Eco Cars and Key Developments within the Global Auto Industry

There is increasing demand for eco-cars in developed markets, where new technologies and an ageing demographic are inspiring the development of next-generation smart cars that will ultimately drive themselves.

But the growth engine of the global automotive industry is now the emerging markets. After the global financial crisis, they overtook developed markets in overall vehicle sales, and are forecast to account for two-thirds of global production next year. Consumer demand for eco-cars is also growing in emerging markets, and the manufacturing industry is developing new processes to address demand profitably, spurred on by government incentives in China and some Southeast Asian countries.

Long- and short-term solutions

With environmental concerns forcing governments to introduce stringent emissions regulations, diversification of power sources is already happening. In China, the government will subsidise the sales of electric vehicles (EVs) and plug-in hybrids (PHVs), aiming to have 5 million on the road by 2020.

The Nissan Leaf was the first mass-produced EV, launched in December 2010. Others have followed, but many have postponed plans. Limited battery life and a lack of recharging stations make long-distance driving unrealistic. Sales of EVs are well below forecast.

Fuel-cell electric vehicles (FCVs), powered by hydrogen, are attracting attention among manufacturers as a viable long-term solution. Many people see these as the ultimate eco car, as they only emit water. They fill up at hydrogen stations, and can travel up to 700 kilometres on a single tank. Toyota revealed its FCV in 2013 and will start commercial production next year. Initial launch will be in California, where some 50 hydrogen stations will be installed by the end of 2015. The industry needs to ensure a stable and competitively-priced supply of hydrogen as well as a network of refuelling stations, but this is considered simpler than grappling with the battery problems of EVs.

There are a variety of short-term solutions. Micro-compact two-seater EVs are now designed for short trips. Then there are the more familiar hybrid electric vehicles (HEVs), such as the Toyota Prius which switches between an internal combustion engine and an electric motor, offering improved fuel economy and lower emissions. But HEVs are relatively expensive and less capable of high speeds. Plug-in hybrids are newer and can travel further on their electric motors, but are very heavy.

Of course, there are ongoing technological developments to conventional internal combustion engines. Reducing their emissions and improving fuel and even thermal efficiency are playing a bridging role until zero-emission eco cars become commercially viable. Flexible fuel vehicles (FFVs) reduce emissions by mixing conventional fuels with varying proportions of bioethanol derived from vegetable material. Such more efficient hydrocarbon-fuelled vehicles are likely to prove more popular than EVs in emerging markets where EVs are relatively expensive and the refuelling infrastructure is poor.

A smarter future

The diversification of fuel sources has brought entirely new players into the automotive market, while others will disappear. Many engine components will become redundant with the shift towards new power sources, while the increasing computerisation of cars brings electronics manufacturers into the market.

Passive safety (seatbelts, airbags etc.) is evolving into proactive safety (automatic brakes, anti-skid systems etc.) to avoid accidents in the first place. Smart cars take things a step further. Sensors detect surrounding conditions and generate automatic responses accordingly. Nissan aims to commercialise such vehicles by 2020, and General Motors wants to have autonomously-driven vehicles on expressways by 2017. Significantly, Google began public road tests three years ago and has a target of 2017 for fully-operational autonomous vehicles.

Automotive manufacturers are focusing on lower-priced models for emerging markets, entailing more efficient manufacturing processes and standardised parts. Toyota, for example, plans to use just three types of chassis for multiple vehicle models and ultimately standardise some 80% of parts. We can also expect an increase in partnerships and alliances, both among car makers and across industries.

But rapid technological development and new strategic alliances are not enough.

The policy and regulatory environment has not kept pace, and the industry must work closely with governments to facilitate the birth of the cars of tomorrow in our region.