Automakers aren’t the only companies taking a keen interest in plug-in hybrid-electric vehicles (PHEVs). Electric utilities are realizing development of such technology could bolster their bottom line, as well, according to a recent WardsAuto.com article.

Although PHEVs offer promising fuel efficiency, they face a number of hurdles before being introduced to the marketplace. Arguably, the most significant challenge is the way the nation’s energy grids will handle the additional power needed to recharge large numbers of plug-in vehicles.

GridPoint Inc., a Washington-based energy-management company, says it has the solution and is working with both utility companies and automakers to make PHEVs viable. Established in 2003, GridPoint’s first order of business was the creation of a standalone power unit called GridPoint Central to be used by utility customers to monitor their energy use. Similar in size to a standard refrigerator, customers can track their energy consumption through the GridPoint unit or via a dedicated website.

“You can log on to our site and see your usage for the month,” Brian Golden, GridPoint’s vice president-product strategy, told Ward’s Auto. “You can see the number of kilowatt hours used and their dollar value.” For example, he says, “You could see that you spent $140 running your air conditioner last month and change your operating characteristics to save money.”

A system that allows fine-tuning of household energy use would appear a perfect fit for PHEVs, which require massive amounts of electricity to recharge their batteries. Golden says a PHEV owner could program GridPoint Central to recharge his vehicle during off-peak hours when electricity is cheap. Or, if necessary, the owner could override the program, allowing for charging during peak hours, albeit at a greater cost.

The way it would work, Golden explains, is the GridPoint Central unit would be owned by the electrical utilities and rented to customers for about $20 per month, with an additional $10 monthly fee for the online monitoring service. Customers would be required to sign a contract with the utility company that allows for greater control over the individual’s energy use by optimizing the flow of power for more uniform electricity output. The peaks and valleys of everyday energy consumption would be leveled out, and energy that normally goes to waste during off hours would be used to charge PHEVs. As part of the deal, the utility would pay customers about $5 a month to access power stored in a stationary PHEV’s batteries when needed during peak hours, minimizing the chance of a grid overload, Golden says.

Because PHEVs run on both gasoline and electric power, in the unlikely case a vehicle’s batteries were drained completely by the utility, the owner still could drive the car with minimal inconvenience. Golden says, theoretically, a PHEV owner could operate his vehicle on electric power without ever paying a dime by programming the GridPoint Central system to sell power borrowed from the vehicle’s batteries for more than the customer’s original cost. For example, if a vehicle was to recharge itself at night at a cost of $0.08 per kW/hour, its owner could sell back the power to the electric utility at $0.50 per kW/hour.

“You could get all your fuel paid for the lifetime of the car,” Golden says. “That’s why you need an intelligent platform to manage this.”

With the technology in place to interact with electric utilities, Golden says his company now is working with several automakers to overcome some major roadblocks before PHEVs can be recharged through the GridPoint system. These include how to instruct the vehicle to discharge its energy and the way in which it would do so. “We’re working with automakers on the discharging. It’s not something (PHEVs) were originally designed for,” Golden says. “Also, how do you get power back to the electrical grid? Maybe through the same plug, but we’re not sure yet.” Golden predicts PHEVs will be on the road in about three years, and GridPoint should be able to interact with them seamlessly in about five years.

But while Golden’s company is confident all the bases are covered, some auto-industry insiders are not so sure. Susan Cischke, senior vice president of sustainability, environment and safety engineering at Ford Motor Co., says she is not convinced the nation’s electric grid will be able to handle the additional loads created by a proliferation of PHEVs. “Having lived (in southeast Michigan) a couple of summers ago when the (regional) grid went down, I don’t know if it’s ready,” she tells Ward’s Auto. “I do agree there’s a real opportunity to take advantage of off-peak power, but I think that more study would need to be done.”

Another concern of Cischke’s and others is the advancement of hybrid-battery technology.

Today’s hybrid-electric vehicles use nickel-metal-hydride batteries, which are durable but don’t hold enough energy to be viable for use in PHEVs. Many automakers say the solution is lithium-ion batteries, but they cost much more and are not as durable. As such, capable energy-storage devices are needed before PHEVs can be readied for production, Cischke says. The cost to accelerate the development of lithium-ion batteries currently rests largely with the auto industry and a handful of battery producers. A new business model likely will have to be implemented to speed along development, perhaps through government subsidies, Cischke says. Another alternative is to have the power companies own the batteries, she says.

“At one time, the phone company used to own all the phones, so maybe there’s a different model out there,” she says. “The model we know today may be different (in the future), it may be one in between.”

While acknowledging the obstacles, Cischke admits GridPoint’s business model is intriguing. Considering that much of the criticism surrounding the use of E85, a blend of 15% gasoline and 85% ethanol, is the lack of a public refueling infrastructure, GridPoint’s PHEV plan has the necessary electrical grid already in place. “I definitely want to talk to (GridPoint),” Cischke says. “I think we have to expand our view of alliances and partnerships to accommodate a full range of transportation options.”

Source: Pope, Byron. (May 14, 2007) “GridPoint Readies PHEV Battery-Charging System.” WardsAuto.com. Retrieved May 17, 2007 from www.wardsauto.com.

Despite the sale of Chrysler group by DaimlerChrysler, powertrain analysts at CSM Worldwide expect the restructured Chrysler to remain highly competitive in the powertrain arena well into the next decade. According to a recent CSM Worldwide press release, Chrysler has been aggressively procuring designs and outsourcing powertrain production from its global partners. The link that will be maintained with Daimler AG will be a key element of this strategy.

“Decisions regarding the long-term supply of Chrysler engines and transmissions have already been made,” said Eric Fedewa, vice president of global powertrain forecasts at CSM. “Moving forward, Chrysler will increasingly outsource its powertrain programs, both design and assembly, to outside suppliers and strategic partners.”

As an example: of the engines Chrysler assembles, 42% are purchased designs while almost 35% of its transmissions are purchased designs. By 2013, according to CSM’s forecast, the company will increase design purchasing to 77% for engines and 68% for transmissions. This practice allows access to innovative technologies from suppliers, which is vital for product differentiation and maintaining a competitive edge.

Products from Chrysler’s powertrain strategy include the new line of four-cylinder engines developed in a joint venture with Hyundai and Mitsubishi, the high-tech Phoenix V6 coming in 2010 as a replacement to the current lineup of V6s, and the Two-Mode hybrid transmission co-developed with General Motors and BMW.

A recent AutoWeek article delves further into what to expect from Chrysler as far as product lineup. By the time Cerberus Capital Management’s $7.45 billion purchase of Chrysler finalizes in the third quarter of this year, the 2008 Dodge Challenger will be less than a year from introduction. The article also reports that “well-received Chrysler concepts from the past two years should be in line for the production green light.” 

Chrysler expects to continue to invest in future products as planned, and the new owners of the car company intend to follow Chrysler CEO Tom LaSorda’s lead while investing even more into future products. The company’s future vehicle-production plan includes 20 new vehicles and 13 major facelifts for its current lineup by the end of 2009, despite reducing the company’s platforms from 12 to seven. More specifically, Chrysler plans to bring out its fifth-generation Chrysler minivan later this year, the Chrysler Sebring-/Dodge Avenger-based crossovers and the next-generation Ram pickup.

Cut from the portfolio will be the Dodge Durango and Chrysler Aspen once the plant that produces the slow-selling big SUVs is shut down in late 2009. The company has partnered up with China’s Chery Automobiles to bring out a production version of the Dodge Hornet mini-car (middle picture below). Chery will likely join forces with Chrysler to bring out the production version of the Dodge Demon roadster as well (bottom picture below). Chrysler is also considering production of its well-received Chrysler Imperial concept (top picture below), which the company says could spark further interest in the Chrysler brand.
 


Sources: CSM Worldwide. (May 15, 2007). “CSM Powertrain Analysis: Chrysle’s Powertrain Lineup Will Remain Strong Through Partnerships.” CSM Worldwide press release courtesy of PR Newswire; Gritzinger, Bob. (May 15, 2007). Imperial Dreams: Chrysler Sale Could Bode Well for Future Product. AutoWeek. Retrieved May 18, 2007 from www.autoweek.com.

SEMA members cited rising operating costs as the number-one obstacle facing their businesses, according to a SEMA research. Part of these operating costs include money spent on energy, and a recent study showed that businesses in general are faced with similar challenges imposed by rising energy costs. Results from a survey of North American business leaders indicate they expect energy prices to continue to rise, and plan to invest in energy efficiency measures to help fight rising costs, according to a recent Johnson Controls press release.

The Johnson Controls Energy Efficiency Indicator research commissioned by the company identified individuals from a wide range of facilities and locations who were decision-makers for energy-management issues within organizations. They asked how these managers were responding to rising energy costs, defined as electricity and natural-gas costs. Members from the International Facility Management Association were included as survey respondents. 

Just over half (52%) of the executives surveyed say that costs savings are either entirely or somewhat the driver for their decision to invest in energy-efficiency measures. Thirty-five percent say cost savings and environmental responsibility are equal motivators, while only 13% cite environmental concern as the greater motivator.

The executives appear to have reached a consensus that energy costs will continue to rise in the near future. Seventy-nine percent say they believe that electricity and natural-gas prices will increase significantly during the next 12 months, with an average price hike of 13.25% expected.

Consistent with the rising energy cost forecast, 62% say their companies are paying more attention to energy efficiency today than five years ago. As a result, they are acting on it. Almost 57% expect to make energy-efficiency improvements using their capital budgets in the next 12 months, spending an average of 8% of those budgets. In addition, 64% anticipate using their operating budgets, allocating 6% to energy-efficiency improvements.

Despite the pain of rising energy costs, executives are generally limiting their investments to more conservative energy-management solutions. Of respondents who have already made energy-efficiency investments:

• 70% educated staff and other facility users on how to be more efficient
• 67% switched to energy efficient lighting
• 60% adjusted HVAC controls
• 46% installed lighting sensors

Commercial buildings consume about 40% of natural gas and 60% of the electricity generated in the United States. So it’s not surprising that three-quarters of executives with companies that are building or planning to build new facilities, or are launching retrofits in the next year, say that energy efficiency will be a priority in the design of those projects.

When it comes to energy-supply-related matters, 36% have negotiated energy contracts with suppliers. Only 14% are putting energy-price hedging strategies in place. In addition, 11% currently have a stated carbon-reduction goal.

“This survey provides a valuable snapshot of how organizations are reacting to rising energy prices, and I think we’re going to see even more attention paid to this in the future,” said C. David Myers, president of the Johnson Controls Building Efficiency business. “There’s a growing realization of the role commercial and industrial facilities play in energy consumption, and the role they can play in making the economy more energy efficient.”

Whatever the motivation for making energy-efficiency investments, companies have by and large not relaxed their payback requirements for such measures (i.e. time for return on investment). About two thirds of companies (64%) have a maximum payback period of between two and five years. Overall, only 18% of those surveyed say their companies would allow a longer payback period today than five years ago. About 45% say the required payback period has not changed compared with five years ago.

Executives responsible for larger facilities (500,000 square feet or more) are an exception, according to Johnson Controls. They spend a bigger part of their budgets on energy, are planning to invest more of their budgets on energy-efficiency measures and will tolerate a longer payback period. A summary of the survey findings are presented below.



Source: Johnson Controls (May 17, 2007). “New Research Shows Businesses Investing in Energy Efficiency Measures to Combat Rising Energy Costs.” Johnson Controls press release courtesy of PR Newswire.

Rising gasoline prices have some owners of large and midsize trucks trading to smaller vehicles, according to J.D. Power and Associates, which uses real-time retail transaction data from its Power Information Network (PIN) to gather figures. In a recent press release, it said gasoline prices have surged more than $.20 in recent weeks to a record nationwide average of $3.10 per gallon, surpassing the previous record of $3.07 per gallon set in September 2005, according to the U.S. Energy Information Administration (EIA). As gas prices rise, owner loyalty in the large pickup and midsize and large utility-vehicle segments drops, according to PIN data gathered between February and April 2007. Owner loyalty is measured by the percentage of owners in any given segment who trade for another vehicle in the same segment.

“We’re seeing a broad, long-term—but gradual—movement to smaller vehicles,” says Tom Libby, senior director of industry analysis at PIN. “For example, during periods of high gas prices over the past two years, we’ve seen movement from larger to smaller SUVs. However, the total SUV pie remains largely intact.”
 


Not every new-vehicle segment has been affected by rising gas prices. For example, PIN findings show that owner loyalty for large and midsize cars, small crossovers and small SUVs has remained relatively unchanged in recent months. Libby notes that all of these trends are consistent with the patterns observed in spring 2006 when gas prices also rose.

Increased demand for smaller vehicles, coupled with higher gas prices, has also given four-cylinder engines a boost in powertrain market share. Four-cylinder engines, as a percentage of total retail sales, has increased from 27.5% in April 2004 to 35.7% in April 2007. While vehicles powered by four-cylinder engines are receiving a lift from rising gas prices, so are new vehicles powered by hybrid-electric engines. Hybrid vehicle sales have shown a strong correlation to gas prices. For more than two years, hybrid sales have increased as gas prices have risen and have decreased as gas prices have fallen. 

 


Additionally, PIN data shows that the retail turn rates—the amount of time a new vehicle spends on a dealership lot before being sold—decreased for both new and used small cars as the price of gas increased. In particular, these retail turn rates suggest that certain parts of the used-vehicle market, such as small cars, compact basic cars and small luxury crossovers, benefit when fuel prices rise. PIN and J.D. Power and Associates data suggest that the small-car market—both new and used—will continue to strengthen as fuel prices escalate.

“The recent strength of the small-vehicle segments—pricing, styling and an increasing number of new models—is receiving an additional boost from high gas prices,” said Bob Schnorbus, chief economist at J.D. Power and Associates. “We’re expecting the small-vehicle segments to continue to grow, regardless of gas prices, but higher gas prices certainly will help these segments relative to others.”

Source: J.D. Power and Associates. (May 16, 2007). “Power Information Network Reports: Rising Gas Prices Begin to Sway New-Vehicle Owners Toward Smaller Versions of Trucks and Utility Vehicles.” J.D. Power and Associates press release courtesy of PR Newswire.

Despite pumped-up production schedules in recent weeks, North American June output will trail last year’s pace by 8.3%, according to a recent WardsAuto.com article. Ward’s Auto forecasts manufacturers will assemble 1,394,600 vehicles next month based on 21 production days, somewhat under the industry’s planned 1,403,000 units. Output in like-2006 totaled 1,521,101 units, with one additional production day.

However, boosted by healthier production rates than seen in the year’s first three months, Ward’s Auto is forecasting second-quarter North American output to surpass first quarter by more than 7.0%, based on a daily build rate, with volume rising from 3,937,354 units to 4,177,072.

While Ford Motor Co.’s Wixom, Michigan, plant will close this month, output of its re-badged Taurus sedan and Taurus X CUV, which are replacing the Ford Five Hundred and Freestyle, will more than offset the lost production. General Motors Corp. is ramping up production of the new 2008 Saturn Vue at its Ramos Arizpe, Mexico, plant and Honda of America Manufacturing Inc. has added more Civic sedans in Canada. These additional builds, along with a bump up in inventories as many automakers prepare for model-year changeovers this summer, will contribute to a stronger second-quarter slate.

Still, compared with prior-year’s production that yielded 4,274,339 units, second-quarter 2007 output will trail the same period in 2006 by 2.3%. Detroit’s Big Three will build fewer vehicles in June than the prior year. Ford output will drop 17.9% to 264,802 units, Chrysler Group’s production will decline 15.1% to 239,190 and General Motors Corp.’s output will fall 14.6% to 391,711.

In keeping with rising sales trends among foreign-based manufacturers, Toyota Motor Manufacturing North America Inc., Nissan North America Inc. and Honda all are forecast to step up production in June. Nissan, now assembling the Versa subcompact in Mexico, is forecasted to increase North American output 23.6% in June over prior-year. Toyota will outpace last year’s 7.4% and Honda will increase its builds 2.9%. Other foreign-based automakers will see a combined 5.0% gain in June.

Capacity utilization also will drop in the month, with North American manufacturers only using a combined 84.1% capacity, compared with 87.5% in like-2006. The largest decline will be in Canada, from last year’s 91.3% to 80.8%. Among the automakers, Chrysler’s capacity usage will see the biggest drop in June, from last year’s 91.6% to 77.3%. The cutback is a reflection of the automaker’s continuing attempt to better align production with demand in order to reduce inventories and return to profitability.

Ward’s Auto is forecasting production in the year’s first half to finish 5.2% behind like-2006, to 8,114,477 total assemblies from prior-year’s 8,561,519.

Source: Elnick, Diane. (May 18, 2007). “June North American Production to Fall Below Last Year’s.” WardsAuto.com. Retrieved May 18, 2007 from www.WardsAuto.com.

Magazine publisher Primedia said on Monday it will sell its Enthusiast Media division, which includes popular automotive magazines like Motor Trend, Automobile, and Hot Rod, to Source Interlink for $1.2 billion. According to a Reuters report, the all-cash deal is expected to close in the third quarter and will zero out Primedia’s debt.

Source Interlink, based in Bonita Springs, Florida, distributes magazines, CDs, DVDs and other entertainment products to over 110,000 retail locations throughout North America, and is part of billionaire investor Ron Burkle’s private equity firm, Yucaipa Companies.

Primedia’s Enthusiast Media group includes more than 70 magazines and 90 websites. Once completed, the deal will leave Primedia with its Consumer Source business, which publishes free consumer guides.

Sources:
-“Source Interlink to Buy Primedia Unit for $1.2 billion,” Micheal Flaherty, Caroline Humer, Reuters.com, 5/14/07

-“Burkle’s Source Agrees to Buy Primedia Magazine Group,”
Leon Lazaroff, Bloomberg.com, 5/14/07

In a move that had been hinted at for weeks, DaimlerChrysler AG divested itself from the bulk of its investment in Chrysler, handing over an 80.1% share of the company to the New York-based private equity firm Cerberus Capital Management, according to a Bloomberg report.

Cerberus will invest $7.4 billion in a new venture called Chrysler Holding LLC, while Stuttgart, Germany-based DaimlerChrysler will contribute a net $650 million. Industry observers may recognize Cerberus as the same group that offered to invest $3.4 billion in bankrupt auto-parts maker Delphi Corp., a deal that Cerberus is expected to back out of, Bloomberg reports.

"The sale of Chrysler represents a significant milestone in the automotive industry,” notes Carl Sheffer, SEMA vice president, OEM relations. “Never before has an American automotive company been acquired by an investment company with the added caveat of taking the company private.

“It will be interesting to watch how this transaction will impact future product offerings, profitability, dealings with the UAW and dealings with other manufacturers as they move forward. At this time, I don't see any significant impact on the relationships currently in place with SEMA and many of our member companies.”

SEMA members are located in each of the 436 Congressional districts (435 plus District of Columbia).

Nine California districts, as well as Rep. Joe Knollenberg's in Michigan, make it on the top ten list of Congressional districts in terms of number of SEMA members. 

Heading the list is Congressional Automotive Performance and Motorsports Cacucus member Dana Rohrabacher's district with one hundred and twelve SEMA members. For a list of SEMA members in each of the 436 Congressional districts (435 plus District of Columbia) click here. 

For a list of SEMA members by state click here. To identify your Member of Congress click here.  To identify which Members of Congress are in the Congressional Automotive Performance and Motorsports Caucus click here.  

Members Per Representative                                                                                                                                      

Truck Accessories Group has signed on as the first Gold Sponsor of the SEMA Installation Banquet and Gala Fundraiser Supported by DUB magazine, Presented by Advanstar. Truck Accessories Group includes popular brands Leer, Century, Raider, Pace Edwards, and State Wide Aluminum.

The SEMA Installation Banquet & Gala Fundraiser is where outgoing Board members are recognized for their service, newly elected Board members are introduced and the newest selections for the SEMA Hall of Fame are announced. Beginning this year, the event was combined with charitable fundraising activities, and proceeds from the gala will be contributed to two very worthy causes—Childhelp and the Petty Victory Junction Gang Camp.

One of the fundraising activities held in conjunction with the annual banquet is the silent auction. The silent auction features a multitude of one-of-a-kind collectibles and memorabilia.

Items that have already been graciously donated include a two-night stay for two couples at the Cibolo Creek Ranch in Texas, as well as passes to the Barrett-Jackson Auction.  

To donate an item for the silent auction, use the PDF donation form located here.

Click here for more information on the Installation Banquet & Gala Fundraiser.

With a new high-performance Nissan 350Z on the way, offered through the automaker’s NISMO performance division, we take a look at the most popular parts for the standard 350Z and its upmarket sibling, the Infiniti G35.

Between April 11-May 10, 350Z enthusiasts spent $601,282 on parts and accessories while their G35 counterparts shelled out $484,894 via online auction, according to data from Terapeak, a developer of market-focused research software that monitors online sales and auctions.

Exterior goods, lighting and lamps, and wheels and tires (in that order) proved the most popular category with 350Z fans, accounting for $62,491. Antennas, grilles, and wings and spoilers were the most sought-after exterior items, while headlight/taillight covers, xenon lamps, and taillights comprised the lighting category’s most coveted items. Wheels and tires accounted for more than 30 percent ($267,291) of the monthly total.

G35 enthusiasts also like their exterior goods, although in different order. Lighting and lamps was the most favored category, comprising $49,906 of the monthly total, with wheels and tires, and exterior accessories completing the top three categories.

Headlights, side markers and xenon lamps were the most purchased lighting components, while grilles, spoilers and wings, and body kits were the hottest exterior accessories. Wheels and tires nearly mirrored the popularity of those for the 350Z, accounting for $244,176 in sales.

Terapeak's Motors P&A Research provides sellers with access to in-depth research on the past year of online auction data and allows users to get in-depth research reports on the competition and themselves. More at www.terapeak.com/motors.