, Novelis reduces their carbon footprint. They’ve recently invested almost $500 million in doubling their recycling space by opening two new recycling plants, one in South Korea and the other in Germany.

Novelis is directly addressing the global issue of climate change, particularly the current concern of the maximum safe limit for concentration of carbon dioxide in the Earth’s atmosphere. The company’s method to decrease their GHG emissions can best be described as a life cycle approach, with a goal of reducing their emissions by 50% by 2020. This idea, coupled with increasing their recycled metal content to 80%, will help them reach their target.

Novelis has also incorporated supporting recycling education into their new vision, as well as advocating awareness and policy initiatives, which will escalate recycling rates and increase the company’s supply of post-consumer aluminum scrap. We at Phinix are huge proponents of all of the above, especially recycling education.

Take a look at Novelis’ website and the full report.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 28, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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