Three Bucks a Gallon and What’s a Car Company To Do?

Three Bucks a Gallon and What’s a Car Company To Do?

By Bill Visnic

As the U.S. auto-buying public resigns itself to handing over $3 for a gallon of gasoline or more, automakers are hitting high gear to firm up alternative-power strategies that certainly seemed much fuzzier at this time last year.

It’s come time to decide how to best save fuel, and for the next several years, the battle will be between hybrid-electric vehicles (HEVs) and sophisticated new diesel engines.

Adding intrigue is a recent study projecting diesel growth in the U.S. will handily outpace HEVs between now and 2012 -– despite the fact North American consumers remain largely in the dark about the general wonderfulness of new-age diesels.

For now, automakers’ choice between HEV or diesel for the U.S. is dictated by the power train influences of their “home” markets –- the Asian manufacturers long have favored HEVs and Europeans are relying heavily on the diesels that have captivated customers and captured more than half of the Continent’s light-vehicle market. The real wild cards are the Detroit Three automakers.

Wise players plan a twin thrust of HEVs and “clean” diesels (now that diesels can meet even California’s persnickety emissions standards) –- but most also have distinct preferences about how they’d like to lure enviro-savvy consumers.

A scorecard of how each region’s major automakers are arranging their chess pieces for the greening of the U.S. auto market. Warning: some tolerance of acronyms is required.

Detroit Three

As typical, the Detroit Three initially were stubborn to acknowledge a potential major shift in consumer tastes. They now are moving with what appears to be a genuine sense of urgency as their bread-and-butter pickup trucks and SUVs, powered by tediously conventional, gas-slurping engines, remain anchored to dealer lots.

General Motors

HEV

GM’s headline grabber continues to be the swoopy Volt “plug-in” HEV, but that’s not coming until 2010 –- and more than a few development questions remain.

Meanwhile, the real game-changer may well be the company’s “two-mode” HEV system, which promises fuel-economy gains of up to 25 percent for its large SUVs.

Due for a release this fall in the Chevrolet Tahoe and GMC Yukon, the two-mode system is claimed to deliver marked improvement in highway fuel economy, a driving mode in which current HEV technology –- as promoted by the market-dominating Toyota Prius –- is virtually useless.

Combined with all of the hybrid benefits normally derived from urban start-and-stop driving, the two-mode design may be the “killer app” so desperately needed to prove the Detroit giant still is able to innovate.

The two-mode system’s true technical importance may not be fully evident in its first application in GM’s full-size SUVs, but later in other vehicle segments where the technology could prove the ultimate purchase-driver.

At the same time, GM is under way with a budding armada of “mild” HEVs that use less extravagant hardware to deliver some HEV benefits -– in the neighborhood of 10 percent better fuel economy, as well as reduced emissions -– but at a more customer-friendly cost.

We’ve already got the “Green Line” mild-HEV variants of the Saturn Vue crossover and the excellent Aura sedan, and later this year comes the ’08 Malibu HEV , which GM says will be the most affordable HEV in the country.

And next year, GM promises a version of the two-mode HEV system for front-wheel-drive/all-wheel-drive passenger cars, starting with the Saturn Vue. Sources say the company is anxious to get the two-mode hardware into its new GMC Acadia/Saturn Outlook/Buick Enclave crossovers, which are selling briskly but don’t exactly peg the frugality meter.

This all leads up to the Volt, a plug-in HEV (PHEV) hoped to run on electric power as far as 40 miles without ever firing up its tiny flex-fuel engine. Everyone (including nemesis Toyota) is watching for the new high-tech batteries to make the Volt a reality by the end of 2010.

Diesel

Not long ago, GM was pointedly un-positive about the prospects for diesel power in this country. Too much negative baggage, too costly to make comply with new emissions regulations. Bob Lutz, GM’s product-development Svengali, cautioned diesel will be hideously expensive.

But the General has softened its message as rivals’ more assertive diesel outlook forced a course correction.

GM announced in June it will build an all-new, 4.5-liter V8 turbodiesel for pickups and the Hummer H2, pulling the trigger for 2009.

It’s the first volley of GM’s carefully crafted diesel game plan, Charlie Freese, executive director of diesel engineering at GM’s Powertrain Division, tells AutoObserver.

“Our strategy for diesels in the U.S. focuses on the highest-fuel consuming vehicles first, such as full-size pickup trucks, because this is where the payback for the consumer can be realized. Fuel savings with a diesel engine will be greater under higher loads, towing or traveling steep grades.

“This is why we introduced our Duramax 6.6L V8 diesel for heavy-duty pickup trucks and utility vehicles in the U.S. (in 2001), and why we plan to introduce a new 4.5L V8 high-output Duramax diesel for light-duty pickup trucks in North America after 2009,” Freese continues.

But it gets juicier: Freese says the V8 fits under many a different hood.

“This new V8 diesel’s compact size, which packages in the envelope of a (gasoline) small-block V8, will provide GM the flexibility to introduce this engine in a wide variety of vehicle applications, including passenger cars, SUVs, etc., should there be future market demand.”

The words were hardly out of GM’s mouth when it announced it was teaming up with Italian diesel specialist VM Motori S.p.A. to design and manufacture a new 2.9-liter V6 turbodiesel first earmarked for the European version of the Cadillac CTS in 2009. Last month, GM said it plans to buy a 50 percent stake in VM.

That same diesel then will make a Stateside appearance in Cadillac and Saturn models, likely around 2010.

Rolling the Dice

GM continues to fiddle with hydrogen fuel-cell development, insisting fuel-cell vehicles (FCVs) remain the end game -– but assessing the General’s true commitment has been difficult.

GM has promoted a few interesting FCV concepts in the past few years –- from the wild Hy-Wire to the well-executed Sequel -– but the effort seems to run hot and cold, and with a fed-up Congress threatening to immediately set drastic new fuel-economy goals, most manufacturers have curbed energetic FCV discussion.

GM may have reenergized fuel cells, however, when it revealed last week that it is developing a version of the Volt/E-Flex propulsion system that uses a small battery and hydrogen fuel cells, like that in the Sequel, alongside its development of the larger battery-gasoline E-Flex system of the Volt.

Ford

HEV

Former CEO Bill Ford’s 2005 promise of having capacity to produce 250,000 HEVs by 2010 is long forgotten in the hurricane of Ford corporate restructuring.

Ford currently has a reasonable presence with the Escape Hybrid and Mercury Mariner Hybrid crossovers, and has plans to hybridize its popular midsize Fusion and Mercury Milan sedans.

The company also announced earlier this summer it’s partnering with Southern California Edison to test a fleet of PHEVs.

Diesel

Ford engineers and executives raised industry eyebrows this year in a dispute with Navistar International Inc., longtime supplier of PowerStroke diesel engines for Ford medium-duty pickups. Although Ford was believed to be working with Navistar on crucial smaller diesels for light-duty pickups such as the best-selling F-Series, Navistar claimed Ford was doing everything it could to sever the relationship.

The very public spat set blog-site tongues wagging with talk that Ford is drilling out the popular 3.6-liter turbodiesel V8 (used in Europe by its Land Rover unit) to 4.4 liters and shoving it into the F-Series by 2009, in time to tussle with arch-rival GM.

“Ford is going to make an attempt to leave Navistar in the dust,” reckons Paul Lacey, manager of technical research at Global Insight, who specializes in automotive power train and technology analysis

Ford may be the best-placed of the Detroit Three to quickly insert diesels into U.S. models, however, thanks to a longstanding diesel design and development venture with France’s PSA Peugeot Citroen, a diesel partner extraordinaire. The two companies have produced millions of diesels of all types, now used entirely outside the U.S., but Ford might easily whistle up any of the fine 4- and 6-cylinder diesels made by the joint venture.

Rolling the Dice

Ford has tinkered with so-called “hydraulic” hybrids, using fluid compressed in an accumulator by braking and deceleration forces and using that energy to accelerate the vehicle from a standstill.

A hydraulic hybrid system is on the road in a few demonstration fleets -– but components are heavy and the technology appears more suitable for commercial applications such as delivery vehicles, garbage trucks, that sort of thing.

Ford has presented little fresh discussion, but if the size and weight of hydraulic-hybrid components can be reduced, there is remote potential for the passenger-vehicle market.

Chrysler

HEV

The “New Chrysler” knows it needs to get moving now that it’s on its own –- but the company nonetheless will leverage links with its former owner, Daimler AG, one of most immediate evidence being Chrysler’s use of the same two-mode HEV system that GM will deploy later this year.

The former DaimlerChrysler and BMW collaborated with GM on the two-mode development program, and early next year Chrysler will reap the reward with a Dodge Durango HEV and Chrysler Aspen HEV . Unfortunately for Chrysler, the coming Durango/Aspen hybrids represent the entire depth of its HEV pool; the company’s decade-long tie to Daimler meant a strong orientation away from HEVs, a technology for which most European automakers have little use.

The company has promised a mild-hybrid system for “a future Chrysler Group vehicle,” part of a wide-ranging-but-scantily-detailed $3 billion power train investment. Chrysler sources say U.S.-market mild HEVs could quickly adopt the “start/stop” systems beginning to be widely used in Europe, where hybridization centers largely on the ability to turn off the engine when the vehicle is stationary and instantly restart to get moving again.

One bright spot: the two-mode HEV development pact with GM (and BMW) includes provision for a system for smaller, front-drive vehicles. As GM intends to have the lighter-duty two-mode system in use for 2009, it’s possible Chrysler could have a similar time frame.

Diesel

Chrysler currently is the only one of the Detroit Three with a light-duty diesel on sale in America. The Grand Cherokee CRD uses a 3.0-liter V6 turbodiesel built by former cousin Mercedes-Benz.

The Mercedes diesel in a Jeep underscores Chrysler’s advantageous state of readiness for diesel deployment in the U.S.: the company has access to diesels from no less than four different sources –- none of which is Chrysler itself.

Mercedes, Volkswagen, VM Motori (troubling for Chrysler, about to drawn into the GM empire), and Cummins Engine Co. all supply diesels for Chrysler-badged vehicles; the VM and VW diesels, so far, are used by Chrysler only in Europe.

“At this point, we have a somewhat divergent diesel supply base,” boasts Bob Lee, Chrysler Group’s Vice President-Powertrain Product Team. Because of that –- and the fact that diesel-powered vehicles in other markets are based on vehicles already sold in the U.S. – “a huge percentage of the work is done,” to adapt those vehicles for sale here, Lee tells AutoObserver.

Earlier this year, Chrysler announced it will collaborate with Cummins –- maker of the bombastic, universally loved inline six-cylinder turbodiesels for the medium-duty Dodge Ram pickup -– for a new V6 diesel for standard pickups after 2009, giving it parity with Detroit rivals Ford and GM in the critical pickup segment.

“It’s critical they make a successful run with diesel,” says Lacey, “because they’re hurting on trucks.”

Chrysler also says it is examining expanding use of the 3.0-liter Mercedes-made diesel into other models in addition to the Grand Cherokee.

Rolling the Dice

As part of its $3-billion power train expansion, Chrysler is making a bold investment: it will build new dual-clutch automated manual transmissions in a joint venture with transmission specialist Getrag Group for use in many of its popular vehicles starting for the ’10 model year.

The dual-clutch technology essentially takes a manual transmission –- still the most efficient variety known to man –- and adds an electrohydraulic module that takes care of the clutch work. The driver gets all the benefits of a conventional manual transmission, including a gigantic 6 percent improvement in fuel economy compared to an automatic, without the hassle of dealing with a clutch pedal.

Volkswagen already has enjoyed thunderous approval for its dual-clutch transmission, developed by BorgWarner Inc. and used in many VW and Audi vehicles, but analysts were surprised by Chrysler’s half-billion-dollar gamble to make the transmissions in Indiana. Conventional wisdom had most future dual-clutch production centered in Europe, where there is considerably more existing manufacturing capacity for manual transmissions.

But Global Insight’s Lacey thinks the dual-clutch investment is a solid, technically informed business move. “They’re (Chrysler) looking forward to the improvement in fuel economy. The technology is proactive.”

EUROPE

Audi/Volkswagen

HEV

In 2009, Audi plans a full-HEV variant of the frighteningly thirsty Q7 SUV, and Volkswagen rings in with the Q7’s Touareg counterpart, which makes sense because they are the same vehicle.

Although the system allows running on either internal-combustion or electric power (or a blend of both), the design, with the electric motor sandwiched between the engine and transmission, more resembles the mild-HEV layout favored by Honda Motor Co. Ltd., which required the engine to always contribute to the propulsion equation.

Diesel

As with most of the European automakers, Volkswagen and Audi have earmarked the diesel, which can boost efficiency by as much as 30 percent, to carry the environmental flag in the U.S.

Volkswagen kicks off in spring 2008 with a Jetta diesel promised to be the first diesel-powered passenger vehicle that meets emissions standards in all 50 states, including California and seven others that have adopted its tailpipe regulations. The new 2.0-liter 4-cylinder turbodiesel departs from the fuel-injection system VW’s now-famous TDI diesels have long employed -– but not to the detriment of fuel economy: VW promises about 45 mpg on the highway.

The VW brand also is reputed to be considering quickly pulling the trigger on a diesel Rabbit for the U.S., the better to battle Japanese HEVs in the compact-car segments.

Audi establishes its U.S. diesel beachhead in the second half of 2008 with a launch of the Q7 crossover using a 3.0-liter V6 turbodiesel.

From there, the sky’s the limit if U.S. customers embrace the diesel. VW could rock the small-crossover world if it follows through on suggestions it will fit the upcoming Tiguan compact crossover with the Jetta’s 2.0-liter compression-ignition engine, delivering what some sources suggest could be an easy combined 30 mpg along with boat-towing torque.

And in addition to the 3.0-liter V6, Audi has a smoking 4.0-liter twin-turbocharged V8 diesel that could plant in the U.S. the reputation as the best-of-both-worlds engine choice the diesel has attained in Europe.

Rolling the Dice

Customers in America don’t connect with the diesel? Regulators turn the screws even harder on emissions?

Volkswagen and Audi have a Plan B: gasoline direct injection.

Already being used for almost all of Audi’s gasoline engines and a healthy portion of VW’s, the company says the technology can generate demonstrable fuel-economy improvements without the emissions liabilities of diesel. Gasoline direct injection already has been good for a roughly 8 percent efficiency boost, and researchers say the gains could go higher.

Further down the road, engines that combine the attributes of both spark-ignition (gasoline) and compression-ignition (diesel) might generate diesellike fuel economy with the less expensively processed emissions of a gasoline engine.

BMW

HEV

BMW’s taking one initial shot at this, adopting the innovative two-mode HEV system (in essence, a transmission that’s “hybridized” by incorporating electric motors) jointly developed with GM and the former DaimlerChrysler.

An HEV version of the X5 crossover is the expected result, although BMW has been cagey regarding just when the X5 HEV will hit the showrooms. At the New York auto show in April, BMW North America CEO Tom Purves promised, “Our application of the hybrid system will certainly become the ultimate driving machine among hybrids.” So don’t rule out a hybrid uber-sedan, such as the flagship 7 Series .

In 2005, BMW showed a concept version of its X3 compact crossover fronting a proprietary hybridized “Active Transmission” and supercapacitor-based electricity storage, but that program’s likely been dumped altogether in favor of the two-mode HEV investment.

Diesel

BMW promises a 2008 launch an as-yet-unspecified model (or models) using the storming 3-liter inline six-cylinder turbodiesel that’s already used virtually throughout its lineup in Europe.

Early money is on a diesel-powered 3 Series, 5 Series or X3 crossover.

Diesels can be slow-revving and somewhat plodding –- though delightfully bursting with the torque that satisfies more than actual horsepower –- but BMW is making the effort to dispel the notion that “diesel” and “dynamic” are not mutually exclusive terms. That’s before we even discuss BMW’s magnificent V8 diesels.

Proof that diesels fit BMW’s performance image just fine: an astonishing 67 percent of all BMWs sold in Europe are diesels.

Rolling the Dice

BMW has fiddled for several years with a program to use conventional internal-combustion engines fueled by liquid hydrogen.

The company has an ambitious demonstration program underway in Germany, 100 examples of the Hydrogen 7 (a 7 Series fitted with a hydrogen-burning V12) have been built. Twenty-five Hydrogen 7s are being tested in the U.S. and BMW just completed an evaluation with NASA.

Mercedes-Benz

HEV

If Mercedes plans to leverage the two-mode HEV system in which parent Daimler has invested (along with GM and BMW), it’s keeping details under tight wrap.

All Mercedes has firmly said regarding the HEV topic is to confirm it will launch mild-HEV variants of the S-Class in 2008, using a system designed primarily to recover braking energy and reuse said energy to help propel the car, a system similar in concept to that preferred by Honda. A start/stop system also is part of the layout.

Diesel

Mercedes clearly is in the lead among all automakers, with four diesel-powered models -– the M-Class , GL-Class , R-Class and E-Class –- already in the market, albeit with emissions systems that preclude sales in eight states until next summer.

At that time, Mercedes’ 3.0-liter V6 turbodiesel will be eligible for sale in all 50 states (except as used in the E-Class), thanks to the new version of the emissions-scrubbing Bluetec system that will include a urea-injection system to eradicate that last bit of smog-promoting NOx California and seven other states insist must go away. Urea-injection for the E-Class will come later than for Mercedes “truck” lineup.

Rolling the Dice

Mercedes recently unveiled an innovative concept engine, the “DiesOtto,” hailing to the above-mentioned combustion concept marrying the diesel and gasoline (Otto cycle) engine.

Mercedes says a turbocharged, 1.8-liter four-cylinder DiesOtto could generate a thumping 238 horsepower while still managing around 39 mpg.

Ferrari

Even the world’s most revered performance brand knows it must kowtow to environmental awareness –- although Maranello, Italy’s most famous business is unlikely to be exchanging its legendary red for any shade of green.

Celebrating its 60th anniversary in July, Ferrari unveiled the Millechili concept, a two-seat coupe that weighs just 2,200 pounds -– a remarkable 660 pounds lighter than the Enzo supercar.

Ferrari says a car lightened to that degree can use a 550-horsepower, 3.0-liter V8 to outperform an FXX model with a V12 that makes 800 horses, while requiring 42 percent less fuel. Makes sense to us -– never mind the thing doesn’t have any seats.

JAPAN

Honda

HEV

After the face-losing discontinuation of the Accord Hybrid after the ’07 model year, some question Honda’s commitment to HEV technology, given Toyota’s withering HEV onslaught –- and Honda’s own startling decision to accelerate in-house diesel development.

Engineering-driven Honda is unlikely to throw in the towel, however. The company has confirmed plans for an ultra-stingy subcompact HEV, using a bespoke structure and featuring several radical innovations for both the combustion engine and HEV components.

The new HEV will be less expensive than today’s Civic Hybrid, says Honda. Likely timeframe: 2009 or 2010.

Diesel

Honda took Europe by storm when it introduced its in-house developed iCTDi 2.2-liter four-cylinder turbodiesel in 2004; until that time, the Japanese were wholly disinterested in diesels and were satisfying Europe’s demand for compression ignition engines with diesels bought from a variety of competitors.

The company plans an updated version of the iCTDi for the U.S. in 2009, replete with a revolutionary catalytic converter that will enable the diesel to meet even California’s squeaky-clean emissions regulations without the complex and expensive urea-injection components most European diesels will demand.

The likely candidate at the 2009 intro is the Accord; Honda planners may see a diesel-powered Accord as ostensibly taking the place of the discontinued Accord Hybrid. Honda may be looking to quickly execute a diesel variant of its popular CR-V compact crossover, as well.

Further along, the analyst community believes if all goes well with the no-urea-required four-cylinder diesel, work already is under way for a V6 turbodiesel to perhaps silence cries for a gasoline V8 for the likes of Honda’s Ridgeline midsize pickup and Pilot SUV, not to mention potential applications for the upscale Acura model range.

Rolling the Dice

Honda continues to whittle away at size, cost and other concerns surrounding fuel cells. And if others are working on advanced combustion processes such as the DiesOtto, you can bet Honda –- which wrote the book on that sort of stuff –- isn’t sitting on its hands.

Nissan

HEV

After a long period of stubbornness, Nissan last fall unveiled the Altima Hybrid for the U.S. market, a model that effectively borrows Toyota’s Hybrid Synergy Drive (used in some form by all Toyota HEVs) and adapts it for the Altima.

Nissan in the past has been unrepentant in publicly questioning the economics of HEVs -– both for the consumer and the company –- but last December announced “Nissan Green Program 2010 that calls for developing its own HEV technology in order to enlarge its deliberately scanty HEV stable. That program is expected to produce a new HEV system for Nissan in Japan and the U.S. by, unsurprisingly, 2010, but Nissan has offered little new information.

Diesel

Nissan’s Green Program 2010 also provides for marketing of new-age diesels in the U.S., starting in 2010, the year the company apparently plans to turn the corner in adopting energy-efficient technologies.

Somewhat surprisingly, Nissan named the Maxima sport sedan as the U.S. model earmarked for its first diesel. That says something either about how Nissan currently views the “sport” portion of the Maxima’s image, or that Nissan plans a genuinely sporty diesel experience. Either way, the engine donor will be French partner Renault SA., upon whom Nissan might call for other diesels in the future.

Nissan also was said to be casting about for diesel engines suitable for its Titan pickup and a potential medium-duty Titan, to better battle the dominating Detroit Three, all of whom will have diesels in their entire pickup model range by 2010.

But Nissan –- along with Toyota –- appear to have throttled diesel-pickup plans, spurred, perhaps, by the recent plunge in pickup sales. It was believed Nissan was talking to longtime Ford partner Navistar, as well as Japan’s Nissan Diesel, which is majority owned by the Volvo Group.

Toyota

HEV

The undisputed dominator of the HEV world, Toyota in June surpassed the 1 million mark in global HEV sales and announced it plans to sell 250,000 HEVs in the U.S. this year. Its global HEV sales target is 1 million annually by 2012, or about one-tenth of the company’s total production.

Obviously, Toyota is backing the HEV horse, and its marketing is cranked for the task. In this year’s first five months, Toyota said it moved 119,154 HEVs in the U.S. –- an increase of 75 percent over the same period last year.

Moreover, as Toyota continues to cut the cost of HEVs and federal incentives remain comparatively lucrative, the company claims a payback period of as little as six months for the Prius (versus a four-cylinder Camry) and less than 10 months for the Camry Hybrid.

But the armor isn’t impenetrable. The fifth-generation Prius, Toyota’s HEV flagship, will come to market in 2008 not with the latest high-tech lithium-ion batteries that markedly improve performance, but with an improved version of today’s nickel-metal hydride batteries, as Toyota struggles with technical issues. And HEV sales at the premium Lexus division have been unremarkable, a couple of thousand units a month.

Toyota has felt the pressure about PHEVs, too, a matter perhaps also hinging on its lagging lithium-ion development. With GM and others breathing down its figurative neck, in July Toyota announced a modest PHEV fleet test with several California entities, as well as road tests with a small fleet in Japan. Those vehicles also use nickel-metal hydride batteries.

But it’s impossible to think Toyota can be deterred from its HEV ambitions, as significant new models are coming.

In 2008, the company is likely to add to its U.S. HEV model lineup with a variant of the Sienna minivan, and in 2009 looms the production version of the prodigious FT-HS concept, a mighty 400-horsepower 2+2 sport coupe that could be judged the spiritual successor to the Supra.

Worst of all for the competition, Toyota has pledged to carve 50 percent from the cost of HEV components by 2011.

Diesel

Toyota’s first love may be HEVs, but it can’t afford to ignore diesels.

The company’s in-house-designed diesels are well-regarded in Europe, but are of small displacements unsuitable for mainstream use in America.

But the company recently entered an agreement with diesel specialist Isuzu Motors Ltd. to codevelop and produce light-vehicle diesels. Isuzu also announced it will build an engine-manufacturing plant in Japan specifically to build diesels for Toyota.

Most of the planned Isuzu-Toyota diesels appear consigned for Europe, however, and Toyota has been mum about near-term diesel models for the U.S., including the large diesel Toyota was long thought to be seeking for a medium-duty version of the new Tundra pickup.

About the Author

Bill Visnic is a nearly 20-year veteran of automotive journalism. He started at Car & Driver magazine, spent 13 years covering automotive technology for the Ward’s Automotive Group, and now is one of the press corp’s leading authorities on automotive powertrains and technology.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.