1The New Volkswagen?ESD.123J, April 8, 2002Elsa OlivettiAntoine GuivarchAlex CosquerOutline of Today’s Presentation!Volkswagen Philosophy!The Golf!Car Choice Criteria!BIW Mass and Cost!Fuel Efficiency!Recycling!And the winner is...!Sensitivity analysis to Al price!The Future2Our Philosophy!Provide quality products for our customers!Protect the environment through fuel efficiency!Optimize for end-of-life disposal and recycling!But main driver remains cost reductionWhy the Golf?!Highest World Production Volume for VW115,851113,826328,542486,023736,4261,923,16901107,090160,147149,426New Bug34,112125,158123,027Bora443,462315,500376,164Polo484,682420,233384,485Passat804,221791,969818,955Golf1,935,2121,980,6011999,107Passenger989900Volkswagen Annual Reports3Criteria for Materials Selection!Vehicle Cost!Vehicle Mass!Recycling Targets!Production Volumes!Fuel Consumption/Vehicle efficiency!Customer Economic AnticipationWhat will sell cars????Design and Manufacturing Phase for the BIWCurrently: laser beam-welded, unitized construction, fully galvanized steel body4Cost Model Assumptions!Production volume: 795,000 / yr3 plants at 265,000 / yr!Labor: $15 / hr!Benefits: 100%!Overhead: 150%!OCC: 15%!Amortization Period: 5 yrs!Materials Costs & pricesAl $1.30 / $0.30Steel $0.33 / 0.05SMC $0.80!Secondary Weight Saving Factor: 50%BIW Cost vs. BIW Mass*90010001100120013001400300 350 400 450 500 550 600BIW Mass (lbs)BIW Cost ($)Non Efficient ScenariosEfficient ScenariosReference: All steel5The 10 efficient scenarios941608SteelSteelSteelSteel32 All Steel1265314AlAlSteelAl101287306AlAlAlAl11179317AlSMCAlAl7930560SMCSMCSteelSteel361000518AlSMCSteelSteel34953548SMCSMCAlSteel271022510AlSMCAlSteel251088367SMCSMCSteelAl181157325AlSMCSteelAl161110355SMCSMCAlAl9CostMassRFPQPOQPIRoofSc #And now the…USE phase!6Use phase!Fuel efficiency calculations!CAFE standard calculation!Customer economic anticipationFuel Efficiency!10-5 rule (most conservative)!Ford Taurus reference202224262830321500 2000 2500 3000 3500 4000Vehicle Mass (lbs)Miles Per Gallon7Advertised Steel FEnot with the Ford Taurus reference!35.6 Average1.4L 4942FYI: Diesel1.9L TDI Manual28222.0L Automatic31242.0L ManualFE, highway (MPG)FE, city (MPG)CAFE standard!27.5 MPG for passenger cars(20.7 MPG for light trucks)!Any new design will improve CAFE because steel is just the heaviest one…8The VW Fleet (World)*24.1212,414Jetta24.8115,851New Beetle20.7486,023Passat23.8736,426Golf (steel)MPG*Production in 2001iiiFENNΣΣ* Combined EPA estimations figure based on 70% city and 30% highway useCAFE Calculation: 22.84 MPG !!!Gas Savings*-$99$169-$268$4,31022.969$35$59-$94$4,48422.0734-$10$12$81$147$217$324$238$346$0Delta BIW-$60-$50$4,52821.8536-$50-$62$4,51521.9127-$21-$102$4,47522.1125-$108-$255$4,32322.8918-$85-$301$4,27623.1416$12-$313$4,25623.2010-$72-$310$4,26723.187$25-$322$4,25623.251$0$0$4,57721.61St.BalanceDeltaGas NPVMPGAssumptions!12,000 miles / yr!12 year life!10% Discount Rate!Fixed Price of Gas, $1.10 / gallon!Assume fleet calculate CAFE9Narrowing the Field$4,527.89$4,483.75$4,515.27$4,475.29$4,322.84$4,276.24$4,264.75$4,309.52$4,267.29$4,255.77$4,577.44GasNPV93010009531022108811571265111011791287941Cost21.8522.0721.9122.1122.8923.1423.2022.9623.1823.2521.61Fuel Efficiency5603651834548275102536718325163141035593177306160832 All SteelMassSc #End of Life Recycling and disposal10Recycling TargetsEU Recycling standards: by Jan 2006 reuse and recycle a minimum of 80%Incinerate a minimum of 5% by Jan 2015 reach to 85% / 10%Recyclability!Assume non-recyclable ~706 lbs. per car (not including BIW)!Secondary weight savings in tires and ferrous materials22.63111Steel283038.723624.62975.113427.42673.56728.23020.462724.82962.992530.92749.291827.42685.681625.92670.121031.12731.0392626581% unrecyclableTotal Mass11Narrowing the Field$4,527.89$4,483.75$4,515.27$4,475.29$4,322.84$4,276.24$4,264.75$4,309.52$4,267.29$4,255.77$4,577.44GasNPV2824.628.224.830.927.425.931.127.42622.6% unrecyclable93010009531022108811571265111011791287941Cost21.8522.0721.9122.1122.8923.1423.2022.9623.1823.2521.61Fuel Efficiency5603651834548275102536718325163141035593177306160832 SteelMassSc #Recycling Processing CostAssumptionsHulk Cost: $5070ton/hr shredder8hrs/day operation4hrs/day maintenanceCost = -48.7820-0.0153F-0.0079N-0.0072U-90-88-86-84-82-80-78-76-74St 1 7 9 10161825273436Option12Landfill Cost Estimate-45-40-35-30-25-20-15-10-50St 1 7 9 10161825273436!$120/ton!Cost =6.932 – 0.0018F + 0.0041N –0.0574U!Separations not 100% efficientChosen Car: stick to ALL STEEL*!Almost cheapest solution!Cheaper solutions replace steel with plastics and violate recycling regulations!Mixing Aluminum and Steel makes recycling more difficult!Aluminum is still too expensive:No incentive for us to pay the cost for the sake of the environment and the customer’s benefit13Sensitivity Analysis to Aluminum PriceSensitivity AnalysisBIW Cost vs. BIW Mass9001000110012001300300 400 500 600Mass (lbs)Price ($)10 options with Al at $1.5New price for 10 options wilth Al at $1Other options with Al at $1Not affected14Aluminum Price Sensitivity Conclusions!$1.00 / lb: still above breakeven point!Options that include aluminum without plastic still aren’t economically efficient!Steel is still the chosen carOther Aluminum Considerations!Aluminum increases stamping timedecreases production rate!Al dies are more expensive!Al induces more rejects!Different mech. properties (different design)!Recycling is more difficult (sorting)unless the whole body is in Al (sorting)15Future of VW!Price of Al!Production GapsSUV, Minibus!Regulation of light trucks and passenger cars