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Tennessee’s Auto Industry Driven by R&D Investments

Tennessee not only hosts a critical mass of auto production, it's redefining the industry through innovation.

By Jessica Walker Boehm on November 5, 2014

The future of the automotive industry is taking shape at the Carbon Fiber Technology Facility at the Oak Ridge National Laboratory (ORNL) in Tennessee. Established in 2013, the $35 million, 42,000-square-foot facility provides researchers with a test bed for developing less expensive, better performing carbon fiber materials and manufacturing processes.

“Our carbon fiber facility is going to help lead a revolution, primarily in the automotive markets,” says Tom Rogers, ORNL’s director of industrial partnerships and economic development.

Operated in conjunction with the Department of Energy as part of its Clean Energy Manufacturing Initiative, the facility includes a highly flexible, highly instrumented 390-foot-long carbon fiber processing line with the capacity to produce up to 25 tons per year of the strong, lightweight material for manufacturers to use to develop more fuel-efficient designs.

Beyond the ORNL, automotive innovation is revving up in Tennessee. The state is known as the heart of the Southeast’s Automotive Alley, not just for its critical mass of auto-related production, but also for its role in redefining and reshaping the industry.

Ranked as the top state for Automotive Manufacturing Strength for the fourth consecutive year by Business Facilities, Tennessee’s automotive industry employs 111,000 at more than 900 establishments and accounts for more than one in every three manufacturing jobs in Tennessee. 

The state is a leader in public sector R&D for the industry, ranking second among automotive manufacturing states and eighth in the nation for this type of R&D spending. Anchoring this innovation network is a deep roster of growing R&D assets at ORNL, the University of Tennessee, Vanderbilt University and other research institutions, giving the state an important base for cultivating a technology advantage.

Tennessee’s higher education institutions also contribute significantly to innovation within the auto industry, supplying a wealth of engineering talent. Engineering completions in Tennessee increased by 22 percent between 2008 and 2012.

At ORNL, Volkswagen has a full-time employee researching carbon fiber, and VW is one of 58 members of the lab’s Carbon Fiber Consortium along with Ford, GE and others. The auto companies are looking for lightweight technologies that will help them meet new stringent efficiency requirements.

“The only way to get to the new standards is to include carbon fiber components, and manufacturers have announced plans to include carbon fiber composites in 2018-2019 model year vehicles,” Rogers says.

The facility’s carbon fiber will be used in a 3D-printed car, designed by the Knoxville shop of Local Motors, at the Chicago International Auto Show in February 2015.

Another facility supporting automotive R&D at ORNL is the National Transportation Research Center. Jointly managed by ORNL and the University of Tennessee, the center offers industry, academia and other agencies access to state-of-the-art technologies, equipment and instrumentation, and computational resources to advance transportation technologies.

ORNL research staff have expertise across a range of disciplines, from fuel to engines and power systems, emissions, and vehicle safety. The center is helping the auto industry achieve up to 50 percent less fuel consumption through advanced materials, drivetrains and manufacturing methods, says Ronald Graves, director of sustainable transportation.

Driving Investment

Innovation is also the driving force behind multimillion-dollar investment at Tennessee’s three major assembly plants – General Motors in Spring Hill, Nissan in Smyrna and Volkswagen in Chattanooga – and a catalyst for growth among state’s burgeoning network of Tier 1 and Tier 2 suppliers.

In 2014 GM announced plans to invest $185 million to make its new line of small gas engines in Spring Hill, which already produces several other engines in GM’s Ecotec portfolio.

“The new Ecotec engine family represents the most advanced and efficient small displacement gasoline engines in Spring Hill’s history,” says Arvin Jones, GM North America manufacturing manager. “It was a good decision to produce this powertrain in Spring Hill.”

GM will soon relocate assembly of the next-generation Cadillac SRX from Mexico to Spring Hill.

Nissan’s Smyrna plant is outpacing all other U.S. plants in production due to rising demand for vehicles assembled there, including the Altima, the Rogue compact crossover and the all-electric, zero-emission Leaf.

Home to the world’s largest lithium-ion battery plant as well as a painting facility that sets new standards for energy efficiency, the plant has attracted billions in investment and doubled employment to 8,000 over the past few years.

“The Smyrna plant has grown significantly – and transformed from a domestic manufacturer to a global one,” says Justin Saia, a Nissan spokesperson.

Volkswagen is investing $900 million to expand its sole U.S. manufacturing facility in Chattanooga, adding production of a new midsize SUV and creating a research and development center designed to incorporate customer wishes into new designs. The expansion will create 2,000 additional jobs.

“This vehicle will be a true American car,” says Volkswagen chairman Martin Winterkorn. “Big, attractive and with lots of high tech on board.”

Accelerating Innovation

Fueling the momentum of research and development across Tennessee’s auto industry are programs like the AutoXLR8R, a mentor-driven accelerator that helps entrepreneurs transform ideas applicable to the auto industry into commercially viable businesses. The program is housed at the Southern Middle Tennessee Entrepreneur Center in Columbia – one of nine regional entrepreneurship centers statewide.

“If they are companies with commercial potential, we’ll start helping them get experience in what it takes to start a company and build it into an investable story,” says Jack Sisk, AutoXLR8R program director.

Participating in AutoXLR8R proved invaluable for Josh Kapellusch, founder of Chattanooga-based Mach Fuels, a company that converts fleet vehicles to clean, low cost propane and liquid propane fuels. Kapellusch spent his youth helping his grandfather deliver home heating fuels and combined that background with his military training and degrees in business and entrepreneurship to launch his startup.

After 13 weeks in the course, he refined his pitch so well that his company is already generating revenue. Kapellusch credits the program with helping him shape his story in a way that was compelling for investors and customers.

“The accelerator helped us focus our business model on what we could do for revenue today,” ​Kapellusch says.

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