The Hybrid Challenge
June 1, 2006
As gasoline prices continue to soar, more and more consumers are purchasing hybrid electric vehicles that improve fuel economy and reduce emissions. To bolster demand, state and local governments are offering numerous incentives, such as tax breaks, dedicated traffic lanes and parking privileges.
However, hybrids pose unique challenges for engineers who are attempting to reduce the production costs that contribute to high sticker prices. Hybrid vehicles average $3,000 to $6,000 more than their counterparts with traditional internal combustion engines. To gain wider market acceptance, that price discrepancy must be reduced by at least 50 percent.
Most experts claim that the higher cost is due to redundancy issues. Indeed, hybrid vehicles feature two power sources: a traditional gasoline-powered internal combustion engine and a battery-driven electric motor. The two systems must work independently, as well as together.
Gasoline engines are most efficient when running at steady loads. Electric motors, on the other hand, are more efficient in start-stop type applications where the power required is highly variable. By combining the two systems, motorists can average up to 60 miles per gallon of gas.
Hybrid technology offers significant cost savings in urban areas with slow-moving, stop-and-go traffic. As a result, hybrid applications also include buses, delivery vans and taxicabs.
During the past decade, Japanese automakers have been investing heavily in hybrid technology and have been promoting its mainstream commercialization. After several years of watching from the sidelines, European and North American OEMs are now jumping on the hybrid bandwagon. But, most components are made by Japanese suppliers that have gained a competitive advantage by being early developers of the technology. Indeed, Japanese manufacturers are 3 to 5 years ahead of the competition.
As they attempt to reduce costs by streamlining production processes, OEMs and suppliers face several big hurdles. "Hybrid vehicles are costly to design, develop, validate and build," says Fawaz Bahtaji, product manager at Yazaki North America (Canton, MI), a leading supplier of wire harnesses and electrical distribution systems. "As a result, they are expensive to purchase when compared to their conventional counterparts."
One reason for the added expense is the fact that hybrids use many complex components. "Hybrid vehicles include systems such as electric motors, electric inverters and converters, high-voltage batteries, electronic control units, semiconductors and sensors that are not used in conventional vehicles," explains Mark Fitzgerald, senior automotive analyst at Strategy Analytics (Boston), a market research firm. "All of these components must be put in a vehicle that is the same size as a conventional vehicle.
"There is much more electric and electronic content in a hybrid vehicle," adds Fitzgerald. For instance, extra wiring harnesses are used to route energy to and from batteries, generators, converters and inverters. An electric motor must be installed, as well as control units for managing the power throughout the vehicle.
Market TrendsDemand for hybrid vehicles has been growing steadily. According to J.D. Power and Associates (Westlake Village, CA), U.S. hybrid-electric vehicle sales volume will grow 268 percent between 2005 and 2012. Despite that large increase, however, models using a hybrid powertrain will remain a small portion of the overall automotive market, growing from 1.3 percent of light-vehicle sales in 2005 to a 4.2 percent market share by 2012.
"Future growth will be the result of more vehicle manufacturers entering the hybrid-electric market and a greater number of hybrid models," says Anthony Pratt, senior manager of global powertrain forecasting at J.D. Power & Associates. "There are currently only 11 hybrid models available in the U.S market. By 2012, that number could increase to 52 models."
Hybrid vehicle sales have been doubling every year. For instance, 205,749 hybrids were sold in the United States in 2005 vs. 88,000 in 2004 and 47,525 in 2003. Toyota, the leading hybrid manufacturer, sold 235,000 vehicles worldwide in 2005 vs. 134,000 in 2004.
While the number of hybrid models hitting dealer lots in the next several years is expected to increase dramatically, Pratt says many of those cars will be in segments currently void of hybrid vehicles.
"Consumers tend to purchase within the vehicle segment that best suits their lifestyle," says Pratt. "When hybrids were first introduced in the United States a few years ago, they were only available in subcompact cars [such as the Toyota Prius and Honda Insight] that were not practical for all vehicle buyers. This trend changed with the introduction of the Ford Escape in late 2004 and we anticipate this trend will continue in the future.
"By 2012, consumers will have the opportunity to purchase a hybrid vehicle in nearly all segments, including full-size pickups, minivans and luxury cars," adds Pratt.
Toyota Motor Corp. (Nagoya, Japan) started the hybrid trend when it unveiled the Prius in 1997. Since then, it has improved the technology and expanded its hybrid lineup to include the Lexus GS 450h sedan, the Lexus RX 400h sport utility vehicle (SUV) and the Toyota Highlander SUV. Later this year it will expand the lineup to include the popular Camry sedan. The automaker also produces a variety of hybrid vehicles that are only sold in Japan, such as the Alphard and Estima minivans.
Toyota plans to offer hybrid powertrains in all its vehicles by 2012. Within 6 years, the company predicts that it will sell more than 1 million hybrids worldwide. Toyota engineers are concentrating on lowering production costs so the technology can be used on all models, instead of just luxury vehicles and vehicles with a large market share.
The automaker aims to keep the retail price differential between hybrid and conventional cars under $2,500. Currently, the conventional version of the 2007 Toyota Camry has a base price of $18,270 vs. $25,900 for the hybrid version.
"Toyota is more vertically integrated than any other hybrid producer, and they produce more hybrids than any other OEM," says Pratt. "This will allow them to keep costs down internally while taking advantage of economies of scale." Toyota is licensing hybrid vehicle technology to Ford Motor Co. (Dearborn, MI) and Nissan Motor Co. (Tokyo).
Ford has the most aggressive hybrid program among the Big Three. In addition to the Ford Escape, the automaker recently unveiled a hybrid version of the Mercury Mariner SUV. Ford has experienced several months of hybrid sales increases, fueled by increasing consumer awareness and rising gas prices.
By 2010, Ford plans to increase hybrid production to approximately 250,000 units annually, with more than half of the Ford, Lincoln and Mercury lineup offered with hybrid capability. The automaker will offer hybrid versions of nine high-volume models. It plans to unveil the Mazda Tribute in 2007, followed by the Ford Fusion and Mercury Milan in 2008. By the end of the decade, Ford expects to offer hybrid versions of the Ford Edge, the Ford Five Hundred, the Lincoln MKX and the Mercury Montego.
"There is a strong market for hybrids, provided they are attainable and affordable," says Al Giombetti, president of Ford and Lincoln Mercury. "We ultimately intend to become the destination for hybrid vehicles, with consumers automatically associating hybrid innovation with Ford Motor Co."
More and more automakers are starting to unveil hybrid versions of conventional vehicles. For instance, Nissan will be marketing a hybrid version of the Altima sedan this fall in California, Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont, which are among the strongest markets for hybrid vehicles. Nissan will assemble the vehicle at its Smyrna, TN, plant.
"Hybrid technology is being offered in top-line models to increase both fuel economy and performance, and to enhance the overall driving experience," says Dan Benjamin, principal analyst for the transportation practice at ABI Research (Oyster Bay, NY). For example, General Motors Corp. (GM, Detroit) recently unveiled two hybrid SUVs, the Saturn Vue Green Line and the Chevy Tahoe.
"This is an important generation for the future of hybrid vehicles," explains Benjamin. "With these models [along with hybrid model variants from Ford, Honda, Nissan and Toyota], we're starting to see hybrid versions of mainstream vehicles. The automakers are giving customers a direct choice: to opt for hybrid technology on a given model, or not."
All vehicle manufacturers are likely to hybridize their vehicles by the end of this decade. Even two major automakers that have been opposed to the hybrid concept in the past-GM and DaimlerChrysler (Auburn Hills, MI)-are cooperating with BMW (Munich, Germany) to develop an even more efficient technology that they plan to unveil in 2007.
Benjamin says the big question is whether consumers will pay a premium for hybrid technology when everything else about the vehicle is the same. He believes market growth will hinge on cost reductions for key components and hybridization becoming available on a greater number of mainstream models.
Complex ComponentsHybrid vehicles employ a complex electrical architecture because they include a traditional powertrain plus an electric system that includes motors and batteries. Numerous components, such as converters, computer modules, connectors and wiring harnesses, are necessary. And, those parts typically require more mounting studs and connectors than conventional vehicles, adding to production time and cost.
"Hybrid systems have complex architectures that affect components," says Mineo Hanai, managing officer responsible for the electric systems business group at Denso Corp. (Kariya, Japan). "Various control systems especially have complex architectures [that] determine the performance for hybrid systems. Among those control systems, the battery electronic control unit is particularly important, since monitoring and control of batteries is essential for the hybrid system."
Batteries, electric motors, inverters, controllers and transmissions are the key components in hybrids. Each plays a unique role in improving fuel efficiency.
Instead of conventional lead-acid batteries, hybrids use rechargeable batteries. Nickel-metal-hydride batteries are typically used to reduce weight and deliver more energy from a smaller package. Cells are packaged in a series of arrays inside a large container called a battery pack.
A DC-to-DC converter converts the high voltage supplied by the main battery to a lower voltage to charge a 12-volt auxiliary battery and supply electric power to various accessories, such as headlamps, wipers and horns.
A battery-monitoring unit monitors the voltage, current and temperature of the high-voltage battery.
A regenerative braking system allows the electric motor to act as a generator when braking. The process converts kinetic energy of the vehicle's motion into electric energy that recharges the battery.
An inverter converts the DC battery output to AC input, providing power to the motors and controlling all control functions.
A compact electric motor operates on power drawn both from the battery pack and from a very intelligent generator motor. When required, the generator motor restarts the gas engine. And when the gas engine is running, it helps recharge the battery pack. The electric motor typically operates at 300V AC.
An electronically controlled, continuously variable transmission works with the generator motor. It harnesses internal combustion and electric power sources to drive the wheels.
Computer modules control the internal combustion engine and the electric motor, allowing them to run together or separately.
A main system relay connects and disconnects electric currents between the high-voltage battery and high-voltage system by controlling the contact of movable and fixed parts. It also shuts off the high electrical voltage in a collision to secure the safety of vehicle occupants.
"Despite their relative low volumes as compared with worldwide vehicle production, hybrids include much more electric and electronic content than a traditional vehicle," says Strategy Analytics' Fitzgerald. "[That represents] new opportunities for suppliers of hybrid traction motors, batteries, electronic control units, semiconductors and sensors."
"Managing such a [system] requires intelligent controllers with firmware and algorithms that are capable of real-time multitasking," notes Yazaki's Bahtaji. "These new requirements are driving design complexity and system requirements to a new level, even for mature control systems such as brakes, engines and transmissions."
According to Bahtaji, hybrids pose numerous challenges to engineers, such as:
- System design. Complex modeling, simulations and optimization are required to understand subsystem interactions and develop robust control strategies.
- Power management. Hybrid vehicles require new ways to control and monitor battery charging systems, power consumption and distribution, and thermal management.
- Battery technology. Engineers are trying to develop batteries that are efficient, safe, environmentally friendly and cost-effective.
- Packaging. Components must be integrated into predefined space to reduce cost and system complexity, while ensuring sufficient heat dissipation. For example, DC-to-DC converters must fit into the battery pack.
- Electromagnetic compatibility. High-voltage AC cables, motors, alternators, inverters and controllers must be shielded to ensure low emissions.
- Operating condition. Hybrid components must withstand harsh environments, such as moisture, dust, vibration and temperatures ranging from -40 C to 125 C.
- Reliability and robustness. Hybrid components must perform equivalent to or better than conventional internal combustion engines that boast 10-year, 100,000-mile warranties.
- Safety and security. Hybrid components must be fault-tolerant and redundant to protect both passengers and emergency personnel in the event of an accident. For instance, there must be a means to shut off the engine and disconnect high-voltage cables if an air bag is deployed.
Smaller and LighterMany automotive engineers are focusing their attention on packaging issues. "The big challenge is finding the optimal use of space for hybrid components in conventional vehicles," says Casey Selecman, North American powertrain analyst at CSM Worldwide (Northville, MI). "Engineers are trying to bundle everything so that it can be plugged into the same area, which allows the hybrid manufacturing process to be more flexible."
In addition, automakers and suppliers are searching for ways to get rid of weight by attempting to miniaturize hybrid components. "Adding 500 pounds of batteries, motors, inverters and other items to a vehicle is not efficient," explains Selecman. Indeed, it's directly contrary to recent efforts to reduce weight by using aluminum, magnesium, plastic and other light materials.
"By their nature, hybrid vehicles require more [parts], resulting in an increasing demand for components that are smaller, lighter and deliver higher performance," says Denso's Hanai. "We need to reduce the cost for each component and simplify or integrate systems." For instance, Denso recently developed a battery-monitoring unit that Hanai claims is 65 percent smaller and 50 percent lighter than conventional products.
"To ensure profitability of the low-priced compact class cars, [engineers] are implementing cost-cutting measures, such as modular production, that drastically reduce assembly costs," says Rajesh Kannan, an analyst at Frost & Sullivan Inc. (San Antonio). "The modular production process is now being adopted for hybrids."
For example, Continental AG (Hanover, Germany) and ZF Fried-richshafen AG (Friedrichshafen, Germany) are codeveloping a hybrid module that comprises an electric motor, power electronics, energy management system, brake systems and electrical auxiliaries. It recently unveiled a hybrid transmission that saves space by integrating the electric motor, clutch, torsion damper, dual-mass flywheel and hydraulics into the system. The transmission will be used in hybrid vehicles being developed by Hyundai Motor Co. (Seoul, South Korea) and Volkswagen AG (Wolfsburg, Germany).
Batteries are one of the heaviest and most expensive components in hybrid vehicles. Indeed, they account for two-thirds of the weight and more than one-half the cost. Hybrid batteries are also in short supply.
"Development of more efficient batteries such as nickel-hydrogen, lithium-ion and lithium-carbon is essential to sustain demand for hybrid vehicles in the long run," warns Kannan. "The challenge lies in creating batteries that have greater peak and pulse-specific power and a high charge acceptance to maximize the utilization of regenerative braking."
"Batteries are the main bottleneck for hybrids at this point," adds Strategy Analytics' Fitzgerald. "Manufacturers are trying to reduce the size and weight of battery systems, as well as move from nickel-metal-hydride to lithium-ion batteries. Battery temperature management is crucial as battery temperatures rise with usage and dedicated cooling systems are used to manage heat."
Lithium-ion batteries offer significant potential, because they promise major advantages in power generation, size, weight, cycle life and cost. Panasonic EV Energy Co. Ltd. (Kosai, Japan) recently unveiled a new hybrid battery that takes up 14 percent less space and offers 40 percent higher cooling performance over earlier technology. Some manufacturers are also experimenting with gel batteries, which reduce weight and bulkiness.
Until recently, Panasonic EV Energy and Sanyo Electric Co. (Moriguchi, Japan) have dominated the market for hybrid batteries. But, automakers are starting to turn to other sources of supply, such as A123 Systems (Watertown, MA), Cobasys (Orion, MI), and Johnson Controls Inc. (Milwaukee), which recently formed a strategic alliance with Saft SA (Bagnolet, France) to develop and market lithium-ion technology.
Cost-Cutting EffortsBecause hybrid vehicles require more components than their conventional cousins, they cost more to build. "Hybrid vehicles are more expensive, as the economy of scale has not been fully developed," explains Fitzgerald. "As the market matures and production methods improve, costs will be lower."
To address the cost issue, some automakers are making less expensive "mild hybrids," such as GM's Saturn VUE Green Line SUV, which has electric motor assist, but does not propel the vehicle solely on electric power. Mild hybrids reap many of the benefits of a full hybrid, but use smaller, cheaper motors and battery systems that are primarily used when accelerating at low engine speeds.
"There will be a market for both mild and full hybrid vehicles," says Fitzgerald. "But, as hybrid technology matures, more vehicles will use full hybrid technology."
Full hybrid systems have more powerful electric drives that typically generate more than 70 kilowatts. They allow limited driving without the internal combustion engine.
Denso's Hanai also believes full hybrid systems will see more demand. "Full hybrid systems are more expensive, but they have better fuel consumption and performance compared to mild hybrids," he points out.
Another factor contributing to the high price of hybrids is the minimal number of industry specifications and standards. "The lack of standardization in hybrid technology is a challenge, with individual vehicle manufacturers implementing their own technology," says Vijayendra Rao, an analyst at Frost & Sullivan.
"Currently, standardization of hybrid components is difficult," explains Hanai. "This is because the hybrid system itself is not standardized and we cannot determine the future trend at this moment."
Rao says it will become vital to standardize crucial hybrid components, such as starter generators, electric motors, energy storage systems and power electronics. This will assist in reducing R&D costs and facilitate faster development of new technology.
Last year, the Society of Automotive Engineers (Warrendale, PA) formed a hybrid technical standards committee to encourage industrywide commonality in noncompetitive areas, such as connectors, high-voltage safety systems, interlocks, power ratings and battery test methods.
Consortiums and partnerships are another way to control costs. Several manufacturers have formed strategic alliances to pool their technical expertise and share risk. "Forging relationships with other vehicle manufacturers will lead to a reduction in R&D costs and avoid licensing hybrid technology from Japanese counterparts," says Rao.
The largest consortium is the BMW-DaimlerChrysler-General Motors partnership recently formed to develop a shared technology platform for hybrid drive systems. Each automaker plans to integrate the system into its internal design and manufacturing process.
The consortium has set up a development center in Troy, MI, to create a modular system and individual components, such as electric motors, high-performance electronics, wiring, safety systems, energy management, and hybrid system control units. In addition, the hybrid development center will be responsible for system integration and project management.
"The extensive sharing of components and production facilities, and the collaborative relationship with suppliers, will enable the alliance partners to achieve significant economies of scale and associated cost advantages," claims Tom Stephens, group vice president of GM Powertrain.
Most hybrid components still come from Japan. As a result, some U.S. automakers have had problems finding suppliers to build key components, such as batteries and transaxles. The lack of supply has inflated prices and limited the number of hybrid vehicles that some OEMs can assemble. But, parts should become easier to source in the United States after more hybrid vehicles go into production.
Once annual hybrid production volume hits 100,000 vehicles, Japanese suppliers will probably begin manufacturing components in North America. "If the production volume of hybrid vehicles will further increase, we will consider increasing our production capability," says Denso's Hanai. "At this moment, we are carefully watching the market situation."
According to CSM's Selecman, economies of scale won't apply to hybrid manufacturing until automakers produce more than 300,000 vehicles a year. He says 350,000 units annually is considered breakeven, and Toyota is the only OEM currently in that ballpark.
Assembly ChallengesHybrid vehicles can be built on the same assembly lines as conventional vehicles, but they require several extra steps. According to Toyota, there are three key production processes that require some unique tools and techniques: The large main battery, which must be installed through the trunk opening and positioned with a lift-assist arm; the inverter, which requires multiple electrical connectors located in a very limited space; and the regenerative braking system, which is much more complex than a standard hydraulic system.
Two years ago, Ford became the first automaker in North America to mass-produce hybrids. The Ford Escape and Mercury Mariner hybrids are assembled at the company's Kansas City, MO, plant.
"Lean, flexible manufacturing processes and specially trained employees at the plant allow the hybrids to be built on the same production line as conventional Mariner and Escape SUVs," says Nancy Gioia, director of Ford's sustainable mobility technologies and hybrid programs.
"The innovative approach to manufacturing showcased at the assembly plant is a key component in Ford's hybrid strategy," claims Gioia. "Our goal is to build hybrid and conventional models on the same line and to offer hybrids with the same style and same functionality as conventional vehicles.
"The Kansas City plant accommodates installation of unique hybrid components at normal line speed," says Gioia. Hybrid components that are attached to the vehicle include a temperature management unit, an electric battery pack, an in-dash electrical outlet, a regenerative braking system, power cables, electronic power assist steering, a DC-to-DC converter, an Atkinson-cycle engine and an electronically controlled continuously variable transmission.
To learn how to assemble the hybrids, operators completed a special course. "It provided in-depth training on how to install and handle hybrid-specific components, such as the electric battery pack, cooling system, regenerative braking system and the instrument cluster," says Ken Ward, the plant manager.
Ford's Oakville, ON, assembly plant is currently undergoing a $1 billion flexible manufacturing conversion that will allow it to build hybrids on the same assembly line as conventional vehicles. Production is scheduled to start by 2010.
Toyota has been building its popular Prius hybrid at the Tsutsumi plant in Toyota City, Japan. The extremely flexible assembly line also makes a wide variety of conventional vehicles, such as the Camry.
Later this year, Toyota will begin assembling a hybrid version of the top-selling Camry sedan at its plant in Georgetown, KY. The company is investing $10 million in the plant so that it will have the capacity to build 48,000 hybrids a year. Hybrid production will take place on the plant's existing assembly lines beginning in October.
"We will produce the hybrid Camry on our plant #2 assembly line, along with the Solara and the regular combustion Camry," says David Cox, general manager and chief manufacturing project engineer at Toyota Motor Manufacturing Kentucky Inc. "We will use heijunka [Toyota's term for leveled production] to smooth out the additional burden of the hybrid build, but they will get many common processes on the same line."
According to Cox, the new Camry was designed with the hybrid version in mind. "Many of the underbody changes required for the hybrid were incorporated into the standard Camry," he explains. "The inverter sits in the engine compartment where the traditional battery sits in the standard version, and the rear seat is designed to accept the large main battery under its normal position. The normal battery that is used with a standard gasoline version is now in the trunk. Of course, there are many unique items, but the design is actually flexible enough to accommodate both systems."
While the basic vehicle structure of the hybrid is very similar to the standard Camry, Cox says the installation and testing of the electronic controls is much different. "Our team members are not accustomed to handling heavy, high-voltage cables like the hybrid vehicle needs," he points out. "And, the controls for everything from the electric HVAC system to the controls for the braking system are much different than anything we have produced.
"The main challenge is related to the complex wiring harness system," adds Cox. "The controls and high-voltage power wiring are unique to the hybrid, and provide assemblers with the challenge of doing these extra processes while the vehicle goes down the same line as our standard Camry. In addition, the quality testing for each system is very specific to the hybrid, and requires very unique skills of our inspectors."
There are approximately 10 unique assembly stations that will only be used for the hybrid version of the Camry. "Areas of the line where only hybrid vehicle activity is performed we call 'bypass processes,' because other vehicles will simply bypass them," explains Cox. "They include many of the more complex and time-consuming electrical areas, such as main battery installation, sub-battery installation, inverter installation, hoses and electrical connections for the inverter, and main battery electrical connections."
In addition to final assembly, Cox says other parts of the plant are affected by hybrid production. For instance, the stamping department has unique processes to make holes for wiring harness routings. The body shop also has some extra steps, such as installing additional brackets and studs for mounting electrical components.