Opportunity Assessment Clean Diesels in the North American ...€¦ · Energy Information...
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MARTEC ® Opportunity Assessment Clean Diesels in the North American Light Duty Market 13 th DEER Conference US Department of Energy August 14, 2007
Transcript of Opportunity Assessment Clean Diesels in the North American ...€¦ · Energy Information...
MARTEC®
Opportunity AssessmentClean Diesels in the North American
Light Duty Market
13th DEER ConferenceUS Department of Energy
August 14, 2007
1
Martec has completed a comprehensive analysis of the opportunity for clean diesels in the North American light duty market.
FleetsFleetsNew Vehicle Consumers
New Vehicle Consumers
Automotive MediaAutomotive Media
Tier I SuppliersTier I Suppliers
Petroleum Petroleum Renewable FuelsRenewable Fuels
DealersDealersEngine SuppliersEngine Suppliers
VehicleManufacturers
VehicleManufacturers
Wall StreetWall Street
10 Stakeholder Groups Shaping the LDD Opportunity - > 2,000 Respondents
Created in partnership with HART Energy Consulting, the study synthesizes the voice of each stakeholder group on critical issues:
• Consumer perceptions and consideration for LDD vs. HEV powertrains• Urea SCR service intervals and compliance • Residual value performance • Variable cost comparison of LDD vs. full HEV by segment• Fit with national energy and CO2 policy development• Demand forecast
2
Agenda
Performance: it’s all about torque
Consumer awareness and impressions
Voice of dealers, Wall Street and the automotive media
Public policy impact
Forecast and conclusions
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US consumer demand for torque has been climbing at a 2.6% annual rate.
120
140
160
180
200
220
240
19931994199519961997199819992000200120022003200420052006
120
140
160
180
200
220
240
Source: Martec analysisModel Year
Engine Torque(lb-ft)
Horsepower
Torque +2.6 % annual rate
Horsepower +3.1% annual rate
US Fleet Torque and Hp Development – Fleet
• Pump price run-up• SAE J1349
• Pump price run-up• SAE J1349
Market Demand
4
EPA
Com
bine
d St
icke
r -m
pg
20
21
22
23
24
25
200 210 220 230 240 250 260 270 280 290
5.3M premium engine buyers drive > $7.5B in incremental industryrevenue and sacrifice fuel economy.
2006 US Fleet Torque vs. Fuel Efficiency
Optional Engine Metrics• +66 lb-ft torque performance• ~ $22/lb-ft dealer invoice price• Sacrificed ~3 mpg fuel efficiency
Optional Engine Metrics• +66 lb-ft torque performance• ~ $22/lb-ft dealer invoice price• Sacrificed ~3 mpg fuel efficiency
Engine Torque – lb-ftSource: Martec analysis
Optional Engine34%
5.29M Units
Standard Engine66%
Standard Engine
Optional Engine
Buy TorqueBuy Torque
Pay TwicePay Twice
Market Demand
5
Even at escalating fuel prices, a significant share of consumerswant to maintain engine performance and vehicle attributes.
New Vehicle Consumers
Rank as No. 1 Purchase Decision Factor at Increasing Fuel Prices
0%
10%
20%
30%
40%
50%
60%
70%
80%
$2.70 $3.20 $3.70 $4.20 $4.70
Fuel Economy
VehicleSize
EnginePerformance
CA Wave 5
Pump Price
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There has been a significant increase in consumer familiarity with Clean Diesel.
New Vehicle Consumers
20%
25%
30%
35%
40%
45%
Ap '05 July '05 Dec '05 Feb '06 Mar '07
% Y
es
CA
49 State
Have you heard of the term “Clean Diesel?”
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But consumer perceptions are not yet aligned with state-of-the-art diesel positioning.
New Vehicle ConsumersCA Wave 5 Gasoline Diesel Hybrid
Fuel Economy
Acceleration from a standing start
Innovation/New technology
Environmentally Friendly
Low cost to operate
Exhaust odor
Reliability
Driving distance between refills
Noise/vibration during driving
Holds value (resale)
Towing performance & capacity
Highway passing performance
Poor Excellent1.0 2.0 3.0 4.0 5.0
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These perceptions are not deeply held.
20%
25%
30%
35%
40%
45%
April '05 July '05 Dec '05 Feb '06 Feb '07
% D
iese
l Cho
sen
CA
49 State
After Education: Percent Selecting Clean Diesel
New Vehicle Consumers
9
Urea SCR compliance is not a deal breaker.
47% 51%
3%
0%
10%
20%
30%
40%
50%
60%
No Impact Slight Impact Would notconsider
CA Wave 5
Part 1: On-board reservoir with oil change
interval range
Part 2:In-use compliance warnings with
no-restart countdown
2-part Urea SCR QuestionNew Vehicle Consumers
47% 48%
5%
No Impact Slight Impact Would notconsider
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European badge dealers have the most favorable impressions of diesel engines.
Dealers: Overall Impression of Diesel Engines/TechnologyDealers
US
NeutralNegative
78%
3% 19%
Positive
Asia
43%
57%
Neutral
Positive
Europe
87%
13%
Neutral
Positive
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Most dealers see performance as the lead diesel attribute.
Large Sedans & CUV: Superior Powertrain by Attribute (Diesel)Dealers
Superior Powertrain
0-40 km/h (25 mph) acceleration
0-100 km/h (62 mph) acceleration
80-120 km/h (50-75 mph) acceleration
Fun-to-drive
NVH characteristics
Residual value at high mileage
Real-world fuel consumption closest to EPA sticker promise
Performance lead attribute; efficiency secondary
Efficiency lead attribute; performance secondary
Best balance of performance & fuel efficiency attributes
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
EuropeUSAsia
12
The Prius depreciates at a faster rate than Jetta GLS TDI . . . during a period of higher diesel fuel prices.
y = 2.50E+04e-1.18E-05x
R2 = 9.12E-01
y = 2.35E+04e-6.92E-06x
R2 = 7.87E-01
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
0 50,000 100,000 150,000 200,000 250,000 300,000
PriusJetta GLS TDI
Mileage at Auction
Pric
e at
Auc
tion
Prius vs. Jetta Diesel
Source: Manheim Auctions
Residual Value
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4%
15%
17%
25%
-2%
-5% 0% 5% 10% 15% 20% 25%
Silverado Duramax
F250 Powerstroke
RAM 2500 Cummins
Jetta TDI
Prius HEV
Diesels pay the owner back with superior residual value retention over standard engines.
Vehicle Residual Value: Points Over/Under Standard Powertrain at High Mileage
Source: Manheim Auctions
Percent Residual Delta at Auction
vs. Camry LE 4-cylinder
Cars at 100K miles; trucks at 150K miles
Drivers want ‘em
Residual Value
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Wall Street is bullish on light duty diesel.
14%
86%
Neutral
Positive
How would you characterize your overall impression of diesel engine technology/diesel-powered vehicles today?
50%40%
Negative
10%
NeutralPositive
How would you characterize your overall impression of hybrid gasoline
powertrains/vehicles today?
Wall Street
No respondents answered “Negative”
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Wall Street sees consumer education and capital as the biggest threats to the LDD business case.
Light Duty Diesel Business Case: Identification of Barriers
Pump price of diesel fuel relative to regular unleaded gasoline
Availability of diesel fuel at off-interstate retailers
Consumer awareness/education on clean diesel benefits
Fit with national energy policy development
Fit with national CO2 policy development
Gasoline HEVs as a competitive alternative technology
Capital availability to convert a significant share of North
America powertrain production to clean diesel
10% 55% 35%
38% 45% 17%
48% 52%
52% 45% 3%
7% 41% 52%
28% 58% 14%
69% 28% 3%
0% 20% 40% 60% 80% 100%Green: Not a barrier to LDD business caseYellow: In transition, but moving toward green status (not a barrier)Red: At this time, appears unfavorable to LDD business case
Wall Street
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The California Energy Commission finds diesel fuel is significantly advantaged on well-to-tank emissions and energy efficiency.
-35%-30%-25%-20%-15%-10%-5%0%5%
10%15%
CO2 in fuel
Fossil Fuel Input
Petro Fuel Input
WTT GHG
Urban NOx
Total NOx
Urban PM10
Fuel + WTT GHG
Energy/Gallon
CA WTT ULSD/RFG for Each Million Btu of Fuel Available in Vehicle Tank
Source: California Energy Commission, June 2007
High energy density means fewer trips to
refuel in real-world driving
Diesel Savings vs. Gasoline
ULS
D O
ver/(
unde
r) R
FG
Policy
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HDPU diesels produced from 1994-2006 will save the US 18B gallons of fuel over their useful lives.
19941996199820002002200420062008201020122014201620182020
0
5,000
10,000
15,000
20,000
Operating Year
Cum
ulat
ive
Fuel
Sav
ings
–M
illio
n G
allo
ns
Diesel Lifetime Fuel Consumption Savings vs. Gasoline Engines
US HD Pickup Truck Diesel Performance
156M tons CO2
Based on 1994-2006 HDPU vehicle sales. Assumes diesels did not exist and were replaced by standard (71%) and optional gas engines (29%), US EPA Mobil 6 VMT and 15 year useful life. Martec analysis of real world fuel economy for all engines in this segment.
9B
Source: Martec analysis
Policy
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How important is an 18B gallon savings?
Energy Security
914MM barrels of crude20 months Venezuelan importsEnough gasoline to support California’s demand for 425 daysMore than $36B in economic savings to vehicle owners700M bbls
Policy
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1 new light duty diesel pickup truck will save the nation more fuel than 3 midsize hybrids.
1 2 3 4 5 6 7 8 9 10
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Gal
lons
Sav
ed
1,275
3,890
Years
Light Duty Diesel Pickup vs. Midsize Hybrid – Gallons Saved
Source: Martec analysis
Policy
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Both the industry and automotive media forecast light duty diesel penetration significantly higher than EIA.
Energy Information Administration Long Range Forecastvs. Industry and Media - Fleet
EIA Annual Energy Outlook 2007. Car and light truck mix based on EIA % share.
Shar
e of
Lig
ht D
uty
Vehi
cle
Sale
s
5%
10%
15%
20%
25%
30%
0%2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
26%
16%
7%
23%
15%
8%
Media Forecast
Industry Forecast
EIA
Forecast
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Both consumers and the nation win with diesel.
Summary
The complete study is available by subscription from Martec or HART Energy Consulting.
Florence KosmalaHART Energy [email protected]
Kevin McMahon The Martec Group, Inc. [email protected] THE MARTEC GROUP, INC.
Diesel-powered vehicles deliver the kind of performance US consumers want … and pay a premium to acquire.
Diesels pay the consumer back through:• Exceptional real-world fuel economy and range• High residual values
Consumer education is the biggest gap identified across all voice modules included in the study.
Light duty diesels are positioned to make major contributions to the nation’s fuel consumption and CO2 emissions reduction objectives.
