Strict vehicle emission reforms favour 'hybrids'

Automotive component/sub-assembly suppliers should note a recent report, which says that all European Union vehicle manufacturers are likely to 'hybridise' their vehicles by the end of the decade.

Stringent emission reforms combined with increasing fuel prices are generating growing demand for hybrid electric vehicles (HEVs) in Europe, while reducing dependency on fossil fuels.

In keeping with this trend, all European Union (EU) vehicle manufacturers are likely to 'hybridise' their vehicles by the end of the decade.

Hybrid vehicles - comprising micro, mild and full hybrid vehicles - provide enhanced driving performance as well as savings in fuel consumption and also lowers carbon dioxide (CO2) emissions therefore assuming increased significance.

"Improved penetration, particularly of micro hybrid vehicles in mini, small and compact vehicle segments will promote market expansion", notes Vijayendra R Rao, research analyst at Frost and Sullivan.

"Micro hybrid vehicles are set to dominate the market due to lower hybridisation costs and rapid return on investments (ROI) for end users." Mini, small and compact segment vehicles are likely to account for about 85-90% of micro hybrid vehicles by 2015.

Further, micro hybridisation of the driveline will help vehicle manufacturers reduce emissions and hence satisfy the voluntary European automobile manufacturers association (ACEA) agreement to reduce the CO2 fleet-average emissions to 140g/km by 2008.

Currently, the PSA Group, Honda and Toyota are the only vehicle manufacturers to market hybrid electric vehicles extensively.

However, the expected introduction of hybrid vehicles by BMW and Daimler Chrysler will contribute to a significant rise in revenues.

The strategic alliance of BMW, Daimler Chrysler and General Motors to design and manufacture full hybrid vehicles (two-mode full hybrid systems) will further improve penetration rates of these vehicles.

Consequently, as several European vehicle manufacturers commercialise hybrid solutions, the market is likely to see increased demand for hybridised vehicles.

Despite the advantages of fuel savings, the high retail price of HEVs is affecting their uptake.

Hence, vehicle manufacturers will need to decrease the cost differences between conventional internal combustion (IC)-driven vehicles and hybrid powertrains.

A high volume output of hybrid vehicles will aid in the reduction of the unit costs of components and will help achieve economies of scale.

Vehicle manufacturers should also develop collaborations with suppliers of motors for consumer applications to reduce the price of electric motors and ensure the commercial viability of hybrid vehicles.

The same strategy can also be applied to battery and electronics suppliers.

The current lack of standardisation in hybrid technology is also a challenge, with individual vehicle manufacturers implementing their own technology.

"It will become vital to standardise hybrid technology in terms of crucial elements such as starter generators, electric motors, energy storage systems and power electronics," remarks Rao.

"This will assist in reducing research and development (R and D) costs and facilitate the commercialisation of technology at a rapid pace." For industry participants, another concern centres on the durability and life span of available energy storage units.

"Vendors will need to concentrate on obtaining energy storage systems for hybrid electric vehicles with pulse-specific power as well as a high-charge acceptance," says Rao.

"This will help to maximise the utilisation of regenerative braking and ensure a reasonable product life cycle." With suppliers such as Continental AG and ZF Friedrichshafen AG likely to initiate a complete hybrid solution (comprising the electric motor, power electronics, energy management system, brake systems and electrical auxiliaries) for vehicle manufacturers, complete hybrid modules will increase in importance.

Consequently, the HEV market is set to increase from about 40,000 units in 2005 to over 1.2 million units in 2015.

Performance-based vehicles, such as the Lexus RX 400h with higher starting torque and better acceleration are enjoying increased customer demand.

In keeping with this trend, vehicle manufacturers should focus on building high-performance vehicles by increasing the electric motor size while retaining the size of the engine.

Moreover, introducing such improvements in sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) will enable manufacturers to offset the additional costs and facilitate fuel savings of about 15-20%.

Forging relationships with other vehicle manufacturers will lead to a reduction in research and development (R and D) costs and avoid licensing hybrid technology from Japanese counterparts.

* About Frost and Sullivan - Frost and Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years.

The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities.

Frost and Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.

Back to top