Aluminum automotive applications (1990s Ford Taurus vs. Toyota Camry)

But they were trying to make a Ford Taurus that would compete with a Toyota Camry made out of steel. I used to give this talk that you'll never see that in the next 25 years. At the time, Alcoa was working very closely with Audi to make the first all-aluminum Audi. The senior Executive Vice President of Alcoa, Peter Bridenbaugh, was a graduate of this department, and at various times I gave talks and he'd get up and talk about how they're building an all-aluminum Audi. Well, anybody can build an all-aluminum car if it costs $90,000. But if you're going to buy a $20–25,000 Ford Taurus, I don't think it's going to be all aluminum, okay. I kept saying that for about five or ten years. Peter and I talked about the price of gas. It gets down to: all-aluminum cars in 1990 made no sense unless you were talking about gas at $4 a gallon. At that time gas was about a buck fifty a gallon. I used to be conservative — I said, well, you're not going to have all-aluminum cars until the gas is $3 a gallon. And Peter came up to me at the end of one conference: no, it's $4 a gallon, okay, because Alcoa knew it. It's the energy cost of the aluminum.

The break-even argument: aluminum body-in-white costs roughly twice steel ($4,000 vs. $2,000), unaffordable on a $20,000 car but invisible on a $40,000 Audi. Anchors the broader pricing-by-market-segment argument.

Yes — but you have to wait for the new design. That $4-a-gallon article was written originally with numbers good from the mid '90s. The break-even point right now might be $6 a gallon. In fact gas has been $6 or $8 a gallon in Norway for years. But the United States is the market where everybody dumps their cars, and we have gasoline prices that are less than $3 a gallon. That's why people make steel cars. You don't see all-aluminum Tauruses. You don't see an all-aluminum Toyota Corolla or Camry. The reason is you can't make a $20,000 car out of aluminum. Aluminum is just too expensive to make a low-priced car. But all-aluminum Audis — if I want to make a $40,000, $50,000, $60,000 car, sure, I can make it out of aluminum.