Revolutionizing the Auto Industry

Written By Brianna Panzica

Posted August 1, 2011

It’s been suggested by campaigning politicians and clean energy advocates alike that the U.S. would be wise to decrease dependence on foreign oil.

On Friday, the Obama administration decided on a plan that has the potential to do just that.

And it’s not by increasing domestic oil production – instead, it would be done by reducing demand.

The Obama administration and major automakers signed a plan last Friday that would raise Corporate Average Fuel Economy (CAFE) standard to 54.5 miles per gallon by 2025.

Currently, that standard is 27.5 mpg.  Doubling it, according to the Baltimore Sun, would actually decrease foreign dependence by 40%, or 23 billion gallons per year.

And the article puts this in perspective even more – we would save the equivalent of the amount the U.S. imported last year from Saudi Arabia and Iraq combined.

The standard agreed upon was the middle ground between numbers advocated by environmental groups, which wanted 62 mpg, and the Detroit Three automakers, which wanted between 42.6 and 46.7 mpg, reported CTV News.

But how can companies increase this standard?

For starters, we may see less large cars on the road. Big trucks and SUVs are known to be gas-guzzlers, and though they would not disappear as they are in demand, they may dwindle.

But even more likely is the increase in electric and hybrid cars. CTV News reports that currently, electric and hybrid car sales make up just 3% of total car sales. But by 2025, it is expected that hybrid sales will hit 50%, while electric cars will be up to 10%.

Part of the low sale rate is due to the costs of owning such a car. Though they cut down on gas, they are expensive.

That’s why companies involved in electronic supplies, battery making, and engine production are likely to see huge increases as automakers move toward the new standard, says 24/7 Wall St.

The article names specific companies that will likely see a huge boost in profits.  Maxwell Technologies Inc (NASDAQ: MXWL), a company specializing in energy storage, is one of these.

Also named are Johnson Controls Inc (NYSE: JCI), creator of lithium-ion batteries for hybrid and electric vehicles, and BorgWarner Inc (NYSE: BWA), an auto parts supplier.

Green Energy News also mentioned a startup company, Xerion Advanced Battery Corporation, that has an innovative new StructurePore battery technology.

This technology allows batteries to recharge quickly – even within minutes – and once it becomes commercial it has the potential to create more efficient electric car batteries.

Over the next fourteen years, these companies could be seen growing exponentially as their technologies advance to adapt to the new CAFE standards.

That’s all for now,


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