Why hasn’t the automotive industry embraced carbon fiber more until now?
There’s a long lead time for developing these technologies for high-volume production. A number of efforts in the past have seen a three-year development cycle and a seven-year cycle for re-engineering an entire vehicle platform. Implementing substantial amounts of carbon fiber in the vehicle platform greatly impacts the engineering of the fundamental platform, painting process and crash analysis. Those changes need to be made up front in that development cycle.
Before moving a large amount of vehicle production to an alternative material, there’s a desire to have the material validated in a smaller-scale, less capital-intensive, less risky environment. A lower volume platform is selected initially, which is also a seven-year development cycle. You can get sufficient data to project the warranty costs and performance in an actual service environment. We’ve been through that cycle a few times, but every time when we have incentives from a fuel economy, the price of fuel has gone back down again. That volatility has never provided a sustained incentive to re-engineer vehicle architecture as well as maintaining the variable cost incentives to spend additional money on more expensive materials. Fuel prices need to be at a sustained projected level where the materials pay for themselves over the life of the vehicle.
Are we reaching that point, or will more instability follow?
After so many years, we finally have an increase in the corporate average fuel economy (CAFE) requirements. There is now a hard target that North American manufacturers have to meet. That hasn’t happened since the 1980s. Most manufacturers are projecting the price of oil to remain above $60 a barrel for a sustained period of time going forward.
What difficulties will you face in starting the subsidiary?
We need to establish a solid relationship with a fairly new and changing supply base. Recent difficulties in the auto industry have put most of the Tier 1 suppliers through Chapter 7 or 11 bankruptcies. There are some financially strong suppliers that do composite materials, but it’s always been a fragmented industry with a large number of suppliers and contracts for a fairly small volume of components. The OEMs and Tier 1s started to re-evaluate their relationship and the applications appropriate for the structural composite materials. We need to re-evaluate what that supply chain looks like and what support they’ll need.
What do manufacturers need to get involved in that re-evaluation?