Progressive Automotive X PRIZE

Commander Andy Karsner

The X PRIZE Foundation was delighted to hear that the King of Sweden is honoring Andy Karsner with the prestigious insignia of Commander of the Polar Star.   Many of you know that - during his tenure as Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Dept. of Energy - Andy initiated DOE's strong and ongoing support of the Progressive Automotive X PRIZE.   And many of you know that Andy has continued to be supportive as a new and active official Advisor to the PRIZE.  

But you may not have known that, as Assistant Secretary, Andy was extremely active internationally as well as domestically.   Among his initiatives were two bilateral agreements between Sweden and the U.S. covering joint developments in biofuels and plug-in electric hybrids.   The King of Sweden is honoring Andy for these and other efforts that have strengthened cooperative developments in the field of renewable energy.   Congratulations Commander Karsner!

Progressive Automotive X PRIZE Applauds President Obama's Plans to Tighten Environmental Automobile Standards

Today, the Progressive Insurance Automotive X PRIZE praised President Obama’s plan to allow states to regulate automobile greenhouse-gas emissions and to expedite countrywide regulations for increased fuel efficiency standards.

Here's an excerpt of the statement:

“We share President Obama’s goal to reduce greenhouse-gas emissions and increase fuel efficiency standards, and commend him for moving swiftly on these important issues,” said Cristin Lindsay of the Progressive Automotive X PRIZE, a competition designed to inspire a new generation of viable, super fuel efficient vehicles.  “Through this competition, we will stimulate innovation and show that the targeted fuel efficiency standards are possible.”

“The auto industry is changing rapidly, and the Progressive Automotive X PRIZE plans to offer an unprecedented showcase of what the future can hold,” said Dr. Peter H. Diamandis, Chairman and CEO of the X PRIZE Foundation. “We welcome the new directives set forth by President Obama, and we believe that his goals can be met and significantly surpassed.   The Progressive Automotive X PRIZE directly targets these goals through the proven mechanism of incentive competition, by stimulating new technology for manufacturers and more car choices for consumers.”

Already, more than 35 teams have been accepted as Registered Contenders, and an additional 100 teams have signed Letters of Intent to compete.  In the coming months, the Progressive Automotive X PRIZE will announce details of a dynamic stage competition in which vehicles will be tested and showcased in real world conditions.  Winners will share the $10 million prize purse, funded by Progressive Insurance.

Read the entire public statement here.

 

Not All That Guzzles is Olds

With apologies to Bill Shakespeare for mangling his prose, we'd like to point out to our readers that, just as not all that glitters is gold, not all that is Detroit guzzles gas.  Perhaps unduly dismayed by that icon of fuel profligacy, the Hummer, or perhaps too easily seduced by diesel-sipping Bluetecs from Europe, the greener portion of the American public seems to assume that Detroit must (almost by definition) be the biggest villain in the MPG saga.  Not quite so!  As shown in a recently released GAO report on fuel economy standards, most European OEMs who export to these shores regularly violate CAFE targets, choosing instead to ante up the civil penalties that result.  In fact, the Europeans have enriched the US Treasury by some $115 million between 2001 and 2005 (which are the newest figures GAO has), with BMW leading the way, at over $50 million in fines.  Even the People's Car maker, VW, ponies up a few million bucks every few years to cover its fuel-thirsty Audis (and of course those products of another VW subsidiary, Lamborghini).  One cannot tie the numbers easily to a given model or even to a given year, as Uncle Sam allows all sorts of averaging and carry-forwards and -backs, but over the long haul the biggest offender is Mercedes.  And these numbers don't even count the gas-guzzler tax tacked on at the point of sale: these are civil penalties paid by the OEM for violating the CAFE standards.  The Japanese and Koreans are notably absent from the list, as you might expect, but perhaps as you might not expect, so are the Detroit 3: GM, Ford, and Chrysler have never yet had to pay a CAFE fine.  (They may start having to, according to rumors that they have recently strayed out of compliance, but with the lags in these numbers it is hard to tell.)  So, while the Detroit side may be not be as green as we would like, at least the home team is not just paying off the referees.  As German diesels hit these shores the situation may change, but for now remember that while the Big Three may be making too many V-8s, for a big thirsty V-12 you have to go to Europe...

We've Met the Enemy, and He Is Us.. or Is He?

I've always been a big believer that to reduce automotive fuel consumption and toxic and greenhouse gas emissions, we need to take a three-pronged approach.  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. 

Throughout the raging debate on this issue I'd estimate that 95% of the rhetoric focuses on the first two prongs: evil Detroit and evil Big Oil.  The American driver gets off the hook pretty easily (unless he or she is foolish enough to park a Hummer on the Berkeley campus!).  But let's face it, the cleanest vehicle is the one that is never bought, and the next cleanest is one that is never driven.  It takes a consumer to buy and drive cars. 

But it is becoming clearer that consumers are grudgingly starting to realize their role in all this.  Rather like overweight people who in public blame McDonald's for tempting them, while in private admitting that no one forced them to eat the Big Mac (yours truly can be said to fall into this category), drivers are starting to acknowledge that while Detroit feeds their oil addiction, they are ones who keep visiting the pumps.  A recent article in the New Yorker, by economics analyst James Surowiecki, illuminates this development.  In essence, it boils down to the point that while the individual driver wants the individual freedom to buy and drive whatever she or he wants, drivers are not happy with the collective result of these individual choices.  That is, we might want the freedom to buy the Hummer, but we wish the government would limit their supply somehow, because collectively there are just too many on the road. 

Surowiecki makes the analogy to the helmet rule in the NHL: prior to the rule, most players refused to wear helmets, since the devices disadvantaged them (e.g. poorer peripheral vision) -- but in secret ballots the majority of players wanted the League to require helmets, since the safety advantages were obvious. 

In the same way, American consumers seem to be coming around to the realization that their individual vehicle choices are collectively irrational.  Thus, in polls, the citizenry as a group votes pretty solidly for higher MPG standards... despite individually continuing to seek bigger and heavier vehicles.  Politicians should take heart from this: higher MPG standards might not be as toxic an issue as they might think.  As Surowiecki concludes: "Sometimes, [ voters ] know, we need to save ourselves from ourselves."

The High Cost of High MPG

Since the AXP is all about incentivizing and publicizing highly fuel-efficient (and thus very-low-emitting) vehicles, you might not think we have much sympathy for OEMs who have difficulty getting much past 20 or 25 MPG on average.  But far be it for us to lecture (after all, we haven't built a car ourselves yet, unless you count that converted wagon from third grade...).  The millions and even billions of dollars, yen, and Euro's that have been poured into powertrain development over the decades make clear how hard this task really is.  While one has to take the huffing and puffing about this that emanates from Nagoya, Stuttgart, and Detroit with large doses of skepticism, the challenge remains immense. 

If you don't believe the OEMs -- or even the think-tanks and analytical labs like ORNL -- there is some recent quasi-independent confirmation of this from the cold hard world of Wall Street.  As Alex Taylor recently wrote in Fortune (and Alex is always very well informed), the private equity firm Cerberus, which is in the final stages now of buying Chrysler from its German parent, is very worried about the new tighter MPG regulations Congress is considering.  In fact, he writes, "the moneymen from Cerberus behind the private equity buyout for Chrysler are said to be threatening to walk away from the deal if the new requirements go through."  Whether Cerberus believes Chrysler's own publicized punumber of $6,000 or more per vehicle to meet the standards we can't say, but the possibility that the biggest automotive deal of this millenium could go South based on what might seem to us a minor tightening of CAFE tells you how worried they may be.  Of course, for them it is all about making more or less money, so it is hard to feel sympathetic.  What is striking, however, is of all the issues Chrysler has to face: UAW contract talks in the Fall, gigantic underfunded retiree health care liabilities, an overbuilt dealer network, and brands that have weak appeal (as a result of which many Chryslers are sold primarily to fleets rather than to individual customers)... the only one Cerberus sees as a deal-breaker is the MPG challenge.

The point of all this?  First, we at AXP are under no illusions as to how hard the task we've set for our entrants is.  And second, we are going to be very, very proud of the winner, knowing as we do what an achievement victory is going to be.

DOE Supports the Automotive X PRIZE

We got a nice public statement of support yesterday from Andy Karsner (DOE Assistant Secretary for Energy Efficiency and Renewable Energy) during his news conference at the Washington DC Auto Show. 

The support is real - for some time, DOE experts have been actively working with us on issues ranging from public education to AXP technical figures of merit (defining fair and technically-sound methods of comparing the energy efficiency and carbon emissions of different fuel sources and drive trains).   Note that Ed Wall from DOE and Michael Wang from Argonne are serving on our Prize Development Advisory Board.   

We have similar support from EPA's Office of Transportation and Air Quality - experts there are working with us on AXP standards for criteria emissions.  Note that Jeff Alson from that office is likewise serving on our Advisory Board.   

The cynics among you might wonder if there are strings attached, but no.  Indeed, one of the most gratifying things about designing the AXP has been the generous support and help from many quarters - all from organizations and individuals who believe in the AXP and want to help it succeed. 

Washington: "We love you... up to a point"

Well hybrid fans, it is official.  The IRS this week announced that the day of reckoning had come for Prius buyers: Toyota has made too many of the darn things and now the tax credit starts to fade away.  To be completely accurate, the the credit falls away for ALL Toyota hybrids, not just Prius, but of course everyone's favorite gas-sipping ovoid is the main culprit in Toyota's success in reaching the 60,000-unit of sales point -- thus triggering the demise of the credit.  To quote the tax guys:

"Under the current tax law, the credit for buying a hybrid vehicle begins to phase out during the second calendar quarter after the quarter in which the company sells its 60,000th hybrid or lean burn technology vehicle."

Some observers have asserted that this limit is calculated to tilt the playing field against the to-date hybrid champion, in that other manufacturers (e.g. Ford) are in no risk of hitting the 60,000 number, and therefore will be able to offer buyers all 100% of the credit.  Whether that is true or not is not for us to say, but it is a shame that such a mixed message is being sent.  Uncle Sam seems to be encouraging hybrid sales --- just not too many of them!

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!

Americans Want Action on Global Warming

The L.A. Times has just published a new Los Angeles Times/Bloomberg poll on global warming and the environment. According to the poll, “Americans are growing increasingly concerned about what could be considered competing concerns – maintaining a healthy natural environment and cheap available energy - and would like to see the federal government take a more aggressive stance on both”.

However, although over 70% of respondents said that global warming is a serious problem, less than 10% said the government should mandate stricter mileage standards, and only 11% were in favor of capping emissions from vehicles and businesses. Rather, they prefer to see the problem solved by market incentives and new technology.

We intend for the Automotive X PRIZE to help – driving innovation, investment, exposure, and public demand. However, I suspect that the desire for government mandates will increase if oil prices surge again or climate change feels increasingly real (heat waves, brownouts/blackouts, floods, hurricanes, tornadoes, …).