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By Maxxwell A.R. Chatsko - November 6, 2012 | Tickers: AA, F, GM, MGA, ZOLT | 0 Comments

Maxxwell A.R. is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

In late August the White House and EPA announced that new Corporate Average Fuel Economy (CAFE) standards had been finalized. The new laws will bind automakers to flaunt fleets with an average fuel economy of 54.5 mpg by 2025. The average for 2011 model years was just 28.6 mpg. In English: this will be no easy (or inexpensive) feat.

Yo car so fat it wishes it was made of carbon fiber

Perhaps the most obvious area for automakers to improve upon is the weight of their vehicles. Steel may be strong and cheap, but it is extremely heavy. Looking for long-term answers, Ford (NYSE: F) has teamed up with a consortium of universities and companies to develop an economical process for producing large amounts of carbon fiber. General Motors (NYSE: GM), not to be left behind, has partnered with Teijin to do the same.

If Fords carbon fiber Mustang goes mainstream it could achieve 30% better fuel economy AND greatly enhanced 0-60 times. Will the government reward automakers by increasing speed limits? Pretty please?

The material weighs much less than steel and is up to 500% stronger. However, the difficulty in scaling-up production has made it 10 to 20 times more expensive than steel and limited its adoption for use in larger applications.

One small cap company looking to break that stigma is Zoltek Companies (NASDAQ: ZOLT), which recently partnered with automotive supplier Magna International (NYSE: MGA). The partnership is a no-brainer given the ferocious push to shed weight from vehicles, but it also gives Zoltek a potentially lucrative revenue stream to offset its stumbling wind turbine segment. A major red flag for the company is the fact that it generates over 50% of its revenue from the slowing wind turbine giant Vestas Wind Systems.

Although Zoltek remains profitable and trades below book value it is highly susceptible to fluctuations in carbon fiber price. A Zoltek spokesman stated that the companys profit margins could be volatile until the industry is three to four times larger than it was at the end of 2010. As with any high growth company there is plenty of risk to stomach with the possible rewards.

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The Only CAFE That Makes You Lose Weight

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Home » Lose Weight » The Only CAFE That Makes You Lose Weight