Impact And Future Of Hybrid Cars In Australia

Published Date: 02 Nov 2017

Aayush Goyal GDEC12CM001

Abhishek Pednekar GDEC12CM002

Amritpal Singh Poon GDEC12CM003

Arun Chander GDEC12CM004

Academic Advisor: Prof. Tharwat Andrawis

IMPACT AND FUTURE OF HYBRID CARS IN AUSTRALIA

TABLE OF CONTENTS

S. No

Title

Page Number

1

Introduction

1.1

Brief Introduction to Research Topic

1.2

Rationale for Choice of Research Topic

1.3

Clear statement of Research Objectives

2

Theoretical Framework

2.1

Advantages & disadvantages of Hybrid vehicles

3

Literature Review

3.1

Hybrid technology development so far

3.2

Brief overview of Hybrids in Australia

3.3

Increasing acceptability of hybrid cars in Australia

3.4

Government attitude towards Hybrid Cars in Australia

3.5

Future of hybrid technology

3.6

Alternate Technologies

4

Methodology

5

Data Analysis

6

Conclusion

7

Bibliography

Appendices

1. INTRODUCTION

1.1 Brief Introduction to Research Topic

This research is undertaken to study the impact and future of Hybrid vehicles in Australia. In a world of soaring oil prices and high rates of carbon emission, hybrid cars are being looked at as the next generation transport utility vehicle. Hybrid cars reduce the oil consumption by approximately 50 miles/gallon or even more (www.hybridcarsaustralia.com). The carbon emissions are very low in hybrid vehicles when compared to any other conventional fuel-vehicle. This research also aims to study the consumer acceptance for hybrid cars in Australia.

1.2 Rationale for choice of Research topic

The research on this topic will bring forth various reasons that led to the development of hybrid vehicles. There are a few speculations regarding the sustainability of hybrid cars, and if hybrid cars are indeed the solution to all the environment related issues with automobiles. This research is meant to understand the current market for hybrid cars and analyze the advantages and disadvantages to the car manufacturing companies by foraying into manufacturing of hybrid cars.

1.3 Clear statement of Research Objectives

This research intends to meet the following objectives:

Understand the emergence and need for development of hybrid cars.

Understand the technology being used for development of hybrid cars.

Evaluate the acceptance of hybrid cars from the perspective of different stakeholders:

Manufacturers

Customers

Environment

Is there any support from Australian government to the manufacturing of hybrid cars in Australia?

Look at trends for future development for Hybrid cars

2. THEORITICAL FRAMEWORK

Hybrid cars have been a part of the automotive ecosystem a lot longer than people actually know off. The first hybrid car was developed in 1899 by Dr Ferdinand Porsche (CarsDirect, 2009). Called the System Lohner-Porsche Mixte, it used a gasoline engine to supply power to an electric motor that drove the car's front wheels. The Mixte was well-received, and over 300 units were produced. The demand for hybrids began to deteriorate, however, when Henry Ford started the first automobile assembly line in 1904. Ford's ability to produce gasoline-powered cars and offer them at low prices dramatically shrunk the hybrid vehicle market. Manufacturers have been developing hybrid technology since then, looking at different ways to improve the technology behind it. The first 4 wheel drive car was in fact a hybrid vehicle. There was no development of hybrid cars between 1920 and 1960. Since then, manufacturers began putting effort again into converting electric cars into hybrid cars.

Widespread development of the modern day hybrid cars began in the late 90s when Toyota launched the Prius in 1997 (CarsDirect, 2011). Since then, other automotive manufacturers have entered this segment. The major players in this segment at the moment are Toyota, Honda and Ford.

With global warming becoming a serious issue globally and nations looking to improve their green footprint, hybrid cars have gained prominence in many countries. The Hybrid cars manufactured commercially are a lot more complicated than Porsche’s design but still use the same principle. Hybrid vehicles use a petrol driven engine and an electric motor to power the vehicle. These two are used depending on the speed of the vehicle, with the engine being used when the car exceeds a certain speed.

It can be very interesting to know, what makes the hybrid cars fuel efficient. The technology in hybrid burns fuel only when it is needed. The electric motor, backed by a stack of rechargeable batteries, is the primary engine responsible for moving the car during lower speeds and in stop-go traffic conditions.

During coasting speeds, the driver only needs to lightly tap the brake, the car's wheels automatically are engaged into an electrical generator. This generator creates the extra load required to slow down the car, but more importantly, it uses this mechanical energy and converts it into electrical energy to recharge the batteries.

Hybrids use a concept (ABC News) called regenerative braking where the kinetic energy generated is stored into batteries. This energy is then used to power an electric motor when the car is running at low speeds.

This technology, commonly known as KERS (Kinetic Energy Recovery System) has also found its way in Formula One Racing (P. Evans, 2009). Using the same principle, every time the brakes are applied, the mechanical energy is converted into electrical energy to recharge the onboard batteries, thus increasing the usability of the batteries.

At higher speeds, such as steady highway cruising, on-board computers automatically switch on the gas-burning engine, which then takes over as the primary driving force of the car. Typically, the small engine is designed with variable valve timing intelligence, or VVT-i, to ensure that the fuel is burned most efficiently and completely.

The electrical motor and gas-powered engine can also operate in conjunction (P. Evans, 2009). For instance, if more power is needed to merge onto a highway or pass a tractor-trailer truck, the on-board computers will automatically activate the electric motor to provide the needed acceleration boost in horse-power. In case the on-board batteries fall below a certain level of charge, the gas engine will also automatically turn on to charge the batteries and run the electrical motor if needed. That's why a hybrid car never needs to be plugged into an electrical outlet at night — a common misconception that many hybrid-makers confess they still need to clarify among consumers and even some car dealers.

2.1 Advantages & disadvantages of Hybrid vehicles

Hybrid cars are touted to be the future of the automotive industry. There are many areas in which they score over traditional combustion engine based cars:

Environmental benefits

Reduces the amount of carbon dioxide released into the environment

Decreases dependency on fuel and consequently lead to reduction in depletion of oil reserves

There are huge savings in fuel cost that can be made in the long run

A hybrid car can reduce fuel consumption by up to 50%

They use no energy when the car is idle

During rush hours, electric cars become even more beneficial with braking increasing the power saved in batteries

Hybrid cars are still a relatively new concept in the market and the major challenges are:

At present, hybrid cars are significantly more expensive than their combustion engine counterparts

There is a perception amongst people that hybrid cars may not travel as fast as combustion engine cars and that the initial acceleration will be too slow as the lower speeds are powered by the electric motor

2.2 Components of the Research Topic

The primary reason for the development of Hybrid Cars was the need to improve our carbon foot print on the environment and to look for alternate fuels to reduce depletion of our petroleum reserves. These objectives affect different stakeholders in the Ecosystem in different ways:

Government

Every government sets itself a carbon footprint target each year. The government sets this target based on various factors like degree of industrialization in the country, objectives of the Kyoto protocol etc. The government then tries to achieve this target through various policies & initiatives. These are directed towards the automotive manufacturers & customers.

Manufacturers

Hybrid cars are the way of the future and manufacturers the world over have begun to realize it. The manufacturers try to align themselves with the mandate of the government and receive tax breaks, carbon credits etc. for producing eco-friendly vehicles. Manufacturers are now funding many R&D projects to develop hybrid technology even further.

Customer

Many governments across the world offer various incentives to people to buy hybrid or other eco-friendly cars. For instance, in Canada, there is a sales tax rebate on purchase of hybrid cars and in Netherlands, there is a discount on the vehicle registration tax. This project also intends to find out what factors influence a customer to purchase a hybrid car.

2.3 The Hybrid Car Ecosystem

Figure 1 below explains the relationship between the various components in the Hybrid Car ecosystem.

Figure 1: Schematic representation of the Hybrid Car Ecosystem

Environment

Government

Customers

Manufacturers

Hybrid Cars

Carbon Footprint Targets

Kyoto Protocol

Tax Breaks

Discounts

Free Parking

Carbon Credits

Mandate

Production

Research & Development

Fuel Efficient

Eco Friendly

3. LITERATURE REVIEW

3.1 Hybrid technology development so far

Hybrid car technology combines the advantages of a gasoline motor with those of an electric engine. Hybrid cars work on a small fuel-efficient gas engine and an electric motor that assists the car engine in accelerating. The power for electric motor comes from batteries that get recharged automatically while the car is running. (http://eartheasy.com/move_hybrid_cars.html). There are two types of gasoline-electric hybrid cars: parallel hybrid in which both gasoline engine and electric engine work together to push the car and series hybrids in which the gasoline engine may either power an electric motor or charge batteries which in turn will operate the motor. 

Ferdinand Porche made first battery operated car

1899

Gasoline-battery cars were developed.

1969

Audi developed a car in which a nickel-cadmium battery powered rear wheels and a diesel engine drove the front wheels.

1989

Toyota developed Prius which was first fully petrol-battery operated hybrid

1997

Going forward, concept of fuel cell will be implemented. A fuel cell will be hydrogen cell powered.

Future

With the growing concern about the environment, the Prius may not be the only vehicle in its segment. Honda has released a second-generation Insight, and Chevrolet has introduced the Volt. With the growth of hybrid technology, hybrid vehicles will eventually take a prime position in the auto market. (Andrew Meggison, www.gas2.org, August 2012)

The battery technology currently used in the hybrid vehicles is relatively expensive. Taking as an instance, several buses in China are now powered by lithium-ion battery. As the buses have to frequently stop at the traffic signals and for passengers to get on and off, these batteries are not well suited for hybrid buses.

In Elfa system when the breaks are being applied, the electric motors start acting as generators and they feed the electricity back into the batteries. The power thus generated is then used to drive the vehicles, making the buses run exclusively on electric power and thus results in zero emissions. Depending on the capacity of the batteries such vehicles can run for a few hundred meters or can go up to several kilometres. (Andrew Meggison, www.gas2.org, August 2012)

As the diesel engine does not provide any acceleration, vehicles running on Elfa system do not produce any noise. The vehicles operate at an economical engine speed, providing better fuel consumption. In normal circumstances such system provides savings of approximately 10,000 litres of diesel in a year. Buses running on Elfa system have been put to on road testing in number of countries worldwide. (www.engineeringnews.co.za; article: advances in hybrid vehicle technology)

3.2 Brief overview of Hybrids in Australia

Though a population of around 22,620,600 people, Australia’s people’s love for hybrid cars is no less. There was an 84% increase in sales of hybrid cars by private buyers in the country in the month of July, 2012. In 2011 there were 8,820 hybrid sold in Australia, but of those only 2,212 were bought for private use. However by the end of June 2012 there were almost 1,950 hybrid cars bought for the private use. Toyota has now set up an Australian plant that assembles the Camry Hybrid, so the hybrid cars can be easily made accessible to the nation’s population. Also, Toyota has lowered the price of the hybrid Camry and Prius in Australia. There by encouraging more people to invest into hybrid vehicles (www.gas2.org).

Toyota Australia divisional manager, Peter McGregor in an interview for www.goauto.com.au admitted that the sales of hybrid cars in Australia had failed in the year 2011 majorly because of the non-existence of many options in this segment for the customers. The only player that existed in the market were Toyota and with only one product in this segment, Prius. In early 2012, major players in the automobile manufacturing like Honda, BMW, Porsche and Lexus entered the market of petrol-electric cars. With more options available in the market, the young generation of Australia became curious about these hybrid products and they came forward to understand the technology behind the hybrids and even many of Gen Y also started investing in them (site : www.goauto.com, article: Why Australians don’t like hybrids). Even Toyota came up with a new hybrid product in this segment, Camry Hybrid, which by reaching the sales figure of 7107 vehicles became Australia’s bestselling hybrid vehicle for the year 2012. (site: www.toyota.com.au, article: record hybrid sales for Toyota industry).

A recommendation of 32 measures has been made in Automotive Australia 2020- A technological roadmap. These recommendations also include schemes to tap into growing global Electric Vehicle (EV) as the automobile manufacturers wish to reduce their reliance on the fossil fuels. Some priority items mentioned in these recommendations are development for both domestic and export markets of super capacitors (an in-car energy storage unit), ), as well as electronics modules, electric motors, battery packs, more efficient and lightweight batteries that will help to produce more number of EVs.(http://news.drive.com.au, article: Australia plugs in to electrical vehicle charge)

3.3 Increasing acceptability of hybrid cars in Australia

Hybrid cars have now started to become a more accepted part of the Australian new-car space. According to the Herald Sun, sales of hybrid vehicles to private buyers in mid-2012 increased by 84 per cent which was nearly double the increase seen in the fleet market.

The hybrid car segment has also increased substantially in size. Major carmakers like Nissan, Toyota and BMW have launched hybrid cars in the premium luxury car segment targeted at upmarket Australian customers. These include the Premium Infiniti M35h GT from Nissan, the Hybrid Lexus GS450h from Toyota and the BMW Active-Hybrid 5 (NEWTON, 2012). Even luxury carmaker Porsche now sells hybrid versions of its Cayenne SUV and Panamera luxury car ("Top of the classes", Money, 2011).

The first hybrid engine plant facility in Australia has been recently launched in Altona, Melbourne. The $330 million plant is slated to produce 16,200 hybrid engines annually and is operated and managed by Toyota. The Australian government has contributed A$63 million to the facility from its Green Car Innovation Fund (International Business Times, December 2012).

Hybrid cars are steadily making their presence felt in Australia’s car rental industry. Major car rental service providers in Australia like Hertz, Thrifty and Europcar are increasing their investments in hybrid vehicles and educating their customers on the economic and environmental benefits that hybrid cars provide (Adam, 2007).

Australian car insurance providers are also offering reduced premiums for low-emission cars like hybrids. In Western Australia, the RAC is offering up to 25 per cent off on comprehensive car insurance, an up to 2.5 per cent reduction in interest on a car loan and a free upgrade to a higher level of roadside assistance for cars emitting less than 150 grams of CO2/km. The NRMA offers a 10 per cent discount on comprehensive premiums for cars that use less than 5.5 litres per 100 km, while Victorian hybrid owners get a car registration discount of $100 (Source: Herald Sun)

3.4 Government attitude towards Hybrid Cars in Australia

The Australian government has recently launched the A New Car Plan for a Greener Future initiative. Through this initiative the government aims to provide a total assistance of $6.2 billion over the thirteen years between 2008/2009 and 2020/2021. Two major aims of this plan are to assist the automotive industry in Australia to prepare for a low-carbon future and to invest in the technologies of tomorrow. Of this $6.2 billion, $3 billion has already been committed towards various schemes and programs (Source: Department of Industry, Innovation, Science, Research and Tertiary Education, Australian Government).

The Green Car Innovation Fund (GCIF) was one such program of $500 million. The aim of this program was to support the research, development and commercialization of technologies that significantly reduce greenhouse gas emissions and/or fuel consumption of passenger vehicles (Source: Department of Industry, Innovation, Science, Research and Tertiary Education, Australian Government). In early 2011, this fund was closed as part of the Government’s saving measures towards rebuilding infrastructure damaged by floods in eastern Australia (Source: AusIndustry, Australian Government).

Through the GCIF, the Australian government has contributed more than $100 million towards:

Production of the Hybrid Camry in Australia

Development of the Toyota Global Engine Line for production of Hybrid engines in Australia

Production of 7 fully-electric proof-of-concept vehicles, to demonstrate the attractiveness and technical viability to consumers.

(Source: AusIndustry, Australian Government).

3.5 Future of hybrid technology

According to a 2011 forecast by Roland Berger Strategy Consultants, 10 per cent of new cars globally by 2025 will be electric, and the category that includes hybrids and plug-in hybrids will have grabbed 40 per cent of the market by then. Jim Motavalli (2012) argues that while this is a pretty optimistic forecast, there are good reasons for the same. People buying electric and plug-in hybrid cars will not only buy them for economic benefits, most will also be motivated by environmental concerns.

An International Energy Agency roadmap predicts a combined Electric and Plug-in Hybrid Vehicles sales share of almost 60 per cent of all Light Duty Passenger Vehicles worldwide by 2050. According to the same report, apart from contributing significantly to the reduction of greenhouse gas emissions, this increase in sales can deliver sizable benefits towards reduced urban area pollution and noise, and improved oil security. However policy support is critical in this regard, especially in ensuring cost-competitiveness and in providing sufficient recharging infrastructure. Also, continued research and development is needed to create efficient smart grids, to ensure adequate materials supply and to reduce battery costs (Source: Electric and Plug-In Hybrid Electric Vehicle Roadmap, IEA, June 2011).

Improvements in hybrid battery packs:

A hybrid car combines an internal (fuel-based) combustion engine with an electric motor. The electric motor is powered by a battery pack which stores and supplies energy to the motor. Thus a hybrid car’s battery pack is arguably one of its most important parts and its shortcomings are usually targeted by sceptics of hybrid technology. There are several ways in which hybrid battery packs are being improved, some of which are – cheaper replacement batteries, Lithium-Ion batteries for cars, new lead-acid battery advancements, extended battery life and lighter-weight batteries (Source: HowStuffWorks).

3.6 Alternate Technologies

Although plug-in cars and hybrids have placed themselves high above in the sustainability market for eco-friendly cars, researchers have also been working on the development of running vehicles on the hydrogen fuel cells. Fuel-cell systems generate power from hydrogen that is passing through polymer membranes which is sandwiched between two plates that could be made of either metal or thermoset plastics. (www.plasticsnews.com, article: Car manufactures)

The use of fuel cells is proposed to drastically reduce the pollution as the only emissions that the vehicles will have will be in the form of water vapours. Unlike the all-electric cars, where in it was being questioned that a huge amount of money would be required on the construction of vehicle charging stations, hydrogen filling tanks can be placed at the existing gasoline and diesel fuel stations. Thereby the cost of infrastructure is expected to reduce.

(Miel, R. (2012). Move over plug-ins, hybrids. Tire Business, 29(25), 0010).

Development of Hydrogen – based vehicles:

Hydrogen-fuelled internal combustible engines or fuel-cell based electric motors have emerged as viable alternatives in car fuel technologies for the near future, as evidenced by the investments being made by carmakers in these technologies. Fuel cell-based cars are reported to drastically reduce pollution as their only emissions are water vapours. Hydrogen filling tanks could also be placed at existing petrol and diesel fuel stations and thereby do not require the additional infrastructure that is needed for plug-in electric cars and hybrids (Miel, 2012).

Liquid Nitrogen vehicles:

These are similar in many ways to electric vehicles, except that liquid Nitrogen is used to store energy rather than batteries. Although they have many potential advantages like low cost fuel, lower maintenance costs, less pollution and so on, vehicles propelled by liquid Nitrogen have been demonstrated but not yet proved viable enough to be used commercially (source: Wikipedia)

4. METHODOLOGY

The primary objective of this project is to better understand what developments have been made until now with regards to hybrids cars and keeping this in mind, the project has been designed to be exploratory in nature rather than fact finding. The report tracks the development of Hybrid technology, beginning with the first electric vehicle in 1899 until recent developments in Australia in 2013. The project has been divided into three major categories:

The history and evolution of Hybrid cars

Developments with regard to hybrid technology

Government attitudes towards Hybrids

Hybrid cars in Australia

The data for this project has primarily been sourced through secondary research. We have looked at the following sources for qualitative information:

Industry Associations (Electric Drive Transport Association)

Manufacturer Websites (Toyota, Honda)

Major business publications (Mckinsey Quarterly)

Industry Forums

Journals

Newspapers

For data on hybrid car sales & cost benefits, we have extracted data from Industry Associations and Automotive research firms.

In order to compare the maturity of the Australian hybrid car market, we have also looked at the following markets:

USA

Europe

China

Japan

5. DATA ANALYSIS

The major drawback with Hybrid cars at present is the high upfront cost, though the car provides long term benefits in terms of fuel savings. In most cases, the primary drawback is that people are not aware of the time frame in which the Hybrid cars would break even with traditional petrol based cars. The comparison between 5 different hybrid cars in USA has been provided in Table A.1 (Appendix). Each car has been compared to a similar petrol based car. What is evident from the data is that the breakeven of hybrid cars varies largely from car to car and can vary from anywhere between 3 years to 19 years.

(Source: EVsRoll)

7. BIBLIOGRAPHY

Adam, C. (2007). Hertz eyes Prius. Travel Weekly Australia, (67), 4.

Australia Launches First Hybrid Engine Plant Facility in Melbourne. (2012, December 6). International Business Times.

NEWTON, B. (2012). Upmarket hybrids. Money (14446219), (150), 29.

Top of the classes. (2011). Money (14446219), (141), 122-124.

Miel, R. (2012). Move over plug-ins, hybrids. Tire Business, 29(25), 0010.

John Fuller, 5 Ways Hybrid Battery Packs are Being Improved. Retrieved January 28, 2013, from HowStuffWorks (http://auto.howstuffworks.com/fuel-efficiency/hybrid-technology/5-hybrid-battery-pack-improvements.htm)

Liquid nitrogen vehicle, Retrieved January 28, 2013, from Wikipedia (http://en.wikipedia.org/wiki/Liquid_nitrogen_vehicle)

Martin, S. (2012, August 02). Cool and green hybrid car sales surge to Australian record. Herald Sun. Retrieved from HeraldSun.com.au (http://www.heraldsun.com.au/business/cool-and-green-hybrid-car-sales-surge-to-australian-record/story-fn7j19iv-1226441599395)

A New Car Plan for a Greener Future: http://www.innovation.gov.au/Industry/Automotive/InitiativesandAssistance/Pages/default.aspx

Green Car Innovation Fund (GCIF): http://www.ausindustry.gov.au/programs/manufacturing/gcif/Pages/default.aspx

GCIF Grants: http://www.ausindustry.gov.au/programs/manufacturing/gcif/Documents/GCIF-GrantAgreementsExecuted.pdf

Motavalli, J. (2012). The Road Ahead for Gasoline-Free Cars. Futurist, 46(2), 6-7.

Kalmbach, R., Bernhart, W., Kleimann, P. G. and Hoffman, M. (2011). Automotive landscape 2025: opportunities and challenges ahead, Roland Berger.

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Smrcka, K. (n.d.). Advances in hybrid vehicle technology. Engineering News | Real-Economy News | Industry News. http://www.engineeringnews.co.za/article/advances-in-hybrid-vehicle-technology-2011-03-04

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Car manufacturers expect to see new interest in hydrogen fuel cells -News – Plastics News. (n.d.). Plastics News. Retrieved from http://www.plasticsnews.com/article/20120202/NEWS/302029984/car-manufacturers-expect-to-see-new-interest-in-hydrogen-fuel-cells#