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U.S. automakers sold 17.2 million vehicles in 2017, nearly 320,000 fewer than 2016, snapping a streak of seven straight years of sales gains. But they did benefit from higher prices for some vehicles, and more demand for higher performance vehicles like SUVs and electric cars. A bullish outlook for 2018 could be dented, however, if the latest tax reforms hurt middle-class spending, or if the federal probe into Russia’s suspected meddling in the 2016 U.S. Presidential election destabilizes the Trump administration, experts say. Meanwhile, automakers have differing preferences in choosing the right technology standards for autonomous vehicles, and changes are likely on the way for fuel economy regulations.
Even as auto sales were down last year, “it was a strong year,” said Wharton management professor John Paul MacDuffie, who is also director of the school’s Program on Vehicle and Mobility Innovation at the Mack Institute for Innovation Management. “Everybody has known that the party would end sometime.” He explained that the record sales in previous years tapped into pent-up demand created during the Great Recession of 2008.
“The party is still on,” said Paul Eisenstein, publisher and editor of The Detroit Bureau.com, a publication focused on the auto industry. He said that auto industry executives are actually upbeat, and “if anything, I think they were surprised that it didn’t go down more.” If auto sales were to fall to 16.9 million or 17 million in 2018, that would have been seen as a record not too long ago, he added.
MacDuffie and Eisenstein discussed the outlook for the U.S. auto industry on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)
Question Marks Amid Optimism
While the auto companies were happy with the latest tax reform bill, “they’re all hoping that it doesn’t mess things up for the middle class,” said Eisenstein. If the middle class and other car-buying segments find their finances crunched by taxes, “that could send car sales into a tizzy,” he added. The fate of the North American Free Trade Agreement, which the Trump administration wants to disband or overhaul, is another worry for the industry. The U.S. auto industry is a huge beneficiary of NAFTA, which allows duty-free trade between the U.S., Canada and Mexico.
Eisenstein cited another factor that could spoil the party. “Everybody is trying to whistle past one potential graveyard and that is [about] what could happen if things get a little bit weird with [special counsel Robert] Mueller’s investigation, and anything that could happen that shakes up the confidence and instability with the Trump administration.” Mueller is probing Russia’s alleged interference in the 2016 presidential election.
“Electric was so tied up with the notion of green environmentalism that I think it made [buying one] seem like a dutiful kind of thing that you did for the right reasons. But it was boring.”–John Paul MacDuffie
Outside of the Mueller probe, Eisenstein saw “three big question marks” facing the auto industry in 2018. One is if sedans will continue to sell, he said, pointing to Ford Motor Company’s announcement on Tuesday that it would cut its car portfolio by 10% and increase its SUV portfolio by 10% — a move towards higher-margin vehicles. The second issue relates to spending on development of electric vehicles, and the third has to do with spending on developing autonomous vehicle technologies. Here, he noted that automakers “are spending tens or even perhaps $100 billion on technology that they don’t know if the market will accept.”
Which Level is Best?
With autonomous vehicles, the industry faces strategic dilemmas, said MacDuffie. Most automakers are working on “lower levels of autonomy,” where they could keep rolling out additional features. But the big question is how much they need to invest in the so-called Level 3 or Level 4 technologies for autonomous vehicles (AVs), he said. Level 3 is “conditional automation,” where the driver does not have to monitor the system, but must be able to resume control at all times. Level 4, called “high automation,” is where the driver is not required to be resume control and the AV system can take care of defined use cases.
Automakers have varying strategies for how to approach those issues. MacDuffie pointed out that Google, for example, is pushing for a fully automated system where the driver is not required throughout the entire journey.
There’s no question that technologies for both electric vehicles and AVs will reach a critical mass at some point in time, Eisenstein said. “It’s just a question of when do you shoot your bullets,” he said. “Do you spend your money now or do you hold tight right now and start to see who’s winning and losing.”
A New Charge for Electric Vehicles
MacDuffie saw more demand for electric vehicles, and predicted a big push in both investments and consumer demand. He noted that electric vehicles saw “more of an uptick” in 2017, especially with high demand for those cars in China and with some automakers announcing plans to discontinue internal combustion engines.
“Not enough capacity exists globally outside of Takata to build all the replacement parts to get this done quickly.”–John Paul MacDuffie
Eisenstein, too, was bullish about electric vehicles, and listed the major product milestones ahead. Last weekend, Ford teased an electric SUV called Mach 1, which he thought could rival Tesla’s offerings and also Porsche’s Mission E. Audi and Hyundai are among the other makers with electric vehicle brands that have longer-lasting batteries and higher performance. At the same time, prices of electric vehicles are dropping, he said. “[Also], they’re going to put more excitement into electric vehicles,” he added, explaining that automakers are working to get more acceleration and power in those vehicles.
Plummeting battery prices are also fueling increased interest in electric cars because they make the vehicles significantly cheaper, said Eisenstein. He noted that from about $1,000 for a kilowatt hour at the start of this decade, battery prices are down to $140 now, and predicted that they would further halve over the next few years. For cars with 60 kilowatt-hour batteries, factory costs could drop by up to $40,000 per car, he added. “All that adds up to a reason why battery cars now start to sound like something that makes sense to be in your driveway.”
All of that also makes up for some of the excitement that was missing from the electric-car space. “I’ve been waiting for the industry to put more emphasis on the performance side and excitement side of electric vehicles,” said MacDuffie. Electric cars bring “tremendous acceleration benefits” and that is one big reason why Tesla’s higher-end cars have been popular, and also why Chinese investors are bringing a bunch of electric supercars to market, he added. “Electric was so tied up with the notion of green environmentalism that I think it made [buying one] seem like a dutiful kind of thing that you did for the right reasons. But it was boring.” But now, improved technology and lower battery prices have “helped make a performance promise real.”
Policy What Ifs
On the policy front, MacDuffie said “one small surprise” in the 2017 Tax Cuts and Jobs Act is that subsidies for electric vehicles were left untouched. A big question mark in the year ahead would be on potential changes to fuel economy standards, he added.
“Do you spend your money now or do you hold tight right now and start to see who’s winning and losing.”–Paul Eisenstein
According to Eisenstein, the Trump administration may not go for a “wholesale rollback” of the so-called CAFÉ (Corporate Average Fuel Economy) standards on miles-per-gallon standards, but freeze it at about the CAFÉ 2021 standard (about 40 miles per gallon); the CAFÉ standard for cars in model year 2025 is 50.4 miles per gallon.
On the features front, MacDuffie said he expected automakers to invest more and compete harder on touch screen automation and voice recognition controls in cars. Technology partners will help car companies improve the interfaces, which would also give firms access to valuable customer data they could try to monetize, he added. However, the distraction they cause in vehicles is a problem, he said noting that the number of deaths due to vehicle accidents rose from 35,000 in 2015 to 40,000 in 2016, and is estimated to have maintained that trend in 2017.
Among other highlights for the year ahead are rollouts from automakers of so-called “muscle cars,” or high-performance cars, said Eisenstein. MacDuffie expected vehicle performance overall to improve with better technology, but also a continued recall of vehicles affected by the Takata airbag scandal.
Takata was the dominant supplier of airbags to automakers for many years, and “not enough capacity exists globally outside of Takata to build all the replacement parts to get this done quickly,” he said. “And then you also have the issue of getting people who may not be paying so much attention anymore to bring their cars in and get the darn replacement done.”
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Anumakonda Jagadeesh
Excellent.
Factors which weigh for Electric Cars and some limitations:
The safety issues of BEVs are largely dealt with by the international standard ISO 6469. This document is divided in three parts dealing with specific issues:
• On-board electrical energy storage, i.e. the battery
• Functional safety means and protection against failures
• Protection of persons against electrical hazards.
Lithium-ion batteries may suffer thermal runaway and cell rupture if overheated or overcharged, and in extreme cases this can lead to combustionSeveral plug-in electric vehicle fire incidents have taken place since the introduction of mass-production plug-in electric vehicles in 2008. Most of them have been thermal runaway incidents related to their lithium-ion battery packs, and have involved the Zotye M300 EV, Chevrolet Volt, Fisker Karma,BYD e6, Dodge Ram 1500 Plug-in Hybrid, Toyota Prius Plug-in Hybrid, Mitsubishi i-MiEV and Outlander P-HEV. As of November 2013, four post-crash fires associated with the batteries of all-electric cars—involving one BYD e6and three Tesla Model S cars—have been reportedThe first modern crash-related fire was reported in China in May 2012, after a high-speed car crashed into a BYD e6 taxi in Shenzhen. The second reported incident occurred in the United States on October 1, 2013, when a Tesla Model S caught fire over ten minutes after the electric car hit metal debris on a highway in Kent, Washington state, and the debris punctured one of 16 modules within the battery pack. A second reported fire occurred on October 18, 2013 in Merida, Mexico. In this case the vehicle was being driven at high speed through a roundabout and crashed through a wall and into a tree. The fire broke out many minutes after the driver exited the vehicle. On November 6, 2013, a Tesla Model S being driven on Interstate 24 near Murfreesboro, Tennessee caught fire after it struck a tow hitch on the roadway, causing damage beneath the vehicle.
In the United States, General Motors ran in several cities a training program for firefighters and first responders to demonstrate the sequence of tasks required to safely disable the Chevrolet Volt’s powertrain and its 12 volt electrical system, which controls its high-voltage components, and then proceed to extricate injured occupants. The Volt’s high-voltage system is designed to shut down automatically in the event of an airbag deployment, and to detect a loss of communication from an airbag control module. GM also made available an Emergency Response Guide for the 2011 Volt for use by emergency responders. The guide also describes methods of disabling the high voltage system and identifies cut zone information. Nissan also published a guide for first responders that details procedures for handling a damaged 2011 Leaf at the scene of an accident, including a manual high-voltage system shutdown, rather than the automatic process built-in the car’s safety systems.
Great effort is taken to keep the mass of an electric vehicle as low as possible to improve its range and endurance. However, the weight and bulk of the batteries themselves usually makes an EV heavier than a comparable gasoline vehicle, reducing range and leading to longer braking distances. However, in a collision, the occupants of a heavy vehicle will, on average, suffer fewer and less serious injuries than the occupants of a lighter vehicle; therefore, the additional weight brings safety benefitsdespite having a negative effect on the car’s performance. They also use up interior space if packaged ineffectively. If stored under the passenger cell, not only is this not the case, they also lower the vehicles’s center of gravity, increasing driving stability, thereby lowering the risk of an accident through loss of control. An accident in a 2,000 lb (900 kg) vehicle will on average cause about 50% more injuries to its occupants than a 3,000 lb 1,400 kg) vehicle. In a single car accident] and for the other car in a two car accident, the increased mass causes an increase in accelerations and hence an increase in the severity of the accident.
Some electric cars use low rolling resistance tires, which typically offer less grip than normal tires. Many electric cars have a small, light and fragile body, though, and therefore offer inadequate safety protectionThe Insurance Institute for Highway Safety in America had condemned the use of low speed vehicles and “mini trucks,” referred to as neighborhood electric vehicles (NEVs) when powered by electric motors, on public roads. Mindful of this, several companies (Tesla Motors, BMW, Uniti) have succeeded in keeping the body light, while making it very strong.
At low speeds, electric cars produced less roadway noise as compared to vehicles propelled by internal combustion engines. Blind people or the visually impaired consider the noise of combustion engines a helpful aid while crossing streets, hence electric cars andhybrids could pose an unexpected hazard. Tests have shown that this is a valid concern, as vehicles operating in electric mode can be particularly hard to hear below 20 mph (30 km/h) for all types of road users and not only the visually impaired. At higher speeds, the sound created by tire friction and the air displaced by the vehicle start to make sufficient audible noise.
The Government of Japan, the U.S. Congress, and the European Parliament passed legislation to regulate the minimum level of sound for hybrids and plug-in electric vehicles when operating in electric mode, so that blind people and other pedestrians and cyclists can hear them coming and detect from which direction they are approaching. The Nissan Leaf was the first electric car to use Nissan’s Vehicle Sound for Pedestrians system, which includes one sound for forward motion and another for reverse. As of January 2014, most of the hybrids and plug-in electric and hybrids available in the United States, Japan and Europe make warning noises using a speaker system. The Tesla Model S is one of the few electric cars without warning sounds, because Tesla Motors will wait until regulations are enacted. Volkswagen and BMW also decided to add artificial sounds to their electric drive cars only when required by regulation.
Several anti-noise and electric car advocates have opposed the introduction of artificial sounds as warning for pedestrians, as they argue that the proposed system will only increase noise pollution. Added to this, such an introduction is based on vehicle type and not actual noise level, a concern regarding ICE vehicles which themselves are becoming quieter.
Internal combustion engines have thermodynamic limits on efficiency, expressed as fraction of energy used to propel the vehicle compared to energy produced by burning fuel. Gasoline engines effectively use only 15% of the fuel energy content to move the vehicle or to power accessories, and diesel engines can reach on-board efficiency of 20%, while electric vehicles have on-board efficiency of around 80%.
Electric motors are more efficient than internal combustion engines in converting stored energy into driving a vehicle. Electric cars do not idle. Regenerative braking can recover as much as one fifth of the energy normally lost during braking.
Production and conversion electric cars typically use 10 to 23 kW•h/100 km (0.17 to 0.37 kW•h/mi). Approximately 20% of this power consumption is due to inefficiencies in charging the batteries. Tesla Motors indicates that the vehicle efficiency (including charging inefficiencies) of their lithium-ion battery powered vehicle is 12.7 kW•h/100 km (0.21 kW•h/mi) and the well-to-wheels efficiency (assuming the electricity is generated from natural gas) is 24.4 kW•h/100 km (0.39 kW•h/mi).
Electric car use by country presents the adoption of plug-in electric vehicles around the world.The popularity of electric vehicles has been expanding rapidly due to government subsidies, their increased range, and environmental sensitivity. Plug-in electric vehicles (PEVs) are generally divided into all-electric or battery electric vehicles (BEVs), that run only on batteries, and plug-in hybrids, that combine battery power with internal combustion engines (PHEVs).
As of the end of 2016, cumulative sales of highway-legal light-duty plug-in vehicles reached 2 million units, of which 38% were sold in 2016. The 3 million milestone was achieved in November 2017. Sales of light-duty PEVs achieved a 0.86% market share of new car sales, up from 0.62% in 2015 and 0.38% in 2014. The global ratio between battery BEVs and PHEVs was 61:39 in 2016, up from 59:41 at the end of 2015. Cumulative sales of plug-in hybrids totaled almost 800,000 units at the end of 2016.
Adoption of plug-in electric vehicles varied by country, affected by consumer demand, market prices and incentives. As of December 2016, China had the largest stock of highway legal light-duty plug-ins with cumulative sales of more than 645,000 units. or 43.0% of the global stock. China’s plug-in electric bus stock reached 343,500 units in 2016, out of global stock of about 345,000 vehicles. More than 637,000 light-duty passenger PEVs had been registered in Europe by 2016, representing 31.4% of global sales. Sales in the European light-duty plug-in electric segment were led by Norway (135,000 units), followed by the Netherlands (113,000) and France (108,000). Norway had the highest market penetration per capita in the world in 2016, as well as achieved the largest plug-in segment market share of new car sales in 2016, with 29.1%, and 5% of all vehicles on Norwegian roads were plug-ins. Iceland had 9% plug-in penetration as of July 2017. France was the largest European market for light-duty electric commercial vehicles or utility vans in 2016, with almost half the market. Denmark, witnessed its plug-in market penetration plunge to 0.1% as of July 2017 due to the end of subsidies. As of December 2016, the United States had more than 570,000 plug-in cars, with California accounting for approximately 48% of cumulative US plug-in sales at almost 270,000 units. Japan had 151,200 plug-ins at the end of 2016(Wikipedia).
With good roads and improved efficiency of storage batteries,Electric Cars have great future especially in the Developed countries.
Dr.A.Jagadeesh Nellore(AP),India