Seeking Alpha

Alcoa hits 52-week high as excitement builds over future of aluminum cars

  • Alcoa (AA) shares hit a 52-week high today amid reports that Ford's (F) lightweight Fusion concept car could provide a profound impact on aluminum demand and aluminum producers’ profits.
  • The prototype unveiled Tuesday is ~800 pounds, or 25%, lighter than the regular Fusion model due to increased use of aluminum; Ford isn't selling the car for now, in part because the lighter materials are more expensive, but Sterne Agee says the vehicle confirms its "thesis of the automotive industry moving down an aluminum adoption curve beyond expectations."
  • Given the momentum of automotive aluminum announcements over the last six months, Sterne Agee believes industry estimates for ~1.2M tons of automotive aluminum sheet usage by 2025 - as well as Alcoa's $1.3B revenue assumption for 2018 - are "very conservative."
Comments (26)
  • Realtor_k
    , contributor
    Comments (172) | Send Message
     
    Didn't GM cars/trucks experiment with aluminum frames and body in the late 80s and 90's?

     

    Only to find out that cost of ownership was more expensive because replacement parts were equally expensive and harder to source (e.g. inventory/logistics issue).

     

    Also paint, bolts and connectors for aluminum body was more expensive. I don't remember why, though. Another failed GM experiment.

     

    I'm searching for the GM article right now.... will let u know.
    5 Jun, 08:03 PM Reply Like
  • King Rat
    , contributor
    Comments (725) | Send Message
     
    Seems like benefits to fuel economy and performance with setback of accident safety, though other sources say aluminum is more energy-absorbent than steel. Fuel economy, higher MPG for CAFE may be the big impetus here.

     

    This bit from NHTSA in 1997:
    http://1.usa.gov/SdGhwz

     

    Aluminum and Plastic Exterior Components: Lighter vehicles built with aluminum and plastic may create additional safety problems due to the basic physics of a heavy object crashing into a lighter object. These lighter vehicles will also have engines with higher power output due to improved efficiency and lower weight thereby maintaining present day performance with increased fuel economy.
    5 Jun, 09:51 PM Reply Like
  • Tdot
    , contributor
    Comments (4045) | Send Message
     
    Most automakers have vehicles on the road with an assortment of body panels made of aluminum, typically hoods and trunks, sometimes fenders, occasionally doors and such. Some also use aluminum parts in chassis / suspensions, like wishbones and A-arms, not to mention wheels and engine blocks.

     

    It has been easier to use sheet aluminum bodies in upscale models due to the selling price premium and 'prestige' of having a lightweight 'sporty' model. Some automakers did better than others, and some customers benefited from the aluminum parts (no visible corrosion or rust-through), and some perhaps didn't (crash parts replacements). But this is mostly due to the rather longstanding paradigm of using stamped sheet steel for body panels. Steel is "cheap" because steel is the first choice at high volumes, while aluminum (and plastic) are occasional alternatives.

     

    The steel-based paradigm may be shifting. With Ford introducing the next F150 with most of the upper body being aluminum, and entertaining the idea of spreading aluminum into other high volume vehicle lines, aluminum may finally become truly competitive with steel on pricing, and all automakers could benefit from a little competition between the materials.
    6 Jun, 02:46 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    http://bit.ly/1paeKbn

     

    http://nyti.ms/1at0QbJ
    6 Jun, 09:33 AM Reply Like
  • Ryandan
    , contributor
    Comments (1614) | Send Message
     
    If people think that adding an entire truck bed in aluminum is a "cake walk" just look at the "class action" against Ford for just hoods. Ford acts like it just invented aluminum, when it's been using aluminum for years.

     

    Nothing like putting a 1000 aluminum truck beds out there for a year for testing and building confidence with customers. Nope - just make the change. Gee, wonder if Mulally could see the disaster coming? He decided on unemployment before the first truck was made. I'm guessing he saw some internal documents....

     

    If the F-150 goes down disaster lane - Ford goes with it.
    10 Jun, 09:00 AM Reply Like
  • TexDan
    , contributor
    Comments (54) | Send Message
     
    A dividend hike would build excitement in my future....
    6 Jun, 11:07 AM Reply Like
  • newnnly
    , contributor
    Comments (246) | Send Message
     
    @TexDan

     

    I agree. I'm looking for price appreciation on this stock long term. But I primarily like to reinvest dividends in my positions. Usually I like to stay above 2% yield and AA would be even more attractive to me with a higher dividend.
    7 Jun, 10:02 AM Reply Like
  • Alex_80
    , contributor
    Comments (61) | Send Message
     
    Will you subsidize them to do it?
    12 Jun, 01:08 PM Reply Like
  • blackslax
    , contributor
    Comments (15) | Send Message
     
    When 2 dissimilar metals come in contact, they can form a 'battery' due to the different electrode potentials. This is called galvanic action. To prevent this action a 'buffer' material is usually added between the two materials to isolate one from the other.
    6 Jun, 11:36 AM Reply Like
  • Suspect
    , contributor
    Comments (16) | Send Message
     
    And your point is?
    6 Jun, 12:22 PM Reply Like
  • Suspect
    , contributor
    Comments (16) | Send Message
     
    And your point is?.
    6 Jun, 12:31 PM Reply Like
  • Tdot
    , contributor
    Comments (4045) | Send Message
     
    Do you think this is the first time automakers have used aluminum in body panels? Many vehicles come with aluminum hoods and trunks, and sometimes on fenders and doors.

     

    They do employ engineers at automakers these days, although sometimes they do screw up (ignition switches).
    7 Jun, 08:39 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    Yup,

     

    And sometimes they screw up REALLY big. (ignition & cruse control switches) No drunken driver necessary.

     

    http://nyti.ms/1kEhvly

     

    http://bit.ly/1paeKbn
    9 Jun, 07:43 AM Reply Like
  • Ryandan
    , contributor
    Comments (1614) | Send Message
     
    Don't forget the spark plug disaster crawling up the back of Ford right now. That one is going to hurt.....
    10 Jun, 09:02 AM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    Spark plugs

     

    http://bit.ly/1l48mgK

     

    http://bit.ly/1l49e57

     

    Mullally (Outsourcer in Chief) just like with Boeing, has been out sourcing aluminum engine castings to crappy, financially struggling companies like JL. French & Nemak for years. Looks like it's coming back to bite them.
    10 Jun, 09:52 AM Reply Like
  • Ryandan
    , contributor
    Comments (1614) | Send Message
     
    The story shows Ford as being just as "anti-customer welfare" as GM. We know there's a problem - we're not going to cover it.

     

    If you have ever changed a spark plug this service bulletin from Ford is hilarious. You need everything but an "Exorcist". Bring the engine up to room temperature........(http://bit.ly/1oIzsQz)

     

    "Steve Creamer says he always has changed his own spark plugs, averaging under $30 plus an hour or two of his time. He says he was floored when he found out he couldn't do the same for his 2005 Ford F-150. Local garages have quoted him $700 if no plugs break, up to $3,500 if they do." from (http://bit.ly/1l48mgK)

     

    That's my kind of company..................
    10 Jun, 10:10 AM Reply Like
  • Alex_80
    , contributor
    Comments (61) | Send Message
     
    The point is quite obvious: erosion problem. Are you an engineer? Probably not.
    12 Jun, 01:03 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    The Grand Canyon has erosion.

     

    You mean corrosion? As in galvanic action from contact of dissimilar metals?
    12 Jun, 01:06 PM Reply Like
  • davenjaneice@charter.net
    , contributor
    Comments (7) | Send Message
     
    The wider use of aluminum in vehicles is close related the the strength gained by aluminum/titanium alloys.
    THE GGUmpa
    6 Jun, 01:09 PM Reply Like
  • averages they've
    , contributor
    Comment (1) | Send Message
     
    To see where this may go, look at Paccar, Peterbilt cab, suspension, battery box, fuel tanks , frame crossmember, fifth wheels , wheels, axle hubs , all Aluminum, fast forward to this in automotive and the 14 million annual North American sale rate,you may see why this can become a game changer
    9 Jun, 09:09 AM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    F more fuel mileage misrepresentation settlements as I have been warning for weeks ECO-Turd
    12 Jun, 02:18 PM Reply Like
  • RSRinehart
    , contributor
    Comments (414) | Send Message
     
    FWIW -- We own a new Ford Escape EcoBoost (almost a year) and mileage has been as good or better than advertised. Around town, on the highway, mixed use, or longer trips doesn't matter. We don't baby it; my wife and I are both rather aggressive drivers. Very satisfied with the Escape. RSR
    12 Jun, 03:59 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    What gets you more excited about the Escape?

     

    The 10 recalls, 34 service bulletins, or the disastrous crash tests.

     

    http://nydn.us/1g8mhRS

     

    The most recent one where the doors open up themselves seems pretty intriguing.

     

    http://nbcnews.to/1hl9xKr
    12 Jun, 04:20 PM Reply Like
  • RSRinehart
    , contributor
    Comments (414) | Send Message
     
    I've received three recall notices so far. They will be dealt with. It's the way of the world any more. Recalls are a fact of life, unless maybe you're GM.

     

    10,000 miles, no problems. I'd buy another one in a minute. RSR
    12 Jun, 08:56 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    Recalls like GM? Like cars from 10 years ago, vs ones on dealer lots now?

     

    You mean like really big ignition switch (7X times bigger than GM's) recalls, that don't even need drunk
    drivers?
    http://nyti.ms/1kEhvly

     

    Are you serious?

     

    http://bit.ly/1ruceB3
    http://bit.ly/1p1CuP0
    http://bit.ly/1sKC8Mv
    http://onforb.es/1g8F9pt

     

    http://bit.ly/1sKFuPr

     

    Good luck to you

     

    http://bit.ly/1xR2v8T
    http://fxn.ws/1gx6ZGj
    http://bit.ly/1xR3aqP
    12 Jun, 09:11 PM Reply Like
  • RSRinehart
    , contributor
    Comments (414) | Send Message
     
    You missed the irony. Good luck to you too.
    12 Jun, 09:52 PM Reply Like
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