A Lightweight Investment With Big Dividends: DOE, Alcoa, and Aluminum Vehicles

March 27, 2015 | 10:03 am
Josh Goldman
Former Contributor

Good news has emerged from the halls of the Department of Energy (DOE). Yesterday, DOE announced that Alcoa Incorporated, a “global leader in lightweight metals technology, engineering, and manufacturing,” has been awarded a $259 million loan guarantee under the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. This capital will enable Alcoa to add 200 jobs at a Tennessee facility that manufactures the type of high-grade aluminum automakers are using to improve vehicle fuel efficiency and help drivers save money, cut emissions, and reduce oil use.

What is the ATVM?

The ATVM Loan Program is a $25 billion direct loan program Congress funded in 2008 to help automakers develop the technology needed to boost vehicle fuel efficiency and performance. Think stop-start technology, lighter but stronger vehicle frames, higher compression engines, and batteries for electric vehicles.

Loan program recipients have included several major automakers that have used these loans to improve the vehicles they produce. Ford, for example, received $5.9 billion to upgrade factories across five states to produce more fuel-efficient models, and Nissan is using a $1.4 billion loan to construct one of the largest advanced battery manufacturing plants in the United States – capable of producing 200,000 batteries each year.

These companies have been paying the DOE back on time. Tesla, for example, repaid the entire balance on a $465 million loan nine years earlier than originally required.


Why is the loan to Alcoa a big deal?

Alcoa produces high grade aluminum that can replace the heavier slabs of steel used in many auto parts, making a vehicle lighter and more fuel efficient without sacrificing safety. Ford made some recent headlines by building the 2015 F-150, one of the top selling full size pickups in the country, with an all-aluminum body.  This 700-pound-lighter F150 will reduce fuel consumption by 14 percent compared to the previous most efficient F150, and my colleague Don found that this improvement can add up to fuel savings of nearly $400/year, assuming $3.50/gallon gas and 15,000 miles per year of driving.

Using aluminum not only helps improve fuel economy and thus reduce driving-related emissions, it can also help reduce the lifecycle, or total, emissions of a vehicle. A 2014 Oak Ridge National Laboratory study concluded that, even though producing aluminum creates slightly more emissions compared to producing a comparable grade of steel, aluminum still “offers the lowest life cycle energy and CO2 impact.” Therefore, the emissions reductions gained from using the lighter material more than offset the slightly larger amount of energy that is needed to produce aluminum.

The DOE loan to Alcoa will help produce aluminum for similar versions of this Ford 150 that will help improve fuel economy and reduce emissions. Image via Wikimedia Commons.

Other automakers are following suit

Along with Ford, other automakers are beginning to realize the fuel saving and emissions benefits of aluminum. For example, the latest Range Rover cut 926 pounds from its predecessor, Jaguar touts that a lightweight aluminum body with “high torsional rigidity” is the ideal platform for their F-Type sports car, and the 2013 Cadillac ATS uses aluminum in its hood, transmission housing, and strut towers.

So, kudos to DOE and Alcoa for completing this loan application. After a period of relative stagnation, Secretary Moniz made some changes to the ATVM program in April 2014; it’s good to see that these modifications have allowed the program to continue supporting the transition to more fuel efficient vehicles that are helping drivers save money, cut emissions, and reduce oil use.