Progressive Automotive X PRIZE

Thoughts on the Third Rail

In a recent posting Glenn Mercer took the courageous step of touching the "third rail."  He wrote:

We need to ask or compel vehicle manufacturers to make more efficient and cleaner vehicles.  We need to ask or compel fuel suppliers to provide the fuels that will enable supply of such vehicles (e.g. ethanol, electricity, hydrogen...).  And we need to ask or compel drivers to consume less vehicle miles. 

The "third rail," fatal to touch (like social security or seat belt interlock) purports to reduce VMT - vehicle miles traveled.  It is true that VMT has been increasing faster than population and faster than GNP.  We
need to seriously ask ourselves what it takes to reduce VMT.   Some high percentage (I seem to remember 80%) of VMT are due to work commute.

Many times it is not a matter of choice.   People cannot afford housing nearer their work place - lack of urban planning!  Sure, in the end we do it to ourselves, but land use (mis)planning should be mentioned along with (as Glenn puts it), "evil Detroit and evil Big Oil."   We require an environmental impact statement for any major project.   We should also require a transportation energy use impact statement whenever a new subdivision is built or a suburb stretches out far beyond places of work.

It is not so much as "we need to ask or compel drivers to consume less vehicle miles," as we need NOT to compel drivers to have to drive such long distances to work.   Incidentally it is one of the worst health hazards too and not just due its effect on air quality.

Gasoline is up, but driving is not down?

Students of the automotive energy-consumption (and thus emissions-production) problem know there are three legs to the solution: fuel source, vehicle design, and driver behavior.  We can use fuels that are less carbon-intensive or more energy-efficient.  We can change vehicle powertrains to more efficient designs, as in diesel ICE for highway driving and hybrids for around-town stop-and-go; we can alter tire rolling resistance and cut car weight.  But the third leg is driver behavior: people can decide to take steps to use less energy in transportation.  In the short run (as defined in the economics world, within a year) the main behavioral adjustment one can make is to just drive fewer miles, either by switching to public transport, or by dropping discretionary trips, or by "chaining" multiple errands together, or heck -- maybe by even walking somewhere. In the long run (defined as longer than a year) one might sell that gas-guzzler, or buy a used Honda Insight, or maybe even move out of the 'burbs into the city.  One of the great things about the behavior-change leg of the tripod is that it can work very quickly: cutting back 500 miles a year across the 250 million vehicles on the road has a spectacular impact on energy consumption.. much larger than dribbling a few hundred thousand EVs or hybrids into the car stock each year. 

But, to the consternation of all and the puzzlement of many, it ain't happening.  VMT (vehicle miles traveled) seems to just march upward year after year, despite general consumer outrage and almost monthly announcements of new spot highs in the fuel price.  Are people just not responding to the "price signal" the way they used to?  Doesn't Economics 101 tell us if price goes up demand goes down? 

Well, a few researchers at the University of California at Davis decided to take a cold hard methodologically-sound look at the problem, comparing short-run price elasticity of demand for gasoline as it existed in the period 1975-1980 and nowadays, in 2001-2006.  (You can see the paper here. They picked these two periods because both saw very similar relative increases in the gasoline price.)  The price elasticity of demand is just the percentage decline in the demand for something, in response to a 1% increase in its price.  Thus a -0.5 elasticity figure means that if gasoline goes up 10%, we'll cut back our use by 5%.  Professors Hughes, Knittel, and Sperling found that indeed, short-run price elasticity of demand has decreased over time, and sharply, from a range of about -0.20 to -0.35 in 1975 to 1980, to a range of about -0.03 to -0.08.  That is an enormous decline, perhaps 80%, depending on how one averages the numbers.  That means that if in 1977 (e.g.) the gasoline price rose by 50%, demand for it would drop by about 15% (over the short run); today the same hike would trim demand only about 2 or 3%.  (In the long term, of course, more adjustment would still occur, as people bought more fuel-efficient vehicles, but the authors hypothesize that long-run elasticities have dropped as well.) 

Why has this happened?  The paper lays out a few hypotheses, from the increasing prevalence of urban sprawl (if you now live 20 miles further from work than you did 30 years ago, what choice do you have to cut back much on driving?), to rising incomes (maybe gasoline is a smaller part of the household budget today), or to -- ironically -- better fuel-economy performance in cars.  (When gas doubles and you are driving a 6 MPG Olds Tornado you feel a lot more pain than if you're in a 35 MPG Civic.)

This is pretty bad news.  Despite all the moaning about gasoline prices and all the pledges to "go green" in the public forum, in private it seems we're all still "Born to Run" (sorry, Bruce).  However, one implication of all this, at least in our little corner of the world, is that the mission of AXP and other technology-forcing initiatives is becoming more crucial, not less.  If people really are not in the mood to change behavior, then we're back to the other legs of the tripod (fuels and vehicles), which will have to pick up the slack.  And AXP is all about innovation in fuels and cars.  As the authors conclude in their final sentence: "... these results suggest that technologies and policies for improving vehicle fuel economy may be increasingly important in reducing US gasoline consumption."  If you're going to floor it anyway, people, at least choose an AXP vehicle to do it in, and save some fuel in spite of yourself.

AXP: NASCAR Goes Green?

Today's ruminations are inspired by this cartoon in a recent issue of the New Yorker (click fast, this link will expire once the cartoon moves into for-sale status in the NY's Cartoon Bank).  I liked this on several levels. 

First, it brought together NASCAR and the green movement, in its own way: two groups which the media tends to stereotype into polar opposites.  (You might be surprised to know that NASCAR is actually seriously considering switching its cars to ethanol, which has led to numerous jokes about the racing series returning to its roots as a moonshine-based competition!)  After all, if you think about it, NASCAR (or any racing series for that matter) in its own way is all about fuel efficiency: a car that can get that extra lap around the track out of a gallon of gas has a marked advantage over the rest of the field.

Second, it highlights how climate change is entering the daily conversation, moving from Important But Distant status (e.g. avian flu) to Part of Daily Life (e.g. trash recycling).  Bringing up global warming during a 6-second pitstop is a wildly inappropriate action, but the joke is funny because the action is (just barely) within the realm of possibility.

And third, it makes a related point about consciousness: we'll probably crack the climate change problem once we all become more aware of the consequences of our energy choices, not only within a political and social context, but in the environmental sphere as well.  It's not a lot of work, for example, to take the 30 seconds on a Saturday morning to think "I bet I can combine this errand with two others today, and reduce three trips in the Volvo to one." 

And that is what, in a way, the AXP is all about: promoting consciousness and awareness.  Awareness that there are powertrain options out there that drivers might choose, awareness that some of those efficient and green vehicles are actually pretty nice-looking and well-equipped!  Other actors will work on public awareness of greenhouse gases in their own ways (e.g. schools can educate, the media can raise the alarm, NGOs can -- sorry to put it this way, but I think it's true -- harangue us all).  But the AXP can make the whole process of gaining awareness about these choices actually fun and exciting.  Race observers will be asking not just "How many grams per mile of CO2 does this car generate?" but also "Who will win this stage of the race?  Do you think the team from Korea can fix their broken car in time?  What is the mysterious power source the car from the University of Southern North Dakota is running on?" 

Let's face it, humans and especially Americans love a race.  The Oklahoma Sooners driving their wagons to grab new farmland (much to the dismay of course of the displaced Native Americans), the railroad crews striving to win the Golden Spike that connected the transcontinental train lines, the explorers sledding to both North and South Poles, and of course Lindbergh heading for Paris -- all captured the American imagination.  "Go West, young man!" would not have been as powerful an exhortation if the young men didn't think that maybe someone else might get there ahead of them!

The AXP aspires to match the excitement of these races, and maybe, at the risk of the sin of pride, to match their importance in terms of transforming public opinion.  The Sooners showed that anyone could stake out and own their own farm, the great railroads showed us how the entire country was finally forged into one economic whole, the polar explorers taught us about the relentless curiosity of the scientific human mind, and Lindbergh showed us that aviation could work for all of us, not just barnstormers and dogfighters.  And maybe the AXP will show us that clean and efficient cars can really make a difference in the struggles for energy independence and a cooler climate.

Not much in common between the Nature Conservancy and NASCAR?  Well, now that we think about it, maybe more than we knew.

Lives Per Gallon

Over the past year, several books have influenced our thinking as we work to launch the Automotive X PRIZE.  We recently curled up with one that really turned our heads.

Terry Tamminen has published a forceful book outlining the true costs of our oil addiction, Lives Per Gallon.  It is a bold and substantive work that pulls no punches and is packed with verifiable facts, logical arguments, and viable solutions. 

What we really liked is that this is not just another "doom & gloom" look at oil.  It is passionate and honest, and a good portion focuses on three achievable steps we can take to solve our dilemma.

Here's a taste of what you'll find inside regarding what Tamminen terms is our "Faustian bargain" with the oil industry and the subsidies and other external costs we pay:

...the amount we pay ... works out to $1 per gallon and possibly as much as $6 per gallon added to the actual price of every gallon of petroleum fuel used in the United States...  For that kind of money, we could provide health insurance for the forty-five million Americans who have none and build fifteen hundred new schools in every state in the union. 

And regarding the response of the major players to date:

Squeezing more from existing energy resources is relatively easy and usually profitable.  It's about personal choices, but it's also about providing products to match those consumer needs.  Automakers tell me again and again that they only make the vehicles consumers demand... It is morally bankrupt for the oil and auto industries to hide behind "consumer demand" as the dictator of actual practice.  If that were the primary driving force in our commerce and society, we would long ago have institutionalized drugs, prostitution, gambling and the three-day work week.

In addition to Lives Per Gallon, following are some other books that have influenced our thinking over the past year, in no particular order:

• The Car That Could
• Cradle to Cradle
• Out of Gas
• The Second Century
• More With Less
• The Innovator's Dilemma
• Alternative Cars of the 21st Century
• The Spirit of St. Louis
• Time for a Model Change
• Power to the People
• The Machine That Changed the World

What books would you suggest for people interested in seeing a new generation of super-efficient vehicles that help break our addiction to oil and stem the effects of climate change?

Remembering Dave Hermance

Many of you will have noted, with great sadness I am sure, Dave's untimely death last week.  It may be some comfort to know that he passed away while doing something he loved, which was flying his Interavia aerobatics plane.  The personal tragedy this represents for his family and friends is grave, of course, and while I knew Dave I did not know him well enough to eulogize in general.  So I will restrict my remarks to what I think Dave meant to one member, at least, of the "green car community," if we can assert the existence of such a group. 

Dave's job in recent years was to assist his employer, Toyota, to adapt the Prius (and other Toyota hybrids) for the North American market, to launch them here, and to answer the numerous technical and commercial questions so many of us had about the cars.  His technical expertise was broad and deep, but what always stuck in my mind after speaking with Dave, or while hearing him talk at numerous industry meetings, was how patient and unflappable he was.  Critiques of the Prius have always included challenges to its MPG claims, its true environmental impact, the depth of its customer appeal, etc. -- and Dave handled these issues well.  But he also dealt stoically and diplomatically with assaults that I know would have driven me around the bend: that the whole thing was just cynical Toyota marketing, that the vehicle's high voltages would kill EMS workers responding to a crash, or that Toyota was duping drivers into buying the cars so they could "stick them" with a $6,000 replacement battery fee years later.

In response to all these arguments, Dave quietly and convincingly returned to the fact base, to what Toyota and its cars were actually achieving in the lab and in the real world, thus adroitly disarming the more zealous (and usually less informed) denizens of the blogosphere.  His achievements were many, but for this one alone, for his calm insistence on the facts, I will miss him greatly.  The "green car community" suffers from an excess of assertions and a shortage of reasoned opinions: in losing Dave we have lost one of our more reasonable, informed, consistent, and insightful voices.

We have met the enemy and it is us (literally)

Traditionally environmentalists have not been known for their sense of humor: saving the planet is a big and depressing job.  But this latest item made some of us here at AXP World HQ smile regardless -- if only in the sardonic sense of "I guess we should have seen this one coming."  A study just out from the University of Illinois reports that "as American waistlines have expanded... so has their consumption of gasoline."  The increase in average American adult weight has been 24 pounds since 1960... and carrying all those extra pounds around costs over 900,000,000 extra gallons of fuel annually.  (To head off any wisecracks about our 18-wheel trucker friends, this study excluded all commercial vehicles.)

Now in my case that 24 pounds is pure muscle (and actually the limited details provided so far do not indicate if the study adjusts for the fact that Americans have gained height since 1960: extra pounds related to that gain would include bone and muscle and other good stuff as well as pure flab).  However, point taken: what we haul has an impact as well as how we haul it (in a compact versus an SUV for example).  The 900 million gallons is of course a drop in the bucket compared to the excess fuel consumed due to added vehicle weight and horsepower, but I wonder if there is a hidden secondary effect: do we demand those bigger vehicles because we ourselves are getting porkier?  It is well known within the car design community that Americans have indeed been asking for cars that are easier to get in and out of (higher sills, wider doors, broader seats), and that preference must be in some part linked to growing waistlines (as well as an aging driver population).  Even the notably fuel-sipping Honda Civic has gotten larger with each redesign since it was launched years ago.

Anyway, next time you congratulate yourself for turning down the Big Mac in favor of the side salad, you can cite another bit of motivation: every pound less you weigh does its own (very tiny) bit for the environment as well.

There's Only One "ME" in Team

In an effort to truly understand the barriers to change in the automotive industry, our research has made it clear that there are a myriad of dynamics that led to where we are today - a fleet of vehicles with fuel efficiency that has actually decreased over the past 20 years.

Still, we're not much for looking backward and placing blame.  The situation is what it is, all for completely understandable (if not defensible) reasons.  The time is right for major changes, and the Automotive X PRIZE will set the stage to see radical breakthroughs emerge.

Today, a headline brought me back to a more direct message that underlies our efforts - U.S. Population on Track to 300 Million.

That's a lot of people using a lot of stuff.  Yes, we desperately need more fuel-efficient vehicles.  And yes, we absolutely need clean alternative fuels to help displace petroleum.

But what about you and me, two little heads in the crowd of 300 million?  Where do we fit in this dynamic?

Most of the large auto manufacturers would argue that they've just been selling you what you want for the last 20+ years.  Why?  Simple.  Because we buy what they offer.

Damn, you mean it's not just the MAN?!?

Complacency gets the better of us all the time.  History has shown that we take the easy route, rather than the right one, more often than not.

So, while the teams that compete for the Automotive X PRIZE will be rising to the challenge to do their part, what will you do?

There's something here for everyone to get behind, whether your primary concern is energy security, global warming, clean air, economics, or any of the issues that the Automotive X PRIZE touches.  If we are to change our course to preserve a livable planet for our grandchildren, we need to examine just why we do what we do.  It is time for us all to ask, "How am I a part of the problem, or a part of the solution?"

Do I really need my 8-seat SUV (which I can easily rent for the rare times I use the full capacity), or would I be better off with something less extravagant? 

If most days I travel 10-30 miles, how much vehicle do I really need?

How fast is fast enough?  Do I really care what my 0-60 time is, or do I just want to be able to merge safely on the freeway and pass someone if I have to?

Do I really need my car to last 10 years, or 100 thousand miles?  What if cars were half as expensive and built to last half that time/distance?

Is a bigger vehicle really safer?

When is the last time I walked to the market?  Took the bus?  Rode my bike?

Do I care enough to change?

I happen to believe that, if we stop to think, most of us don't really want what we're being sold.  Extra power, performance and size are nice when we don't think beyond ourselves.  But at the cost of our health, our economy, and the political and social stability of the world?

The Automotive X PRIZE will showcase the heroes that commit to bringing you clean, super-efficient vehicles that meet your needs (for price, size, capability, image, safety, performance, etc.).

It's up to all of us to support the innovation and change they bring to market.

Reflections on the ZEV Technology Symposium

This week, we went to listen to three days of talks by folks in the Zero Emission Vehicles world, from regulators and academics to folks at suppliers, OEMs, and startups. Specifically, we heard talks that detailed progress in areas like hydrogen storage, fuel cell efficiency, energy and power density in batteries, and so forth. Take a look at the presentations. It was interesting...I mean, large portions were dry as a desert, interspersed by wonderful oases of non-monotonal technical dissertations and fleeting, but brilliant, mirages of pointed political commentary that bordered on petulant. I didn't fall asleep once, I assure you. But the free WiFi was a great thing...

My overarching conclusion is that we must recognize that there will be multiple solutions to our energy and mobility crises and that the market is more than large enough to profitably accommodate the right alternatives. It's disappointing to see the barely hidden vitriol that exists between the various technology proponents, those that favor some sort of battery, or hydrogen, or hybrid drivetrain. But the stakes were high. The findings from this symposium are being summarized and presented to the Air Resources Board (ARB) and regulatory changes might follow. So, imagine a mixture of scientific/experimental data reports, politics, business, spin, and sometimes not-so subtle lobbying. Given that ARB has the power to do things as divergent as mandate the length of warranties on batteries and also the levels of emissions of carbon and particulate matter...you can see big dollars resting on the results of these days of reports and questioning.

On this all-important subject, given the economic impact ARB decisions have on the auto industry, one thing stood out like a sore thumb: the truthiness of people's units and energy calculations. Wow. In presentation after another, there were data and arguments being discussed, each with units and justifications that we couldn't benchmark. It seemed like each presentation created its own arbitrary axes and coordinate systems to make its case. And because many arguments were made without regard for opposing or alternate perspectives, it was hard to consider the presentations objectively...a little bewildering. I amused myself by imagining a giant gong sounding each time somebody said something that deserved a chortle to point out its imbalance. 

That said, the hydrogen folks seemed defensive, as if their failure to have affordable technology in the marketplace right now was some sort of congenital failure. Not the kind of curious, entrepreneurial attitude we want exuding from people on the forefront of future mobility. Why are we castigating them for doing research into a possible solution to a percentage of our mobility future? Then came the battery electric folks...exactly the opposite: politely combative, confident, and ready to challenge all comers. As one person said to me...it was like the future mobility wagons had circled but everybody decided to fire inward rather than defend the family. That's just silly.

But there were highlights...one of which came when somebody off the street came to ask the panel of battery electric vehicle innovators, including Tesla, GEM, Miles Automotive, Wrightspeed, Aerovironment (the folks that brought us the EV1),  and AC Propulsion, what kind of practical options he could plan on seeing in his lifetime. What he saw from this panel ranged from a $100k supercar to a $12k neighborhood electric vehicle that can't go over 25MPH. He pointed out the gaps in this range and said, "I have $25k and can only afford one car...and it needs to take me to work and also cart my family around." That's the question, alright! Where are our alternatives and when are they coming?

The Impact of Declining Oil Prices

Oil and gas prices are down.  Oil prices have dropped about 20% since their high in mid-July.  Here in Southern California, gas prices are just under $3 per gallon again.  It's a bit hard for us "west coasterners" to believe, but according to Forbes:

Prices at the pump are below $2 a gallon in Missouri, Kansas, Oklahoma, Arkansas, South Carolina and Ohio and soon may fall to similar levels in New Jersey and Texas.

So, where is the attendant dancing in the streets?  Consumers are feeling better, right?  Not quite.  It seems that saving at the pump really just amounts to less consumer pain.  According to ENN:

While the decline in prices will provide some relief to motorists, it also reflects the country's weakening economic outlook. In other words, any benefit from falling pump prices may be outweighed by higher interest rates and a stagnating real-estate market.

People don't seem to trust the price decline much, even going so far as to posit pre-election market manipulation.  So... why the decline?  Experts cite much more plausible (and boring) reasons.  Major hurricanes haven't pounded the coasts this year and inventories are healthier, reflecting more stability in the market.  The current US administration appears supportive of negotiations with Iran, which is easing international tensions.  Also, temperatures cool at this time of year and people stay home more so it is typical and cyclic to see prices fall from their summer highs. 

That's not to say that the long-term outlook is rosy.  The Saudi oil minister suggested that the current price of a barrel of oil is "reasonable," so further declines from OPEC seem unlikely. Plus, the aforementioned Forbes article notes that:

...the current decline doesn't signal a long-term return to cheap oil or rule out future spikes to about $70 a barrel.

Of course, any number of natural or man-made events could disrupt supply and prices could go up. According to LA Daily, all is takes is one glitch that can change everything. Plus, overall growth in worldwide demand isn't showing any sign of slowing. 

In the mean time, clean tech investment might be hurt the most from a decline. Investments in energy funds that have bet on tight oil supply for years to come are feeling the hit, hurting short-term alternative energy development.

Truth in Fuel Labeling?

Most people know that our personal health is affected by what we eat – i.e., how we fuel our bodies. And now there's growing awareness that our planet's health is affected by how we fuel our cars.   The main culprit is carbon dioxide emissions, and in that respect some fuels are unhealthier than others.

In the case of food, we understand that the type of food - chicken, lamb, corn, spinach(!), etc. - doesn’t fully determine how healthy it is.  That depends on a full “ground-to-stomach” accounting – how the food is grown, processed, and distributed. Did that chicken grow up eating processed nutrients, chemicals, and hormones in a dark, crowded chicken factory, or strutting around in a sunlit barnyard eating natural, pesticide-free food? It makes a difference.

Likewise for automotive fuel. One can easily get the impression that carbon emissions (and therefore planetary health) are determined simply by the type of fuel – gasoline, diesel, electricity, ethanol, hydrogen, etc. – but it’s not that simple. Valid comparisons require a full ground-to-tank accounting, i.e., including the emissions from fuel production, distribution, and use.  Such comparisons are not easy; to get a sense for the complexity, look here, and here. 

Whether an electric vehicle is good for the environment depends on how the electricity is produced – from renewable energy sources like solar and wind, good; from burning coal, not so good. Likewise, whether ethanol is healthier than gasoline depends on how the ethanol is made. With today's methods, sugar-based and switchgrass-based ("cellulosic") ethanol are healthier (less carbon-intensive) than corn-based ethanol, and healthier than gasoline.  Meanwhile, it's not clear that corn-based ethanol is healthier than gasoline, although improved methods of production may yield corn-based ethanol that's clearly less carbon-intensive. 

So what’s a consumer to do? In the case of food, those who care are informed by such truth-in-labeling, ground-to-stomach designations such as “certified organic” (far from perfect, but better than nothing). What about fuel? For those who care, could fuel be labeled to indicate ground-to-tank carbon emissions?

There are obvious practical problems in doing so, but in principle it's possible. For example, all fuel could be encoded with information about carbon emissions – chemical markers in liquid fuel, specialized modulation in electricity, etc. And fuel-dispensers could display carbon information just as they display changing prices. Could a practical system be developed, perhaps involving regional, manual labeling? Would anybody care?

Perhaps some consumers would pay more for healthier fuel. You are what you eat.  We are what we burn.