Suppliers benefit from tailpipe crackdown
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Suppliers of emissions controls are likely to do brisk business over the next few years as automakers redesign vehicles to meet stricter standards on soot and smog.
Emissions controls add $405 to the cost of a gasoline-fueled car with a four-cylinder engine, compared with cars built before establishment of federal tailpipe rules, the International Council for Clean Transportation said in a March report. The cost of such a car with an eight-cylinder engine is $690 higher than before the rules, according to the report.
If the EPA adopts new California rules requiring further cuts in air pollution, the cost of a new gasoline-fueled light vehicle would rise by an estimated $150 nationwide, according to a separate study commissioned by the National Association of Clean Air Agencies. The money would go to companies such as Faurecia SA, which claims a 33 percent market share for emissions controls in U.S. cars.
The French supplier predicts that annual U.S. revenue will rise to $7 billion by 2016 from $1.56 billion in 2009. One of the main reasons: new light-vehicle standards that automakers expect to be in place for the 2015 through 2025 model years.
"We have been positioning ourselves to meet that demand," said Mike Clegg, chief technical officer of Faurecia Emissions Control Technologies USA. He said he expects that "because of the different technologies that are coming out, we will have the opportunity to see revenue growth over the next 10 years."
Faurecia's main rival among exhaust system suppliers is Tenneco Inc. of Lake Forest, Ill., which had North American sales of $3.4 billion last year and gets two-thirds of its global revenue from emissions controls. It supplies exhaust systems to the Ford F series and Chevrolet Silverado full-sized pickups and Chevrolet Malibu mid-sized sedan, among other vehicles.
To hit the new targets, suppliers are likely to offer larger catalytic converters with more precious metals, or steel or aluminum fuel tanks that allow less fuel to evaporate.
Tenneco says it will offer heat pumps and chemical traps that reduce air pollution during the first few seconds after a cold start. Clegg said Faurecia will offer to use thinner, lighter pieces of steel in catalytic converters, doing a similar job by heating up the catalyst more quickly.
Meeting the California standards will take many of these technologies in tandem. That poses new engineering challenges and has helped the emergence of unconventional products, such as a radiator coating from BASF Corp. that converts ozone, the main ingredient in smog, into oxygen.
Cars with the PremAir coating do not have lower tailpipe emissions. But because the coating cleans up smog, California will offer credits to automakers that use it, letting them skimp elsewhere and still meet the standards.
You can reach Gabe Nelson at gnelson@crain.com.
