My name is Peter Frise, and I'm the scientific director and chief executive officer of AUTO21, which is Canada's national automotive research network. I'm a mechanical engineer and I helped found the first automotive engineering program in Canada, at the University of Windsor, in 1998.
As many of you will know, the automotive market has rebounded quite strongly in recent months, which is good news for all Canadians because of the important place this industry holds in our economy. However, the auto industry faces a new challenge following on the heels of the recession in 2008 and 2009. This new challenge is the rapidly changing fuel economy regulations, known as the corporate average fuel economy, or CAFE standard, in the United States, which is mirrored here in Canada by our drive to reduce greenhouse gas emissions, or GHGs.
CAFE standards are an extraordinarily complex topic, but essentially, to be eligible for sale in the United States, new cars are required to achieve a 40% better fuel economy by 2016 relative to their 2010 ratings. This is an improvement at a rate that is many times the usual rate of progress in fuel economy. There are moves afoot to enhance fuel economy even more radically by 2025.
Here are the numbers: the present CAFE requirement is about 9.26 litres per 100 kilometres, or about 25 miles per U.S. gallon. In 2016 it will move to 6.6 litres per 100 kilometres, or 35 miles per U.S. gallon, which is a 40% change from 25 miles per gallon; by 2025 it could go to 4.3 litres per 100 kilometres, which would equate to about 54 miles per U.S. gallon.
This is a very complex topic, but those are the round numbers.
These regulatory changes represent very strong challenges to the entire automotive value chain. Achieving these improvements will take far more than evolutionary changes in future vehicles, for a number of reasons.
Aside from driver behaviour, the largest factors in vehicle energy consumption are the weight of the vehicle and the aerodynamic efficiency of the vehicle. Studies have shown that a 10% decrease in vehicle weight can improve fuel economy by 2% to 4%. A 10% to 11% aerodynamic improvement can result in a 5% fuel economy gain.
This depends on what kind of driving you're doing. On the highway, aerodynamics are more important. In city driving, weight is more important. It doesn't matter what kind of car you're talking about. Whether it's a big car, little car, or electric car doesn't matter; those numbers are good for just about any kind of car.
A 10% decrease in vehicle weight is an extremely tough goal to achieve, but even that amount will not get us to where we need to be. The other difficulty is that decreasing vehicle weight can have a major impact on the cost of vehicles, the efficiency with which they can be manufactured, and most importantly, with occupant safety.
This balancing of vehicle performance with safety and cost is a critical factor in the future competitiveness of every nation's automotive manufacturing sector. That is why every entity participating in the automotive industry must become more innovative and bring new ideas and technology to the market at an unprecedented rate.
Personally, I am concerned that Canada's automotive parts industry is entering this era when innovation is even more important than ever before at a time when studies have shown that business investment in R and D in Canada is low; as well, our innovation support programs are also comparatively smaller than those of competitor countries.
For that reason, each of the major automaking countries is providing some form of very active R and D assistance to its own industry to ensure they can meet the challenges of CAFE by bringing lighter, more innovative products to the market, while maintaining vehicle safety at reasonable cost targets, and thus win new contracts to supply parts for future car models.
AUTO21 has been a major Canadian success story in the innovation landscape. The key to that success is the requirement that each project have an industry partner that co-invests in the project with AUTO21 and stands ready to take the knowledge from the research teams and commercialize it for Canada.
The co-investor requirement is what we call a market pull approach, and the requirement for an external partner is called a knowledge receptor strategy. They are foundational to how AUTO21 commercializes research. We know where the knowledge is going before we even start the project.
The market pull-knowledge receptor approach, coupled together, is used by AUTO21. It's quite different from many other Canadian programs. We feel it's foundational to how future progress will be made in this industry and in many others, such as aerospace, information technology, telecommunications, and so on.
In conclusion, let me say that I believe government investment plays a vital role in supporting innovation in the economy by providing specialized people and facilities that industry simply does not need all the time but can certainly benefit from on a periodic basis. Those people and facilities are often at universities and in public sector science labs, so organizations like AUTO21, which can broker relationships and help to buy down the risk of R and D in Canada, can often help make the difference between innovations being developed here or abroad and whether our country benefits from them or people in other countries.
As a follow-on strategy, I can tell you that the AUTO21 board of directors is developing a follow-on program to AUTO21 when it sunsets in 2015. We are presently in active discussions with industry to make sure this program will work for industry, and we would welcome an opportunity to talk about our plans with the government as well.
Let me just say also that I'm quite happy to talk to your committee about particular innovations as well.
Thank you very much.