Game-changing 2015 fuel economy rules are forcing vehicle development teams to make high-stakes bets on expensive technologies -- bets that will separate the winners from the also-rans.
Not only do federal rules target a 2015 fleet average of 35.5 mpg, up from the current 27.5 mpg for cars and 23.1 mpg for light trucks; they force automakers to bet on different technology packages for each vehicle segment. Companies that do best at mixing technologies while keeping down costs will have an advantage when buyers wince at higher stickers.
It's a much more complex game than in the past. Here's why:
-- Each size category of vehicle -- "footprint," in federal jargon -- will have its own miles per gallon bogey. That means that even shrimpy little compacts will get systems such as dual-clutch transmissions and variable valve timing. That could add $1,800 to the sticker.
Many big pickups, meanwhile, will need diesel engines to get acceptable fuel economy while maintaining hauling and payload specs. Chalk up $8,000 or more for that.
Nizar Trigui, director of vehicle energy management engineering for Ford Motor Co., says the footprint rule will require automakers to develop the right technology package for each segment. Trigui adds: "Technology is not generic. It is very specific for the different segments."
-- Every automaker will have its own corporate average fuel economy requirement, sales-weighted by footprint. That last bit may sound like technical jargon, but it turns CAFE strategies upside down.
In the past, automakers could pump out stripped-down econoboxes to balance out big, gas-guzzling trucks. Not anymore. The more small cars they sell, the higher their CAFE number rises.
Overall, it's a thorny problem. Cost makes automakers especially nervous, says Robert Bienenfeld, senior manager for environment and energy strategy at American Honda Motor Co., traditionally one of the most fuel-efficient automakers and the company that historically has been most open to fuel economy regulations.
"There is concern that if there is too much cost associated with it, we're going to be hurting demand," Bienenfeld says. "It's a challenge.
"You can get too far ahead. You can make too big of a leap and go for a higher fuel economy that maybe the market won't bear."
The EPA has said that technology required for fuel economy improvements will raise vehicle prices an average of $1,300 by the 2016 model year, when the rules take effect. Environmental groups agree.
But industry sources scoff at that. To begin with, having different targets by footprint makes the idea of an average cost irrelevant, they say.
Sandra Stojkovski, president of See More Systems consulting firm, which specializes in systems engineering, says cost increases will vary by segment -- and greatly exceed $1,300.
"Most people don't understand that there's really no average number for these costs, and in fact some of these numbers are pretty high," Stojkovski says.
She projects the sticker of a compact car will go up $1,800 to $2,000. The price of a mid-sized car is likely to increase $4,500 to $6,000, she says. Outfitting a full-sized pickup with a diesel, rather than a gasoline-powered V-8, and other new equipment could cost $9,000.
Environmental groups disagree. Jim Kliesch, senior engineer for the Clean Vehicles Program at the Union of Concerned Scientists, says the $1,300 average increase "is completely realistic."
"We have done a number of total cost assessments ourselves and are getting numbers on a par with that," Kliesch says.
But automakers still foresee sharp price increases. As Honda's Bienenfeld says, "Technology costs money."
Uwe Grebe, General Motors executive director for global advanced engineering, says fuel economy gains will be expensive because "everyone is done picking the low-hanging fruit." Cheap, continuous-improvement tactics such as friction reduction already are in place.
To meet standards, automakers must move up the cost ladder. Grebe lists three steps:
1. Improvements to conventional technology, such as engines and transmissions.
They include turbocharging, gasoline direct injection, variable valve timing, cylinder deactivation and dual-clutch transmissions. Grebe estimates that 15 to 20 percent more fuel economy can be squeezed out of conventional gasoline powertrains.
2. Designing vehicles for maximum fuel efficiency.
Anne Asensio, the former Renault and General Motors designer who is now vice president for design experience at Dassault Systemes, says product development must incorporate fuel economy targets.
"They have to address those challenges at the moment that they start to design, not just 'I'm thinking about a style, how am I going to get the aero number, or how am I going to make it lighter weight?'" Asensio says.
But even weight reduction -- a basic fuel economy tactic -- often requires costly materials such as carbon fiber and aluminum. Jay Baron, president of the Center for Automotive Research, a nonprofit research organization in Ann Arbor, Mich., says that cutting weight costs about $2 a pound.
3. Electrification, ranging from stop-start to electric vehicles.
Mainly because of battery costs, electrification is pricey. But Grebe says electrification "gives you a new set of tools. When you get into hybrid, you get into the business of gaining back some energy while braking."
Grebe says cost-benefit ratios of various fuel-saving tactics are remarkably similar. Cheaper technologies produce small gains, but for hybrids, which greatly increase efficiency, the cost shoots up.
Says Grebe: "It gets you more, but it costs you more."