Review of the Research and Development Plan for the Office of Advanced Automotive Technologies (1998)

The Office of Advanced Automotive Technologies (OAAT) within the U.S. Department of Energy (DOE) was established in 1996 to consolidate DOE's programs in automotive technology research and development (R&D) into an integrated program for light vehicles.¹ One of the first activities undertaken by OAAT was to develop a plan defining the scope, focus, and content of its Advanced Automotive Technologies Program for calendar years 1997 through 2001. The Research and Development Plan for the Office of Advanced Automotive Technologies describes the research that OAAT plans to undertake "to reduce the most serious technical barriers to the development of energy-efficient automotive technologies that could significantly reduce the nation's dependence on petroleum." The National Research Council formed the Committee on Advanced Automotive Technologies Plan in response to a request from the OAAT to conduct an independent review of the OAAT R&D plan.

The committee commends the OAAT on its R&D plan, which is a worthy attempt to integrate and coordinate research on advanced automotive technologies within DOE. In the committee's judgment, the technologies described in the plan generally offer important potential benefits to the nation in terms of reducing petroleum consumption² and adverse environmental effects from automobiles,

even if the ambitious OAAT goals are not met. The plan emphasizes jointly funded partnerships among government agencies, the national laboratories, universities, and industry to develop and validate technologies. The committee encourages OAAT to continue these partnerships, which permit the federal government to stimulate technology development and create opportunities for the exchange of ideas between government and industry. In most cases, the OAAT plan is attentive to the different but complementary contributions of government and private sector R&D to technology development. In the committee's view, for the reductions in petroleum consumption and adverse environmental effects to be realized, the participation of industry in the implementation and commercialization of advanced automotive technologies is essential. However, the OAAT should fund only generic, precompetitive R&D that industry would not undertake on its own.

The technical section of the plan provides information on technical barriers and approaches to overcoming these barriers for vehicle systems and seven individual technology areas: advanced engines; fuel cells; high power energy storage; power electronics and electric machines; advanced automotive materials; alternative fuels; and electric vehicle batteries. The committee found the technical plan to be logical and well structured, with a clear progression from the technical barriers to the technical tasks. The technical barriers are, in general, appropriately defined in that they represent the most significant hurdles to technology development. However, the quality of the strategies for overcoming the technical barriers varies considerably. An important feature of the technical plan is the incorporation of "Go/No Go" decision points corresponding to potential technical "showstoppers." The committee considered the Go/No Go methodology to be sensible for high-risk R&D, although the decisive implementation of the Go/No Go approach will be essential for the overall success of the R&D portfolio.

The committee was unable to clarify the detailed relationship between the R&D described in the plan and two related programs, namely, the research programs of the Partnership for a New Generation of Vehicles (PNGV) and the U.S. Advanced Battery Consortium (USABC), whose projects include developing batteries for electric and hybrid vehicles. Although the plan states that "PNGV is larger than OAAT and OAAT is not strictly PNGV," OAAT activities are central to the PNGV automotive technology development. In fact, about 86 percent of OAAT funds for fiscal year 1997 were expended in PNGV, according to DOE representatives. A better explanation of the differences between OAAT and PNGV goals and of the relative time frames for these two programs would be helpful for the reader. For example, OAAT activities for 1997 to 2001 cannot be readily correlated with PNGV targets after 2001.³

A more detailed description of, and justification for, OAAT's targets as distinct from those of PNGV—such as increasing fuel efficiency from 80 miles per gallon (mpg) to 100 mpg—would give the reader a better perspective on OAAT's long-term objectives. A more detailed explanation of the relationships among the OAAT R&D plan, the USABC, and the proposed Advanced Battery Initiative (to be launched in 2000) would also be helpful.

The committee understands that the plan is a living document and that assimilating existing R&D programs and aligning them with OAAT objectives is an ongoing process. The committee also recognizes that the plan is required to respond to legislative directives, such as the directives in the Energy Policy Act of 1992, and must accommodate evolving political agendas. In this context, the committee offers some suggestions for improving both the content and presentation of the plan. The committee was mindful that for the plan to be effective it must be both technically robust and clearly communicated. The committee's major recommendations are provided in the executive summary. Additional recommendations, including those relating to individual technology areas in the plan, are given in the body of the report.

Recommendation. The relationship between the OAAT R&D plan and the PNGV and USABC programs should be explained clearly in the plan, particularly with regard to the different goals and objectives, budgets, and responsibilities for program management.

One of DOE's goals is to ''enhance energy productivity.''⁴ The committee recognizes the benefits of this goal as part of a strategy for responding to possible energy supply shortages or more stringent environmental regulations, such as mandatory reductions in emissions of greenhouse gases to the atmosphere.

In keeping with DOE's goals, OAAT's goal is to develop technologies that will enable the introduction into the domestic market of vehicles with several times the fuel efficiency of current, comparable conventional vehicles. At the same time, these advanced technology vehicles will have to meet all future emissions regulations and be competitive with conventional vehicles in other ways (including costs). The OAAT goal includes a requirement for fuel flexibility, although it is not clear whether this requirement applies to individual vehicles or to the light-vehicle fleet as a whole. In the committee's view, the OAAT goal is commendable but will be very difficult to reach, especially for fuel-flexible

vehicles. It would be helpful if the overall light-vehicle fleet were fuel flexible so that alternative fuels could gradually absorb some of the demand for petroleum. However, attaining the high performance needed to meet OAAT's challenging fuel efficiency goal and other targets will be less difficult if an individual vehicle is optimized for a well defined and well refined fuel and is not required to be fuel flexible.

The objectives of the OAAT plan specify fuel economy levels and dates for meeting technical targets and for marketing advanced vehicles. These objectives are very challenging, and the marketing objectives are probably not attainable without higher gasoline prices or other market incentives. In the committee's judgment, the plan should recognize the possibility that OAAT will fall short of meeting the stated objectives in the specified time. But the committee believes important benefits could be realized even if the objectives are not fully met. For example, fuel economy values of 40 or 60 mpg—as opposed to the target values of 80 and 100 mpg—would considerably reduce petroleum consumption.

Alternative fuels may help reduce the consumption of petroleum-based fuels in the United States. However, the OAAT role in enabling the efficient use of alternative fuels does not go beyond the pre-production development of new vehicle technologies and R&D related to the development of low-cost refueling facilities. Because at least two automotive companies are already producing ethanol-fueled vehicles, the committee considers the OAAT tasks related to ethanol-fueled vehicles to be inappropriate for federal government support. The committee also believes that the OAAT approach of progressing from E85 technology to E95 technology is not technically defensible.⁵ Increasing the proportion of ethanol in the fuel from 85 percent to 95 percent offers negligible efficiency gains and aggravates the cold-start problem. In the case of vehicles fueled by compressed natural gas (CNG), the committee considers that some OAAT efforts are justified to address the problem of refueling, which now limits the market for CNG vehicles. In the committee's view, the cost and reliability of CNG refueling are more critical for market penetration than the cost of fuel tanks or vehicle range. The committee therefore suggests that OAAT change the priorities of the CNG technical barriers defined in the plan and focus its efforts on the most critical barrier, namely, the refueling infrastructure.

The committee supports setting target dates for achieving performance goals but questions OAAT's decision to set dates when vehicles will be "commercially viable" or "could be successfully marketed."⁶ Dates when marketing becomes feasible are beyond OAAT's control and are strongly dependent on when

advanced vehicles become "cost competitive" (see discussion of costs below) and when other market factors come into play.

Recommendation. The OAAT should modify its R&D plan to acknowledge the benefits of the partial attainment of goals and objectives.

Recommendation. The OAAT efforts related to ethanol-fueled vehicles should be eliminated from the R&D plan because these vehicles are already in production. In the event that legislative mandates require OAAT to continue some work on ethanol, further consideration of E95 should be eliminated from the plan because this fuel has little more to offer than E85, and it exacerbates the cold-start problem.

Recommendation. The priority of the technical barriers for CNG should be changed. The cost and reliability of fueling facilities and the related technical task should be given the highest priority. Substantial reductions in the cost of refueling facilities should be a major criterion for the 2001 Go/No Go decision to continue the development of CNG vehicles.

Recommendation. The dates indicating when advanced technology vehicles could be marketed should be either eliminated from the plan or qualified to indicate that they depend on many unknown, nontechnical factors.

The plan defines technical targets for each technology area. The dates by which the intermediate and final targets are to be achieved vary, but most of them fall between 1997 and 2006. The basis for technical targets is not clearly defined in the plan, which was of concern to the committee. For example, some of the targets for 1997 appear to be overly optimistic considering the current state of the technologies, which undermines the credibility of later targets. In some cases, the intermediate targets appear to reflect a steady rate of progress from today's technology toward the final targets. In other cases, the intermediate targets appear to require technology breakthroughs or reflect diminishing returns, although assumptions about rates of progress are not articulated in the plan. Representatives of OAAT explained to the committee that the technical targets are based on a combination of performance data and projections and will be refined as more data are generated. The committee also noted some inconsistencies in defining targets. Targets should be defined in a way that facilitates comparisons of components that perform the same function but are based on different technologies. For example, the cost and efficiency of a fuel cell power plant should include the reformer (if used), motor, and other necessary accessories so they can be compared to the cost and efficiency of a compression-ignition direct-injection (CIDI) engine and transmission.

Recommendation. To enhance the overall credibility of the plan, OAAT should do the following:

• clearly state the bases for the technical targets
• explain the proposed procedures for updating and refining targets as more data become available
• ensure that targets for the various technologies are defined consistently in terms of efficiencies and functional units

Throughout the plan, advanced technology vehicles are referred to as being cost competitive with conventional vehicles, but the term "cost competitive" is not clearly defined. The committee interprets "cost competitive" to mean that the overall cost of owning and operating an advanced vehicle over its life is equal to or less than the cost of a comparable conventional vehicle at a particular date. The cost of operations includes fuel and required service.⁷ The term "comparable" implies that advanced and conventional vehicles will offer the same degree of customer satisfaction in terms of functionality, design, prestige, reliability, comfort, safety, etc. However, the two vehicles will not necessarily offer the same ''societal benefits," such as reduced air pollution or less dependence on imported petroleum.

The PNGV Goal 3 states that advanced technology vehicles should "achieve up to three times the fuel efficiency of comparable 1994 family sedans with equivalent cost of ownership adjusted for economics." The committee believes this PNGV goal is unrealistic because many of the technologies under consideration are likely to increase the cost of advanced vehicles, even when adjusted for economics. Although changes in market conditions could make cost competitiveness easier to attain (petroleum prices could rise substantially or government mandated market incentives could be introduced), the committee believes that OAAT should set more realistic objectives for cost competitiveness. The plan might also indicate that some increase in cost over conventional vehicles at a specific date might be justified on the basis of broad societal benefits. Determining how much of an increase in vehicle cost might be justified on the basis of societal benefits is a public policy issue that falls beyond the scope of OAAT's mandate.

The committee found that the strategies for reducing the cost of technologies in the technical plan are generally inadequate, although there are some exceptions. The plan emphasizes performance rather than cost and offers few specific technical approaches for reducing the costs of various systems.

Recommendation. To ensure that expectations of the cost competitiveness of advanced technology vehicles are realistic, the OAAT should clearly define "cost competitiveness" in terms of some future date when the overall costs of ownership and operation of comparable conventional vehicles might be considerably higher than they are today because of higher petroleum prices or new environmental regulations.

Recommendation. The OAAT should apply more effort to reducing the costs of advanced automotive technologies and should be more specific in explaining technical approaches to cost reduction for individual technologies.

Identifying technical barriers and establishing technical targets are necessary steps in the development of an R&D plan but do not in themselves constitute a strategy for achieving goals and objectives. OAAT needs to lay out specific technical strategies (and actions) for overcoming the barriers. In some instances, the technical road maps described in the plan simply state that barriers will be overcome. The committee was concerned that some of these statements relate to technology areas where necessary breakthroughs have not materialized despite significant R&D efforts over a period of many years (e.g., batteries, gas turbines, ceramic materials for gas turbines). Proposals from the larger technical community might yield some innovative solutions to overcoming the technical barriers defined in the plan.

Although the Go/No Go decision points in the technical plan are commendable, the committee believes OAAT must define the criteria for decision making more clearly. It is not clear from the plan what will be done if performance falls somewhat, but not hopelessly, short of the levels judged necessary to make a Go decision. In this context, the committee considers that the OAAT should use better systems analysis tools not only to configure vehicles to meet overall objectives, but also to establish performance requirements for component technologies and trade-offs as a basis for making Go/No Go decisions. These tools should include vehicle simulation models capable of comparing vehicle options on a consistent basis to clarify questions of relative performance and fuel economy. Simulation models should be verified with experimental results as they become available. The systems analysis must include all of the objectives, not just fuel economy. Costs, emissions, acceleration, safety, reliability, accessory loads, and other criteria must be considered in the optimization of a vehicle.

In addition to technology development related to family sedans, DOE has a separate program for sport utility vehicles and other projects for developing CIDI technologies. The plan does not include a comprehensive explanation of CIDI technology development by the government outside the OAAT program. The plan is also unclear as to how the OAAT program in general, and the CIDI

program in particular, will relate to the light-vehicle market from 2004 to 2008, which could be quite different from today's market if the increase in the sales of pickup trucks, vans, and sport utility vehicles continues.

Recommendation. OAAT should define the technical approaches to achieving its objectives in terms of specific actions. Suggested approaches to overcoming technical barriers might be solicited from the larger technical community, particularly when innovations or nontraditional technologies are needed.

Recommendation. The OAAT plan should emphasize the development of improved systems analysis tools that incorporate all factors relevant to: (1) configuring the vehicle and making trade-off decisions; (2) setting priorities for resource allocation and technology selection; and (3) supporting Go/No Go decisions. Funding for systems analysis should reflect its overall importance to OAAT's R&D program.

Recommendation. Because the OAAT plan includes R&D for "light trucks under 8,500 lb. GVW," the requirements and technical targets for these vehicles should be included in the plan.

The OAAT anticipates that the R&D described in the plan could be implemented within "plausible" budget levels, but the plan does not specify budget levels. The plan notes that "in the event that appropriated budget levels will not support all of the activities reflected in this plan, available funding will be concentrated on the highest-priority technical barriers in the development path of the subject technologies." No mention is made of prioritizing activities across technology areas.

In the committee's judgment, in the face of budget uncertainties, OAAT must set priorities both within and across technologies. The committee understands that some priorities are implicit in the plans for individual technologies (in the ranking of technical barriers, for example). OAAT representatives informed the committee that prioritization across technologies will be part of the PNGV technology selection process for concept vehicles to be constructed by the year 2000 and will involve extensive discussions with other interested parties.

The committee recognizes the difficulty of setting priorities, particularly across different technology areas. In some cases, a lack of adequate data to support decisions adds to the difficulties. Nevertheless, good management requires clear priorities, even if they are not articulated in the written plan, and the committee urges OAAT to be decisive in this regard. Extending timelines or cutting uniform percentages across the entire plan in response to budget reductions may be expedient temporary measures but are not effective long-term practices.

Changing the proportions of government/industry costs may be one way of accommodating reductions in federal funding although increasing the cost share of industry may cause industry partners to withdraw from programs they consider to be of low priority. The committee again emphasizes the importance of developing systems analysis tools to assess performance requirements and trade-offs in support of a technically robust set of priorities for R&D. The committee recognizes that judgment is required in balancing the many factors that influence priorities, but a rigorous analysis of technologies incorporating the latest technical discoveries should be the foundation for setting priorities.

Recommendation. To ensure implementation of the plan in the face of budget uncertainties, the OAAT should prioritize R&D both within and across technology areas.