What’s driving demand?
At about 20%, transportation is one of the largest and the most visible contributors to global greenhouse gas emissions. The increasing chorus singing the dangers of rising pollution has forced legislators to pass stringent fuel economy standards to ensure that gas guzzlers are penalized. In 2012, US President Barack Obama signed an agreement with major automakers to increase fuel economy standards to 54.5 mpg (miles per gallon) by 2025.
According to the EPA (US Environmental Protection Agency), fuel economy increases by 1% for every 100 pounds reduced in your car. While composites have been major players in the high-speed vehicle market, where performance takes precedence over cost, these new regulations have forced automakers to expand their use of composites to passenger cars as well.
Rising deals in the carbon fiber universe
In April 2015, Ford Motor (F) entered into an agreement with DowAksa, a carbon fiber producer, to advance research on the cost effects of carbon fiber manufacturing. General Motors (GM) had already entered such an agreement in November 2014 with a Japanese firm, Teijin. Meanwhile, BMW’s i3 has been sourcing its carbon fiber through a joint venture with SGL Carbon (SGL). In 2013, the BMW i3 became the first mass-produced car to have most of its components made from carbon fiber.
Competition and challenges
But the adoption of composites in the automotive industry (FSAVX) has been complicated by high costs and competition from other cheaper materials such as aluminum, also yield significant weight reduction for automakers. Additionally, composites have slower production cycles, and there are significant end-of-life regulation issues, because carbon fibers are difficult to recycle or reshape after an accident.
Still, despite these handicaps, carmakers are increasingly opting for hybrid-material composition in cars. For the kind of weight reduction these materials achieve, carmakers can easily downsize engines without sacrificing performance. In fact, with the regulation challenges coming up in the next few years, it will be more and more difficult for car companies (VCR) to give a pass on composites.
Continue to the next part for a look at the aerospace industry.