As the industry recovers from the financial crisis, firms such as General Motors and Ford have set up renewables projects
The automobile industry, on life support during the global financial crisis, has recently been catching its breath. In America, many reasons are behind the slow resurgence: improved design and performance, painful restructuring, and new technologies such as hybrid or electric vehicles that push innovation.
Meanwhile, America’s auto competitors across the pond hold their own. But while tecchies and green transport mavens marvel or mock new developments in hybrid, EV or alternative fuelled vehicles, another business trend is changing how automobile manufacturers are conducting business, running their operations and planning long-term strategies.
Companies including General Motors, Volkswagen, and Ford now invest in renewable energy projects. Most are small and experimental considering the size of these corporations; others are aggressive and reach the scale of Google’s investment in energy projects. Some schemes fall in line with the development of an infrastructure for electric vehicles; others look towards the future to guarantee energy security or to meet regulatory pressures.
Volkswagen by far has been the most aggressive company on this front. With a goal to overtake General Motors and Toyota as the world’s largest automaker by the end of the decade, renewable energy is now part of the firm’s strategy. Its €1bn (£862m) investment in two offshore North Sea wind farms is a step to meet the company’s renewable energy goals, hedge against future volatile energy prices and score some corporate social responsibility points. All the while they will also be boosting Germany’s fitful wind power sector.
Across the pond, American automakers are making small yet notable investments in renewables. Earlier this summer, the General Motors (GM) subsidiary GM Ventures announced an equity investment of £7.5m in Sunlogics, a solar energy systems company that will install solar panel charging canopies at GM facilities and Chevrolet auto dealerships.
While renewable energy only accounts for 1.4% of its energy consumption, GM’s incremental investment in solar energy will lead to 60 megawatts of annual power by 2015 – the equivalent of powering 10,000 homes a year. The company also evaluates how it can fuel its manufacturing plants more efficiently and cleanly. For example, GM retrofitted one of its Michigan plants so landfill gas could power its operations 40% of the time. That conversion will save the firm $1ma year in energy costs.
Ford Motor Company has taken more of a public-private partnership approach towards renewable energy. A solar power generation system at its Michigan Assembly Plant (MAP) received mostly state and federal funds with a small contribution from Ford, and that project will save the company $160,000 a year. The MAP renovation was just one small part of a modernisation plan that will cost Ford at least $550m. MAP is the first automobile factory in the world that manufactures gasoline powered, hybrid electric, plug-in and battery electric cars all on the same line.
Ford also operates experiments throughout its global operations, including energy storage projects at its MAP facility and wind turbines that toil above European factories. Other plants were not included in Ford’s transformation, but some have been redesigned for other purposes. Ford’s Wixom plant, for example, was for decades Ford’s most profitable factory, churning out Lincolns and Thunderbirds. Ford closed the factory a few years ago, and now it is slated to become a renewable energy research and development hub.
As companies develop more automobiles that run on technologies other than the internal-combustion engine, it is only logical that they design, assemble and market these cars in facilities that are powered by energies other than fossil fuels.
For Volkswagen, GM and Ford, any investment in these technologies, from a few hundred thousand to €1bn, is still a risk. And despite the hype and excitement, hybrids, electric and plug-in hybrid cars are still only a tiny sliver of these companies’ total sales, as consumers overall still have not warmed to them. Nevertheless, as fossil fuels rise in price and consumers’ tastes evolve, the smart money is for more of these new cars to roll out, in part, manufactured thanks to the energy technologies of the future.