Progressive Automotive X PRIZE

Reaching Out to Future Automotive Engineers

I've mentioned before that we're planning a robust education program for the Automotive X PRIZE. In addition to educating the car-buying public about their clean vehicle options, we hope to inspire future automotive engineers and encourage them to think about fuel efficiency and emissions as exciting fields of work.

The Society of Automotive Engineers (SAE) Foundation already sponsors a wonderful program also designed to get students interested in engineering, math and science through practical applications. The progam is called A World in Motion (AWIM) and includes 4 great challenges including projects to build a skimmer boat, a "jet toy," a motorized vehicle, and a glider. A World in Motion's impact on students to date is significant:

• More than 16,000 schools have received AWIM kits since 1990
• They estimate that more than 2 million students have participated in AWIM programs
• More than 15,000 volunteer engineers have been involved in AWIM programs

If you are a teacher looking for additional resources to get your students excited about science and enginnering, there is more science-related curriculum that can be found online here:

• American Society of Mechanical Engineers (including a lesson plan on the automobile)
• Smithsonian Education
• Discovery Channel Schools Curriculum Center

Perhaps there are many more resources like these available...do you know of other tools for teachers looking to inspire future automotive engineers? Do you have any great ideas about how to get students involved in the Automotive X PRIZE? Speak up!

Where is the Innovation?

Over the past few months we've seen glimpses that change is afoot in the automotive industry.  Whether it's coming from individuals, large auto manufacturers, or everyone in between... innovation is happening right now.  Our goal is to act as the catalyst that brings that change to market.

Of course, the large auto manufacturers (GM, Toyota, Honda, Ford, DaimlerChrysler, BMW, VW, Hyundai, etc.) each have their own initiatives, from clean diesel to flex-fuel, from hybrids to hydrogen. 

You may not know about the rest. Following are just a few of the organizations that are trying to change the status quo:

• AC Propulsion
• Accelerated Composites
• AeroVironment
• AFS Trinity
• Azure Dynamics
• CLEVER
• Commuter Cars
• EDrive
• Enova
• EVT Solutions
• Feel Good Cars
• GEM
• Hybrid Tech
• Hymotion
• L3 Research
• Loremo
• Maranello
• MIT Vehicle Design Summit
• Modec
• Myers Motors
• New Triumph Company
• Phoenix Motorcars
• Reva
• Tesla Motors
• Th!nk
• Universal EV
• US EPA
• Wrightspeed
• Zap

Who else are we missing?  Chime in and let us know...

Investment in Energy & Fuel Conservation

Much has been said about the causes and the effects of global warming and about the controversy around whether it is real or not. I don’t have anything new to add EXCEPT the little talked about notion of the risks of a false positive vs a false negative. Imagine, “IF global warming and its effects are real and we DON’T do anything about it … “. Now also imagine the opposite, “IF global warming and its effects are NOT real and we invest in conserving energy/fuel …”.

Is this wasted investment? It turns out that this is a highly beneficial investment anyway, global warming or no global warming. It results in:

1. A diversified energy portfolio (they constantly advise us to diversify our investment portfolio)
2. Reduced dependence on uncertain energy sources
3. Improved balance of payments
4. Reduced congestion on the streets
5. Greatly improved technology in automobiles – you just have to look at what the past 40 years of emissions regulations have done to improve internal combustion engines
6. Economic GROWTH – again the experience of the past 40 years and the growth of industry essentially making a car “a computer on wheels” with much added value can be attributed to the motivation provided by the need for emissions control

Why are we not doing it? The answers to this question are even more speculative than the answers to the question of global warming:

1. Legacy investment in plants and equipment 
2. Intellectual investment - technical and business know-how, a lot of which appears to be geared to “brute force”
3. Emotional investment – careful cultivation of attachment to the vehicle, use of vehicle as an expression of personality etc. 
4. Policies turned on their head (we give up to $3,400 tax credit for the most fuel efficient vehicles and up to $100,000 tax credit for vehicles HEAVIER than EIGHT THOUSAND FIVE HUNDRED pounds)
5. Complexity because most other major investment (housing, infrastructure) is made around the vehicle – our cities are built for automobiles, NOT people

What should we do? This the most difficult question before us. Fortunately, we DON’T have to answer it. The Automotive X PRIZE competition, the way it is designed, is likely to stir up the community of people thinking about this issue and putting their skin in it, to come up with a variety of answers that will create multiple solutions – diversifying our portfolio. Let the competition begin.

Pity the Poor Bugatti Driver!

One of the greatest frustrations facing developers of more efficient vehicles is the necessary evil of meeting safety regulations.  To state the obvious, cars are not iPods or T-shirts or PCs, not just because they cost a lot more, but because they can and do kill people.  In the USA, some 45,000 people a year.  In its ongoing battle against this carnage, the lead US government authority is the NHTSA (National Highway Traffic Safety Administration), which implements vehicle safety rules through the FMVSS system (Federal Motor Vehicle Safety Standards).  For those with lots of free time, you can browse the standards on the NHTSA website (FMVSS Overview).  These incredibly elaborate rules cover everything from windshields to seat belts to crumple zones to airbags and more.  Estimates of the cost of their implementation abound, but a good working figure is $2,000/car... for a manufacturer cranking out a few million cars a year.  For smaller firms, such as those the X Prize would try to encourage, the per-car amount is much higher, because of the inability to amortize huge investments such as test tracks and supercomputers across massive volumes.  There are ways around some of this burden, with the most tried-and-true method being to retrofit an existing vehicle with a nifty new powertrain: it's a lot cheaper to put a methanol powerplant into a Honda chassis (for example) than to develop a whole new car.  In any case, the X Prize staff is working hard to set prize rules that take this challenge into account.  One trade-off to determine is that of safety versus public acceptance: if the competition produces incredibly green cars that are also incredibly unsafe, no one gains; but if every car must meet every FMVSS, does the added cost block out many of the most innovative entrepreneurs? 

All this came to light again recently in a humurous way, as covered in the Financial Times (FT - subscription required).  The VW subsidiary Bugatti, makers of the world's most expensive ultra-car, the Veyron, said:

"Bugatti could be driven out of business if the supercar manufacturer is forced to comply with new US airbag rules which come into force next month, the French subsidiary of Volkswagen has told safety regulators.  Bugatti told the NHTSA in a letter last month that it would face "substantial economic hardship" from the new rules, which would require it to redesign its only model, the 1,001 horsepower €1m ($1.28m) Veyron. The cost would push up the price of the car 10 per cent and have a "catastrophic" effect on sales, it said."

One might wonder what kind of "economic hardship" the producer of a million-dollar car might face (can't Veyron buyers just sell one of their five or six condo's in Monaco to scrape up the extra quarter-million?), but the point is made in any case: it costs a lot to meet safety standards, especially as they continue to evolve.

Large SUVs Illegal on CA Residential Roads?

California is known around the world as a leader in promoting innovative and environment friendly vehicle policies. If you have any doubt about that, check out the Union of Concerned Scientists' summary of California's role in promoting cleaner vehicles. California has every incentive to maintain this leadership position, UCS points out, because California is one of the 10 largest carbon emitters worldwide and represents 10% of the nation's new vehicle market.

In an earlier post, John Shore explained the connection between vehicle weight and MPG. Many advances in fuel efficiency have gone towards supporting the steady increase in vehicle weight instead of lowering MPG.

A couple of years ago, Andy Bowers of Slate exposed a hidden way for California to encourage lighter, cleaner vehicles. He noticed street signs in his neighborhood prohibiting vehicles over 6,000 pounds, and realized the following:

By weighing in at more than 6,000 pounds, big SUVs are prohibited on thousands of miles of road in California. Cities across the state—including San Francisco, Los Angeles, Pasadena, and Santa Monica—use the 3-ton cutoff for many or nearly all of their residential streets. State law gives them the ability to do this for very straightforward reasons: The heavier the vehicle, the more it chews up the roads, endangers pedestrians and smaller vehicles, and makes noise.

This isn't an arbitrary weight limit. 6,000 pounds has long been a recognized dividing line between light and heavy trucks. (For example, the Clean Air Act defines "heavy duty vehicle" as a truck with a gross vehicle weight "in excess of six thousand pounds.")

He lists several of the vehicles that exceed that limit, including:

The Chevy Suburban and Tahoe, the Range Rover, the GMC Yukon, the Toyota Land Cruiser and Sequoia, the Lincoln Navigator, the Mercedes M Class, the Porsche Cayenne S, and the Dodge Ram 1500 pickup (with optional Hemi). What about the Hummer, you ask? Hasta la vista, baby!

SUV owners happily use their vehicle's 6,000+ lb gross vehicle weight rating (GVWR) to qualify them for large federal and state tax breaks. I'm sure they wouldn't be so happy if California started enforcing the fines associated with the (admittedly unintentional) ban. But for California, it would be another front-of-the-pack attempt to encourage more fuel-efficient, clean vehicles!

More on Fuel Efficiency & Emissions

Since many of you chimed in with great comments on Why 100 MPG is Significant, I thought I'd post some follow up thoughts on both fuel efficiency and emissions.

Whether your concern is oil independence or climate change, vehicle fuel economy is important.

The Union of Concern Scientists makes a strong argument in their report Fuel Economy: The Single Most Effective Step for Cutting Oil Dependence.  In it they state,

The importance of fuel economy is... twofold. First, it delivers bigger savings in the near to medium term. Second, it makes it conceivable that biofuels could almost completely replace gasoline for our cars and trucks in the long term because we would need much less fuel.

Whether biofuels or [name your alternative] helps to replace gasoline, it's hard to argue with the logic of "just use less."

Of course, fuel consumption is directly related to green house gas emissions too.  Use less gas, spew less gunk.  As you can see in the graph below from MIT's Technology Review, carbon dioxide levels have skyrocketed off of the 400,000 year historical chart

Everyone is hypothesizing the consequences, and whatever your particular angle, it ain't good.

The Automotive X PRIZE will require stringently low emissions, and not just from the tailpipe.  Teams will also be judged by the fuels they choose to power their vehicles, using a "wells-to-wheels" approach. 

Fuel-efficient cars and the ghost of Thorstein Veblen

Best known for his work on conspicuous consumption, Dr. Veblen (1857-1929) was also interested in economic anomalies such as one named after him, the Veblen Good.  A commodity is a Veblen good if people's preference for buying it increases as a direct function of its price -- contrary to all standard economic theory, which says we'd typically like more of something to the extent it costs less.  But in the case of high-efficiency (high MPG) cars, such as those the Automotive X Prize seeks to encourage, the Veblen effect may apply.  Why is this?  Well, as researchers at the UC Davis Institute of Transportation Studies and elsewhere point out, until roughly today if one wanted a more fuel-efficient car one spent less money.  Fuel-sippers of recent years have almost always been small, inexpensive, and typically stripped of luxury features.  Think Geo Metro, Toyota Echo, VW Fox.  Thus, in the public mind, efficiency became associated with "cheap," or tinny, or small, or worse.  Only now, with the advent of Prius, Hybrid Escape, Civic Hybrid, and new-generation VW and Mercedes diesels, etc., does the public have the option to pay more, for a well-equipped and/or spacious but still efficient vehicle.  Of course all of us want to see the cost of fuel-saving technologies come down, in order to make them more widely available.  But in the near term, it is crucial for the industry to keep launching these "upscale efficient" vehicles, as it gives the market more choices.  Hard-core fuel savers can still scour eBayMotors for an old Golf diesel, or buyers uninterested in interior space can pick up an Aerio -- but for the vast middle of the market pricier and more feature-laden cars may actually sell better.  And as these cars penetrate the market, any residual stigma against green cars as cheap or tinny erodes... and that's good for all of us.

Greetings

Welcome to my first post on this blog.  As this is my first post, I'd like to provide you with some background on myself and my goals for my posts.  My bio is attached to this website, but I thought a little context might help.

My experience is as a consultant for over 20 years in the Automotive Practice of McKinsey & Company, although I have now struck out on my own.  As consultants, we provide the management of car companies, truck makers, parts suppliers, auto insurers, car dealers and more with advice on strategic decisions, and assistance in tactical implementation.  I'd work on up to 200 projects a year, which led to the development of a broad base of information and perspective on all the links in the incredibly complex automotive value chain.  Some might even call it an ecosystem...

As a result, I have some claim to the term "industry insider," and so that perspective will color my posts.  However, I would not be posting here if I did not want to evolve rather than simply perpetuate the industry's accepted wisdom.  I am sure the readers of this blog will let me know if my thinking gets a little too Neanderthal!

My goals for my posts do not include making grand pronouncements nor sweeping policy statements.  There's lots of that going on now in The Great Automotive Efficiency Debate, and I am sure I cannot productively add to it.  What I will try to do, weekly I hope, is comment on current developments in that debate, with an eye to offering data when it is germane, history when helpful, and linkages to other issues when relevant.  There's plenty of heat within the debate (I wish we could channel it to power cars, that alone might end the energy problem!): I'll try to shed some light. 

Gentlemen, start your (hopefully biofuel-powered and electric-motor hybridized) engines....

No Silver Bullet

Electricity, ethanol, methanol, vegetable oil, hydrogen, etc. -- all have passionate proponents. But -- despite the impression casual readers can get -- it's clear that any substantial replacement of gasoline will take a combination of  alternative fuels.

Take electricity, for example -- not to pick on it since in many ways it's ideal (electric cars are clean and quiet, and a totally-electric car would be so elegant from a design viewpoint -- all electronic, all the time).  But if suddenly we could all plug-in our cars, many of us would be running them on coal (as Dan Becker of the Sierra Club and others point out).

Coal aside, where would all that electricity come from (at least, anytime soon)?  Today's grid is already close to being maxed out (New York Times, 2 August: "A smothering heat wave shattered records for electricity use across a wide swath of the country yesterday as utilities and government officials called for conservation and braced for even more strain.") Yes, I realize that most people would plug-in overnight, but not everyone.  And blackouts don't end at sundown.  Imagine first oversleeping (electric alarm clock), and then discovering that your car is -- in effect -- out of gas?   

Electric vehicles are clearly part of the solution, especially where renewable energy can be used (one good case, except for the birds: personal wind turbine).   But they are not the whole solution.  Likewise other alternative fuels.  We don't know which one is going to be "the best", but we do know that we'll need many of them. 

Why 100 MPG is Significant

There are many reasons we want to reduce the amount of gas our cars and trucks burn.  Putting aside alternative fuels for the moment, simply increasing fuel efficiency is one way to achieve that goal.  To that end, 100 MPG might be the magic number -- a tough, worthy and meaningful goal.  Here's why...

Today's US consumer vehicle fleet averages about 21 miles per gallon (MPG). 

Increasing to 50 MPG represents a 60% increase in fuel savings over today's average.  In other words, for every 100 miles you travel, you would use 2 gallons of gas instead of 5 gallons.  Don't get me wrong... a fleet average of 50 MPG would be fantastic.  Today there are cars on the market that meet or exceed that standard, but they're the exception to the rule.  We need to set the bar higher.

Increasing to 100 MPG represents a whopping 80% increase in fuel savings over today's average.  Or, for every 100 miles you travel, you would use just 1 gallon of gas instead of 5 gallons.  That's an average 10% gain in fuel savings for every 10 MPG in fuel efficiency.  Now we're talking!

But why stop there? 200 MPG sounds a lot better, right?  Or, how about 500 MPG?  Not exactly.  Now we enter into the world of diminishing returns for increased MPG (see chart below).

At 200 MPG, we see a 90% increase in fuel savings over today's average.  So, to get an additional 10% increase in fuel savings over 100 MPG, we've had to DOUBLE fuel efficiency.  The costs simply get too high, and things like safety and affordability go out the window. 

At 500 MPG, we see a 96% increase in fuel savings.  That's a 300 MPG increase for 6% savings.  Okay, you get the picture.