Automotive Insight: Back to the Drawing Board

Nearly eight years ago the Big Three, the U.S. government and the National Laboratories banded together to change the auto industry as we know it. With much fanfare they announced their ambitious goal to triple the fuel economy of the typical five-passenger family sedan to 80 miles per gallon (3L/100 km).

The Clinton White House quickly equated the effort with the Apollo moon-shot program, while auto executives put it on par with the Manhattan Project that produced the first atomic bomb. It certainly signaled a change in which American industry, government and academia would work together to bolster the nation's economic vitality, help the environment and reduce our dependence on imported oil.

In the not-too-distant past, of course, such cooperation would have been entirely illegal. Antitrust legislation would have prevented any collaboration between General Motors Corp., Ford Motor Co. and Chrysler Corp. And in any case, a "let them fend for themselves" attitude discouraged business from seeking help from Washington. But as the end of the Cold War made much of the weapons research at the National Laboratories unnecessary, the Clinton Administration suddenly found itself being pressured to find a new role for these national treasures. So, making a virtue out of necessity, the Partnership for a New Generation Vehicle (PNGV) was born.

The press quickly dubbed it the Super Car program, and the industry happily rolled up its sleeves and plunged into the effort, both grateful and somewhat surprised that Washington was working with it and not against it. Each of the Big Three pursued a slightly different tack, thus assuring a three-pronged approach to the task at hand, and allowing a broader range of technologies to be tested.

The deadline imposed by the Administration was to have drivable versions of these vehicles ready to roll in 2000 - the last year of the Clinton presidency. And lo and behold, they did it! GM, Ford and DaimlerChrysler are showing off their 80 mpg cars in demonstration drives this year.

While critics point out that Toyota and Honda already have 70 mpg (3.4L/100 km) cars in their showrooms, that isn't an apples-to-apples comparison. Road tests suggest that the Toyota Prius is somewhat underpowered and doesn't achieve 70 mpg in real-world driving. And the Honda Insight is a small two-seater - not the peppy, five-passenger family sedan that was the PNGV target.

The next step calls for these cars to undergo more testing and refinement and then go into production around 2008. But I don't think that's going to happen. The reason is that the advanced powertrains and lightweight body and chassis systems need-ed to get the typical American sedan up to 80 mpg adds about $3,000 to the cost of the car. And that's not an economical proposition for American consumers.

Do the math. The average family sedan consumes a little over 500 gallons (1,900 L) of gasoline a year. Add the PNGV technology and that drops to just under 200 gallons (760 L) a year. But with gasoline prices in the U.S. averaging $1.30 a gallon that would only save about $400 a year. In other words, it would take consumers nearly seven years to get a payback on their $3,000 investment, which is just about the time they would be getting rid of the car. Not much incentive there.

Some environmentalists argue that the public would be willing to "do its part" to save the planet and pay for this technology. Don't count on it. American consumers already have the choice of buying fuel-sipping compact cars that get 50 mpg (4.7L 100/km), but the companies that make them can't even give them away.

That's why it's time to take PNGV back to the drawing board. Instead of developing family sedans that get 80 mpg, it makes more sense to develop sport/utility vehicles (SUVs), minivans and pickup trucks that get 50 mpg.

The typical sport-ute today burns up nearly 900 gallons (3,400 L) of gasoline a year. But a 50 mpg PNGV version would only use 300 gallons (1,140 L). Buyers would get a payback in only 4 years, and after that they would save more than $1,000 a year in fuel costs! That's the kind of financial sense that would get them to pay the up-front cost.

Yet, I wonder if it's even worth it. Fuel cell technology looks like it's just around the corner. Will we really worry about the automobile's contribution to smog, global warming and pollution when only a little bit of water vapor comes out the tail pipe? Probably not.

The irony of the PNGV program is that it instantly makes sense to use it in Europe and Japan. With gasoline there priced at more than $4 a gallon, consumers would get a payback much sooner. In fact, PNGV technology applied to their small cars would probably yield 100 mpg (2.4L/100 km)! So American taxpayers probably have helped foot the bill to develop the technology that will be used by their neighbors across the oceans before it ever gets used here.

You have to ask yourself if government-directed programs like PNGV make sense. Just as the Japanese found out with their fifth-generation computer project and all the money they threw at analog high definition television, technology changes. Those projects were fabulously expensive boondoggles that yielded next to nothing. My bottom line: If corporations aren't willing to fund the research that will keep them viable in the future, don't come looking for my tax dollars to do it for them.