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Electric Vehicles and the Prospects for Aluminum Casting

June 1, 2018
Improving battery technology and pending regulations on internal combustion engines are boosting the outlook for EVs, which means new possibilities — and some risks — for foundries and diecasters.

Automotive industry developments drive developments in several upstream manufacturing sectors too, including metalcasting businesses, of course. Changes in automotive technology invariably mean changes in metalcasting operations.

Electric vehicle (EV) prices are falling faster than predicted, and the consumers’ cost of ownership could reach parity with standard internal-combustion engine (ICE) vehicles in Europe as early as 2018, according to USB. Forecasts for EV sales are being revised upward, as the technology improves, promising longer ranges and shorter charging times in the near future. 

Meanwhile, the list of countries imposing regulations (or even bans) on ICE vehicles is growing longer. The Netherlands and India recently announced complete sales bans on ICE vehicles starting in 2025 and 2030, respectively, while China and EU have sales quota systems on the agenda for plug-in electric (PHEVs) and battery electric vehicles (BEVs).

If indeed the next generation of BEVs will have a range of +400 km, and charging times of about 15 minutes, and cost parity with ICE engines is met due to falling battery prices, the market penetration of BEVs will increase rapidly. Looking at the latest projections from 24 different automotive forecasting institutes and Tier suppliers, a worldwide BEV penetration of 6.86% (range, 2-15%) is expected by 2025, growing to 18.56% (range, 5.75-34%) in 2030.

Risk of overcapacity — Currently, lightweight materials like aluminum, magnesium, and carbon fiber are in high demand as lower weight equals longer range, or a reduction of the battery cost for an electric vehicle. But, the fast-developing BEV segment could lead to overcapacity in the aluminum casting industry around 2025-2030.

In particular, foundries and diecasters serving the powertrain segment, together with peripheral components such as pump housings, are in the danger zone. To deal with the additional demand for HEV and PHEV cast aluminum components, metalcasters have added capacity (as likewise have the screw, hose, and pipe manufacturers,) some of which will become redundant as the BEV share increases. 

BEV vehicles contain much less cast aluminum in the powertrain compared to ICE, HEV and PHEV vehicles. Engine components like cylinder blocks/heads, oil pans, turbochargers, and manifolds, to list a few, are not needed for battery electric vehicles.

And, though BEVs feature aluminum casting-intensive powertrain applications too (motor housings, inverters, converters, chargers, and stator housings), new designs are expected to shed around 35-40 kg of cast aluminum in the powertrain area compared to the average North American ICE vehicle. (The figure is somewhat lower when compared to European ICE vehicles.) 

For PHEVs, the difference in cast aluminum powertrain utilization is even higher, considering PHEV applications like electric motors, batteries, and power electronic housings. Should cast aluminum become the preferred solution to house the battery on BEVs, the difference in the cast aluminum utilization would be narrowed considerably. At this time, however, steel or hybrid solutions seem to be preferred by the OEMs.

Furthermore, heating, cooling, steering, brake/recuperation, assistance systems, door closers, and windows, are or will be electrified, which will further decrease the demand for cast aluminum parts. In addition to that, aluminum casting is under pressure from other materials, like Aramid-reinforced plastics that replace zinc and aluminum diecastings for small parts such as belt tensioners, filter housings/brackets, etc.

For a state of overcapacity to occur it is important to note that the BEV share has to grow considerably faster than that of the PHEV and full HEV combined. Otherwise, the decreasing demand for aluminum castings created by the growing penetration of BEVs would be compensated by the increasing demand for PHEV and full HEV applications. Furthermore, regions like Africa, Russia and parts of Asia are not likely to be hit due to the expected low penetration of BEVs there.

Increasing structural applications — One may argue that the increasing use of automotive structural aluminum castings will more than offset a possible decline in demand for powertrain applications. Structural aluminum casting applications are being used increasingly in the premium segments for applications such as suspension domes, longitudinal carriers, cross-members, doors/gates, and A-B-C pillars. 

In Europe, the demand for automotive structural aluminum castings increased by around 65% in 2017. The high growth rate in this segment has not gone unnoticed, resulting in several new entries in recent years (e.g., Bocar, Cosma, Nemak, 2a, Mercury), profiting from a growing segment but also diversifying away from ICE powertrain applications.

But it is questionable if the increasing demand for automotive structural aluminum castings applications will more than offset the falling demand for cast aluminum applications expected due to the increasing penetration of BEV vehicles. So far, there have been only a few samples of automotive structural aluminum casting applications in and below the D-Segment (that is, the EU designation for larger cars like the Mercedes C-Class and BMW 3- and 4-Series. 

Furthermore, hybrid body structures are being used increasingly by the premium OEMs rather than full aluminum bodies. Audi’s latest generation A8 D5 (body weight 621 lbs., 58% aluminum) was launched with a hybrid structure that resulted in a heavier body compared to the outgoing A8 D4 (509 lbs., 92% aluminum) structure.

The increasing penetration of BEVs has been expected to boost the demand for lightweight materials in structural applications even further, but the fast-developing battery technology has had and could have a negative impact on OEMs’ willingness to implement these materials. When the BMW I3 was launched in 2013 it made sense for BMW to invest in a CFRP cell for the I3, as a lighter car needs a smaller battery. The battery is the most expensive part on an electric car, and the cost saved on the battery could be invested in the frame. Meanwhile, advances in electric vehicle battery technology have improved vehicle operating range by more than 50% since 2013, taking some pressure off the need to use ultra-lightweight materials like carbon fiber in the manufacturing process. Though aluminum and CFRP cannot be compared, projected advances in battery technology could limit the use of automotive structural aluminum casting applications, too.

Two-thirds of automotive consumers consider the 300-mile/480-km range on a single charge as sufficient (according to USB.) Next-generation BEVs from VW, Nissan, Daimler, and BMW are expected to have a range of 500-600 km. Solid-state batteries as announced by Toyota, BMW, and VW will increase the range even further, and bring charging times down to “a few minutes.” If solid-state batteries perform as the OEMs project, when they are launched around 2022, one of the main incentives to use lightweight materials — powertrain efficiency — will no longer fully apply, and demand for automotive aluminum castings could decrease as a result.

Looking at newly launched BEVs, like the Tesla Model 3, Chevrolet Bolt, and Nissan Leaf, all feature a steel structure. The VW ID will, according to industry sources, become a steel structure with some components made from aluminum and magnesium; and the next generation BMW I3 is said to lose its carbon/aluminum passenger cell/drive module. In fact, BMW and Benteler have de-invested from carbon engagement.

The technical commercial conditions are in place. Add to that a potentially global economic downturn, and we could see a painful overcapacity in the aluminum foundry industry.  

Jost Gaertner is managing partner of AluMag Automotive GmbH, a market research and development service. Contact him at [email protected]