THE FUTURE OF THE CAR

FINANCIAL TIMES SPECIAL REPORT | Monday October 4 2010

www.ft.com/car­2010 | twitter.com/ftreports

From
Global light vehicle sales (m)
Europe N America Asia S America Other Figures below are
Asia’s contribution
20.2m to global growth
over past five years

hybrids to 2005
18.9m
16.8m
2..6m
5.6m

self­driving 17.7m

2010
14.0m
28.8m 1
188%

vehicles 4.6m
5.4m
23.2m

2015
A sector hit hard by cars wired up to the surround- 19.4m
ing environment.
the downturn is “The car will transform from 40.7m 45%
hoping to exploit being a viewing machine for
6.6m
manoeuvring in traffic towards
changing urban a sensorial experience 7.0m
landscapes, writes machine,” the architectural firm
John Reed J. Mayer H. said. Cars would
“interact with the urban context
26.9m

2020
in completely new ways”. 20.7m

G
eneral Motors – with
the memory of the
worst crisis in its his-
tory still fresh –
indulged in a futuristic flight of
fancy at the Shanghai Expo.
The US carmaker and its
Chinese partner SAIC unveiled
The year 2030 is a long way
off, even by the standards of 48.6m 56%
automaking, with its long prod-
uct cycles. 7.2m
However, both projects indi-
cate how automakers see the 7.4m
future of driving: electric-pow-
ered, networked to the sur- 28.9m

in March their vision of a car
for 2030: a self-driving, net-
worked bubble-car run on elec-
tric power, and small enough to
park in your living room.
It was called EN-V (for Elec-
tric Networked Vehicle) and
came in three variants with Chi-
nese names: Xiao (“laugh”), Jiao
(“pride”) and Miao (“magic”)
“Miao will transport you mag-
ically and seamlessly through
the urban landscape,” GM and
SAIC promised. “You can play
your favourite video games or
hold a videoconference with
your colleagues around the
world.
In Europe, Audi, the German
luxury carmaker owned by
Volkswagen, this year staged a
competition for architects to
imagine what urban landscapes
and driving would be like two
decades hence.
Like GM and SAIC, the win-
ner of the €100,000 prize offered
a vision of automated driving in
rounding environment, and
decidedly urban.
The crisis that sent GM into
bankruptcy court – and even
dented sales at Germany’s more-
resilient luxury carmakers such
as Audi – accelerated big, long-
term changes already afoot in
the car industry, and suddenly
brought the future closer.
The industry’s centre of grav-
ity tipped decisively to Asia,
where China replaced the US as
the world’s largest vehicle mar-
ket in 2009. Before the crisis,
analysts had predicted this
would take up to a decade.
By 2050, more than 2bn people
in emerging markets will
become first-time buyers,
demanding low-cost cars,
according to PA Consulting.
Many of them live in large cit-
ies, where policymakers con-
tending with smog and packed
streets are realising that auto-
mobiles can no longer be large,
costly hunks of metal that pol-
2025
lute for a few hours of the day
then sit idle for the rest of the
time, occupying valuable space.
Electrification of cars, already
a growing trend among auto-
makers, accelerated during the
crisis.
Governments in the US, the
UK, France and elsewhere ear-
marked stimulus grants or soft
loans for producers of electric
and plug-in hybrid cars and
their batteries, and made subsi-
dies available to early buyers.
Electrification will fundamen-
tally change the way cars are
manufactured and sold, and
transform carmakers’ relation-
ships with their customers.
7.7m
7.8m Source: JD Power Automotive Forecasting
BMW’s family of electric vehi-
cles due out in 2013, code-named
“Megacity”, will feature a light-
weight carbon-fibre and plastic
shell on an aluminium chassis.
It will mark an industry first
in terms of both materials and
architecture, a radical departure
from mass-produced cars’ usual
“unibody” form.
Electric motors are mechani-
cally simpler than internal com-
bustion engines, and so will
reduce some of the money auto-
makers earn on service in the
years after they sell a car.
On the other hand, carmakers
will have to offer warranties on
the batteries through the life of
22.0m
52.0m 46%
FT montage Photos: company; AP
a car – an obligation, but one
that holds the promise of longer Inside this issue On FT.com
relationships with their custom- Safety The once­popular vision Low­cost production
ers. of fully automated cars is being Sharing platforms across
But to keep new customers resisted by drivers, says Daniel different models offers
interested, carmakers will have Schaefer Page 3 manufacturers big savings,
to raise their game and make reports John Reed
cars more like those most cov- Interiors Buyers are
eted devices of the digital age: demanding a home from home, Batteries An infant industry
smart phones, with their portals writes Bernard Simon bears the hallmarks of a
to social networks and endless Page 4 gold rush, says
upgradeability. Bernard Simon
While millions of people in Technology
China, India and Brazil buy Two­wheelers Connectivity The
their first cars, something else can show the car that can compose
is happening in the developed way, says and send its own
world. Younger people in Rohit Jaggi tweets is just the start,
Page 4 writes John Reed
Continued on Page 2
2 ★ FINANCIAL TIMES MONDAY OCTOBER 4 2010

The Future of the Car

From
hybrids
to higher
tech
Continued from Page 1
Europe have been telling poll-
sters that the one device with-
out which they cannot live is
not a car, but a phone.
Enter the smart car: an auto-
mobile wired to the internet and
– increasingly – other cars and
roadside infrastructure. Drivers
increasingly demand a seamless
Sales feed off
hype and subsidy
be priced more like small luxury
Electric and hybrid cars than mass-market vehicles.
In a poll carried out for the
Limits to range will Financial Times by Nielsen in
prove crucial for September, three-quarters of
respondents in the US and the
these vehicles, say UK said they would consider
John Reed and buying an electric car. However,
more than half in each country
Jonathan Soble said they were unwilling to pay
any more for them.
The oil price and the rate at
cars, whose global sales Toyota
dominates and in which it has
invested billions of dollars.
Both companies can point
to recent achievements in
their home market to support
their favoured technology. The
Leaf, due to arrive in dealer-
ships in December, exceeded
Nissan’s first-year Japanese
sales target of 6,000 vehicles in
just two months. The Prius was

transition from the social net-
working, entertainment, and
communications networks they
use at home to their cars.
“If you look back over the
past 10 years, everything within
the car got connected to every-
thing else, with computers
steering everything,” says Peter
Schwarzenbauer, Audi’s head of
marketing and sales.
“The change over the next
10 years will be that the car
gets connected to its environ-
ment.”
The car of the future, rather
than just losing value in the
driveway, might do a better job
of earning its keep, too.
Utility companies are study-
ing schemes that would see elec-
tric cars recharging during the
night when rates are low, then
either using the power during
peak hours or selling it back to
the grid.
If cars are inexorably converg-
ing with phones, automakers
are also realising that they need
to make their products just as
adaptable.
Customisation is already a
lucrative business line for car-
makers – notably for urban
minicars such as Fiat’s 500. For
its forthcoming A2, Audi is stud-
ying the possibility of selling
mobile phone-like “apps” allow-
ing customers to download and
activate features already engi-
neered to the car, such as stiffer
suspension or heated seats.
Carmakers are also reaching
out to the sceptical hard core of
young drivers unsure whether
they want to own a car at all.
A
fter years of develop-
ment – and substantial
amounts of hype – a
new wave of battery-
powered cars will begin arriving
in Japan and the US by Decem-
ber, led by Nissan’s Leaf and
General Motors’ Chevrolet Volt.
All the big carmaking groups
plan to produce battery-powered
cars over the coming three
years, from China’s SAIC to
Germany’s BMW – which plans
an entire new sub-brand for
electric cars from 2013.
Electric and plug-in hybrid
cars have captured policy-
makers’ imaginations, prompt-
ing governments around the
world – even in the fiscally
stretched US, Spain, Portugal,
and the UK – to pledge big sub-
sidies to early buyers.
Electric cars have also
galvanised private investors,
allowing Tesla Motors and Bet-
ter Place, Silicon Valley start-
ups in electric cars and charg-
ing infrastructure, respectively,
to raise hundreds of millions of
dollars for untested businesses
during the depths of the credit
crunch.
The technological bandwagon
forming around plug-in cars
is remarkable, given the serious
doubts about whether consum-
ers will accept the cars’ high
prices and short range. Even
with subsidies worth $7,500 in
the US and £5,000 ($7,900) in the
UK, the Leaf and the Volt will
which lithium-ion batteries’ per-
formance will improve are two
other variables affecting the
adoption rate for electric cars.
Japan’s car industry might
seem a good place to look for
clues about what is to come.
However, even there, opinions
about what customers will want
are sharply divided.
On the one hand Carlos
Ghosn, chief executive of
‘There will be a lot of
battery electric
vehicles in the future
for urban usage’
Nissan, plans to launch four
electric cars for Japan’s third
largest carmaker by 2014, and
another four at its French ally
Renault. A long-time sceptic
about hybrid cars – which he
sees as an interim technology –
he has predicted that one in
10 cars globally will run on bat-
tery power alone by 2020.
Toyota, for its part, agreed in
May to invest $50m in Tesla,
and plans to introduce a bat-
tery-only city car in 2012. How-
ever, Takeshi Uchiyamada, who
heads the carmaker’s product
development, says it will pro-
duce only “a few thousand” of
the small commuter vehicles to
start, and bets that more
consumers will want the hybrid
Japan’s best-selling car of any
kind for the 16 months ending
in August.
But the numbers say little
about real consumer demand –
and highlight the extent to
which plug-in cars will remain
creatures of subsidies for years
to come.
The Prius took Japan’s top
sales spot only after the govern-
ment introduced subsidies last
year worth more than Y400,000
($4,770) for low-emission vehi-
cles. The incentive expired in
September and Toyota execu-
tives are braced for a sharp fall
in sales.
JD Power, the consultancy,
recently revised upward its fore-
cast for electric vehicles, which
it now predicts will overtake
hybrids by 2015, mostly because
of government incentives. Even
so, it says both pure electric and
plug-in hybrid cars will account
for a scant 3 per cent the overall Live wire: General Motors is hedging its bets with a ‘range extender’ on the Chevrolet Volt Mark Blinch/Reuters
world market by 2020.
Price aside, driving range development. “It is a partial surprise. Analysts say a fresh the US in one of the industry’s
remains a formidable barrier to answer for a particular use: spike in petrol prices as the biggest tests of battery-powered
pure electric cars. For this rea- there will be a lot of battery world economy recovers could cars to date. It found that most
son GM is including a petrol electric vehicles in the future lower the break-even point for drivers charged the car only two
“range extender” on the Volt for for urban usage.” electric cars. Early drivers of or three times a week and
longer trips. Even so, GM is He adds: “When we ask people electric cars have also raved mostly used charging points at
keeping expectations for electric what they are expecting from about their high torque and lack home or at work.
cars modest. an electric vehicle, they say of engine noise. Some have “Before they drove the car,
Battery limitations will hold ‘500km of range, absolutely found their limited ranges eas- they wanted us to install a
back the “electric revolution” quiet, doesn’t emit anything, ier to accept than they had charging pole every mile,” says
says Frank Weber, head of and I’m willing to spend €1,000 thought. Ulrich Kranz, the BMW execu-
corporate and product planning more for that vehicle than my BMW recently tested 600 elec- tive heading its “Project i” elec-
at GM’s Opel unit, who played a conventional one’.” tric versions of its Mini small tric cars programme. “After a
central role in the Volt’s Yet the technology could car in Germany, the UK and week this [desire] was gone”.

Utilities hope vehicles will open electric avenues

PSA Peugot Citroën recently
launched a scheme that allows
drivers to pay for “mobility
units” used to rent a car,
scooter, or even a bicycle. Most
big automakers now are study-
ing “mobility” – a new industry-
wide buzzword.
Amid all this blue-sky think-
ing, profound doubts remain
around customers’ acceptance of
new products such as plug-in
cars.
While decisionmakers clamber
to subsidise “silver bullet” tech-
nologies, for example electric
powertrains and lithium-ion
batteries, some of the industry’s
biggest technological strides are
coming in relatively prosaic
areas such as downsized and
turbocharged engines.
There is also the perennial
question of what carbuyers will
value enough to buy.
“The big question today is not
the technology,” says Patrick
Pelata, chief operating officer of
Renault. “The big question is
what customers need, and how
much they will pay for it – all
our strategy is driven by that.”
Renault and its partner Nis-
san announced in April a part-
nership with Daimler allowing
the three companies to pool
costs in small and electric cars,
vans, and other technologies.
Automakers, while offering
customers endless variants in
the showroom, are radically
simplifying their manufactur-
ing, building more cars on fewer
platforms with a greater com-
monality of parts.
Ford’s new Focus midsized
car, for example, will have 80
per cent of parts in common in
its different versions around the
world.
And amid all the doubts about
the future, there are reasons for
optimism too: while the politi-
cally correct term these days is
“mobility”, it looks like driving
has a future. All the entrants to
Audi’s urban design competition
included cars.
Contributors
John Reed
Motor Industry Correspondent
Bernard Simon
North America Motor Industry
Correspondent
Rohit Jaggi
Aircraft and Motorcycle
Columnist
Power companies
Electricity providers are
gearing up for very
uncertain levels of demand,
reports John Reed
Cars have a lot of attention and money
lavished on them but they spend much
of their time idle – expensive, depreci-
ating deadweight taking up precious
urban and household space.
But with time, say power companies,
electric cars will be able to store elec-
tricity overnight, when it is cheaper,
then during the day – when rates are
higher – sell it back to the grid or feed
it into your home. Cars could thus help
utilities smooth out the daily spikes in
power demand and allow owners to
benefit from lower rates.
While such vehicle-to-grid schemes
are still only being studied, utility com-
panies are already teaming up with
carmakers to explore the opportunities
– and future demands on their power
supply – posed by cars that run on
electricity rather than petrol.
“It’s a business – not only for new
electricity, but to develop infrastruc- that will link to EDF’s sponsorship of left to their own devices,” says Ms companies – and independent studies
ture and provide services to our cus- the 2012 Olympic games. Carver. such as the UK’s King Review on low-
tomers,” says Andrea Valcalde, head of EDF also has a partnership with Toy- Most of Europe’s big utility comp- carbon cars – have concluded that elec-
innovation and environmental activi- ota, which in July began testing 20 of anies, from Germany’s RWE to Swe- tric cars have a lower carbon footprint
ties for Italy’s Enel. The notion of cars
storing power as part of a “smart grid”
its Prius plug-in hybrid cars with fleet
customers, including London’s Metro-
den’s Vattenfall, have similar partner-
ships with automakers on electric cars.
than conventional ones, whatever the
source of their power. “Even based on
scheme could work, he thinks, in about politan Police Service, Transport for They are also working together to the current-generation mix, EVs are
10 years’ time.
For now, the utility is working with
London, broadcaster Sky, and the Gov-
ernment Car and Despatch Agency.
study the impact on Europe’s power
grids of the coming wave of electric
around 30 per cent lower-carbon than
an internal combustion engine equiva-
Daimler, Renault and Piaggio on “We’re looking to understand how and plug-in hybrid cars under a project lent”, says EDF’s Ms Carver.
projects to develop charging infrastruc- the vehicles are used, and how we can called G4V (Grid for Vehicles). Renault, which is launching four
ture for electric vehicles and to study Given most analysts’ forecasts of a electric models by 2014, is not ducking
how drivers use them modest adoption curve for electric cars, the fact that its cars’ “well-to-wheel”
Enel is joining Daimler in a pilot ‘EVs are around power companies do not have to worry impact is not zero. In the UK, when the
of 100 Smart-brand electric cars in 30 per cent lower­carbon about an early surge in power needs. French carmaker recently showed a
Milan, Rome, and Pisa, for which it is However, as more plug-in cars arrive, plug-in version of its Kangoo van to
developing 400 public and private than an equivalent utilities will have to meet the demand – potential fleet customers, it offered
charging points.
Unlike some early electric vehicle
internal combustion engine and be prepared to answer tough ques-
tions about where the power comes
estimated carbon dioxide counts for the
cars. “We put in a fair disclaimer: ‘Zero
schemes in Europe, where power ’ from. emission when used’,” says Thierry
was offered free at charging points, incentivise users to recharge at specific Sceptics about EVs question the net Koskas, Renault’s head of vehicle elec-
Enel will charge for what it supplies. times,” says Bethan Carver, an EDF environmental benefit of running cars trification.
“We want to send a clear message executive. As the company brings more on electricity produced by “dirty” In France, he says, electric cars will
that this is a real business,” says nuclear power online in coming years, sources such as coal and oil. While emit about 12 grams of CO2 per km but
Mr Valcalde. it wants to flatten the “spiky” demand electric cars’ true carbon footprint is the European average will be more like
In Britain, EDF is also investing in profile for power to match supply from smallest in countries such as France, 60-70 g/km. This will change as more
on-street infrastructure. In partnership nuclear plants, which is flat through- which derives most of its power from countries decarbonise their grids to
with Elektromotive, a Brighton-based out the day. nuclear plants, it is larger in Britain, help meet international commitments
private company, it has installed about EDF is also working with Daimler to the US and China, with their higher to reduce greenhouse gases.
85 charge points in the UK and plans install charge points to serve a pilot of share of power generated from non- “We need to see things in a dynamic
another 550 in London as part of the 60 electric Smarts in Britain. “We’re renewable sources. way,” says Mr Koskas. “The picture
city’s “Plugged-in Places” initiative studying how customers charge when Most automakers and utility will be very different in 10 or 20 years.”
Hydrogen car plans go off the boil
tailpipe emission is water – fuel an analyst at Advanced pushed hard by Daimler, which
Fuel cells cells stood the best chance of Research Japan. has spent billions of euros devel-
replacing today’s petrol engines, Not everyone is giving up on oping fuel-cell technology.
Jonathan Soble and Mr Fukui believed. the fuel. Hyundai, the fast-rising This year the premium car-
Daniel Schaefer note In June 2008, Honda started
leasing its first hydrogen fuel-
South Korean carmaker, has
announced plans to sell a fuel-
maker started production of a
hydrogen drive module that fits
a shift in sentiment – cell vehicle, the FCX Clarity, to cell car in 2012, while General into a B-class compact car and
with some exceptions a few hundred drivers in Cali-
fornia, becoming the first car-
Motors hopes to have a produc-
tion-ready version by 2015.
its Citaro city bus.
In 10 years, the company will be
maker to put the technology in Perhaps the deepest well of selling “a few hundred city buses
In 2008, a battle for the future of the marketplace enthusiasm is in Germany. Last with fuel cells“ a year, says Chris-
automotive propulsion seemed Two years later, however, and year, a consortium including tian Mohrdieck, head of fuel-cell
to be shaping up in Japan. Honda executives rarely men- Daimler, the energy group development, adding that “several
On one side were Toyota and tion hydrogen. During the reces- EnBW and the industrial gas dozen” have been ordered.
Nissan, which were promoting sion, the company slashed fund- maker Linde agreed plans to Daimler plans to begin mass
electric motors powered by ing for the Clarity, which costs build 1,000 hydrogen stations in production of hydrogen-powered
rechargeable batteries as the more than $1m each to build. the next five years, at a cost of passenger cars once the refuel-
best alternative to internal-com- Takanobu Ito, who succeeded up to €2bn. The first 25 will ling network is completed, Mr
bustion engines: Toyota with its Mr Fukui as president in 2009, Mohrdieck says. He is adamant
Prius petrol-electric hybrid, and says the infrastructure needed that the company can sell the
Nissan with the Leaf, a forth- to process and distribute hydro- ‘We will have to bring vehicles at a profit – something
coming all-electric car that was gen “isn’t moving forward”. 500,000 to 1m cars many industry experts doubt.
then still on the drawing-board. Instead, he has steered Honda Annual output of 80,000 to
On the other side was Honda, into the battery camp, expand- on to the roads before 100,000 units would be needed to

Daniel Schaefer
whose president, Takeo Fukui,
dismissed electric vehicles as
Frankfurt Correspondent underpowered “golf carts”.
Jonathan Soble Although Honda was developing
Tokyo Correspondent a new version of its hybrid – the
Insight, launched last year – Mr
Rohit Jaggi Fukui insisted the technology
Commissioning Editor would be limited to smaller
models and said Honda had no
Steven Bird plans for a battery-only vehicle.
Designer Instead, Honda was backing
an even more futuristic technol-
Andy Mears
Picture Editor ogy: hydrogen fuel cells, which
harness the chemical energy
For advertising details, contact: produced when hydrogen, stored
Stuart Wakling on-board, is mixed with oxygen
+44 020 7873 4129 from the air.
stuart.wakling@ft.com Powerful as well as super-
Tough cell: Honda has cooled to its fuel­cell Clarity Bloomberg News clean – a hydrogen car’s only
ing the company’s line-up of
hybrids, and plans to launch an
all-electric vehicle in 2012.
Honda’s move is symbolic of a
broader shift in the fortunes of
hydrogen fuel-cell cars. In the
US, the Obama administration
cancelled $100m in annual
research funding last year,
reducing overall public spend-
ing on the technology by 60 per
cent. California’s “hydrogen
highway”, was meant to have
150 filling stations serving cars
such the Clarity by this year,
but only 30 have been built.
“Hydrogen cars look even fur-
ther off than they did a couple
of years ago,” says Koji Endo,
2020 to fully utilise
the planned capacity’
appear in large cities such as
Berlin and Hamburg next year.
Andreas Opfermann, head of
innovation at Linde, says the
hype around hydrogen’s main
rival, lithium-ion batteries, has
outgrown their capabilities.
“Today’s combustion-engine
cars are all-round-vehicles.
There will be a fragmentation of
drive technologies, just as we
have seen a fragmentation of
car segments.”
The German initiative is being
make production economically
viable, he estimates.
According to Mr Opfermann,
“We will have to bring 500,000 to
1m cars on to the roads before
2020 to utilise fully the planned
hydrogen station capacity.”
In Japan, meanwhile, the
technology is being kept alive in
the housing sector, where a
group of natural-gas utilities
has joined hardware makers to
sell fuel-cell units for residential
heating and power generation.
Manufacturers include Pana-
sonic and Toshiba, and Toyota –
which for all its current focus
on hybrids, may yet see a future
use for hydrogen infrastructure.
FINANCIAL TIMES MONDAY OCTOBER 4 2010 ★ 3

The Future of the Car

Mass reduction techniques

cross into the mainstream
departure from its current
Weight saving line-up of cars. Indeed, the car
will be built using a different
Exotic, lighter manufacturing process – and
materials ease using different materials – from
most other cars on the road.
the load on motors The car will have a flat bat-
and batteries, tery pack smaller than the Mini
E’s inside a lightweight alumin-
writes John Reed ium chassis called a “Drive”
module. Atop it will sit a “Life”
says it is as strong as steel, but
about 50 per cent lighter,
whereas aluminium, is “only” 30
per cent lighter than steel.
BMW says that the car will
seat four and have a range of
160km to 180km between
charges. The carmaker will
source the carbon fibre through
a 49-51 per cent joint venture
announced last year with SGL
While curing carbon compo-
nents for a Formula One racing
car “takes hours” in an oven,
says Mr Kranz, “our manufac-
turing process is different”.
BMW is keeping close wraps on
the details.
Automakers have long been
working with new materials and
manufacturing processes in a
bid to take weight out of cars.

W
hen BMW recently
fielded a fleet of
about 600 electric
cars to study their
viability in real-life driving con-
ditions, it packed a 260kg bat-
tery pack into the back of its
small Mini.
Test drivers liked the car, but
complained about the bulky bat-
teries, which took up most of
the boot space and all of the
back seat. The Mini E is a test
mule, BMW says, and as such
not destined for series produc-
tion; nor is the Active E, a forth-
coming battery-powered test
version of its 1 Series small car.
But the Munich carmaker’s
“Megacity” mass-produced elec-
tric vehicle, when it goes on sale
in 2013, will mark a radical
module – a passenger cabin
made mostly out of carbon-fibre-
reinforced plastic.
BMW’s decision to build the
car out of expensive aluminium
and plastic composites turned
heads in the industry – as did
the Megacity’s departure from
the classic “unibody” method of
designing and building cars.
But BMW says the weight sav-
ings will allow it to spend less
on the Megacity’s battery pack.
“Battery cells are quite expen-
sive, so we said, Let’s reduce the
weight of the vehicle – we can
achieve the same mileage with
less battery,” says Ulrich Kranz,
the head of BMW’s “Project i”
electric-car unit.
Carbon fibre has long been
prized in the industry. BMW
Because of carbon
fibre’s high price, it
has until now mostly
been used in aircraft
and racing cars, or
on luxury vehicles
Group, a leading German-head-
quartered carbon producer.
Because of carbon fibre’s high
price, it has until now mostly
been used in aircraft and racing
cars – or in small quantities on
luxury vehicles, such as some of
the bumper reinforcements and
roofs in BMW’s own “M” high-
performance models.
The pressures to do so have
changed over the years.
In past decades, a leading fac-
tor pushing for weight reduction
was the growing number of
safety and comfort features
automakers were building into
cars, which made them heavier
– for example electric seats and
stronger steel bodies.
Over the past decade, regula-
tors’ demands for lower-
emission, more fuel-efficient
cars have become the factors
pushing carmakers to find
lighter materials.
The industry’s new push into
electric cars has intensified the
quest.
Tesla Motors, the recently
floated US electric carmaker,
chose Lotus, a British niche pro-
Light touch: the Megacity’s construction allows for cheaper batteries – and better handling, BMW says
ducer, to make the bodies for its
pioneering roadster based on its
Elise, largely because of their
light weight.
Among BMW’s luxury compet-
itors, Audi has also been a
leader in lightweight design,
most notably the aluminium
bodies based on its trademark
“Space Frame”. The carmaker
has made more than half a mil-
lion cars with aluminium bodies
since 1994.
While high-tech materials
used to be solely the province of
luxury automakers, their use is
filtering down to volume pro-
ducers as the value of weight
savings in their cars goes up.
PSA Peugeot Citroën, in part-
nership with its supplier
Rhodia, is studying ways of
using high-tech materials
including composites in its cars.
“For a lot of parts, it is diffi-
cult to be cost-competitive ver-
sus steel,” says Marc Duval-
Destin, the company’s head of
research and development. “But
the value of lightweight solu-
tions is really increasing now.”
Automakers are also using
new alloys, metal foams, and
enhanced manufacturing meth-
ods to save on weight. By using
more integrated electronics in
their cars, automakers are also
saving on weight and costs by
reducing their use of chips and
the cable needed to connect
them – about 35kg in the typical
car, according to Engelbert
Wimmer of PA Consulting.
While traditional safety fea-
tures added weight to cars, new
“active safety” features that
reduce the speed of any crash,
or avoid collisions entirely, will
allow the industry to take even
more weight out of its cars.
“We have just begun to
exploit the potential of light-
weight construction,” says Mr
Wimmer.

Buyers seek
assistance not
loss of control
Safety
Drivers limit the
effectiveness of
electronics, says
Daniel Schaefer
If one technological feature
of a car ranks high on cus-
tomers’ shopping list, it is
safety.
Carmakers and their sup-
pliers around the world
have been investing heavily
in safety features over the
past decade, and a slew of
new products will soon
start to trickle down from
high-end cars.
After a first wave of elec-
tronic systems such as anti-
lock braking systems (ABS)
and electronic stability pro-
grammes (ESP), customers
are starting to adapt to
safety systems that become
even more actively involved
in a driver’s reactions.
The new buzzword in the
car industry is “driver
assistance”. This decade
will see the roll-out to the
mass market of a number of
these “active” and highly
advanced safety features
such as emergency braking
systems or lane departure
warnings.
“Downsizing might be a
‘It will take five to
10 years until driver
assistance systems
will be as common
as ABS and ESP’
trend for engines but it is
definitely not one for safety
features,” says Ralf Cramer,
head of the chassis and
safety division at Continen-
tal, the German car parts
supplier.
The trend has been
spurred by customer
demand, tighter regulation
and carmakers’ realisation
of its relevance to image.
“Today, a carmaker
spends 15 to 20 per cent of
the development costs for a
new model on safety fea-
tures,” says Hermann Stef-
fan, head of the institute for
vehicle safety at the Techni-
cal University of Graz in
Austria. “Twenty years ago,
it was almost zero.”
The issue is more press-
ing than ever. The number
of fatal car accidents has
been falling in Europe in
the past two decades (from
70,000 to about 39,000 this
year). But worldwide the
figure is still on the rise,
driven by the rapid trend
towards individual mobility
in emerging markets.
The UN estimates that
1.3m people die each year in
road accidents. It has called
the period to 2019 the “dec-
ade of action for road
safety”, aimed at halving
the number of road deaths.
One way to get there will
be to make sure that every
car sold has ABS and ESP.
Carmakers in the US will
be forced by law from 2011
to install ESP on every car
they sell. Similar laws will
take effect in Europe, Aus-
tralia and South Korea in
the next few years, and
some emerging markets are
expected to follow.
Werner Struth, head of
the chassis systems control
business unit at Bosch, the
world’s largest car parts
supplier, says: “It will only
take another one or two
years and this will be stand-
ard everywhere.”
Even low-price cars such
as the Dacia Logan will
soon be equipped with ESP.
Carmakers are also roll-
ing out a number of fea-
tures that will take some
decisions out of drivers’
hands.
Emergency braking sys-
tems are one. They monitor
the area in front of a car
with radar and/or video sen-
sors. If they compute that
there is a danger of a colli-
sion, they give an acoustic
warning. And if the driver
fails to react they brake
automatically.
Mr Struth at Bosch,
which has sold the first
such predictive emergency
braking systems for Audi’s
premium A8 car, says that
this feature will soon be
sold in the middle ranks of
cars as well.
“We expect a doubling or
even tripling of driver
assistance sales within the
next two to three years,” he
says. “This will lead to a
rapid cost reduction.”
Mr Cramer at Continental
says: “It will take five to 10
years until driver assist-
ance systems will be as
common as ABS and ESP
are today.”
Other systems, such as a
lane departure warning,
and a hold control that
prevents the car from roll-
ing backwards at traffic
lights, will spread to the
mass market in this decade.
But there is a limit to
how much control drivers
are prepared to give away,
says Mr Steffan. “Auto-
matic cruise control, which
adapts the driving speed to
traffic and speed limits, has
not been widely accepted
yet, as customers feel
restricted in their driving
freedom,” he says.
This is why most carmak-
ers’ forecasts about the
future of vehicle safety look
different from the auto-
matic, driverless visions
commonplace in the past.
Manufacturers now see a
future in which cars bristle
with sensors and communi-
cate with each other – to
warn and help the drivers,
but not to take over control
from them.
But the obstacles for
introducing such a system
are many. Unlike with ESP
or driver assistance sys-
tems, the customer who
pays for such features will
not reap any benefit until
most cars are equipped with
the relevant sensors and
communication devices.
“What we will need is a
business model that will
help to entice customers to
buy such a system,” says
Mr Struth. “This does no
exist yet.”
4 ★ FINANCIAL TIMES MONDAY OCTOBER 4 2010

The Future of the Car

Mobile phone generation cools on cars Old tech still

Alternatives
Sharing or rental
could replace
ownership for
many drivers,
says John Reed
Marketing and strategy
executives at automakers
who poll young people
about cars are meeting a
chilly indifference toward
the notion of owning one at
all.
While buying an automo-
bile remains a leading aspi-
ration for consumers in
emerging markets, a grow-
ing proportion of younger
people in Europe – and, to a
smaller extent, the US – say
the one device they cannot
live without is a mobile
phone, not a car.
A cooling of younger peo-
ple’s enthusiasm toward
cars has been noted for sev-
eral years in Japan.
A new frugality after the
credit crunch has fed the
trend, as has the rise of
social networking sites.
Back­seat driving: the rear of the Buick LaCrosse was designed with chauffeur­driven Chinese buyers in mind
“Physical mobility is not
as necessary as it was in
the past,” says Beatrice
Fourcher, Renault’s head of
production. “It’s not neces-
sary to get in a car to get
connected.”
Ms Fourcher says the
number of customers aged
35 or less in France who
want to buy a car has fallen
from 30 per cent 10 years
ago to only 20 per cent now.
“It’s too expensive,” she
says. “They want to put
money into other things.”
Carmakers, ever resource-
ful, are searching for new
ways to give these sceptical
younger consumers prod-
ucts that fall short of full
car ownership, but attach
them to their brands.
Many leading manufac-
turers, including Renault,
have appointed executives
or working groups responsi-
ble for “mobility” – one of
the biggest buzzwords in
the industry these days.
Some are now studying
car-sharing or rental
schemes, including ones
that meld cars with public
or other forms of transport.
PSA Peugeot Citroën
recently launched an inter-
net-based scheme offering
subscribers the ability to
rent a “mobility solution”.
Users of Mu by Peugeot
pay a fixed fee for “mobility
units” – not unlike a mobile
phone subscription package
– which they can redeem to
rent a large car or cabriolet
for the weekend, a scooter
for an urban jaunt, or even
a bicycle.
The buzz around “mobil-
ity” has coincided with the
growing popularity of car-
sharing schemes such as
Zipcar. Frost & Sullivan,
the consultancy, says mem-
bership of such schemes in
Europe will rise from about
500,000 today to 5m by 2016.
It also dovetails with the
launch of the first of several
electric cars. Renault and
BMW are among carmakers
that think plug-in cars will
appeal to a generation scep-
tical of automobiles – not
just because of their
smaller carbon footprint,
but because of the connec-
tivity possibilities they will
offer via recharging infra-
structure.
“The electric vehicle is a
solution: it’s new, it’s fresh,
it’s different from what
your parents had,” says Ms
Fourcher. “Also, it’s a con-
nected car.”
Daimler’s Smart car
brand is piloting a car club-
like scheme in Ulm, Ger-
many and Austin, Texas,
under which users can pick
up a car on the street and
drive or drop it off as
‘Physical mobility is
not as necessary
as it was. It’s not
necessary to get
in a car to get
connected’
needed, and pay for the
service with a smart card.
Paris plans on expanding
its Vélib’ public bicycle hire
scheme to include cars.
“You can imagine a
future where most vehicles
that provide battery electric
propulsion for urban usage
can be owned by a car-
sharing company, a leasing
company, a city, or a utility
company,” says Frank
Weber, head of corporate
and product planning for
General Motors’ European
Opel unit. “They might take
the car away from the per-
sonal ownership we have
today.”
GM is studying possible
shared mobility solutions
involving electric cars and
recharging stations able to
identify drivers. However,
adds Mr Weber: “There’s
too much uncertainty – we
need products first to
understand people’s electric
mobility needs”.
BMW says it is looking at
new sales models or rental
schemes based on the needs
of customers who live in big
cities and do not have
enough space for more than
one car.
An urban driver who uses
his electric car 350 days a
year to get to work, for
example, might need a
larger car once a year to
take on holiday. “We are
studying this, and looking
at whether there are ways
of making money on this,”
says Ulrich Kranz, head of
the carmaker’s “Project i“
team devising its Megacity
line of electric cars.
Rival luxury brand Audi
is also, according to a sen-
ior marketing executive,
studying a pool leasing
scheme akin to a car club,
where participants pay a
monthly fee for a vehicle
based on their needs for a
week, a weekend, or a day.
“Are young people still
interested in cars?” asks
Peter Schwarzenbauer,
Audi’s head of marketing
and sales. “If you have the
right product, the answer is
‘yes’.”
The “iPhone generation”
is, he says, used to getting
hardware free with the
right mobile-phone con-
tract. So Audi, he says, is
studying the possibility of
allowing customers to pay
for usage – say, 10,000km of
driving a year – rather than
the actual car.
“We have to add to – not
replace – the normal way of
selling cars,” says Mr
Schwarzenbauer. “We are
trying to figure out which
format would attract which
focus group. We think the
possibilities are unlimited.”
has plenty of
mileage left
Powertrains
It is too early to
bury internal
combustion, says
Bernard Simon
When Oliver Kuttner, a
Virginia real-estate devel-
oper, brought together a
group of investors to enter
a $10m competition for a
highly fuel efficient but
commercially viable vehi-
cle, he expected they
would produce an electric
or hybrid car. He was so
confident that electric
power held the key to suc-
cess that the venture was
named Edison 2.
Yet Mr Kuttner and his
colleagues realised early on
that the weight of batteries
currently on the market
made them unsuitable for
the project. Instead, they
chose an internal combus-
tion engine powered by eth-
anol, complemented by
lightweight materials and
an aerodynamic design. The
final product weighs just
826lbs.
Edison 2’s experience is
evidence that for all the
headlines garnered by elec-
tric cars, many of the most
meaningful advances in
low-emission, fuel-efficient
powertrains will come
from improvements in tra-
ditional petrol and diesel
technology.
“We were surprised at
how clear it was that
we were better off concen-
trating on an internal
combustion engine”, says
Ron Mathis, Edison 2’s chief
designer.
Ian Penny, global engines
director at Ricardo, a con-
sultancy, told the Financial
Times earlier this year:
“There is more scope to
improve the internal com-
bustion engine now than
there has ever been.”
Mike Omotoso, a power-
train specialist at JD Power,
another consultancy, adds
that improvements in gaso-
line technology can be
accomplished at relatively
advanced electrical sys-
tems.
Improved technology has
enabled carmakers to
replace eight- and six-cylin-
der engines with smaller
models that offer greater
fuel efficiency but little or
no drop in performance.
According to Ward’s
Automotive Reports, four-
cylinder cars made up
61.9 per cent of US produc-
tion last year, up from
46.6 per cent in 2000. The
proportion of four-cylinder
light trucks – pick-ups
and sport-utility vehicles
– almost doubled to
14.8 per cent.
Direct petrol injection
and turbochargers enable
Ford Motor’s new EcoBoost
engine to achieve as much
power in a six-cylinder con-
figuration as a traditional
V8. The number-two Detroit
carmaker aims to turn out
1.5m EcoBoost engines a
year by 2013, fitting them in
80 per cent of its models
worldwide.
Others are working on
engines that, they claim,
will go even further than
the EcoBoost in combining
fuel efficiency, low emis-
sions, compact size and per-
formance.
Ricardo has developed a
technology – known as eth-
anol boost direct injection –
which it expects to demon-
strate by early next year.
Another potentially
ground-breaking technology
being developed by General
Motors and Volkswagen,
among others, combines the
Ford’s EcoBoost
engine achieves as
much power from
six cylinders as a
traditional V8
efficiency of diesel with the
low emissions of the most
advanced petrol engines.
Known as homogenous-
charged compression igni-
tion (HCCI), the process
could improve fuel economy
by 25-30 per cent. Mr Omo-

Everything but the kitchen sync

Interiors
Constantly connected
consumers are asking
more of their vehicles,
writes Bernard Simon
Studies, says: “The consumer is
going to want [carmakers] to
deliver everything they’ve got in
the rest of their lives, whether it’s
a good idea or not.”
The list of “everything they’ve
got” keeps growing. A JD Power
survey found that 47 per cent of
drivers owned cars with heated
seats last year, up from 35 per
quarrelling children out of each
other’s hair.
Chrysler’s minivans feature
swivel seats and a small, remov-
able table that turn the area
behind the driver into what the
Detroit carmaker calls “a family
room on wheels”. They boast
no fewer than 13 cup and bottle
holders.
●Selection of materials. “Increas-
ingly, [consumers] want natural
materials, as long as they are
affordable,” Mr Mays says. Plas-
tics are giving way to natural
fibres. The seat fabric in some
Ford models is made from
recycled yarn, and reclaimed
wood is used for accents on some
premium models.
However, the need for a car to
withstand extreme weather and
driving conditions has hampered
progress towards sensitive iPad-
type controls. Even so, Mr Mays
predicts, “it’s just around the
corner”.
Cultural differences present
another challenge, even as car-
makers move towards global plat-
low cost, both for carmak-
ers and their customers.
JD Power estimates that
global sales of pure electric
and hybrid vehicles will
reach about 2.8m units in
2015, or less than 5 per cent
of total light-vehicle sales.
Even after that – probably
for at least another 20 or 30
years – the vast majority of
vehicles on the roads, espe-
cially in emerging econo-
mies, will continue to be
powered by petrol, diesel
and, to a lesser extent, bio-
fuels such as ethanol.
toso predicts that HCCI
engines will be commer-
cially available within the
next few years.
On another front, Micro-
soft founder Bill Gates
teamed up earlier this year
with Khosla Ventures, a
California venture capital
fund, to invest $23.5m in
EcoMotors, a two-year-old
company in suburban
Detroit staking its future on
a opposed-piston opposed-
cylinder (Opoc) internal
combustion engine.
If all goes to plan, com-

E
ven as car buyers – espe-
cially Americans – seek
out smaller, more fuel-
efficient vehicles, they
are demanding more space with
more amenities inside the cabin.
The growing emphasis on inter-
iors reflects the evolution of cars
into much more than a means of
transportation. They increasingly
cent in 2006.
The proportion of cars with con-
trols on the steering wheel has
climbed from 53 per cent to 73 per
cent, while more than two-thirds
now offer compatibility with MP3
devices, up from slightly more
than a quarter in 2006.
The evolution of car interiors is
especially noticeable in minivans,
J Mays, Ford Motor’s chief
designer, ticks off three priority
Voice and graphical
interface technology is
paving the way for the
elimination of buttons,
●Most important are advances in
the interface between man and
machine. As Mr Mays puts it, the
demand for “seamless sociability”
and “total connectivity” is help-
ing blur the lines between home,
office and car.
Improvements in voice and
graphical interface technology are
paving the way for the elimina-
forms.
General Motors designed the
interior of its latest Buick
LaCrosse sedan with an eye
mainly on China, where the
Detroit carmaker sells four times
as many Buicks as in North
America.
While a car’s rear passenger
compartment is typically designed
“There are an awful lot of
things we can do that
weren’t possible or eco-
nomic in the past,” says Mr
Penny, citing advances
such as more aerodynamic
turbochargers, engine cov-
ers that retain more heat,
and lighter materials.
He notes that the typical
mercial production of the
two-stroke engine will start
in two to three years.
EcoMotors claims its
engine will be half the
weight, half the size and
have half the number of
components of existing
powertrains, giving
50 per cent more fuel
it

double as offices, entertainment
venues and communication hubs.
People eat and drink while driv-
ing. Who has not used a car for
sleeping or sex?
According to the JD Power con-
sultancy, Americans typically
spend almost three hours a day in
their vehicle during the week, and
more than two hours over week-
ends, making a total of 18.5 hours
a week.
Larry Erickson, head of the
transportation department at
Detroit’s College for Creative
which are designed to appeal to
both adults and children, and
to be used for a wide range of
activities.
The 2011 Honda Odyssey has a
cool-box under the instrument
panel that can store six soft-drink
cans. The second and third rows
of seats can be removed, provid-
ing enough space for three moun-
tain bikes or a 4ft x 8ft sheet of
plywood.
The Odyssey’s entertainment
system includes a 16-inch screen
that can be split in two to keep
knobs and switches
areas for car interiors in the years
ahead:
●Improved “packaging” of com-
ponents to create more space.
Seats are becoming thinner.
Mechanical transmissions and
parking brakes are making way
for “drive-by-wire” technology.
Outdated technology is being
ditched. “If you’re under 30, who
needs a CD player?” Mr Mays
observes.
tion of the buttons, knobs and
switches that have been part of
instrument panels and consoles
since the car was invented.
The goal is to replace them with
voice recognition systems and the
swiping movements used to oper-
ate an iPhone or iPad.
Ford’s Sync system, developed
with Microsoft and introduced in
2007, uses voice commands to con-
trol mobile phones and music
players. A version with improved
voice recognition capability made
its debut this year.
for children in North America,
the LaCrosse is marketed as a
chauffeur-driven vehicle in China.
As a result, the LaCrosse has an
unusual amount of backseat leg-
room for a North American car.
The back window is equipped
with an anti-glare screen operated
at the touch of a button, making
it easier for Chinese businessmen
to use their laptops – and for
American children to watch
DVDs.
“We both benefited,” a GM
spokeswoman says.
sedan now achieves a ther-
mal efficiency – the ratio of
heat energy in its fuel con-
verted into power – of only
about 25 per cent. Turbo-
charging can raise the per-
centage to the mid-30s.
Mr Penny estimates that
technological advances
could raise diesel engines’
thermal efficiency from the
current 40 per cent to more
than 50 per cent. Ironically,
much of the improvement
is likely to come from
efficiency. Its other backers
include Zhongding Holding,
a Chinese car parts
supplier.
Meanwhile, Mr Kuttner’s
decision to opt for a conven-
tional engine turned out to
be wise one.
The results of the contest,
organised by the California-
based X Prize Foundation,
were announced on Septem-
ber 16. The Edison 2 team
walked away with the first
prize of $5m.

Two­wheelers show four­wheelers the way in innovation

Technology
Rohit Jaggi looks
at the latest
developments
My dining room in London
contains a couple of bikes
that should have changed
motorcycling for ever.
One is the only produc-
tion two-wheel-drive motor-
cycle from a big manufac-
turer, Yamaha. The same
Japanese company was also
responsible for the other
bike, an attempt to improve
on the failings of conven-
tional front forks.
Neither achieved big sales
success. But in spite of such
setbacks a number of the
trends only now emerging
among car manufacturers
have long been seen among
two-wheelers.
One that is also reflected
in aviation is the pursuit of
light weight, with alumin-
ium and more recently car-
bon-fibre construction being
employed to make the most
of power outputs and fuel
loads.
But two-wheelers have
also led on powertrains.
Piaggio, the Italian manu-
facturer, beat the carmak-
ers into series production of
a plug-in hybrid with the
launch last year of the first
hybrid scooter, based on its
innovative MP3 tilting
three-wheel scooter.
An electric-only mode
running on its lithium-ion
batteries, with a range of
about 20km, gave it a big
advantage over the four-
wheel competition. And the
extra wheel at the front
gave nearer car-levels of
stability on greasy roads.
However, low sales were
attributed to a high price of
about €9,000 ($12,250) and
the small petrol engine
being inadequate to cope
with its extra weight. So
Piaggio’s answer this year
is a bigger engine – of 300cc
– and a price cut of €1,000.
Even conventionally
engined scooters have
many advantages for urban
transport, by minimising
traffic congestion and the
space needed for parking.
However, safety-paranoid
planners in the west tend to
fight shy of promoting
machines that some groups
are vocal in insisting
expose users to more risk
than in cars.
BMW of Germany, with
its history of making both
four-wheelers and two-
wheelers, has addressed
this in a number of ways.
One was with its C1 safe-
ty-cell scooter of early this
decade. However that failed
to achieve hoped-for sales
volumes. In the UK, where
buyers should have warmed
to its weather protection,
sales also suffered because
of the obduracy of officials,
who refused an exemption
from the requirement to
wear a helmet despite the
twin seat belts.
The Munich manufac-
turer has revisited the con-
cept, though, with a similar
all-electric version, the C1-E
unveiled last year.
And it has taken another
approach with the newly
unveiled Mini Scooter E all-
electric two-wheeler, which
aims to complement its
Mini car brand. Features
aimed at the mobile genera-
tion include a docking sta-
tion to integrate a smart
phone into the electronics.
Smart, part of Daimler-
Benz, is also unveiling an
electric scooter in Paris
that it claims will have a
60-plus mile range.
Safety fears, however,
may be better addressed by
the cabin motorcycle design
that last month won one of
the two subsidiary
classes in the
$10m
X Prizes for fuel efficiency shows that performance
(see also separate story on and economy can co-exist.
Powertrains). The E-Tracer is a develop-
The E-Tracer from Swiss ment of the Monotracer and
company Peraves uses a
150kW electric drive system
its predecessor the Ecomo-
bile – cabin motorcycles
made by AC Propulsion, powered by BMW bike
based in San Dimas, Califor- engines that have been in
nia, and a 19.4 kWh lithium small-scale production for
polymer battery system more than 25 years.
from NeuEnergy of San With the safety and
Diego. With a claimed top weather protection of a
speed of “well over tough composite shell, and
120mph” and the rider-controlled retracting
equivalent of outrigger wheels to keep
more than upright when standing still,
200 mpg they answer many of the
– much criticisms of conventional
b e t t e r two-wheelers – at a price.
than the The Monotracer, which is
other two available now, costs about
X Prize win- €53,000. The E-Tracer, once
ners – it Peraves and fellow Swiss
company Designwerk have
Winner: the E­Tracer made it ready for produc-
has speed, range and, tion next year, will sell for
in effect, 200mpg €60-80,000, It promises
0-60mph in less than 4.5 sec-
onds and a real-life range of
220 miles. And, from my
own experience of driving
the Ecomobile, unique fun.
The Yamaha off-road bike
in my dining room is lower-
tech, but was revolutionary
in using hydraulics to drive
the front wheel.
Later 2WD designs – from
Austrian manufacturer
KTM – use a simpler elec-
tric motor in the front hub
instead. With no need for
cumbersome and heavy
hydraulic hoses.
Car designers say they
are just starting to exploit
the freedom that new tech-
nologies give them to relo-
cate components and pro-
vide better aerodynamics or
more space for occupants.
This is a direction that is
likely to provide exciting
results for some time.