Analysis of aluminum in auto body designs and its strategic implications for the aluminum industry

Abstract

Although the use of Aluminum in cars has been increasing for the past two decades, there has been limited progress in the development of aluminum auto bodies. Although some carmakers have developed all aluminum spaceframe designs, aluminum is far from being a material of choice for autobodies. Most aluminum substitution has come in the form of castings and forgings in the transmission, wheels etc. The substitution of steel by aluminum is partly influenced by the regulatory pressures to meet fuel efficiency standards by lightweighting and recycling standards. The thesis looks at the possible reasons-both regulatory pressures and market forces as to why aluminum has been a part by part substitute for steel rather than for the entire autobody. The key obstacle is the high cost of primary aluminum as compared to steel. Both the aluminum and the automotive industries have made attempts in their respective areas to make aluminum a cost-effective alternative to steel. The thesis looks at the possible options for the aluminum industry in the current macroeconomic conditions including scale economies and cost analysis of newer rolling technologies. The thesis then analyzes the cost of fabrication and assembly of four different aluminum car body designs compared with the conventional steel designs. The cost of the car design depends on the how cost effective that the aluminum producers can be in producing the primary aluminum. We then attempt to analyze if the aluminum can be an alternative to steel at lower primary aluminum prices, if these can be feasible and the possible implications for the aluminum producers and the regulators.