HERE is an example of how the links between the petrochemicals and polymers business and the autos industry have long worked:
- In the 1980s, propylene was a very low value co-product of naphtha and other liquids cracking. You always make around half a tonne of propylene for every one tonne of ethylene you make – you pretty much have no choice. And so a lot of work went into finding better ways of making use of all of this cheap propylene.
- Polypropylene (PP) was one way of making great use of propylene. Many R&D departments pushed the envelope on changing the properties of PP to make it of greater value in end-use applications. They then went to the autos companies and persuaded vehicle manufacturers to replace steel, aluminium and other polymers with PP for cost saving and performance reasons. PP is, for example, both light weight because of its density and also strong. So it is a safe material to use in front and rear bumpers, whilst boosting fuel efficiency. What a fantastic success story.
The same has applied more recently to polycarbonate (PC), which right now is very cheap to produce because China has basically destroyed the global phenol market. A cheap feedstock is thus once again an opportunity. PC makers have a chance to replace more glass, steel and competing polymers in autos by investing in PC application development.
Replacing glass in autos for weight reasons is an old story, but one that still has plenty of mileage left on the clock. But as electric battery-driven autos become much more cost effective and efficient, leading surely to a big jump in sales, here is another application for PC: Safety housings for the batteries, as PC is a good material to prevent injury in the event of a battery fire.
But the relationship between the petrochemicals and polymers industries and their auto-manufacturing customers is undergoing a 180 degree turnaround. This is the result of breakthroughs in material science.
Instead of our industry pushing polymers on to the auto makers, we will switch to a pull factor: The auto makers coming to us and saying, “These are the materials we want”. And they may not come to the petrochemicals business at all if the optimum materials required end up being super lightweight and cheap composites of say of steel and inorganic materials – or even recycled and bio-based materials.
Supercomputing is enabling new ventures, such as the California-based Materials Project, to compile the properties of all known compounds and predicted compounds. In other words, if a compound hasn’t even been made yet, a supercomputer can tell you whether it makes sense to make the compound by analysing loads, stresses, fluid dynamics, aerodynamics and thermal conditions etc. In the virtual world, you can make your new car and drive it around the streets to see how it performs, long before you even think about going into production.
What is worrying about the Materials Project is that its entire focus is on inorganic compounds. So far it has simulated 60,000 materials and in five years’ time says it will have reached 100,000.
Further breakthroughs in 3D printing technology will enable much more flexibility in using either single new materials or composites in auto manufacturing that could replace say PP and PC.
Researchers in Tennessee have developed an automated 3D printing technology called Big Area Additive Manufacturing. This enabled another group of US researchers, along with a machine-tool company, to take just six weeks to design, print and assemble a Shelby Cobra, a classic 1960s sports car.
Using 3D printing on site in a car factory lends itself very easily to switching between different materials to achieve performance gains. Switching between materials is much harder on a conventional outsourced injection-moulding line.
Why the desire for this 180 turnaround? Because in a deflationary world, the global autos market has essentially split into two distinct and very different value propositions:
- Making and selling millions of very cheap, but very reliable, longer-lasting and very fuel-efficient autos for all those struggling on reduced incomes in the West because of the end of the Babyboomer economic Supercycle. The same models will also sell extremely well in emerging markets now that the other big driver of the Supercycle – China – has changed economic direction. The auto makers will thus have to very push the manufacturing envelope to keep their costs to an absolute minimum. If they fail to do this, their very survival is in question.
- Making top range cars in much smaller volume, of course, but with higher margins, for the super-rich. These are the people who will be more or less immune from the New Normal. But even if it is about “wants” rather than “essential needs” for the super-rich, what they want is still undergoing important changes. For environmental reasons they will want more gasoline-efficient or diesel-efficient cars, or will instead opt for the new generation of electric battery-driven autos. They will also take a close look at what their car is made of. If it is made from “dirty old petrochemicals” that will not be good. But what if, by using all that clever supercomputer modelling, an autos manufacturer can replace crude oil-based polymers with recycled or even bio-based materials?
What will happen is that the “middle market” for autos will shrink. No longer will auto makers be able to get away with making money out of cars that are only reasonably cheap to make, reasonably well designed, reasonably cost effective and reasonably fuel-efficient. “Reasonably” or “average” will no longer be good enough. Only “outstanding” will work.
How does the petrochemicals industry respond to this challenge? See our new 5 Critical Questions study for guidance on what to do next.