We’ve expressed in the past that accurate and reliable early-stage disease detection combined with non-invasive sample collection is the holy grail of molecular diagnostics. Previously, we discussed the growing popularity of non-invasive saliva-based diagnostics in the context of this theme (see the insight “Digital IVD sample of the future: Saliva” [client registration required]). While less mature, sweat based tests, too, present a compelling avenue for non-invasive sensing in medical, enterprise, and consumer applications. To gauge the state of innovation in sweat sensing, we surveyed the evolving landscape of sweat sensors patents. In total, we identified 1,009 patents for the search terms “sweat sensor” and “perspiration sensor” published in the past decade. As evident by Figure 1 below, sweat sensing technologies have seen consistent increase in patents applications. 2016 saw most activity, with a total of 194 patent grants and applications.
Mitsubishi Rayon recently announced that the new Toyota Prius plug-in hybrid (PHV) will adopt a carbon fiber (CF) sheet molding compound (SMC). SMC is a form of thermoset chopped fiber composite; glass fiber reinforced SMC is already commonly in use in the automotive industry. Toyota will use the SMC to form the structure of the rear lift gate of the Prius. It appears that the CF lift gate will only be used on the PHV variants of the Prius. Continue reading
The idea of a solar-powered car has drawn another attempt from an optimistic manufacturer. Toyota has announced an optional 180 W Panasonic HIT (heterojunction with intrinsic thin layer) module for the roof of its plug-in hybrid electric vehicle (PHEV), the 2017 Prius Prime. This comes as Toyota’s second attempt; the 2010 Prius infamously could not connect its rooftop panels to the drive battery without strangely broadcasting radio signals, so the 50W panel only powered a fan to cool the interior. With more than triple the original wattage and new optimism from Toyota, the new module is intended to charge the drive battery and power unspecified car accessories. Toyota estimates that the module will add about 3.7 miles daily to the PHEV’s current range (25 miles electric, 615 miles gasoline). Continue reading
Last week, Bloomberg Business released a story claiming that Alphabet – parent company to Google – would be selling Boston Dynamics, the robotics company that worked primarily on military applications until Google acquired it in 2013.
Boston Dynamics is best known for its incredible, and sometimes creepy, quadrupedal and bipedal robots, which are capable of incredible feats, such as walking on ice, reacting to repeated abuse, and operating in extremely challenging environments. In February of this year, Boston Dynamics released a video of its most impressive robot to date – Atlas, which showcased incredible agility and reaction time for a humanoid robot. Atlas wowed the robotics world with the Boston Dynamics’ innovations in terms of how the system reacted to shock (being repeatedly attacked with a hockey stick) and its stabilization and control capabilities.
Despite the acclaim and progress of Boston Dynamics, Alphabet has apparently opted to distance itself from robotic innovation and sell off the company. Continue reading
Volkswagen (VW), the world’s best-selling automotive OEM, has been caught in a vehicle emissions scandal of unprecedented proportions. At least 11 million diesel-powered VW cars worldwide use a specially-coded piece of software to purposefully cheat during emissions testing. The result is that VW’s diesel cars appear sufficiently clean to government regulators – enough to be eligible for sale – but when consumers drive their cars in the real world, the vehicles’ software switches the engines’ behavior: In consumer hands, these VW diesel engines switch into a mode where they perform better (more power and more fuel efficient), but pollute up to 35 times more than during official testing.
The initial fallout for VW has been swift and brutal: Its stock plummeted 23% in value, its lowest in three years, wiping out almost $20 billion worth of market capitalization. It faces a revenue decline too, as the OEM has told dealers to stop selling new diesels. Consumers are starting to file class-action lawsuits, as their VWs will have lower resale values. Next will come the fines: In the U.S., it will face fines of up to $37,500 per vehicle from the Environmental Protection Agency (EPA), totaling $18 billion in the worst case. The final amounts may not be as high, but nonetheless VW is preparing for some high losses, setting aside $7.2 billion already to start handling the fallout. Besides the U.S. Environmental Protection Agency (EPA), VW faces other challenges too: South Korea has already announced it will investigate VW’s vehicles, as will Germany. Even the U.S. tax agency is looking into VW’s cheating, because the OEM benefited from $52 million in tax credits for its “clean diesels” that have now turned out to be dirty.
VW is not the first OEM to court disaster. Other high-profile fiascoes include General Motors’ faulty ignition key, Firestone’s tread separation on Ford Explorers, and Takata’s exploding airbags. All are bad in their own way, and these OEMs survived, just like VW will. The other fiascoes involved an inadvertent flaw in the design or manufacturing, which dishonest and incompetent managers later tried to cover up. The VW case is different: It appears that the OEM purposefully engineered the cheat into its cars from day one.
The audacity and sophistication of VW’s cheating software is stunning. Its engineers apparently programmed the cars to detect when a regulator like the U.S. EPA tested vehicles – doable because testing uses a stationary dynamometer, where some of the vehicle’s wheels spin, but others do not. For example, on a VW Jetta, the front wheels spin on a dynamometer because it is a front-wheel-drive car, but its rear wheels are stationary. In real-world driving all four wheels spin. VW engineers appear to have used sensors to distinguish between these two modes, programming the engine to behave in different ways depending on whether the car was being tested by the government or being driven in the real world by consumers. This cheat worked for years, until an independent study carried out by West Virginia University actually tested VW’s diesel emissions in the real world. It is flabbergasting that VW thought they wouldn’t be caught – the U.S. EPA had already fined diesel cheaters $1 billion in 1998, for deceptively programming their engines as well.
At its very root, VW’s misbehavior was driven by the push for cleaner cars. Automotive OEMs are under immense pressure from governments and consumers around the world to perform a fine balancing act: Make their cars emit less pollutants, keep power high and acceleration good, deliver better fuel mileage, and keep costs low. Diesel engines have had a hard time pulling all of these off. When OEMs optimize these types of engines to deliver good performance (snappy acceleration and fuel mileage), they become prone to emit poisonous, reactive gases known as nitrogen oxides (NOx). To deal with that NOx issue, OEMs like Mercedes-Benz and Toyota use an additive based on urea as part of a selective catalytic reduction (SCR) system, which is expensive. VW’s cars were unique in passing tests without a urea system, thus saving money on each vehicle. It turns out that their secret to doing so was a software cheat.
In the near-term, VW doesn’t have good options to fix the issue. If they reprogram the software to pollute less, then 11 million of their car owners will have poorer acceleration and worse fuel economy. If they re-engineer the cars to retrofit them with a urea system, it would likely come at a cost of tens of billions of dollars over recall, R&D, component costs, and ongoing urea refills. In the longer term, this will force VW to re-evaluate their strategy for clean cars. The OEM had staked a lot on its “clean diesel” strategy – for example, just a few months ago, VW’s marketing arm proudly announced that one of its diesel-engined cars had set a new Guinness World Record for lowest fuel consumption by a nonhybrid car. In the aftermath of the cheating scandal, VW will face an uphill battle to win back consumer trust and acceptance.
Looking forward, clients should expect that:
1. Regulators will try to smarten up, but will need better equipment: It’s striking that the U.S. EPA, with its $8 billion budget and workforce of 15,000 staff, couldn’t catch VW, but a small team of researchers from West Virginia University could. Regulators should revise their testing protocols to test real-world performance when the vehicles are in motion in real traffic, rather than on a stationary dynamometer. With the miniaturization of sensors and better analytical software, making this change is easier than ever before. Indeed, testing authorities have known about discrepancies between real-world performance and testing for a long time, and more efforts like the upcoming Worldwide Harmonized Light Vehicles Test Procedure are needed.
2. VW will reconsider its clean vehicle portfolio strategy: VW was slowly moving beyond conventional gasoline and diesel engines anyway. Earlier this month, before the diesel scandal started, VW’s CEO discussed the OEM’s plan to put out 20 plug-in vehicles by 2020, like an Audi EV (client registration required) with a 500 km driving range. They have also invested (client registration required) in next-generation batteries, including lithium-sulfur and solid-state. VW is actually in a strong position to innovate their way out of this mess. They have been spending most on the R&D of any OEM (about $11 billion in 2013), and they are the largest automaker by volume. Arguably, no major OEM is better positioned than they are to decisively accelerate the push towards plug-in hybrids and electric vehicles, putting the shine back on their tarnished image. However, they probably lack the vision, leadership, and ambition to do it, so they will most likely carry on as usual after some apologies.
3. Automotive software will come under pressure to open up: In the U.S., it is illegal to prevent independent repair shops from fixing cars, under a policy called “right to repair”. However, OEMs successfully lobbied regulators to use the Digital Millennium Copyright Act (DMCA) to keep their software locked up and proprietary, and off-limits to diagnostic and repair companies the OEM does not like. That has led to legal squabbles, with GM arguing that while consumers may own their cars, the OEM owns the software; similarly, Ford sued a company called Autel, which was developing some independent repair software. Indeed, even VW itself sued some security researchers that pointed out a flaw in the way its key-fobs worked. Ironically, the U.S. EPA itself sided with OEMs, fearing that if the software is open-access then consumers would modify it at the expense of emissions. VW misused the protection of the DCMA to hide their crime – precisely the kind of scenario that open source software advocates have argued makes closed systems a bad idea. Forget consumers – OEMs’ actions show that they need watching too. The DMCA exception for automotive software should be struck down, and replaced with a policy in line with right to repair.
4. Diesel passenger vehicle sales in the U.S. will drop drastically: Due to strict NOx emission standards in the U.S. diesel passenger vehicles have failed to make any significant market penetration, representing less than 1% of passenger vehicles and only 3% of all vehicles on the road. In part, slow adoption was due to the requirement of installing the urea-containing SCR unit to control NOx emissions in diesel engines, which is expensive. When Lux Research compared OEM engine options – the cheapest engine option within a model range versus the diesel-engine option – we found on average the diesels cost $6,000 or more. VW’s “clean diesel” was positioned to revolutionize passenger diesel vehicles without the need of an SCR unit, saving costs. With the EPA setting new emission standards in early 2014, close to California’s much stricter regulations, this is not a good sign for diesel. Consumers will now consider other vehicle options likely to the charging of the U.S. EPA, which had plans to aggressively grow (client registration required) the biodiesel market over the next three years.
5. AdBlue systems and renewable diesel will infiltrate Europe’s existing diesel passenger vehicle market: The Euro 5 NOx emission standard that is applicable to vehicles prior to 2015 is nearly six times more lenient than that in the U.S. (180 mg/km compared to 31 mg/km). This has resulted in diesel powertrains present in approximately 35% of passenger vehicles and 53% of all vehicles and biodiesel making up 62% of Europe’s biofuels market (see the report “Biofuels Outlook 2018: Highlighting Emerging Producers and Next-generation Biofuels” [client registration required]). With Euro 6 approved and increased attention to NOx emissions (80 mg/km), and implementation of AdBlue systems in diesel passenger vehicles, it’s truly inevitable to achieve “clean diesel”. While biodiesel has carbon emission benefits that’s been the primary focus of Europe’s biofuel mandates, it actually has higher NOx emissions – up to 10% depending on blend percentage. Biodiesel will soon lose its luster as a viable solution. With the push for nonfood biofuels and new focus on NOx emissions, Europe offers potential for renewable diesel growth. By no means is renewable diesel the holy grail, but it has been shown through third-party testing to emit up to 9% less NOx compared to conventional diesel, and the region will see nearly 300 million gallons per year (MGY) of capacity come online by 2018, nearly doubling what it is today, according to our Alternative Fuels Tracker (client registration required).
During the past half year, oil prices have been falling dramatically, from $115/barrel in June 2014 to less than $50/barrel today. For car buyers, this plummeting oil index means cheaper gas prices when refueling. For example, in the U.S. during that same period, gas prices have fallen from $3.7/gallon to about $2.1/gallon. Historically, cheap oil and gas has meant that more car buyers turn their focus away from fuel efficient vehicles, which sales data of hybrids like the Toyota Prius supports.
For example, during the 2008 oil crash, when U.S. gas prices dropped by 58% in half a year, Toyota Prius sales in the U.S. fell by 47% (see figure). More recently, during the latter half of 2014 gas prices dropped by 31%, and Toyota Prius sales fell by 22%. The data is admittedly noisy, influenced by shoppers’ preferences to buy on certain months, and affected by random external factors like Toyota Prius production slowdowns because of the 2011 Tōhoku earthquake and tsunami. Nonetheless, the fact remains that consumers are influenced by gas prices when choosing what vehicle to buy. In preparation, automakers like BMW are already warning of lower sales of plug-in vehicles.
To investigate the long-term effect of this cheap oil trend on alternative drivetrains, Lux Research used its forecasting models to analyze how the oil price will affect plug-in vehicles for the rest of the decade. First, it is important to note that today’s low oil prices are not here to stay: They are partly the result of a war for market share between different oil suppliers, leading an relatively unsustainable situation that will eventually correct itself. Eventually some oil producers will find they can no longer compete (client registration required), meaning oil prices will eventually creep back up.
We find that in the likely case of only a gradual return to previous prices – which we call the “cheap oil” scenario in the figure below – then electric vehicle (EV) sales will dip by 20% for a number of years, while plug-in hybrid (PHEV) sales will dip by about 14% during that same period. This percentage is relative to the other forecasted scenario, where oil prices rebound much more quickly – the “stable oil” scenario. The reason for this partial but not dramatic drop is that the consumer base for EVs and PHEVs remains relatively insensitive to oil price: These early adopters are driven more by environmentalist concerns or technical differentiation rather than oil price. To take an example, the Tesla buyer that can afford to pay almost $100,000 for an EV is not swayed too much by the economics of the gas pump. Not all EV buyers are rich, of course, but many buyers of even cheaper EVs like the Nissan Leaf are early adopters driven more by environmental concerns and plug-in vehicle perks rather than gas prices.
Nonetheless, the loss of 14% to 20% in sales depending on drivetrain will be an unwanted surprise for makers of plug-in vehicles. In addition to these plug-in vehicles, we expect hybrid sales will be the hardest-hit, with volumes dropping by as much as 33%, since a significant portion of their buyers do look carefully at gas prices and payback period. The situation will gradually correct itself as oil prices return to normalcy by the end of the decade. In the meantime, clients should view low oil prices as a bump in the road for increasing plug-in vehicle adoption, and not something more serious. That being said, a return to normal oil prices is not totally guaranteed by the end of the decade, adding an extra risk for automakers like Tesla that hope to sell 500,000 EVs around that time – for which they will need a mass market tired of costly gas.
Source: Lux Research Insight “Just a speed bump: Despite cheap oil, niche plug-in vehicle sales will be resilient” — client registration required.
Researchers from the Hyundai Motor Company recently published a study about lithium-sulfur (Li-S) batteries, a promising next-generation energy storage technology. They focused on the effect that electrolyte choice has on Li-S battery performance, by replacing conventional ether-based mixtures with one that was sulfone-based. The Hyundai researchers claimed that this sulfone-based electrolyte improved Li-S battery capacity by more than 50%, reaching 715 mAh/g, and improved reversible capacity retention by more than 60%. This line of research is important, because performance degradation over extended cycling is one of the key problems that Li-S developers must overcome (see the report “Beyond Lithium-Ion: A Roadmap for Next-Generation Batteries” — client registration required).
Aside from the technical developments, which remain early stage (coin cells in this research from Hyundai), the work is important for three other reasons. Firstly, because Li-S batteries are so far from market, this work signals a long-term interest from Hyundai and Kia in plug-in vehicles and hybrids, areas where thus far they have not made much of an impact (see figure below). Secondly, it puts more automotive clout behind Li-S technology, a welcome change in an emerging landscape that has been start-up dominated to date, by the likes of Oxis Energy (client registration required) and NOHMs Technology (client registration required). Indeed, Hyundai has been working on Li-S for years, but it is not the only automaker active here: General Motors has been researching the technology, as well. Third, it adds another OEM to the list of players looking to go beyond lithium-ion batteries, joining the likes of Toyota (working on magnesium-ion batteries and solid-state designs) and Volkswagen (which is experimenting with lithium-air batteries).
The big question associated with this Li-S study is whether Hyundai Motors will put its money where its researchers’ mouths are: Bringing a fundamentally new battery chemistry to market will likely require not only billions of dollars in investment along the value chain, but also the singular vision of an automaker willing to commit to making a car around Li-S technology. For now, Hyundai is focusing more on fuel cell (client registration required) vehicle development and deployment. Nonetheless, clients with any interest or activity in Li-S batteries should consider Hyundai as a potential partner in this next-generation energy storage chemistry.
Panasonic’s lithium-ion (Li-ion) battery division is resurgent: In Q2 2013, it
made about $40 million in profits, a turnaround from one year before, when it lost $20 million in Q2 2012. As a result, Panasonic will invest $200 million over the next year to expand its Li-ion production lines in Osaka and Kasai, making batteries destined for automotive applications.
The company’s improved Li-ion fortunes coincide with its customer Tesla Motors beginning to ship the Model S, an electric vehicle (EV) that packs a massive 60 kWh to 85 kWh worth of batteries. About 16,000 Model S units have been sold thus far, accounting for more than $400 million in revenues for Panasonic. Moreover, Panasonic has become the leading battery supplier for plug-ins and hybrids sold in the U.S. Its market share by capacity sold has increased to 54% during the last year, overtaking LG Chem and Nissan’s AESC in the process. This breakthrough has been four years in the making and involved Panasonic investing $30 million in Tesla in 2010.
Remarkably, the upstart Tesla now drives more of Panasonic’s battery revenues in the U.S. than the world’s largest automakers, like Toyota and Volkswagen. A mere 20,000 Tesla Model S units use three times more battery capacity than the U.S. sales of Toyota’s popular Prius hybrid family (which moved about 230,000 units during the past year). Tesla’s battery demand now outweighs all other OEMs in the U.S., taking 49% of the market share for battery capacity shipped in the U.S. plug-in and hybrid market in Q2 2013. Others are taking notice of Tesla’s increased clout: Samsung SDI, BYD, and LG Chem have reportedly been in talks with the automaker, seeking to supplement or displace
Panasonic. However, they may have to wait for Tesla’s next model, because Tesla could find it difficult to mix cells from different suppliers, due to battery management system considerations, and because the Panasonic-Tesla contract stipulates supplying 80,000 vehicles by 2015. Interested parties should now expect increased development and more pricing pressure for the Panasonic-Tesla battery solution, including more research on 18650 automotive cells and a strengthening nickel cobalt aluminum (NCA) cathode value chain.
The U.S. government has announced much stricter fuel efficiency standards for the future, requiring a 54.5 mpg average for cars and light-duty trucks by 2025. This would nearly double the fuel efficiency that vehicles must currently achieve by law. The standards will scale according to vehicle footprint: 61.1 mpg will be required of an average compact car by 2025, while large pickup trucks will be allowed 33.0 mpg. The announcement also includes special provisions for large hybrids, and for vehicles powered by electricity, natural gas, and fuel cells. Among these is the ability of alternative-fuel car-makers to sell credits earned by exceeding the standards. Major carmakers were involved in discussions with the government prior to its decision, and mostly support the 54.5 mpg target. However, in order to boost fuel efficiency, they will incur significant research and production costs, which will be passed on to car buyers.
There are multiple reasons why battery electric vehicles (BEVs) will not benefit significantly from the mandate. First, 54.5 mpg will be achievable even with the smaller batteries of micro-hybrids, mild hybrids, full hybrids (HEVs), and plug-in hybrids (PHEVs),
especially when coupled with the use of lightweighting technologies (client registration required). The shift to BEVs is driven more by strict policies like California’s zero-emission vehicle standard, however strict regulations such as that remain few and far between. Secondly, the ability of BEV companies like Tesla to sell credits to others is not a business model: credits can boost revenues modestly, but will not save a company or make a vehicle line profitable. Furthermore, the final version of the standard allows competing natural gas vehicles to qualify for the credit, as well. Finally, as the incumbent internal combustion engine powered vehicle approaches 54.5 mpg, it will erode two key selling points of the electric car – lower fueling costs and lower total cost of ownership.
Therefore, clients looking for winners from the new standards should track three other spaces. The first are incremental improvements to today’s vehicles, including turbochargers, efficient transmissions, and lightweight materials. Next, in the hybrid space,
manufacturers of small and medium-size lithium-ion packs will see increased volumes due to growing adoption of HEVs, PHEVs, and potentially micro- and mild hybrids (see the report “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles” — client registration required). Finally, leaders in natural gas and fuel cells stand to benefit: in the U.S., Honda is the only carmaker offering a commercially-available compressed natural gas passenger vehicle. The company is also a frontrunner in fuel cell development, along with Toyota, GM, Daimler, and Hyundai.
Toyota has triggered electric vehicle alarmism by announcing it will lower sales targets of its iQ EV hatchback to just 100 units of this all-electric vehicle (EV). The news came accompanied by some damning quotes, with Toyota head of vehicle development Takeshi Uchiyamada opining that the “capabilities of electric vehicles do not meet society’s needs.” Many have been quick to misinterpret this as a new development – an unexpected vote of no confidence in EVs.
However, the reality is that Toyota has never pursued all-electric vehicles in earnest. While competitors were developing cars like the Nissan Leaf EV and Chevrolet Volt heavy plug-in hybrid (PHEV), Toyota instead opted to focus on more incremental hybrid electric vehicles (HEVs) and development of a light PHEV. It worked – the company hit a 2-million-unit home run with its Prius line of hybrids that now includes a light PHEV. In this context, Toyota’s hardly backing off its commitment to electrification generally – indeed, by 2015 it will offer 21 hybrids, tripling its current count.
Lux Research predicted this EV disappointment three years ago (see the report “Unplugging the Hype Around Electric Vehicles” — client registration required) and reinforced that take last year (see “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market” — client registration required).” The reality is that HEVs and light PHEVs are simply far more economical now, given high battery costs, and will remain so for years to come. As a result, in 2020 sales of HEVs and light PHEVs with be 16 times greater than those of heavy PHEVs and EVs.
The announcement has several key implications. First, it reinforces the divide: Toyota’s hybrids and light PHEVs on one side, against Nissan’s EV (and Chevrolet’s heavy PHEV) on the other. Nissan has bet billions, and could be dealt a huge loss. Secondly, it means the world’s largest carmaker’s clearly defined strategy is an implicit rebuke to the investment by the U.S. and other governments in EVs and subsidies. The political fallout could be severe, especially following flops like Solyndra. Third, it paints the agreement with Tesla (jointly developing the RAV4 EV) as a hedge by Toyota rather than core to its strategy.
However, there are opportunities abound in the EV market, and Toyota is aware of this. Contrary to claims in the press of “misreading demand and battery technology“, this EV downsizing fits into a consistent long-term plan for Toyota: the Prius as a high-volume hybrid, the iQ and RAV4 EVs as “compliance vehicles”, and fuel cell vehicles a long-term goal. Other carmakers should follow suit: There is a solid opportunity for hybrids and light PHEVs and an excellent one for micro- and mild hybrids (see the report “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles“ — client registration required).