Will Ford Motors win the race for a greener future?

Is the end of traditional fuel engines near?

Automobile manufacturers have to find creative solutions to reduce CO2 emissions, while keeping their core technology relevant.

You probably won’t find it surprising that the automotive industry is one of the largest contributors to CO2 emissions worldwide. Looking at some numbers, CO2 emissions from road transport were responsible for 17% of global CO2 emissions during 2012 (1). Today, there are 1.2 Billion vehicles operating on the roads worldwide, with estimation of additional sales of 2 billion vehicles by 2035 (2). While CO2 emissions originated in cars from developed countries is expected to decrease, about 70% of car sales growth is related to developing countries, where CO2 emissions originated in fuel are not well monitored (3).

Worldwide regulations promoting fuel efficiency and GHG (greenhouse gas) standards are accelerating during the last decade; Mandatory CO2 standards were first introduced by the EU and the US Government in 2009 and 2010 respectively (4), (5).
Monitored by the US Environmental Protection Agency (EPA), the greenhouse gas standard requires vehicles to meet a target of 36% decrease in CO2 emissions per mile by 2025 (6). In addition, some governments are taking diverse approaches to incentivize emission reductions through fees, taxes, privileges for low-emitting vehicles and penalties for high-emitting vehicles.

Automobile manufacturers are required to find different solutions addressing regulations. Some solutions involve changes in market behavior or production infrastructure and others involve changes in the car industry’s core technology, the combustion engines (the traditional gasoline and diesel engines). Inevitably, manufacturers have to highly invest in innovative projects which include R&D, new production processes and market education.

Ford Motor Company, the second largest automobile manufacturer in the US (15% market share as for 2015 (7)), developed a strategy focused on reducing GHG in their operations as well as their vehicles. In order to reduce CO2 emissions in their vehicles, Ford activities are based on the following theory: GHG emissions = Vehicle + Fuel + Driver (8).

Vehicle: most of Ford’s emphasis is on improving traditional gasoline and diesel powered vehicles by developing different engine technologies as well as electrical and aerodynamic improvements and weight reductions.
Fuel: Ford is developing vehicles that can use new types of fuels with lower fossil carbon content (the ingredient contributing to CO2 emissions) such as biofuels. However, in order for this effort to be useful, a widespread use of these fuels is required.
Driver: promote “eco-driving” among drivers around the world by providing training, vehicle technology and apps that helps drivers track and improve their fuel efficiency.

 

Additional steps Ford can take in order to further develop their strategy:

  • Integrate Automotive IoT technologies (Internet of Things) – A connected car is a car equipped with internet access and wireless technology allowing it to be connected with other devices inside and outside the car to eventually enhance the driving experience. As most auto manufacturers, Ford already started working on its electric car technologies. I would recommend Ford to prioritize integration of fuel economy metrics to its IT (9). Researches show that by better controlling and analyzing main factors such as rapid acceleration, rough breaking and imbalanced tire pressure it is possible to significantly decrease fuel consumption (10).

(11)

  • Increase “Eco-Driving” influence – mainly by integrating third party technologies in the field of automotive. For example, Mobileye is a technology company that uses vision algorithms to interpret real time scenes and provide drivers with immediate evaluation of the road, in order to expand their safety (12). Mobileye visual technologies can actually be adopted to evaluate and monitor efficient driving, by reducing some of the factors mentioned above (rapid acceleration and rough breaking).
  • Invest in Electric cars and hybrid technologies – although demanding a new technology development, electric cars and hybrid technologies are already a significant part in the efforts of reducing CO2 emissions and fuel dependency in general. The use of electric car can decrease CO2 emissions up by 65% and reduce fuel consumption, making this technology beneficial to the environment and the driver (13).

(14)

In summary, traditional cars will continue dominate the industry in the foreseeable future, allowing manufacturers to experiment a wide range of solutions. However, increasing regulations are pushing manufacturers to find creative paths to a greener future.



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References:

(1) Source: International energy agency (IEA), Statistics, CO2 emissions, http://www.iea.org/statistics/topics/CO2emissions/. Accessed November 2016.
(2) “Sales of Light Duty Vehicles Are Expected to Total More Than 2.1 Billion from 2015 to 2035, According to Navigant Research”, Business Wire, December 2015, http://search.proquest.com.ezp-prod1.hul.harvard.edu/abicomplete/docview/1747237751/97776209F3334118PQ/1?accountid=11311. Accessed November 2016
(3) “Carbon footprint of global passenger cars: Scenarios through 2050”, Elsevier Journal April 2016, http://dx.doi.org.ezp-prod1.hul.harvard.edu/10.1016/j.energy.2016.01.089. Accessed November 2016.
(4) “EU CO2 standards for passenger cars and light-commercial vehicles”, ICCT (The International Council on Clean Transportation), January 2014, http://www.theicct.org/eu-co2-standards-passenger-cars-and-lcvs. Accessed November 2016.
(5) “U.S. Issues Limits on Greenhouse Gas Emissions From Cars”, The New York Times, April 2010, http://www.nytimes.com/2010/04/02/science/earth/02emit.html. Accessed November 2016.
(6) Source: International energy agency (IEA), Vehicle greenhouse gas rules, https://www.epa.gov/vehicles-and-engines. Accessed November 2016.
(7) “Auto Sales, sales and share of total market by manufacturer”, The Wall street Journal, November 2016, http://online.wsj.com/mdc/public/page/2_3022-autosales.html. Accessed November 2016
(8) “Vehicle Fuel Efficiency and CO2Emissions Progress and Performance”, Ford Motors Official website, https://corporate.ford.com/microsites/sustainability-report-2014-15/environment-products-efficiency.html. Accessed November 2016.
(9) “How Ford Is Building the Connected Car”, The Wall street Journal, February 2016, http://www.wsj.com/articles/how-ford-is-building-the-connected-car-1456110337. Accessed November 2016.
(10) “Fast Model Predictive Control-Based Fuel Efficient Control Strategy for a Group of Connected Vehicles in Urban Road Conditions”, IEEE, http://ieeexplore.ieee.org.ezp-prod1.hul.harvard.edu/stamp/stamp.jsp?arnumber=7491347&tag=1. Accessed November 2016.
(11) The Car of the Future: Safer, cleaner & smarter, European Automobile Manufacturers Association, May 2015.
(12) Source: Mobileye Official Website, http://www.mobileye.com/. Accessed November 2016.
(13) “Energy use, cost and CO2 emissions of electric car”, Elsevier Journal, February 2011, http://www.sciencedirect.com.ezp-prod1.hul.harvard.edu/science/article/pii/S037877531001726X. Accessed November 2016.
(14) Electric Cars & Global Warming Emissions, Union of Concerned Scientists, November 2015.

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4 thoughts on “Will Ford Motors win the race for a greener future?

  1. Very interesting choice the automotive industry when considering climate change and business impacts for two main reasons: being one of the largest contributors to CO2 emissions worldwide the automotive industry has been one of the main causes of global warming and could potentially be one of the main contributor to its solution.
    As you pointed out, the potential improvements in this sector are tremendous and technology can play a key role in many aspects, both in terms of initiatives in the traditional automotive sector as in the new electric car sector.

    It has been very interesting to learn how also a giant traditional company as Ford is developing electrical engine technologies and it would be also important to analyse the impact on oil and gas companies, as I believe they constitute the main obstacle in the mass-market roll out of these technologies.
    Finally, I found remarkable that Ford is approaching the problem of GHG emissions from a 360 degrees point of view, not only considering vehicle and fuel improvements but also initiatives devoted to driver education, once again leveraging new technologies and apps.
    This third aspect maybe not have the same large scale impact as the other two, but I do agree that constitutes a fundamental piece in the picture. It will require very small investments compared to vehicle and fuel related initiatives and can be also a driver of brand image and reputation for Ford, in an era when more and more people is conscious and sensitive about sustainability initiatives.

  2. I think that the driver education piece of this is huge. Before HBS I drove a Ford pickup and there was an LED screen between the Tach and speedo that showed me the truck’s instantaneous fuel consumption. This was a cool feedback tool and I found that I altered my driving to keep the fuel consumption as low as possible. Imagine if every vehicle on the road has this simple little driver training tool, I bet we would reduce co2 from vehicles by 10%.

  3. Probably the most pertinent topic, Orly. Nicely written. A singular thought that jumps out. The traditional automobile industry is in the middle of a huge crisis. The simple reason is that construction of an electric car, requires you to basically start from scratch from a design, engineering and business perspective. Incumbents thereby will face a huge barrier to break into this space. More on this here

    http://www.newsweek.com/quora-question-how-will-google-and-apples-entry-car-market-change-industry-385631

  4. Orly – Great post. Although later then probably deserved, it is encouraging to see regulatory authorities taking measures to incentivize the adoption of environmentally friendly modes of transportation. In your blog, you state that some governments are moving towards taxes and privileges for low emissions vehicles. One leader on this front is the state of California with its Clean Vehicle Rebate Program. According to the Center for Sustainable Energy, since 2010 the CVRP has issued more than $291 million in tax rebates for more than 137,000 vehicles [1]. These rebates are for fuel cell, electric, and plug in hybrid cars. At the time of purchase, the state refunds buyers up to $2,500 coupled with up to $7,500 in annual tax credits [2]. Given these significant savings, the purchase behavior of consumers is being heavily influenced. In 2016, the Rebate Program was adjusted to further benefit low and moderate income families. This was done to ensure that drivers, especially those living in the communities most impacted by air pollution, can afford to benefit from and drive zero emissions vehicles [1]. If additional states continue to follow California’s lead, this could truly open up the market for Companies like Ford that are investing in clean technologies, and ultimately have a real impact on CO2 emission levels across the United States.

    1. California Environmental Protection Agency, California Clean Vehicle Rebate Project increases incentives for low- and moderate-income drivers
    https://www.arb.ca.gov/lispub/rss/displaypost.php?pno=9274

    2. Plug In Electric Vehicle Resource Center, Vehicle Incentives
    https://driveclean.ca.gov/pev/Costs/Vehicles.php

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