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DaimlerChrysler: How Does a Global Corporation Tackle Sustainability?

Defining Sustainability: Part Seven of Eight

By Jack Rosebro

Mercedes-Benz F-Cell hydrogen fuel-cell vehicle. More than 100 Mercedes-Benz fuel-cell cars, trucks, and buses are operating worldwide.

Last week’s installment of the current Green Car Congress series on sustainability reports discussed South Korea’s aggressive push to create its own hydrogen economy, and Hyundai’s implicit part in that effort.

No less wedded together is the work of fuel-cell vehicle pioneer Mercedes-Benz—now part of DaimlerChrysler—with the hydrogen aspirations of Germany, a country whose government is understandably anxious to develop new sources of energy. The country’s capital, Berlin, now boasts two working hydrogen-refueling stations (earlier post).

While DaimlerChrysler subsidiary Mercedes-Benz no longer claims to have built the world’s first fuel-cell vehicle with its 1994 NECAR 1 van*, its worldwide fleet of hydrogen fuel-cell vehicles easily remains the planet’s largest at an estimated 110 to 130 cars, trucks, and buses (earlier post).

At one time, Mercedes confidently predicted that its annual fuel-cell vehicle production would reach 40,000 by 2005. However, the quests for reasonable unit costs, clean and cheap fuel production, decent onboard storage capacity and a fueling infrastructure have relentlessly vexed the best and brightest minds in the hydrogen and fuel-cell industries.

Taxpayer assistance is on its way, indirectly: earlier this month, Germany’s Transport Minister Wolfgang Tiefensee announced a commitment of €500 million (US$619 million dollars US) over the next ten years to help accelerate the commercial adaptation of hydrogen-fueled transportation (earlier post).

By comparison, the US government has committed $1.2 billion over the next five years to its Hydrogen Research Initiative with the goal of bringing hydrogen and fuel-cell technology from the laboratory to the showroom. The US Department of Energy (DOE), which oversees the program, has set 2015 as a target date to decide whether or not fuel cell technology is commercially viable.

Last week’s interim report from the European HyWays project concluded that the initial 5% target for hydrogen vehicle sales by 2020 in European markets may be too optimistic, with a market penetration of 3.3% and 0.7% being more likely (earlier post).

Schematic of the Mercedes-Benz Sprinter (Dodge Sprinter in the US) plug-in hybrid delivery van.

DaimlerChrysler—often referred to as DCX, from its NYSE stock symbol—isn’t betting everything on hydrogen, of course. The company is arguably closer than other automakers to producing a plug-in hybrid, having produced and distributed for evaluation gas- and diesel-powered plug-in hybrid versions of its popular Sprinter commercial van.

DCX is reportedly “close to a decision” as to whether or not to commercialize the vehicle, according to a source familiar with the project. And despite its experimental forays into hybrid powertrains over the last eight years, Mercedes-Benz is, of course, well known for favoring clean diesel technology, especially its Bluetec urea-injection system (earlier post).

DaimlerChrysler released its first sustainability report, titled a “Sustainability Profile”, in 2005. The production of such a report has freed the company to position its annual Environmental Report as a collection of essays and articles, leaving the Sustainability Profile to carry the hard numbers. A reading of both reports paints the overall picture of the DCX vision for sustainability.

Design for Environment. DaimlerChrysler’s Design for Environment (DfE) department develops life cycle assessments (LCAs) and evaluates component and vehicle concepts for Mercedes-Benz passenger cars and commercial vehicles. The practice is expected to spread to other DCX brands.

DfE starts, as it must, at the very beginning: by analyzing raw materials. Those with a low consumption of resources, outstanding recycling properties, below-average energy requirements and emissions in their manufacturing, processing and use are seen as more favorable to the construction of the Stuttgart-based brand’s passenger cars.

Analyses continue, examining the production process associated with the creation of each part from its respective feedstock. Proposed vehicles are then tested to ensure that they can be disassembled easily and thoroughly. The 2004 Mercedes-Benz A-Class thus was able to meet the recycling rate of 85% mandated by the European Union in 2006.

The current A-class is on target to meet the EU’s planned 2015 recycling target of 95%. Those regulations allow up to 10% of the vehicle to be incinerated to produce energy; as long as the energy is recaptured, the process qualifies as recycling.

Bioparts galore: Mercedes-Benz S-Class automobiles alongside the parts of the vehicles that are made from renewable materials.

DaimlerChrysler’s High-Fiber Diet. The amount of renewable raw materials used in DaimlerChrysler vehicles increases every year. The primary benefit, according to the DfE analysis, is the saving in energy needed—and thus greenhouse gases produced—to make a given part.

Many renewable parts projects have a social aspect as well. For example, the POEMA (Poverty and Environment in Amazonia) project in Brazil employs former subsistence farmers to produce Mercedes-Benz seat cushions out of normally discarded coconut fiber. Honda and Volkswagen have also approached POEMA for parts, and the POEMAtec factory now makes its prototype dies from resins that are sustainably harvested from the rainforest.

Workers in Brazil sort coconut husks to be used in seat cushion material for DaimlerChrysler products, as part of the POEMA (Poverty and Environment in Amazonia) program.

DCX has reported that coconut fiber-based parts it uses cost about 5% less than the parts they have replaced. No great surprise there—coconut fibers have been used to make auto interior parts since the 1930s, and were phased out as petroleum-based products became cheaper.

On the island of Leyte in the Philippines, the Abaca Project has been producing natural abaca fibers to replace the use of fiberglass and plastic in A-Class models since 2004. Daimler Chrysler also helps to support the Abaca Processing Center at Leyte University to verify that the abaca fibers are being harvested sustainably. The charcoal filter that absorbs fuel evaporative emissions in the 2007 Mercedes S-Class is made from olive pits that have been processed into coke.

Tripping Over Definitions. The DCX worldview of the corporate “triple bottom line” (economic, environmental, and social) concept of sustainability is that processes should be (1) profitable, (2) environmentally responsible, and (3) create employment in poorer parts of the world. At the end of the day, however, sales must be made, and a global corporation invariably responds to the peculiarities of each market.

The market speaks: after dropping for several years, fuel consumption of Dodge light trucks sold in the US spikes in 2004, thanks in part to consumer choices.

One example: for all of DaimlerChrysler’s fuel-sipping technologies available to European customers, its American-based subsidiary Chrysler takes a decidedly different tack in stateside markets.

No current Chrysler vehicle can better the EPA rating of 19 miles per gallon city/22 miles per gallon highway that its base-model PT Cruiser manages. Keep in mind that the most efficient Mercedes-Benz A-class—a very different vehicle, to be sure—burns fuel at less than half the rate of the PT Cruiser.

Chryslers’s new Aspen full-size SUV on the stage at NAIAS in January.

Chrysler’s upcoming 2007 Aspen SUV—marketed with tag lines such as “decadence without shame” and “jaw-dropping MPG”—is EPA–rated at 15 MPG in the city, 20 on the highway—that is, if it is ordered with its most fuel-efficient engine and without four-wheel-drive. The Aspen’s fuel tank holds 27 gallons of gasoline.

While one must acknowledge that different markets require different products, any global company must implement its best environmental practices worldwide if it is to hope to make significant progress toward the Holy Grail of sustainable development. Given that Chrysler describes the achievement of 15 miles per gallon as “jaw-dropping,” it would seem that DaimlerChrysler has yet to apply its best practices and priorities to all of its markets.

Moving Forward, Slowly. Though most automakers claim to view sustainability as a three-legged stool (environment, economic, and social), too often they forget that even that simplistic definition of sustainability implies that all three “legs” must be equally valued.

Comparing a company’s valuations of each component of the “triple bottom line” is difficult, but DaimlerChrysler is not alone in giving more weight to the economic aspect of sustainability.

Witness the many different ways in which automakers configure otherwise identical engines to meet the myriad of emissions standards in different countries. No automaker is willing to step forward and commit to building all engines to the highest and cleanest standard. Put another way, the so-called environmental policy of the world’s automakers is, in some aspects, to build the vehicle “as bad as the law will allow.”

The social section of DaimlerChrysler’s Sustainability Profile can be said to be more unflinching than most. Lingering a bit longer than usual on the topic of ethics, the report faithfully describes various ongoing allegations made against the company’s predecessors, claiming forced labor during the Nazi regime, support of the apartheid regime in South Africa, collaboration in the murder of ten Mercedes-Benz of Argentina executives by state security forces during the 1970s, and the production of land mines.

Such mention, brief though it may be, is a welcome departure from the typical sunny portrait of a company’s participation in various social charities and causes.

Even as the auto industry struggles with its own vague and shape-shifting concept of sustainability, automakers are increasingly employing a new buzz-phrase in the hopes of gaining some street cred.

Transportation design is out, “sustainable mobility” is in. The term suggests a new paradigm in lieu of the developed world’s blueprint of transportation as built around the private motorcar, and the concept of sustainable mobility is being taken seriously, particularly at transportation design schools such as California’s Art Center College of Design, but as of yet, its meaning, even as an ideal, remains apparently elusive to the automakers who use it.

A recent presentation by Dr. Rainer Balbach, Senior Manager, Mercedes Car Group Purchasing, described the global sustainability strategy of DCX as “on the way to Sustainable Mobility”, and defined key elements of sustainable mobility as:

  • Vehicles and powertrain
  • Traffic system and infrastructure
  • Consumer and consumer behavior
  • Renewable resources and fuels

DaimlerChrysler is not alone in its pledge to achieve sustainable mobility, and it is likely that the concept will be central to the sustainability strategies of many—if not most—automakers. We look forward to the day when those companies decide for themselves—and tell us—just what they think that concept means, and how they plan to transform it into reality.

DaimlerChrysler (DCX) oversees passenger-car brands Chrysler, Dodge, Jeep, Mercedes-Benz, Smart, and Maybach as well as commercial vehicle brands Mercedes-Benz, Freightliner, Sterling, Western Star, Setra, Thomas Built Buses, American LaFrance, and Orion. DCX employs about 385,000 employees and has around one billion shares of common stock circulating worldwide.

Graph showing emissions life-cycle analysis of Mercedes-Benz A-Class. Emissions created by the production of its fuel are much greater than that created by the actual usage of the vehicle—with the notable exception of carbon dioxide.

Next week: General Motors and Toyota Square Off Over Sustainability

*Among early fuel-cell vehicle pioneers, General Motors unveiled an experimental hydrogen fuel-cell powered Corvair van in 1966. Allis-Chalmers displayed a working hydrogen fuel-cell tractor—now in the Smithsonian Institution—in 1959, and both a fuel-cell forklift and fuel-cell golf cart in 1960. Inventor Karl Kordesch converted a motorcycle to run on an alkaline fuel-cell in 1967, and an old Austin A40 car to alkaline fuel-cell power in 1970. (Back to text.)



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