Special ReportAutosteel and the New Materials Competition
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The materials composition of the automobile willchange relatively little between now and 2030.The dominant material will still be steel, with aluminum,plastic, and composites making marginalgains. The biggest materials shift will be the displacementof mild steels with high strength steelgrades.
The United States government’s CorporateAverage Fuel Economy (CAFE) standards havebecome a global reference point for steelmakers.They also constitute a tipping point for a newkind of materials competition for the industry.
The first challenge for steelmakers is the internalchallenge of keeping up with the acceleratedpace of technical innovation. The second major challenge will be to theautosteel customer base, the auto supply chain.Only a limited number of current customers areable to effectively deploy and apply new high endsteels. Most of the auto supply chain is comprisedof small and medium-sized enterprises (SMEs)with limited capital, human resources, and technicalcapacities.
The CAFE standards applyto new passenger cars and light-duty trucks formodel years 2012 through 2025. A mid-termreview of the 2022–2025 standards is in processand will be finished by 2018 at the latest. Theinitial determination, supporting the policy, wasreleased in late November 2016. Assuming thefleet mix remains unchanged, the standards requirevehicles to meet a combined average fueleconomy of 34.1 miles per gallon (mpg) in modelyear 2016, and 49.1 mpg in model year 2025.The new fuel efficiency targets have turnedlightweighting into the overwhelming goal forautosteel.
There are two redesign cycles left before 2025. Given the accelerating pace ofsoftwaredevelopment and improved materials, it is reasonable that each of theseredesign cycles shouldachieve at least a 5% weight reduction. Overall, about a 15%weight reduction should be feasible by 2025.
Traditionally, autosteel design parameters were based on 2G: gauge and grade.The future is 3G:geometry, gauge and grade. Academics talk about a shift fromtraditional Design forManufacturing to Manufacturing for Designin the new stage of advanced materials competition.
Most of the auto supply chain is comprised ofSMEs. Overcoming the challenges of change forsuch companies will require new perspectives,new partners, and new public policies. For bothsteel companies and automotive OEMs, futuresuccess will critically depend on raising the gameof the SME supplier base. The autosteel issue, however,is more in the nature of a “network failure.”
More explicitly collaborative “network”forms are functionally superior, especially wheresome combination of unstable demand, rapidlychanging knowledge, and/or complex interdependenciesbetween component technologies ispresent. The industrial economics lesson is thatrealization of value will be less and less correlatedto the original site of production.