Buyers Want Cleaner, Lighter Cars That Also Make Them Feel Good
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I spent the beginning of the week at BloombergNEF’s Summit on transportation, energy, and technology in San Francisco. I’m struck not just by the changes coming to the multi-trillion dollar automotive industry, like electrification and sharing models, but also by what’s motivating those changes. Consumers are demanding that the automotive industry get cleaner, lighter, better, but each one of those imperatives is being expressed in a slightly different way.
My colleague Julia Attwood, who heads BloombergNEF’s advanced materials analysis, gave a talk (on web here, for terminal subscribers only) on the materials composition of today’s automobiles. That’s been slow to change so far—it took more than 20 years for automakers to reduce the steel content of cars to below 50% of vehicle weight—but she expects it to shift much more quickly in the future.
Carmakers are already quite rigorous about becoming cleaner operationally; as Attwood noted, Ford already operates 88 plants that send zero waste to landfills, and Honda has begun designing its vehicles for “end-of-life,” a.k.a. easier materials recovery and re-use. There is an economic rationale for companies behind these cleaner operations. More interesting to me, though, is that there’s now consumer interest in substituting recycled plastics for virgin plastics in mass-market automobiles. That’s cleaner in a way that means more to the consumer than to the manufacturer, and is also difficult or impossible to appreciate in terms of how the vehicle looks and feels.
Attwood also noted that using composite materials allows vehicles to become lighter. Lighter weight materials with similar or better performance will mean that electric vehicles will be able to achieve the same performance with smaller batteries, or perform better with the same batteries. Those lighter-weight materials can also mean lower embedded carbon dioxide emissions per part, too.
The question, however, is whether cleaner and lighter (and also electric) vehicles are really better from a consumer standpoint. My colleague Hugh Bromley gave another talk (on web here, for terminal subscribers only) on how quickly new automotive technologies become common in the market. In the third quarter of 2019, electric vehicles were less than 2% of total new car sales in the U.S., meaning that EVs are still in the “early adopter” territory of Everett Rogers’ diffusion of innovation framework. EVs are cleaner than internal combustion engines, though still more expensive. Vehicles with more composite and recycled materials might be visually indistinguishable from more conventional cars but consumers may also still prefer them for the same reasons they demand recycled plastic parts. How exactly then, are they better, and what does better mean for the speed of adoption?
Bromley noted that vehicle innovations that positively affect comfort—enclosed cabins, automatic transmissions, power steering, air conditioning—can go from being in zero new cars to being in 50% of them over the course of a few decades. This process of diffusion, as it’s called, works even faster for vehicle innovations that positively affect performance. Electronic ignitions, disc brakes, and radial tires reached 50% of new car sales in just a few years.
Consumer weighting of exactly which type of better these vehicle innovations represent may decide whether cleaner, lighter, and electric innovations reach the mass market in years or in decades. Cars with more composites and recycled materials might operate the same to drivers, but be more psychologically comfortable than those made with conventional materials. Electrification can make cars both more comfortable and higher-performing. And if it’s electric performance, and not comfort, that has the edge with consumers, then look for EVs to reach the mass market quickly.
Nathaniel Bullard is a BloombergNEF analyst who writes the Sparklines newsletter about the global transition to renewable energy. Sign up to receive the Green Daily newsletter in your inbox every weekday.
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