Overview of issues that today's powertrain planners must address because of increasing fuel economy regulations.

1. Leadersinanalytics-basedstrategicconsulting
Regulatory Driven Impacts on
Powertrain
April 9, 2014

2. 2
The regulatory environment is getting more
stringent…
Potential View of Future Fuel
Efficiency Standards
Regulations increase an average
of 2.0-3.5% EVERY YEAR
• Targets beyond 2020 are uncertain
Some convergence in standards
globally, but differences persist
• Varying test cycles
• Footprint versus Weight based
standards
• Unique credits and incentive
programs
Differing fiscal tax regimes add
complexity

3. 3
…but compliance is only part of the challenge…
• Increasingly tougher
• Complex
• Uncertain
• Customer Needs &
Wants
• Product & Brand
Position
• Competitor Actions
• Technology Benefits &
Costs
• Technology Availability
• Technology Risks
Regulations
Markets Technologies
• How to balance competing demands and arrive at ‘optimized’ decisions?
• How to be confident decisions are ‘robust’ to future risks AND uncertainties?
• Is there a ‘silver bullet’ solution?

4. 4
…and there are many different technology
paths to consider
Technology Area
Improvement
Potential
Growth
Potential
Comments
Transmissions Incremental Limited
• Limited potential based on cost and efficiency gains
• Optimization opportunities with integrated electric motors
Gasoline Engines Incremental Moderate
• Incremental base engine improvements
• Opportunities for modifications to optimize operation in a
hybrid drive cycle
Diesel Engines Incremental Moderate
• Incremental base engine improvements
• Issues with after-treatment and fuel quality
• Opportunities for modifications to optimize operation in a
hybrid drive cycle
Energy
Management
Incremental Limited
• Limited by future energy system efficiencies
• Controls strategies for smart energy usage have some
opportunity
Hybridization
Incremental to
High
Limited to
Broad
• Wide range of systems with different complexities and
degree of electrification
• Gains for PHEVs that make use of grid energy.
Electrification High Broad
• Long term growth potential with consideration
infrastructure
System
Integration &
Optimization
High Broad
• Key enabler
• Increasingly important driven by increasing (and
sometimes conflicting) requirements and technologies
• Critical to managing system complexity and attribute
tradeoffs

5. 5
First Challenge:
Balancing regulatory and market demands
Unique Powertrain
Technology
Combinations
FuelEconomy
Performance
Cost
Solution 2
Solution 1
Cost
Solution 2
Solution 1
Customer Satisfaction Target
Compliance Target
• Understanding the ‘gap’ between consumer and regulatory targets is key
• This ‘gap’ will increase as future compliance targets increase
• Focus on finding optimized solutions at a system level (i.e. vehicle or higher)
• Solutions must be robust to changes in future market conditions
GAP
ProductAttribute
Performance

6. 6
Second Challenge:
Picking the most robust solution from many
alternatives
• An optimal solution is determined analytically based on attribute priorities
• A robust solution is determined by quantifying scenarios and evaluating
sensitivity (changing market factors, attribute trade-offs, and tipping points)
• Data integrity, disciplined planning, and adaptability are keys to success
0 2 4 6 8 10
Alternative C
Alternative B
Alternative A
Packagability
Cost
Reliability
NVH
Drivability
Performance
Fuel Economy
Alternative A
‘Advanced’
Technology +
Higher risk
Optimal
Solution
Indication of
robustness
Example Attribute Capability Assessment
(Higher is Better)

7. 7
There is no ‘Silver Bullet’ but execution of key
‘principles’ helps
• ‘Minding the Gap’ requires robust requirements
definition and target setting, with a system-level
view
• Manage system optimization over the relevant time
dimensions (changes in regulations, technologies,
markets)
• Future risks and uncertainties should be taken into
account in the potential solution sets; quantify the
range of relevant risks and identify ‘tipping’ points
• Stress test pre-program plans in the context of a
system level view

8. 8