Innovative "Off Cycle" Credits Give Stop-Start Systems, Other New Technologies Big Boost in Marketplace

New provisions in the recently finalized model year 2017 to 2025 carbon and fuel efficiency rules are set to give a huge boost to Innovative fuel-efficiency technologies. These new so-called “off-cycle credits” provisions --buried amidst 3,000 pages of regulatory documents -- are a new addition to the federal clean car programs standards that require the equivalent of 54.5 mpg by 2025.  [see note 1]

The big winner of the new credit system is stop-start ignition systems.  Already popular in Europe, stop-start systems shut off the engine when it is not needed, such as when idling at traffic lights. It's an inexpensive addition to conventional gasoline-powered cars and can reduce fuel consumption and CO2 emissions between 5 to 12 percent.

The problem was that the old test cycle, set by law in 1975, doesn’t reflect the current amount of time a drivers spends in traffic. As a consequence, the old system undercounted the fuel saving benefits.

The benefits are so great under the new off-cycle credit system that by 2025, the agency engineers estimate that one-in-four cars sold will be equipped with this common sense, fuel-sipping technology.  [see note 2]

This is a $1.3 billion annual market for stop-start component suppliers.

Automakers and suppliers are racing to take advantage of this provision, meaning less pollution, lower fuel bills and less oil dependency.  BMW, Mercedes and Porsche already have the technology on non-hybrid vehicles and Jaguar will introduce it soon.

But it’s not just for high end cars. Ford and Kia are bringing the technology to the masses. Ford will offer the stop-start system as an option on its new Fusion mid-size car for $295, estimating drivers can save up to $1100 over the first five years. Kia will offer the system as on option on its compact 2013 Rio, as part of a $400 Eco Package.

Suppliers are rushing to seize lead in this burgeoning market.

Johnson Controls invested $138.5 million to revamp its Toledo, Ohio battery facility to produce stop-start ready batteries, creating 50 new jobs and retaining 400 jobs in the local community.  Japanese manufacturer DENSO will create 75 new jobs in Tennessee by starting production of a new starter motor specifically for stop-start applications.  While not yet producing stop-start systems in the U.S., German manufacturer Bosch predicts that within four years, 50 percent of U.S. vehicles will have stop-start technology, up from 5 percent today, and the firm is expanding its production and parts sourcing in North America aggressively. 

Other suppliers of stop-start system components located in the U.S., include Calsonic in Tennessee, Magnetti-Marelli in North Carolina, and Kimball Electronics in Indiana.  Readers may have noticed that many of the firms are either Japanese or European in origin, which is primarily due to the fact that stop-start systems have had strong uptake in foreign markets, but are not yet as popular in the U.S. yet, which is about to change according to Bosch’s forecast. 

The good news on innovative off-cycle technologies goes on.

“Active aerodynamic improvements” is another off-cycle  technology that includes active grille shutters, which open only when the engine needs cooling, but are closed otherwise to reduce drag. Rochling Automotive, a German auto parts supplier, opened a $20 million factory in Akron, Ohio, to build aerodynamic body parts, including floor panels and active grille shuttersg.  The plant opening created 100 jobs for the local workforce, and the active grille shutters are estimated to improve fuel efficiency by up to five percent on applications such as the Ohio-built Chevy Cruze.

A further off-cycle technology, “waste heat recovery”, is also set to generate both jobs and fuel efficiency increases. Thermoelectric generation (TEG) as being developed by Gentherm, based in Northville, Michigan.  TEGs use the waste heat created by auto exhaust gases to create electricity, thus improving fuel efficiency up to 5 percent.  Gentherm received an $8 million grant from the Department of Energy to commercialize its passenger car technology in partnership with Ford and BMW, and the grant was recently modified to adapt the technology for heavy-duty applications as well.  A rapidly-growing firm, Gentherm is expanding its employee base in Michigan to take advantage of opportunities generated by the new standards.

As demonstrated by our website DrivingGrowth.org, the job benefits of the new 54.5 mpg standard are indisputable. And thanks to new, more flexible “off-cycle” provisions, the standard is sparking even new technologies, allowing the auto industry to do what it does best, innovate to meet future standards at the lowest possible cost.  And that’s great news for jobs, consumers and the environment.

NOTES:
[1] Below table from the Final Rule shows the off-cycle technologies and the credits they receive.

[2] See the Regulatory Impact Analysis, Table 3.5-25, for the Final Rule for MY 2017-25, which refers to these systems as “MHEV” (micro hybrid electric vehicles). The agencies estimate “MHEV” technology  will be on 26 percent of new vehicles by model year 2025.