E-Vehicle Manufacturing Industry

Running Head: ELECTRIC VEHICLE MANUFACTURING: AN INDUSTRY STUDY
Electric Vehicle Manufacturing: An Industry Study

SUS 6103 Implementa0on of Sustainable Business Prac0ces
May 11, 2011
Team GridREV: Max Dunn

Nicholas Franco
Aaron Greene
Obrie HosteDer
Christy Hurlburt
Jamie Jones
Jeff Milum
ELECTRIC VEHICLE MANUFACTURING: AN INDUSTRY STUDY
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ELECTRIC VEHICLE MANUFACTURING: AN INDUSTRY STUDY 1
1.0 Background
Electric Vehicle Industry – Early History
The electric vehicle industry can trace its roots back over 180 years. In the 1830’s, the first
electric car was built in Scotland. It used a non-‐rechargeable baAery and was essenBally a horse-‐less
carriage. By 1881, rechargeable lead-‐acid baAeries had been developed which were pracBcal for use in
vehicles. Electric vehicles were so mainstream in 1887 that New York City had a fleet of electric taxis. By
the turn of the century, 38% of cars in America were electric. They were a more pracBcal car for the day
as gasoline powered vehicles were dirty, noisy, and a rough ride. In addiBon, internal combusBon
engines had to be started with a hand crank. The 1902 Wood’s Phaeton was a typical car of the day, and
had a range of 18 miles and top speed of 14 mph. It wasn’t unBl 1912, when the electric starter was
invented, that internal combusBon engines started to become more popular than the electric and steam
powered cars. New oil discoveries in Oklahoma and Texas, infrastructure improvements allowing for
longer trips, along with Henry Ford’s innovaBons in producBon all contributed to the eventual
dominaBon of gas powered vehicles.
The electric vehicle never disappeared enBrely, though its use was extremely limited.
Unsurprisingly, the oil crisis in the 1970’s spurred the development of many EV concepts. LegislaBve
efforts led by California in 1990 spurred development in a new way. Major auto manufacturers,
including: Ford, Chrysler, Honda, Toyota and Nissan all started limited producBon of electric vehicles. The
most famous of these was General Motors EV1. For a variety of reasons, including the repeal of
regulaBons in California as a result of lobbying efforts by automakers, GM confiscated all of the EV1s and
literally destroyed them. It was emblemaBc of the apparent senBment of major automakers.
Electric Vehicle Industry – Current AcNvity and Key Players
Today, market condiBons have moBvated even the major auto manufacturers to invest in EV’s.
Late 2010 saw the release of the Chevy Volt; a plug-‐in electric hybrid. 2011 has already seen the release
of the all electric Nissan Leaf, and should see a counterpart by Ford enter the market by the end of the
year. Within a few years, nearly all of the major auto manufacturers will market plug-‐in hybrids or EVs. In
addiBon to general market offerings, there is a wide variety of specialty vehicles such as the performance
oriented all electric Tesla Roadster and the ultra-‐narrow Tango EV commuter.
At this point, no major players or technologies have emerged as leaders in the sector. The
economics of manufacturing and purchasing EVs are sBll maturing. Federal and state incenBves for
purchase alleviate some of the relaBvely high cost of EVs. However, those incenBves are designed to
phase out aber a manufacturer has sold 200,000 vehicles (“Consumer Energy Tax IncenBves,” n.d.).
Conversely, pricing of EVs should drop as efficiencies of scale take hold. This is parBcularly true for the
most expensive part of the vehicle: the baAery (Kanellos, 2010). Fuel prices and the effect on the total
cost of owning an EV will be a major factor in EV adopBon.
It is unclear whether plug-‐in hybrid’s, all-‐electric vehicles (EV)’s, or some combinaBon, such as
the Chevy Volt, will find more tracBon with the American public. Although the range of today’s EV is
sufficient to meet the needs of most drivers the majority of the Bme, it is an important factor in
determining which technology will prevail. There are sustainability consideraBons that arise from hybrid
technology which requires the manufacturing of an addiBonal internal combusBon engine for each
vehicle. Currently, EVs have been incorporated into the exisBng manufacturing system, and sustainability
consideraBons revolve around product use instead of producBon.
2.0 Industry Trends

The electric vehicle manufacturing industry is comprised of two categories of manufacturers:
those that only produce EVs and those that produce both internal combusBon engine (ICE) and EVs.
Manufacturers that exclusively make EVs (one to two models at most) are relaBvely small in size. The
most well known player in this category is Tesla Motors, although there are others such as Coda
AutomoBve and Th!nk City. The majority of these electric only manufacturers are low volume or limited
run producBon operaBons. The other category consists of large, tradiBonal automobile manufacturers
who have also begun to offer EVs. The front runners in this category are Nissan, with the all electric Leaf
and Chevy, with the electric-‐ICE hybrid Volt. Given the breakdown of the two major players we will look
at trends affecBng the larger automoBve industry and trends that are specific to electric vehicle
manufacturing.
AutomoNve Industry Trends
The most significant trend affecBng the auto industry is rising and volaBle gasoline prices.
Gasoline prices have increased, on average, over a dollar a gallon from the same Bme last year. The
average price for a gallon of gasoline in the U.S. was $3.96 on May 9 (“U.S. Retail Gasoline Prices,” 2011).
Figure 1: Weekly U.S. Retail Gasoline Prices, Regular Grade (“U.S. Retail Gasoline Prices,” 2011)
ConBnuing poliBcal uncertainty in major oil producing regions including the Middle East, Africa, and
South America combined with the depleBon of petroleum stocks will likely cause this trend to conBnue
UBliBes and regulators such as, California Public UBliBes Commission (CPUC), are beginning to roll-‐out Bme of
use rate (TOU) to encourage off peak (typically at night) charging of EVs so that the energy grid is not
overloaded. According to Robert Levin, Senior Analyst at CPUC, the “price of electricity charged to EV owner
should be appropriate to reflect the cost of off peak generaBon...if not, there will be arBficial barriers to EV
adopBon...EV owners should charge at night when they sleep” (Levin, Personal CommunicaBon, 2011). TOU
rates means that EV owners will be able to charge their vehicles during off-‐peak Bmes at a discount from the
typical electricity rates.
or intensify in the future. Rising pump prices directly impact consumer’s pocket books and create an
economic imperaBve for auto manufacturers to produce alternaBve fuel vehicles and fleets with beAer
fuel efficiency. It is likely that eventually pump prices will reach a level where EV’s total cost of
ownership will be less than that of tradiBonal autos.
There is also growing green consumer senBment, which includes concern about polluBon
reducBon, energy efficiency, and an increasing awareness regarding carbon emissions and climate
change. Consumers are systemaBcally seeking out green products that they perceive to be healthier and
beAer for the environment. According to a 2009 survey this trend conBnued to increase even during the
height of the recession, with 34% of those surveyed saying they search for and purchase green products
(World Business Council for Sustainable Development, 2009). A 2009 survey of consumers online
sustainability discussions saw a move from skepBcism or confusion around sustainability issues in 2007
to ones focused on taking acBon, with over 50% of online posters indicaBng they were taking some type
of acBon such as cupng back electricity use and buying green products (“Consumer SenBment On Green
Topics Moves from SkepBcism to AcBvism,” 2009).
These two trends have led to increasing consumer acceptance and demand for non-‐tradiBonal
vehicles such as the Toyota Prius – Hybrid vehicles had 2.8% of the market in 2009. (Market Dashboard,
2009). This may explain why hybrid and electric sales conBnued to experience growth during the
recession, one of the few bright spots for troubled U.S. automakers.
Finally, there are federal legislaBve and regulatory trends that are creaBng risks for auto
manufacturers that focus on heavy, high-‐powered cars. In 2010 The U.S. Environmental ProtecBon
Agency updated the Corporate Average Fuel Economy (CAFE) standards for the first Bme in 10 years. The
average fuel economy is set to increase from 27.5 MPG to 34.1 MPG by 2016. The U.S. EPA now has
authority to regulate CO2 emissions more broadly and has mandated that CO2 emissions not exceed 250
grams per mile. Also, Congress conBnues to consider broader climate change legislaBon (Abuelsamid,
2010).
Electric Vehicle Industry Trends

Previous forays into EV’s were driven by government mandates in California. The most
significant trend is that auto manufacturers are now internally moBvated to produce and market EV’s.
This moBvaBon is driven by all of the larger auto industry trends and has led to every major auto
manufacturer offering an EV, or having plans to offer an EV in the near future. Industry experts predict
that 841,000 plug in hybrid vehicles (PHEV) and electric vehicles (EV) are predicted to be sold in the US
by 2015 (Pike Research, 2010).
Since GM cancelled the EV1 eight years ago technological advances have made electric vehicles
more cost compeBBve. The biggest barrier to EV adopBon is the cost of baAeries. In 2007 lithium ion
baAeries were running over $1,000 per kWh. The EV manufacturer BeAer Place has a contract to receive
baAeries for $400 per kWh in early 2012, a 60% reducBon in three years, which is illustraBve of
conBnuing price/performance advances in EV baAeries (Kanellos, 2010). The U.S. government is
predicBng that baAery prices will fall further, as much as 70% over the next five years (“Price of EV
baAeries to go down by 70% over 5 years,” 2010).
There is significant aAenBon, funding, and research and development efforts within the greater
baAery and electric motor industry. “The Obama administraBon has provided more than $5 billion in
grants and low-‐cost loans to baAery manufacturers and auto companies to support projects intended to
spur the development and sale of rechargeable electric cars and plug-‐in hybrids (“Price of EV baAeries to
go down by 70% over 5 years,” 2010).”
Another major barrier to EV adopBon is the availability of public charging staBons. The U.S.
Department of Energy just announced a $5 million grant program to expand EV charging infrastructure
over and above the $400 million that was made available in 2009. Local governments are supporBng
the deployment of the EV charging infrastructure, however EV infrastructure projects must compete
with other iniBaBves for limited discreBonary funds (King, 2011).
Timothy Boroughs, Sustainability Coordinator at the City of Berkeley, stated that “lack of funding and staff is
currently keeping them from moving forward with EV infrastructure” (Boroughs, Personal CommunicaBon,
2011). This senBment was echoed when interviewing Peter Brandom, Sustainability Manager at the City of
Hillsboro, who said “not all incubaBon should come from government...local governments role is at the front
end.” He also believes that “private development and the market must also act” to meet EV infrastructure
needs” (Brandom, Personal CommunicaBon, 2011). The City of Hillsboro has currently installed 16 public
charging staBons.
Despite these barriers, the trends in the EV and larger auto industry all point toward growing
consumer acceptance and demand for electric vehicles. Manufacturers are embracing this demand as
an opportunity for growth and differenBaBon in an increasingly compeBBve market place.
3.0 RaNonale for sustainability

The business case for sustainability is sBll rooted in the business fundamentals of reducing
expenses, increasing revenues, and recognizing profits. In order for sustainability iniBaBves to gain
tracBon they must provide a “boAom line” benefit. This is certainly true today in the besieged
automoBve industry. Oben the deciding factor in the incorporaBon of sustainability is the Bme frame
required for a return on investment. Since creaBng a new auto line is an inherently long term
investment, it makes sense for automakers to apply a long-‐term view when making decisions about
sustainability. Therefore this study will make the assumpBon that the business case for sustainability
accounts for factors with impacts from 5-‐25 years from the current date. The business case for
sustainability typically boils down to the business drivers of expense reducBon, risk management, and
market opportuniBes.
Expense ReducNon
Reducing expenses by leveraging eco-‐efficiencies is typically the easiest and most cost effecBve
means of invesBng in sustainability related iniBaBves, especially for manufacturing organizaBons. In the
automoBve industry opBmizing the use of materials and energy reduces current expenses and directly
increases gross profitability. The sustainability efforts of auto manufacturers to date have focused in this
area and manufactures such as Ford have reduced their energy usage by 35% since 2000 (Voelcker,
2011). Standards, such as ISO 14001, and tracking methodologies, such as Ford’s LCA based Product
Sustainability Index, have already been implemented and the industry has a relaBvely high level of
achievement in this area. Significant gains are oben limited by manufacturer's ability to change exisBng
producBon lines. Since EV’s are expected to differ from tradiBonal autos, the introducBon of EV models
represents an opportunity for auto manufacturer’s to make radical changes in the materials usage,
producBon process, and end product that should not be squandered. Ford’s River Rouge plant, rebuilt as
a green showcase by William McDonough in 2000, is an example of the possibiliBes that await the auto
industry. The 10 acre living roof decreases energy costs by 7% and improves air quality by 40% (Voeckler,
2011). The roof, porous cement parking lot, and efficient use of waste-‐water obviated the need to build
a $50 million water treatment plant (Voeckler). By conBnuously enhancing designs and improving the
producBon process manufacturers can decrease raw material inputs, energy consumpBon, emissions,
and the usage of rare materials. This results in immediate cost savings, and more importantly reduces
exposure to escalaBng materials and energy costs in the future.
Risk Management
Reducing exposure to liabiliBes is universally applicable and desirable for business. Regulatory
liabiliBes pose a threat to many industries, especially transportaBon related sectors including auto
manufacturers. Automakers that proacBvely pursue sustainability in producBon shield themselves from
the negaBve impacts of increasing and unpredictable government regulaBon in emissions, hazardous
materials, and even safety. The impact of auto emission standards, CAFE standards, and vehicle safety
standards create an incenBve for advances in product design. Those manufacturers who ignore
sustainability place themselves at the mercy of the ever changing and unpredictable regulatory
landscape. Pursuing sustainability translates to staying ahead of the regulators, and a compeBBve
advantage over rivals without equal foresight.
A combinaBon of liabiliBes and negaBve percepBon may threaten a company or industry’s
license to operate. OrganizaBons that are perceived to produce products and manufacturing by-‐
products that degrade the environment, resource stocks, and societal benefit risk consumer backlash,
media scruBny, and alienaBng stakeholders. Insincere or incomplete efforts to address these issues can
easily result in accusaBons of greenwashing and make maAers worse. Such occurrences would certainly
reduce profitability, however a combinaBon of fines, addiBonal compliance costs, boycoAs, and reduced
revenue can effecBvely revoke an organizaBon’s license to operate without any formal charter
revocaBon. Although the benefits derived from EV product usage should create goodwill, detrimental
environmental and societal by-‐products resulBng from the producBon processes of both tradiBonal
models and EV’s (including life-‐cycle baAery material issues) represent a liability that can be miBgated by
sustainability efforts.

Market OpportuniNes
Changing demographics, technological improvements, and shibs in consumer preferences
translate into opportuniBes for more nimble and innovaBve companies. With pump prices nearing all
Bme highs, and a growing awareness of GHG emissions and other environmental consideraBons that are
directly Bed to the auto industry consumers are demanding a different vehicle than the gas guzzling
Escalades and Hummers of a few years ago. Demand for hybrids has resulted in almost 2 million sales
over the last decade (Alterna)ve Fuel Vehicles in Use, 2011). To further illustrate this shib in consumer
demand, in 2008 hybrid sales were up 3.2% and SUV/Minivan sales were down 11.8% (“2009 Car Buying
StaBsBcs,” 2009). Manufacturers who do not respond to this demand will almost certainly experience
reduced revenues as well as brand value (Alterna)ve Fuel Vehicles in Use, 2011).
This trend also represents a significant opportunity to profit from new models. In the core
markets of North America and Europe, auto manufacturers have experienced a sharp reducBon in
demand for exisBng product lines. Yet, hybrid and EV’s represent a high growth sector. One analysis
places EV’s with a 50% market share by 2035. New markets in the developing world will most likely be
focused on resource efficient models as well. Manufactures who do not respond to these shibs, they are
likely to be leb behind, just as Detroit was in the 70’s. Especially as compeBBon will become more fierce
Figure 2: U.S. Hybrid-Electric Vehicle Sales
as India, China, and start-‐up US companies enter the tradiBonal and EV markets.
In April 2011 Toyota announced the sale of its millionth Prius in the US (“Toyota Sells One-‐
Millionth Prius in the U.S.,” 2011). The Prius serves as a prime example of the benefits associated with
the market opportunity associated with sustainability. The story of the Prius also illustrates how winners
and losers are created within the auto industry. Toyota not only developed a soluBon to the technical
challenges of hybrid vehicles earlier than compeBtors, they produced a beAer and differenBated product
as a result of its focus on the sector. This made the Prius synonymous with hybrid vehicle, resulBng in
Toyota’s unquesBoned leadership in a high-‐growth category, a new highly profitable model, and an
increase in brand value. Other entrants into the hybrid category have not fared nearly as well.
One can expect a similar scenario for manufacturers in the next booming market, electric
vehicles. However, it is interesBng to note that Toyota has eschewed the EV market. Manufacturer’s
such as Nissan and Chevrolet are aAempBng to capitalize on this by establishing category dominance in a
sector that may eclipse hybrids in the future.
The industry today is under siege and most auto manufactures will be tempted to eschew the
pursuit of anything other than short term profitability. Businesses that take such a short-‐term view are
unlikely to see long term prospects improve. Current trends in consumer demand, society, and
resources indicate that manufactures can’t afford not to become more sustainable.
4.0 EV Industry Impact Analysis

In considering the impacts of the EV industry it is important to consider societal as well as environmental
impacts. It is also equally necessary to recognize consideraBons based on producBon as well as product
use. Since EV’s share much in common with tradiBonal vehicles, the most useful analysis compares the
cumulaBve impacts of EV’s in relaBon to petroleum powered autos.
Figure 3: EV Industry Process Diagram
Key Environmental Impacts of EV Industry

Environmental Impacts of Produc)on Processes
The process of manufacturing an automobile, regardless of whether it’s an EV, has significant
impact on the earth. In all automobile manufacturing, there are a number of different chemicals used
throughout the process. Steel blast furnaces and coke ovens produce air pollutants including sulphur
dioxide, parBculates and organic compounds. Red mud from the smelBng process someBmes leaks from
holding tanks and contaminates water with causBc soda and metals. Aluminum producBon produces
fluorocarbons that degrade the ozone layer and is a greenhouse gas. The rinse water from metal
finishing processes can contain zinc, chromium and lead but is treated before leaving the factory to
remove these harmful metals. The painBng process releases many volaBle organic compounds (VOCs)
than can be harmful if ingested (DTI, 2000).
Environmental Impacts of Material Inputs
Many materials are used in the construcBon of an automobile. Figure 5 below lists the main
materials used.
Figure 4: Automotive Material Usage (EPA, 1995)
The main material in manufacturing automobiles is steel, which accounts for almost half of the
car by weight. Energy used in steel producBon represents about 2.5% of domesBc energy and about half
of this energy comes from coal (EPA, 1995). Steel producBon in the U.S. produces these emissions
whose contribuBons to smog are the most injurious to health (EPA, 2008).
●VolaBle organic compounds (VOCs): 39,365 tons per year
●Nitrogen oxides (NOx): 99,966 tons per year
●Fine parBcles, under 2.5 micron (PM2.5): 45,431 tons per year
●Hazardous air pollutants (HAPs): 2,971 tons per year
Most EV manufacturing processes are to those employed to build tradiBonally powered autos.
For instance, the frame, interior, and body manufacturing is essenBally the same. Where EVs deviate is
mostly in regards to the power train and baAery. Some types of motors in EVs use rare earth elements
in their magnets. China accounts for 97% of the global producBon of rare earth elements (Huffington,
2010). Countries are now scrambling to find other sources for these rare earth elements including re-‐
opening mines that previously had become unprofitable. A posiBve trend is starBng to emerge in the EV
industry as companies like Tesla are redesigning engines to eliminate the use of rare earth elements.
Another aspect of the EV that sets it apart from tradiBonal cars is the baAery. The Nissan Leaf
has a Li-‐ion baAery pack that can power it for 100 miles and contains 4 kgs of lithium (Sylvester, 2011).
There are some concerns that current lithium producBon is not great enough to support the upcoming
surge in EVs. Also while lithium has the greatest impact, baAeries contain many other materials as
shown in Figure 6 which have impacts themselves (EMPA, 2010). Currently only the nickel and cobalt in
baAeries is recycled while the lithium and the rest of the materials are simply shredded and disposed of
(Taylor, 2009).
Figure 5: Components of Li-Ion batteries (EMPA, 2010)
CumulaNve Environmental Impact Comparison of EV Industry

In terms of overall impacts, EVs are far ahead of their gasoline counterparts as shown in Figure 4.
In comparison to convenBonal ICE vehicles, EVs have 220% less total cumulaBve impact on the
EcoIndicator 99 Scale, which assesses damage to human health, damage to ecosystem quality and
damage to resources (Gauch et al., 2009). This is based on full lifecycle impacts and includes the 15%
addiBonal environmental burden associated with producing an EV (EMPA, 2010). Aber factoring in
product usage, EV’s reduce GHGs by 72% throughout their enBre lifecycle (Yubanet.com, 2010). Despite
the fact that EVs have far less impact than their tradiBonal counterparts, usage sBll accounts for half of
the overall impact of the EV.
Figure 6: ICE vs. EV Lifecycle Impact Comparison (Gauch et al., 2009)
Even though the enBre EV lifecycle impact is less than that of tradiBonal gasoline powered cars, the
manufacturing process of EVs and standards cars is similar and will be explored in more depth below.
The net result is that EVs are substanBally more environmentally friendly over the enBre lifecycle of
producBon and use.
Key Social and Economic Impacts of EV Industry

The primary human health impact from automobiles in general is the loss of life and injury from
accidents. In 2009 92 people per day were killed in automobile accidents; that is over 30,000 people
during the enBre year. The AAA esBmates that in 2008 automobile accidents cost the United States over
$164 billion, though the NaBonal Highway Traffic Safety AdministraBon thinks the number may be much
higher. This translates into an average annual over $1,000 per person in the U.S. Thus, the most
significant social and economic impact that the industry could have would be to increase automobile
safety (Clifford, 2008).
The resurgence of the U.S. EV manufacturing industry is also posiBvely impacBng society through
job creaBon. For instance, Nissan is opening a plant in Smyrna, TN to manufacture the Leaf and Tesla is
re-‐opening the closed NUMMI plant in Fremont, CA (Nissan, 2011; Tesla, 2010). In addiBon, while the
bulk of EV baAeries are currently made abroad, there are many US companies with growing baAery sales
including A123, Altairnano and EnerDel. To support EV charging, charging staBons are being installed in
homes and in public places and this is creaBng both jobs and charger sales. Some industries will suffer
job losses, for instance in gas delivery and gas engine repairs (Becker, 2009). However, a net increase of
1.9 million jobs is expected by 2030 because of vehicle electrificaBon (ElectrificaBon CoaliBon, 2010).
5.0 EV Industry Framework and Vision

Given the major environmental and social impacts idenBfied with the EV manufacturing industry
in the previous secBon, The Natural Step (TNS) is the framework most suited to increasing sustainability.
The Natural Step is a Swedish nonprofit organizaBon founded in 1989 with a mission to create a
sustainable society. In an effort to meet this mission, founder Karl-‐Kenrik Robert created the TNS
framework. The Natural Step framework outlines the system condiBons for sustainability, based on the
laws of thermodynamics. The system condiBons are reframed into principles of sustainability, so that
communiBes and businesses can leverage the framework to incorporate environmental, social and
economic consideraBons to make decisions that beAer incorporate sustainability. Table 1 shows the four
system condiBons and the corresponding principles.
Table 1: Natural Step System Conditions and Principles
The Four System Condi2ons... …Reworded as The Four Principles of Sustainability
In a sustainable society, nature is not subject To become a sustainable society we must...
to systemaBcally increasing:
1. concentraBons of substances extracted from 1. eliminate our contribuBon to the progressive buildup of
the earth's crust substances extracted from the Earth's crust (for example, heavy
metals and fossil fuels)
2. concentraBons of substances produced by 2. eliminate our contribuBon to the progressive buildup of
society chemicals and compounds produced by society (for example,
dioxins, PCBs, and DDT)
3. degradaBon by physical means 3. eliminate our contribuBon to the progressive physical
degradaBon and destrucBon of nature and natural processes (for
example, over harvesBng forests and paving over criBcal wildlife
habitat);
4. and, in that society, people are not subject 4. eliminate our contribuBon to condiBons that undermine
to condiBons that systemaBcally undermine people’s capacity to meet their basic human needs (for example,
their capacity to meet their needs unsafe working condiBons and not enough pay to live on).
There are three main reasons why TNS is the best sustainability framework for the auto industry.
First, the language used in TNS is both industrial and scienBfic. This language style is familiar to
engineers and already resonates with the auto industry. The second reason is again based on familiarity.
TNS relies on a planning approach called backcasBng where an organizaBon first sets desired future
condiBons and then defines the steps necessary to aAain that vision (TNS, n.d.). The auto industry is not
likely familiar with the term backcasBng, but they are familiar with the pracBce. Manufacturers currently
create strategic plans and roadmaps to meet government mandates in areas such as safety and fuel
efficiency. BackcasBng from an envisioned sustainable auto industry would be a shib in prioriBes, but not
a drasBc change in pracBce. Lastly, TNS is compaBble with other guidelines tools used by the auto
industry. For example, ISO 14001, a detailed environmental standard already widely used in the auto
industry is a perfect complement to TNS. The ISO 14001 standard provides the guidelines and processes
to develop an environmental management system, but does not provide guidance on what to measure,
and therefore, what to manage (TNS, n.d). The TNS Framework fills this gap by providing guidance on a
complete strategic and sustainability level, without impeding the ISO 14001 system. The TNS website
provides a very helpful metaphor: “Think about running a ship, where the ISO standard provides
guidance on how to run a ship well, but does not suggest where to go. On the other hand, the TNS
Framework provides a compass to guide the ship to where it needs to go, but does not say how to
manage the ship.”
Building on the tools already used by the auto industry, The TNS framework can serve as a
general lens for decision making to ensure that the industry is heading in the right direcBon, parBcularly
in terms of manufacturing. In order to become more sustainable, the auto industry needs to expand its
definiBon of sustainability and applicaBon of sustainability tools, which currently focus almost enBrely
on the products and not the manufacturing process. TNS would assist the EV industry in rethinking
inputs and manufacturing processes. TNS would prioriBze refining baAeries to be lighter, less expensive,
and last longer. TNS ulBmately requires that the EV producBon would be based on closed loop processes
with upcycling of all materials. Combining the innovaBve spirit and engineering capabiliBes inherent in
the EV industry with the guidelines of The Natural Step, a truly sustainable EV industry is possible,
however the biggest and most important change is for the industry to commit to evolving to a
sustainable version of itself. The following secBon will explore this vision in more detail and put specific
metrics around how to achieve the goals desired in accordance with TNS.
6.0 Industry Metrics

The metrics developed to improve the sustainability of electric vehicles producBon and their
performance targets are shown in the Table 2 below. There are two metrics for each of the four Natural
Step Sustainability Principles. Targets are based on ten year goals, in order to recognize the long Bme
horizons required in terms of planning for process and material changes and associated capital
requirements.
Table 2: EV Industry Metrics
Natural Step Sustainability Principles EV Industry Metrics 2021 Target

1. eliminate our contribuBon to the % recycled content in vehicle 60% overall
progressive buildup of substances extracted
from the Earth's crust. average fleet vehicle weight 15% reducBon
2. eliminate our contribuBon to the % hazardous materials used in producBon – 15% reducBon
progressive buildup of chemicals and emissions and disposal
compounds produced by society.
% renewable energy used in producBon 50% overall
energy used to produce
% of miles driven charged by renewable 50% overall

energy
3. eliminate our contribuBon to the % sustainable materials used (recycled and 85% overall
progressive physical degradaBon and natural)
destrucBon of nature and natural processes.
water used for vehicle producBon (gallons) 20% reducBon
4. eliminate our contribuBon to condiBons life cycle ownership costs 15% reducBon
that undermine people’s capacity to meet
their basic human needs. % of cars with 5 star safety raBng 80% with 5 star crash
test raBngs

Vehicle Recycled Content
Ra)onale: one way to reduce the buildup of substances extracted from the earth’s crust is to reduce the
demand for products that directly or indirectly lead to increasing concentraBons. This can be
accomplished by closing material loops so more recycled content is used and reducing the demand for
virgin material. According to the U.S. Environmental ProtecBon Agency 94% of vehicles in the U.S. are
scrapped and 75% of material collected is recycled. Seventy percent of recycled material is ferrous
metals, so there is an exisBng recovery system. Since 50% of a vehicles weight is steel there is large
opportunity to increase the proporBon of recycled content used in vehicles (U.S. EPA, p. 32). Lithium
baAeries can be recycled as the baAeries reach their end-‐of-‐life. BaAery recycling will be a thriving $2.2b
market by 2022, providing an adequate supply such that no new mining is needed (Frost & Sullivan,
2011).
Measurement: manufacturers already have detailed material and parts lists for their automobiles. This
metric would require them track the recycled content of inputs into the producBon process.

Average Fleet Vehicle Weight
Ra)onale: another opBon to reduce buildup of substances extracted from the earth is to reduce the
amount of the material needed in manufacturing the product. The most obvious example for
automobiles is through weight reducBon, which has the added benefit of improving mileage and
reducing polluBon. The sales-‐weighted average of automobile weight has been increasing by 1% per year
since the early 1980s and in 2008 the average vehicle weight was 4,144 pounds (MIT, p 43).
Measurement: vehicle curb weight is already required to be reported by the U.S. EPA. Manufacturers
only need to begin sepng goals to begin reversing the trend of annual vehicle weight increases.

Hazardous Materials
Ra)onale: the volume of hazardous materials sent to landfills or emiAed as a byproduct of producBon
has a direct impact on the buildup of chemicals in the environment.
Measurement: companies should begin tracking the volume of hazardous chemicals used in the
producBon of an automobile and take steps to reduce the volume of chemicals. Hazardous chemicals
are defined by the Resource ConservaBon and Recovery Act, which sets out regulaBons for how
hazardous chemicals are transported, stored, used and disposed of. These regulatory requirements
should provide sufficient informaBon for companies to begin tracking and reducing their hazardous
chemical use.

Renewable Energy Used in ProducBon

Ra)onale: 50% of electricity in the U.S. is generated from dirty coal, which directly leads to the buildup
of hazardous chemicals and also results in significant human health impacts. A 2009 NaBonal Research
Council report esBmates non-‐climate change impacts of coal fired power plants at over $62 billion
annually.
Measurement: the percentage of producBon related energy that is produced from renewable sources.

Miles driven charged by renewable energy
Ra)onale: the source of energy used to generate the electricity that powers EV’s can reduce the benefits
derived from product use. See above raBonale in Renewable Energy Used in ProducBon for staBsBcs.
Measurement: the energy mix of regions is publicly available and can be combined with EV distribuBon
staBsBcs to determine in general a percentage of miles driven by EV owners that were charged by
renewable energy sources. Improving this metric would require EV manufacturers to work with their
end customers to encourage the purchase of renewable energy if available in their area. EV
manufacturers could also provide incenBve for the installaBon of solar charging staBons by brokering
volume discounts with installers.
Sustainable Material Use

Ra)onale: increased use of sustainable materials, (e.g. soy-‐based set foam vs. petroleum-‐based foam)
will help reduce the degradaBon of natural systems.
Measurement: the percentage of material inputs into the producBon process by weight that are
sustainable.

Water Use
Ra)onale: waste water is one of the primary pathways for hazardous and toxic substances to leave the
producBon facility and accumulate in the environment. Thus, reducing water use can lead to reduced
environmental degradaBon. In addiBon, water is an increasingly scarce resource, and its overuse leads
to direct degradaBon of natural systems. A 2010 report by the Natural Resources Defense Council
predicts that fully one third of U.S. counBes (1,100) will higher risks of water shortages by 2050, with 400
facing extremely high risks.
Measurement: average gallons of water used in vehicle producBon

Life Cycle Ownership Costs
Ra)onale: the ability for individuals to meet their needs and those of friends and family is directly
impacted by transportaBon costs. For example, cost effecBve transportaBon provides access to a wider
array of employment, educaBon, recreaBon, and retail opBons.
Measurement: Ford currently measures life cycle ownership costs as a combinaBon of purchase costs,
fuel costs, maintenance costs, insurance and taxaBon, minus any residual value over a specified Bme
frame. Other manufacturers could use a similar measure over a 5 year Bme frame to esBmate life cycle
ownership costs.

Vehicle Safety
Ra)onale: avoidance of serious injury or death in a car accident goes directly to an individual’s capacity
to meet their own basic human needs and those of their family and friends.
Measurement: the U.S. Department of TransportaBon requires all cars to go through front and side
impact crash tests. At least 80% of cars receive a 5 start raBng on the NCAP (New Car Assessment
Program) front impact crash test and the LINCAP (Lateral Impact New Car Assessment Program) side
impact crash test.
7.0 Key players and pracNces related to sustainability

Best PracNces
Most EV manufactures are touBng zero emission vehicles and concentraBng markeBng efforts on
the environmental benefits of the electric vehicle in use. With roughly a third of a vehicle’s ecological
footprint coming from the manufacturing process, this report finds that most electric vehicles
manufacturers have focused liAle, if at all, on addressing this aspect of EV’s impact on the environment.
Some aAempts have been made such as the use of recycled materials and limited integraBon of
renewable energy into the manufacturing process. Many US manufactures do state they are moving
towards environmentally friendly manufacturing but at present there are few actual examples of this
commitment. It would seem that EV manufacturers are relying on the benefits of product use to offset
the manufacturing process, rather than making EV’s as holisBcally sustainable possible.
In examining best pracBces we will concentrate on the Nissan Leaf, Ford Focus EV, and GM Volt.
The Nissan Leaf appears to be slightly beAer than the others for sustainable EV manufacturing.

All Electric Nissan LEAF
According to Nissan’s website, wind turbines do power a porBon of the factory; although Nissan
has chosen to concentrate sustainability efforts on recovery, recycling, and reuse. It is difficult to
determine the specifics of this effort, but according to Nissan the LEAF is “designed for both
recoverability and recyclability” but it does not specify which components. (Nissan US Website, 2011).
This is supported by various efforts. Nissan is using materials taken from vehicles that have
reached the end of their life and reducing the use of non-‐renewable resources and substances that will
end up as waste. InsulaBon layers in the floor and skin fabric of headlining are made with fibers from
recycled plasBc, the fabric for the seats and armrests used in the Leaf is made from recycled plasBc
boAles, bumpers are made from used or damaged recycled bumpers, etc. At the end of life of the Nissan
Leaf a new life starts with recycling: 99% of the car and 100% of the lithium car can be recovered. Efforts
extend to the baAery since it maintains 80% of its capacity aber 5 years of use it can be given a second
life, otherwise it can be dismantled and its materials recovered,” (Zero Waste Europe, 2011). Nissan and
Sumitomo CorporaBon have established a new joint venture for this reuse.
In Europe, efforts extend to a focus on “how to design waste out of the system: the
environmentally damaging substances are reduced, a new chemical-‐free system to remove paint from
the bumpers is used, and the lithium-‐ion baAery can get a second life as energy storage soluBons” (Zero
Waste Europe, 2011).

All Electric Ford Focus
The Ford Focus also uBlizes renewable energy and the Michigan assembly plant has a “500 kWh
solar power generaBon systems that it includes a 50 kWh facility where Ford is tesBng how they can
reuse EV baAeries for energy storage systems”(Dailey, 2011).
Efforts to improve the interior’s sustainability leverage “soy-‐based foams, which are used on
more than 20 Ford vehicles, with seat cushions shaped from 8 percent soy-‐based content.” Lignotock a
material used behind the cloth on the door is derived from 85 percent wood fibers and is lighter
resulBng in weight reducBon and provides sound-‐ deadening benefits compared to convenBonal glass-‐
reinforced thermal plasBcs (Ford Website, 2011).
Other environmentally friend processes include a three-‐wet paint process that applies all three
coats of finish in sequence before oven curing, ensuring high-‐quality paint finish and a significant
reducBon in energy use. There is also the Fumes-‐to-‐Fuel system, an eco-‐friendly, industry-‐leading
polluBon-‐control system, which converts emissions from the plant’s paint shop into electricity (Media
Ford, 2011).
GM Volt Plug-‐in Electric Hybrid Vehicle

The GM Volt is a plug-‐in hybrid electric vehicle (PHEV). The anBcipated vehicle range is 40 miles
electric before the internal combusBon generator kicks in. According to, GM’s Manager of Public Policy,
Environment and Energy CommunicaBons, Dave Barthmuss, GM “considers the internal combusBon
engine (ICE) to be a range extender...GM plans to begin making the Volt range extender run off E85 bio-‐
diesel in Europe and Fuel Cells in China in 2012” (Barthmuss, Personal CommunicaBon, 2011). Even so,
the Volt’s product use benefits are not strictly comparable with a true EV.
According to GM website, GM does use renewable energy in the manufacturing process
consisBng of solar, hydro and landfill gas resources. They have reduced CO2 emissions from producBon
faciliBes by” 39 percent from 2005 to 2009” and also “reduced the amount of water used by worldwide
faciliBes by nearly 35 percent” (Chevy website, 2011).
Waste reducBon has been a priority and 76 faciliBes around the world which has earned a
landfill free cerBficaBon. The Volt does use some recycled materials which includes materials, salvaged
from the Gulf of Mexico, that have been re-‐purposed for auto parts used in the Volt (Chevy website,
2011).
It was difficult to find out which other recycled materials are used in the Volt. Most likely the
Volt makes use of similar recycling methods employed in other GM vehicles including the use of old
bumpers in the Chevrolet Camaro, Impala, Traverse and the Cadillac CTS; as well as the recycling of worn
carpets to produce mirror frames, fascia brackets and door-‐handle parts for the GMC Arcadia (Motavalli,
2010).
General Motors and Swiss power and electric giant ABB announced Tuesday that the two
companies will jointly research ways to reuse old baAeries from GM’s Chevy Volt for storing power on
the grid to provide community back-‐up power, renewable power management, grid balancing, and peak
price arbitrage (John, 2010).
The analysis of the manufacturing of these three vehicles confirms that EV auto manufacturers
are producing electric vehicles in a mostly similar fashion to ICEs. Electric vehicle manufacturing is sBll in
its infancy so it is not surprising that there have been no major departures in the manufacturing process.
However, EV’s afford manufacturers an opportunity to “get it right” this Bme. It is recommended that
when building the new producBon lines for EVs they uBlize sustainability frameworks, such as TNS, to
redesign and rethink manufacturing to create true sustainability gains.
8.0 Sustainability Reports and Results

It was difficult to compare the sustainability of manufacturing processes of the Leaf, Focus, and
Volt because the manufacturers are concentraBng efforts in different areas. Based on available
informaBon manufacturers appear to be focused on using recycled materials, leveraging renewable
energy, reducing emissions, and protecBon of air, soil, and water.

Table 3: Sustainability Report for Manufacturing Process (1= low, 5 = high)
Natural Step Principle LEAF FOCUS VOLT

Reducing Emissions 2 4 4 3
ProtecNng Air, Water, Soil 2 4 4 4
Uses Recycled Components 1,3 4 3 3
Recycling Program for BaDery 3 3 3 3
Based on the informaBon available Nissan barely wins the comparison. Nissans’ advantage
primarily is based on its greater usage of recycled materials. It sBll remains to be seen which EV
manufacturer will make the biggest sustainability innovaBons in the long term.
Conclusion
EV manufacturing is sBll in its infancy stage. Nissan and GM appear to have first mover
advantage; however, no major players have materialized as the clearly defined industry leader. It is also
unclear which technology, plug-‐in hybrid, all electric, or even another technology, will finally emerge as
the winner.
While EVs do boast zero emissions from their tailpipes, the EV manufacturing process is almost
idenBcal to the highly unsustainable tradiBonal vehicle manufacturing process. The only caveat is the
lithium-‐ion baAery that EVs use. The baAery does add to the environmental footprint of the EV and
baAery end of life use and recyclability is sBll relaBvely unknown. However, even with the baAery, EV’s
do reduce GHGs by 72% throughout their enBre lifecycle (Yubanet.com, 2010)
This report recommends that the industry apply the four principles of the Natural Step to EV
manufacturing by developing a standardized set of performance metrics that can be used across the
industry. The metrics listed in Table 2 recommend that EV manufacturers take a systems approach to
manufacturing by incorporaBng recycled materials into producBon, developing end-‐of-‐life programs, and
reducing the amount of energy, natural resources and hazardous substances in the producBon process.
By applying these principles to EV manufacturing, automakers can greatly reduce expenses through
leveraging eco-‐efficiencies, improve sustainability, miBgate risk, and posiBon themselves to profit by
capturing new market opportuniBes.
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Appendix A: Interview Summaries
Dave Barthmuss. GM, Manager of Public Policy, Environment and Energy CommunicaNons.
GM has released 1500 Volts and 40,000 Volts will be released by 2012. GM considers the Internal
Combine Generator to be a “range extender”. GM will begin in 2012 making the range extender run off
E85/ Diesel in the EU and Fuel Cells in China. Considers $7,500 Federal tax credit for EV’s to be very
important to driving down the cost of Volt leases to $349 per month.
Peter Brandom. City of Hillsboro, Sustainability Manager.

Very concerned about government having to pay for EV infrastructure. Believes the private sector and
markets must play a part. Believes not all incubaBon should come from government. and the role of
governments is at the front end.
Timothy Boroughs. City of Berkeley, Sustainability Coordinator.

Lack of funding and staff is keeping them from moving forward with EV infrastructure. Wants
transportaBon be looked at from a systems perspecBve and integrated with public transportaBon,
bicycles and carshare.
Ron Coury. North Bay Nissan, eCommerce Director.

Banks are not treaBng EV's loans any differently than Internal Combine Engined vehicles. Nissan does
qualify for the $5K state tax credit with a lease but you must hold the vehicle for 36 months. CARB
(California Air Resources Board) ruled that the Volt does not qualify because they are considering the
Volt to be more of a hybrid. This may change next year. CARB has $6M in tax credits and roughly $2M
are claimed.
Felix Kramer. Calcars, Founder.

Calcars is a non-‐profit that converts Internal CombusBon Engines cars to EV. The original goal was for EV
and and Plug in hybrids to become mainstream but now they concentraBng on fleet vehicles and big
vehicles that tend to last longer. Wants higher Federal tax credits for conversion. Currently the credit is
up to $4,000 but on average these conversion cost $10,000 to $15,000.
Robert Levin, PHD. California Public UNliNes Commission, Senor Analyst.

Believes the price of electricity charged to the EV owner should be appropriate to reflect the cost of off
peak generaBon. If not, there will be arBficial barriers to EV adopBon. EV owners should charge at night
when they sleep.
Edward West. Mission Motors, Founder.

Confirmed that EV manufacturer's have major anxiety over baAery life and the liabiliBes of baAeries.
Believes that they have accumulated significant data, but that they want more. CauBons that they are
already seeking to gather this data, and that many are planning on sobware similar to GridREV’s
interface (including Mission Motors). Believes that auto manufacturer's’ will work with V2G, but, that it
will conBnue to void warranty for the foreseeable future.

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Running Head: ELECTRIC VEHICLE MANUFACTURING: AN INDUSTRY STUDY

Electric Vehicle Manufacturing: An Industry Study

Team GridREV: Max Dunn

Table of Contents

2.0 Industry Trends

Electric Vehicle Industry Trends

3.0 RaNonale for sustainability

Figure 2: U.S. Hybrid-Electric Vehicle Sales

4.0 EV Industry Impact Analysis

Figure 3: EV Industry Process Diagram

Key Environmental Impacts of EV Industry

Figure 4: Automotive Material Usage (EPA, 1995)

Figure 5: Components of Li-Ion batteries (EMPA, 2010)

CumulaNve Environmental Impact Comparison of EV Industry

Figure 6: ICE vs. EV Lifecycle Impact Comparison (Gauch et al., 2009)

Key Social and Economic Impacts of EV Industry

5.0 EV Industry Framework and Vision

Table 1: Natural Step System Conditions and Principles

6.0 Industry Metrics

Table 2: EV Industry Metrics

Natural Step Sustainability Principles EV Industry Metrics 2021 Target

% of miles driven charged by renewable 50% overall

Renewable Energy Used in ProducBon

Sustainable Material Use

7.0 Key players and pracNces related to sustainability

GM Volt Plug-­‐in Electric Hybrid Vehicle

8.0 Sustainability Reports and Results

Natural Step Principle LEAF FOCUS VOLT

Chevy Website. (2011). Retrieved from: hAp://www.chevroleBnthenews.com/chevy-­‐volt-­‐uses-­‐recycled-­‐

Ford Website. (2011). Retrieved from: hAp://www.ford.com

Nissan Website. (2011). Retrieved from: hAp://www.nissanusa.com/leaf-­‐electric-­‐car/index#/leaf-­‐

Appendix A: Interview Summaries

Peter Brandom. City of Hillsboro, Sustainability Manager.

Timothy Boroughs. City of Berkeley, Sustainability Coordinator.

Ron Coury. North Bay Nissan, eCommerce Director.

Felix Kramer. Calcars, Founder.

Robert Levin, PHD. California Public UNliNes Commission, Senor Analyst.

Edward West. Mission Motors, Founder.

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GM Volt Plug-‐in Electric Hybrid Vehicle

Chevy Website. (2011). Retrieved from: hAp://www.chevroleBnthenews.com/chevy-‐volt-‐uses-‐recycled-‐

Nissan Website. (2011). Retrieved from: hAp://www.nissanusa.com/leaf-‐electric-‐car/index#/leaf-‐