Alcoa (AA) Saved by Lighter Car Trend?

Alcoa (NYSE:AA) has been fighting to find growth areas for some time, and possibly just as long at been touting the possibility associated with light cars, which would obviously play to aluminum's strength.

CEO Klaus Kleinfeld said, "To get to the next step in fuel economy, you have to look at a new material: aluminum." To that end, Alcoa has been hiring a number of workers in the automotive unit of the company over the last year.

Kleinfeld said he has a goal of doubling the amount of aluminum sold to the auto industry by 2013.

There are challenges though, and the outcome is uncertain. While on Alcoa's part it has pushed down the price of aluminum to compete better with steelmakers like Arcelor Mittal, but Arcelor Mittal isn't standing still either, as they've developed a lightweight product which is about 14 percent lighter than the prior generation, and costs the same as its predecessor.

Ford Motor Co.'s (NYSE:F) manager for global materials and manufacturing research, Matthew Zaluzec, is leaning toward aluminum becoming a much larger part of the auto picture, saying "I believe in 2015 and 2020, we will be more aluminum-intensive. It may not be 100%, but it could be more than 50%."

At this time about 8 percent of the weight of a car is made up of aluminum.

While this is mandated, as far as lightening up the weight of a car to produce more fuel efficiency, the potential backlash over the inevitable increase in deaths from the move could backfire on regulators and car companies.

All of this will take several years to play out, and possibly longer, depending on the length of time it takes to produce enough data to make a decision on the safety of lightweigt vehicles.

Alcoa closed Tuesday at $16.04, falling $0.08, or 0.50 percent. Arcelor Mittal closed at $34.30, down $0.65, or 1.86 percent.