Automakers are racing to meet an aggressive deadline for future fuel efficiency standards. By 2025 automakers are required to produce vehicles that can achieved 54.5 miles per gallon. That has companies like Ford (NYSE: F) taking out heavier metals like steel and replacing it with lighter aluminum in its wildly popular Ford F-150 pickup. Ford, however, is not stopping there in its effort to produce greener vehicles, as its next move has it adding renewable wood fibers to the 2014 Lincoln MKX.
Growing a sustainable advantage
Ford went on a three-year search to find a lighter replacement for fiberglass. Its collaboration with Weyerhaeuser (NYSE:WY) and Johnson Controls (NYSE:JCI) believes that it has developed the ideal solution by using natural fibers that are harvested from trees. These all-natural, renewable fibers replace traditional glass fibers to create what is being called "cellulose reinforced polypropylene," though Weyerhaeuser sell the product under the THRIVE brand name.
This has the potential to be a game-changing development for two reasons. First, natural fibers from harvested trees are renewable and in many cases the fibers will be harvested from byproducts that would otherwise be wasted. Further, the new fiberglass replacement is 6% lighter than standard fiberglass, which will help to increase fuel efficiency.
Building a thriving product
Working with Weyerhaeuser to create a sustainable wood-based replacement product made a lot of sense for Ford. Weyerhaeuser isn't just one of the largest forest product companies in the world, but it is also internationally recognized for its sustainability practices. Because of this, the company can ensure that it can meet future demand as it plants more trees than it harvests.
The renewable nature of the product hints at its long-term potential. However, Weyerhaeuser sees THRIVE composites initially being used to make automotive parts and household goods. After that its future uses could include office furniture, kitchenware, consumer appliances and industry goods. Because of the broad potential applications of the product, Ford thinks it can eventually be used for exterior and under-the-hood applications as it grows to become a greater portion of each car.
Weyerhaeuser and Ford see such a far reaching future for THRIVE due to the product's combination of economical production, low mass, strength and flexibility. Further, the product can be made faster and with less energy than traditional fiberglass materials.
Ford's drive to go green
Ford is doing everything it can to reduce the weight of its vehicles as that is one of the keys to fuel efficiency. A recent study showed that a 10% reduction in a vehicle's weight yields a 3%-4% reduction in fuel consumption. This is why we are seeing Ford focus on reducing the weight of its vehicles.
Lighter metals like aluminum are providing the most immediate boost. It can reduce the weight of an average midsize car by nearly 12% and those saving really add up in larger vehicles like trucks. For example, Ford was able to shave a few hundred pounds off of the F-150 thanks to aluminum. That change, along with a new engine has the potential to save Ford F-150 customers a staggering 115 million gallons of fuel. That's one-tenth of one percent of the entire country's fuel consumption. That's why it is easy to see how these moves to add lighter materials like aluminum and wood fibers will have a meaningful impact on fuel consumption in the U.S.
Ford is making some gutsy moves. However, the data is pretty compelling that these moves will really translate into real tangible fuel savings for Ford customers. That puts Ford on the pathway to a pretty compelling future as its drive to go green should yield substantial profits for its investors.
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Matt DiLallo has the following options: long January 2016 $15 calls on Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.