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Startup supplier Tula Technology worries about CAFE rollback

The 2019 Chevrolet Silverado's engine, below, uses Tula Technology's Dynamic Skip Fire feature to boost fuel economy.

WASHINGTON — Tula Technology Inc. is a late-stage powertrain startup that is finally producing revenue, hitting the market with innovate software designed to optimize the power output and fuel efficiency of internal combustion engines.

The company's algorithm selects the best combination of cylinders to fire to match torque demand at a given moment, delivering a 15 to 20 percent efficiency boost compared with conventional engines. The Dynamic Skip Fire technology just launched into full production with General Motors which will include it in 2019 Chevrolet Silverado and GMC Sierra pickups and roll it into full-size SUVs next year.

Tula, a 60-person outfit in Silicon Valley, is on the verge of landing contracts with other automakers and hiring. But growth could be jeopardized if the Trump administration gets its way in weakening Obama-era fuel economy standards.

The 2019 Chevrolet Silverado's engine, below, uses Tula Technology's Dynamic Skip Fire feature to boost fuel economy.

CEO Scott Bailey, a former Delphi Automotive executive, worries that without the pressure to meet the aggressive targets laid out in 2011, customers may be more conservative and dial back orders for advanced fuel-saving technologies. And that means a slower return on investment for Tula.

"I spent my whole life in the auto industry," Bailey told Automotive News. "Implementing a new technology is not trivial. It takes time, a lot of engineering effort and capital. Throw a lot of potential uncertainty and market risk on top of the technology risk, and I think what you'll end up with is, 'Nah, I don't think I'm going to go down that path.'?"

The current targets, implemented in 2012 under an agreement among federal regulators, automakers and California, would result in fleetwide fuel efficiency rising steadily to 46.7 mpg in the 2025 model year, according to the latest estimates. The EPA, which regulates greenhouse gas emissions, and NHTSA, which regulates safety and fuel economy, this month issued a proposal to freeze fuel economy standards at the 2020 level, rather than continue the graduated increases.

According to an internal EPA document made publicly available last week, the administration's proposal could result in the loss of up to 35,000 jobs per year. Suppliers such as Tula are most likely to feel the pinch because they stuck their necks out for automakers by investing in r&d for advanced fuel management systems, emissions controls, lightweight materials, electrification and other advanced technologies.

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Predictable rules

While car companies lobbied President Donald Trump to revisit the corporate average fuel economy rules in hopes of winning some compliance flexibility, suppliers have pushed to prevent any significant changes that would undercut their investments. They argue that the fuel economy mandate has contributed to job growth in automotive technologies and that they need predictable rules to justify investments.

According to a report last year from the BlueGreen Alliance, a coalition of labor and environmental groups, 288,000 supplier jobs were tied to making components and technology that improve fuel efficiency.

"We're still confident that we can continue a dialogue with the administration and California to communicate the industry's need for progress with the standards," said Laurie Holmes, senior director of environmental policy at the Motor & Equipment Manufacturers Association. She said her optimism is based on the industry's united front in seeking a single national program and compliance flexibility, but the Trump administration has tended to ignore the auto industry's appeals for modest tweaks to trade agreements and the CAFE rules.

Bailey is convinced the CAFE rules played a major role in GM's 2012 decision to invest in Tula, become a development partner and license its technology. Dynamic Skip Fire is well-suited to GM's strongholds: full-size pickups and SUVs, powered by big V-8 engines.

Tula did proof-of-concept work on a GM Yukon Denali with a V-8, and approached GM when it was comfortable with the results. During a two-year advanced development phase, GM incorporated the fuel management technology in one of its engines. Once the automaker was convinced it was ready, it coordinated with suppliers to retool the engine heads so individual cylinders could be deactivated and then scaled for production — a process that took another three years.

Support from GM

The program has helped GM keep pace in terms of efficiency with Ford, which switched to aluminum bodies for its current-generation F-150, and Ram, which has integrated a mild hybrid system into some versions of its latest 1500 pickup.

"The truth of the matter is, GM played a really large role in our ability to commercialize our product," Bailey said. "They might have done that anyway, but I think it's highly likely that the federal standards that were in place helped facilitate their interest in exploring a new technology."

Absent aggressive fuel economy rules, Tula might have moved overseas, where governments are pushing automakers to develop clean cars.

"If we take away that pressure, we'd be struggling to get traction in the U.S.," he said. "And perhaps the concept of Dynamic Skip Firing never makes it, or alternatively, since we believe in the concept, we would have just turned our attention immediately to Europe or Asia and focused efforts there. And perhaps Tula ends up growing up on another continent.

"But I know it was certainly beneficial for us to have a strong interest from a domestic manufacturer," Bailey said.

"And as a small company, it's a lot easier to work in your backyard than a couple continents away."

Putting on a broader policy hat, Bailey expressed concern that loosening fuel efficiency and emissions rules would erode U.S. leadership in developing advanced vehicle technologies.

"The home market is where a lot of early development takes place and new technologies tend to be introduced first by global automakers," Bailey said. "They start at home and then move into other regions. And if home isn't demanding any requirements or new aggressive development, that's not a good thing.

"Independent of what you may think about global warming," he added, "it makes little sense to abdicate a strong competitive position to others for no apparent gain."

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