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Stuck In Reverse: Why can't Detroit mend its gas-guzzling ways?

Each January, Detroit kicks off the new year with the North American International Auto Show, a catwalk of automotive seduction. New cars don't just jump through hoops; they drive through plate-glass windows and veils of smoke and fire, are lowered -- sometimes dropped -- from a high ceiling, and are tumbled by artificial earthquakes. Chief executives sit on lily pads; a minivan soars overhead.

It's not until spring, however, that the industry gets under the hood, at the World Congress of the Society of Automotive Engineers. In the concrete cavern of the Cobo Center in downtown Detroit, hundreds of technologies are unveiled and debated, hawked and hustled. In conference rooms near the main hall, more than 2,000 technical sessions discuss the merits of friction stir welding and structural foam, and even a hydrogen economy.

But it is on the show floor where the future beckons you to touch, where the next generation vies for geek credibility and market buzz. For those in the business of making cars, everything needed is here, from thumbnail sensors to robotic arms. If the automobile is the gleaming totem of the American Dream, then spending time at the World Congress is like going backstage at Dreamland, deep into the sandman's garage.

It's no wonder we love cars. Henry Ford didn't invent the automobile; he invented modern manufacturing, and with it a new middle class. The ripple effects created a century of power and prosperity for many Americans. Faults aside, the automobile is truly a wonder of the world, a sublime testament to human ingenuity and know-how. But just as the twentieth century cannot be credibly imagined without cars, the twenty-first century cannot be realistically conceived without their reinvention. Even top engineers at the Big Three auto companies -- General Motors, Ford, and DaimlerChrysler -- seem to know that cars cannot continue to squander the world's last reserves of fossil fuels.

Americans now burn a quarter of the world's oil -- 40 percent of this in passenger vehicles. It's a thirst with snowballing impacts on global climate, our economy, and national security. Cars, SUVs, and light trucks consume 8.7 million barrels of oil a day and are the fastest-growing source of greenhouse gases. We urgently need fuel-efficient cars, yet carmakers seem to be driving in reverse. Ford's world-changing Model T got about 25 miles to a gallon of gas. In 2002, all of Ford's models in total averaged 24.3 miles per gallon, while the entire fleet of American-made cars averaged 24.6 miles per gallon.

Like junkies hooked on SUV profits, Detroit's automakers continue to fight stronger fuel economy standards. Meanwhile, Japanese policymakers have bet on hybrids, and in Europe a generation of cleaner, more fuel-efficient diesel engines accounts for half of new car sales. Toyota's trendy hybrid, the Prius, has given the company a head start not only in hybrid technology but in navigating new business realities. "Toyota is lapping the field," says Roland Hwang, vehicles policy director for the Natural Resources Defense Council (NRDC). "It must be scary for Detroit to think about how many real-world miles these guys have on their technology."

In other words, change is coming, though unless U.S. carmakers adapt it will not be at the wheel of a Ford or a Chevy. But even if these carmakers want to shift gears, it's difficult to know whether they're up to the task. The industry clearly is ailing. G.M. shows a profit only thanks to its home finance division. Ford is recovering from near bankruptcy. Chrysler has been swallowed by Mercedes -- its own engineers joke that in German, DaimlerChrysler is pronounced with a silent Chrysler. Because all three have older plants and older workers, they give up at least a $2,000 advantage to their foreign competitors on the cost of each new car. Health care and pension costs are strangling the U.S. automakers, and depressed stock prices reduce their maneuvering room further still. Globalization has also taken its toll. In a little over three years, from 2000 to 2003, the United States lost one out of six factory jobs. That's 2.8 million people nationwide, and among the worst hit were autoworkers in Michigan and Ohio.

In 1999, Bill Ford Jr. raised the hopes of environmentalists -- briefly -- when as the newly elected chairman of the board he pulled his family's company from the Global Climate Coalition, a flat-earth cartel of corporations that rail against climate change science. The company then issued a report acknowledging that SUVs cause serious environmental problems and promising, among other things, a 25 percent improvement in SUV fuel economy by 2005. But even as Ford seemed to be positioning his company for change, the tires, literally, started coming off its popular and highly profitable Explorer SUVs. A series of deadly rollover accidents resulted in severe setbacks to its finances and public image. Then 9/11 sent the automotive economy into a tailspin, a problem compounded, for Ford at least, by G.M.'s decision to heavily discount its cars to keep the assembly lines rolling. Whatever the reasons, Bill Ford's promises have gone unmet, causing him to lose favor among environmentalists who initially gave him the benefit of the doubt.

Despite a dismaying lack of progress, engineers and even top executives across the industry speak routinely of "taking the automobile out of the environmental equation." U.S. automakers have invested billions of dollars in new fuel-efficient technologies -- hybrid cars, hydrogen fuel cells, clean diesel. Over the next year, Ford plans to sell 20,000 Hybrid Escape SUVs, its first hybrid vehicle. But put that into perspective. This number amounts to little more than a niche market -- "the environmentally conscious customer," as one Ford executive put it -- from which the company hopes to gain a "halo effect." Even as Ford and G.M. spend millions on advertisements claiming that they are turning over a new green leaf, these decidedly small gestures are dwarfed by the industry's enormous stake in selling gas-guzzling internal combustion engines, which increase our dependence on foreign oil and degrade the environment.

All the hype about the "hydrogen future" ("the destination is the hydrogen economy," intones G.M. in one of its full-page ads) and the warm, fuzzy feelings generated by the novelty of hybrid cars can sometimes obscure the fact that the technological wherewithal for manufacturing super-fuel-efficient cars has existed for many years. The hitch has been getting them to market.

The Here and Now

Amid the vast bazaar of the World Congress of the Society of Automotive Engineers, the booth for the American Foundry Society's honorees is hundreds of yards from the glamorous concept cars. Here, laid plainly on a table, is a dull gray sweep of metal -- the back side of an instrument panel for a Cadillac DeVille. From the size of it one would expect it to have the heft of a large suitcase, but instead it's as light as an aluminum lawn chair. Actually, it's made of magnesium, which is at least five times more expensive than steel but, for this part, is 70 percent lighter. Magnesium can be cast directly into complex three-dimensional shapes, minimizing costly finishing labor, and it requires less time to design both the part and the tools for making it. The final piece, therefore, is ultimately cheaper than its steel counterpart, as well as lighter, stronger, and more versatile. On the next table is a steering knuckle -- an obscure but significant link between the steering wheel and the wheels on the road. It's been forged from aluminum and is 40 percent lighter than the iron it replaces.

This drive to simplify assembly and remove mass is constant in the industry, spurred by relentless competition on price. Because mass is the enemy of fuel economy, these undercover improvements could lead to increased efficiency -- right now -- but instead they are going into larger, heavier, and more powerful vehicles. The net result: Innovation subsidizes waste.

There is even more potential under the hood. An array of engine improvements fly under the cover of jaw-breaking names such as "multi-valve, overhead camshaft valve trains," "variable valve timing," "intake valve throttling," and "camless valve actuation." Other concepts are more scrutable. Cylinder deactivation turns off parts of an engine when they're not needed. Smaller engines can be supercharged or turbocharged to provide punch for passing. Automatic transmissions can be made more efficient, and so can various accessories. Air-conditioning and power steering are essentially engine parasites, so the more efficient these are, the better the mileage. Even improving lubricants and tires can boost fuel economy.

A National Academy of Sciences panel estimated in 2001 that by using available technologies such as these in combination on a small SUV, it could cost as little as $465 for automakers to raise overall fuel economy 10 percent, $1,543 to raise it 30 percent, and $2,580 to raise it 50 percent. By comparison, Ford's new Hybrid Escape -- utilizing what is, for the foreseeable future anyway, the more expensive technology of hybrid engines -- costs $3,300 over and above the comparable V6 Escape. While the hybrid's city mileage is 50 percent better than the non-hybrid model, the highway mileage benefit is less than 20 percent. The National Academy panel, which was established by congressional mandate, came under intense political scrutiny when a draft of its report was leaked to the industry in early summer of 2001. After the report's official release, G.M. and DaimlerChrysler demanded -- and received -- a private audience with the panel to raise objections. In October 2001 the panel reconvened for further consideration. Though its members concluded that more stringent fuel economy standards benefited both consumers and the national interest, they chose not to recommend a raising of standards in their final report: "Given the choice, consumers might well spend their money on other vehicle amenities, such as greater acceleration or towing capacity, rather than on the fuel economy cost-efficient technology packages."

"Consumer choice" -- this is Detroit's code for "no new regulations." Why should it stick its neck out to build fuel-efficient cars that consumers, crazy over horsepower and size, will not buy? A new car model represents a billion-dollar investment. Everything from the scent of Cadillac leather to a pickup's throaty rumble is strategically engineered, focus-grouped, tweaked, and then marketed for maximum emotional impact. Cars often compete on trivial details. Missing a trend as simple as retractable cup holders can cost millions.

To get a glimpse into the marketing psyche of the auto industry, you could talk to medical anthropologist Clothaire Rapaille, a consultant to the auto industry who posits that a "reptilian brain" governs our automobile purchases. "The reptilian brain functions in the now time," Rapaille explains. "I'm going to go to the supermarket. And I'm afraid that somebody is going to attack me right now. So I'm going to take a Hummer to go shopping." Rapaille was enormously influential in articulating this fear-based marketing rationale for the SUV in the 1990s. Preying on our most ancient fears helped create an apparently unquenchable market for light trucks (SUVs, pickups, and minivans); in just two decades the American market moved from 20 percent light trucks to more than 50 percent, helping drive the fuel economy of our nation's cars to its lowest point since the 1980s.

This downward trend has been subsidized by the notorious "SUV loophole" in the government's Corporate Average Fuel Economy (CAFE) standards, national guidelines for fuel efficiency. Originally enacted after the energy crisis of the 1970s, the law exempted light trucks -- then a small share of the market and primarily used as work vehicles -- from the more stringent fuel economy standards for passenger cars. Indeed, CAFE standards have not been significantly raised in more than two decades, thanks to our elected representatives in Congress and their financial patrons in the car industry (including car dealers), who pump millions of dollars into campaign coffers -- $4 million in 2002 alone, when the Senate last defeated a proposed increase in CAFE standards. (Since 1990 the industry has given more than $97 million to congressional and presidential campaigns, 75 percent of that to Republicans. See "Priming the Pump.")

While U.S. carmakers and lawmakers fought for the status quo, Honda upped the fuel economy of its Civic by 5 to 10 percent in 2001 and debuted its hybrid Insight. That same year, Ford devoted much of its energy to doing damage control on the Explorer. And G.M. rolled out its Hummer 2, which gets 10 miles to the gallon.

Flirting with Hybrids

But here it is late 2004, and Ford has finally delivered, producing the first American-made hybrid car. The country's flirtation with this relatively new kind of vehicle will be tested in earnest as more models arrive in showrooms. Toyota has tweaked the Prius -- already the darling of what is still a niche market -- to be even faster, cleaner, larger, and more fuel-efficient than last year's model, and will further up the performance ante with a hybrid Lexus SUV that promises the acceleration of a V8. G.M. is offering a hybrid pickup and claims that by 2007 it will have seven more hybrid models, with the capacity to build a million of these vehicles a year -- if Americans want them. Toyota's Camry and Honda's Accord, the two best-selling passenger vehicles in America, will go hybrid over the next two years.

Still, hybrids -- 20,000 from Ford in the next year, 100,000 from Toyota -- represent an insignificant number in a market that sells 17 million vehicles a year. Nor is it likely these carmakers want to build many more. The Escape hybrid is priced thousands of dollars more than a comparably powered standard Escape; Ford refuses to say whether it's actually covering its costs. But certainly for Ford, and perhaps for Toyota as well, the answer is: not yet. It's true that new technologies often fall dramatically in price over time, but the consensus is that hybrids will always cost more to build than internal combustion engines for the simple reason that instead of one propulsion system you have two, an electric motor and a gasoline engine.

These price barriers must be surmounted for hybrids to become real players in the market and thereby have a measurable impact on slowing the disastrous pace of climate change. Joe Tomita, senior vice president of regulatory and technical affairs for Toyota North America, is clear on this: "The best technology can't accomplish a thing without mass-market acceptance and volume sales." It's a real Catch-22. There won't be mass-market acceptance unless automakers help create the market, and this is something they are clearly unwilling to do without the certainty of market demand.

High manufacturing costs and the instability of energy prices mean that the major carmakers will want to keep their options open. All are pursuing at least one other power train besides gasoline. In Europe, where gasoline prices have been high enough, long enough to shape the market, diesel has been reborn. With no more nasty soot and noise, and with efficiency approaching that of hybrids, this new "clean diesel" has captured nearly half of European car sales. Surprisingly, European air quality standards for 2008 allow five times as much particulate matter and eight times as much nitrous oxide as in the United States, where carmakers are also required to warranty their exhaust systems for two to three times as long as in Europe. So diesel would have to prove itself adaptable to the more stringent emissions standards in the United States.

But the Office for the Study of Automotive Transportation at the University of Michigan believes this will happen and predicts that by 2012, diesel will capture 15 percent of vehicle sales in the United States, hybrids 7.5 percent, and hydrogen fuel cells 1 percent. What about beyond 2012? Will we then come upon the hydrogen future?

Hydrogen or Hot Air?

While carmakers agonize over the variety of options for investments in fuel economy, the long-term hope is clearly hydrogen. Industry consensus puts the hydrogen horizon at a minimum of 15 years, with other guesses at two to four decades. This timeline matters. One scenario conceived by NRDC compared aggressive fuel economy (40 miles per gallon by 2012 and 55 miles per gallon by 2020) to early hydrogen adoption (100,000 fuel-cell vehicles per year by 2010 and 2.5 million per year in 2020). This is a very favorable development pace for hydrogen, yet implementing aggressive fuel economy would still save almost 25 times as much oil by 2020.

Larry Burns, the vice president of advanced product development for G.M., sees first light for hydrogen in 2010: "I'm talking about fuel cells that are the same cost and durability as gasoline propulsion systems," he says confidently. G.M. believes that whoever cracks the fuel cell puzzle first will assume a commanding height in the global economy. Burns sees huge opportunity in the fact that 88 percent of the world's people do not own a car or truck. He looks at booming markets in India and China and sees dollar signs. He understands that the way cars are currently made, and the rate at which they consume fuel, cannot support the kind of exponential growth he anticipates. And he insists fuel cell cars will perform so much better than current vehicles that they will drive significant market change.

Burns is not alone in seeing this potential, but a recent report by the American Physical Society identifies more than a few critical technology gaps: A panel of physicists concluded that hydrogen production needs a fourfold to tenfold improvement in cost and efficiency, while fuel cells themselves must improve 10 to 100 times in cost, size, durability, and ease of manufacture.

Widespread acceptance of hydrogen cars will require widespread availability of hydrogen. In the United States, 175,000 filling stations sell petroleum; 25 sell hydrogen. Cost estimates for this endeavor spiral into the hundreds of billions of dollars. The potential of hydrogen to be a climate-change savior also assumes environmentally sustainable production, but in the short run much of this energy source will likely come from fossil fuels, releasing still more greenhouse gases.

These question marks, and the wide consensus that Burns is a decade off the mark, haunt an otherwise compelling dream. G.M.'s pursuit of fuel cells is, in effect, a high-stakes poker game with a 10- figure ante. "I think it's a mistake for G.M. to plunk down a billion-dollar bet on hydrogen and fuel cells in the next 10 years," says NRDC's Hwang, who sees much better business prospects in more conventional technology. "It's easy to get seduced by the sexy technology, the water vapor coming out of the tailpipe." And he worries that G.M. may be trying to dodge federal action on fuel economy in the present with its seductive vision of the future.

"Maybe it's reasonable that people are skeptical, given some of the history of the auto industry," says Burns, in passing reference to its unseemly resistance to such public benefits as seat belts, air bags, and emission-control devices. But he protests that the fuel cell critics are not in his labs. "We have not seen one thing yet that suggests the roadmap we have [for affordability] can't be realized by 2010," he says. His real concern is the competition: Toyota, Honda, Nissan, Ford, Ballard, VW, United Technologies, Hitachi. All of these companies are developing fuel cells, and Toyota is rumored to have outspent even G.M. "I don't intend to blink," Burns says. "We're not doing this because of a CAFE head fake. We're doing it because of the competitive threat of somebody else figuring it out."

But Hwang at the NRDC doesn't buy it. "The engineers may be well intentioned, but G.M.'s lobbyists, and its PR machine, are as Machiavellian as they come," he says.

A Look in the Mirror

But what about us, the consumer? What's our role in all this? Americans consistently express a desire for better fuel economy. It's not just environmental pollsters who find this. Research by Ford and JD Power, the marketing and consumer research firm, noticed it well before our $2-a-gallon summer. Yet on the car lot, not only do we choose less efficient models overall; we also tend to choose the least efficient package of engine size and accessories. We like power. When cars are available in four- and six-cylinder models, it's six by a landslide. Stick shifts are more efficient than automatics, but we've chosen automatics so often that manual transmissions are no longer available on many car models.

Consider, though, that cars operate in a very public realm. They take up space, consume fuel, exhale soot and other pollutants that cause asthma, and release greenhouse gases like carbon dioxide. Cars are 99 percent cleaner than they were four decades ago. It didn't happen because we, as individual consumers, were given the option of spending an extra few hundred bucks for clean air. It happened because California, with its tough emissions laws and huge car market, and then Washington, D.C., demanded it. "If one person buys a car to lower emissions it doesn't do any good," explains NRDC economist Ashok Gupta. "We all have to participate to get those social benefits. We all benefit and we should all pay. More stringent standards do that. They impose a cost which, in effect, we all pay."

Unlike emissions control, fuel economy does benefit the individual consumer in a tangible way. But when practiced in the car market as a whole, it also has public benefits, such as reducing our dependence on foreign oil. And because we're such big consumers, if we use less it's likely global prices will drop. David Cole, chairman of the Center for Automotive Research, a not-for-profit group in Ann Arbor, Michigan, estimates huge economic returns on automotive conservation. "A billion dollars invested is going to generate $10 billion in savings to the economy in lower oil prices," he says. "I believe a full-court press on efficiency and alternative technology is going to lower the price of oil in the world market."

This demonstrates both the potential for conservation and the peril for Detroit. If U.S. carmakers invest aggressively in fuel economy, oil prices could drop again -- and wipe out the very market impetus for fuel economy. Americans have very high performance expectations, and given the competitive price advantage of foreign manufacturers, the Big Three are pressed simply to meet the demand for towing power and acceleration -- a demand that, of course, the automakers themselves feed in nearly every advertisement they produce. "What scares the industry more than anything else is getting out of step with the market," explains Cole. With razor-thin profit margins, one misstep could prove fatal. American automakers are already on the edge as they try to integrate new technology with the dynamics of the global marketplace, he says. "They're trying to change the fan belt with the engine running."

How has the foreign competition done it? A voluntary agreement between European manufacturers and the European Union promises a per-vehicle reduction in carbon dioxide emissions of 25 percent between 1995 and 2008. National standards in Japan require about a 23 percent increase in the fuel economy of gasoline-powered vehicles by 2010. Only in the United States is a significant public benefit like fuel economy left to market whim. Indeed, by manipulating the campaign finance system with barrels of cash and exploiting the job-loss fears of its workers, the industry has helped defeat, by increasingly wide margins, any attempt by Congress to raise U.S. standards.

China, with the authoritarian privilege to do whatever it likes, has decided its future lies in following Japan and Europe. An array of new standards aggressively lay out improvements expected in the near future. The largest vehicles must achieve 19 miles per gallon by 2005, and 21 by 2008. For smaller cars, the standards are 38 and 43 by those dates. According to an analysis by the U.S. Public Interest Research Group, only 19 percent of our cars and 14 percent of trucks meet China's 2008 standard.

The consumers who have the greatest say about the car of the future, therefore, might live in China and India. Both countries have burgeoning middle classes and double-digit growth in automotive sales. Both are oil-poor and leery of a supply line at the mercy of America's navy. Both have relatively little invested in a fueling infrastructure and could choose hydrogen if the technology progresses. And both have attracted billions of dollars in investment from global automotive manufacturers -- including the very companies that have resisted fuel economy gains in this country. It's entirely possible that by the end of the next decade those same consumers in Beijing and Bombay will have better automotive choices than folks in Burbank. Unless we get our act together we may not only be unable to buy cars as thrifty as those in China, but be unable to export to these markets either.

Shifting into Forward

Too often, debates about future cars are framed only in terms of technological choices -- diesel versus hybrid, for example, or short-term gains in gasoline efficiency versus long-term bets on hydrogen. These arguments are misguided. It is widely accepted that no one power train or fuel will solve the problem by itself. To curb the upward trajectory of greenhouse gases we will need to make significant progress across the board: with conventional and hybrid technologies that already exist and with advanced technologies like hydrogen. But we do not need a technology breakthrough so much as we need a breakthrough in desire -- in our desire to set goals and actually meet them.

We have spent $120 billion and counting on our entanglement in Iraq, a war fought, in good part, over oil. "For that same amount of money," says Hwang, "you could rebuild all of our factories to make the most fuel-efficient vehicles out there."

That's not big spending; it's big investment. "If Detroit doesn't retool, it's not going to be able to compete globally," says Hwang, who notes that one in ten American jobs flows from the auto industry. "Will it cost a lot? Yes. But how can we afford not to spend when it comes to protecting U.S. jobs? Let's not be too shortsighted or too narrow in our accounting."

How do we pay for this? Industry and environmentalists have suggested a gas tax at various times: Start with a dime per gallon, then add a dime a year for a decade. Twelve billion dollars could be raised in the first year -- lots of new money, most of which could be invested in transportation research, development, and retooling. The problem is that most folks consider this idea, politically speaking, a nonstarter. Straight-up governmental regulation would certainly assure progress, but this approach (take the CAFE debates, for example) has proven so politically divisive, not to mention unsuccessful, for the last 20 years that a new strategy is needed.

"If you want industry to do the right thing, look at their financial incentives and figure out how they can make money doing it," says Ashok Gupta at NRDC. "How can you expect them to do something that's not in their shareholders' interest? Government needs to set very clear goals in terms of what needs to be achieved, and then help industry retool to meet those goals."

Gupta and others support a creative array of manufacturer incentives. "The technology exists, so why isn't the industry doing it? Their response is that consumers don't want the product," he explains. "You could provide consumers with an incentive -- here's a $3,000 rebate -- but the problem for the auto industry is they still have to invest billions of dollars retooling their factories in hopes that the incentive will work. Will consumers show up? Risk is still on the auto industry side." Instead, Gupta believes incentives such as tax credits and investment write-offs could allow manufacturers to bring new and emerging technologies -- whether hybrid or hydrogen fuel cells -- to market so that consumers could see new products without a higher price tag.

However these incentives are structured, Gupta says there is a pretty broad consensus that they should be linked to a real improvement in fuel economy standards. By resisting the very principle of an average, industry-wide fuel economy, automakers are preventing the development of a much needed market for the efficient vehicles they are promising to deliver.

Perhaps the most encouraging progress has been the beginnings of a collaboration among industry, labor, government, and environmentalists to hammer out a functional, bipartisan plan. The National Commission on Energy Policy, a privately funded project whose diverse membership includes the chairman of ConocoPhillips, the president of the United Steelworkers of America, the chairman of the board of the Consumers Union, a former Ford executive, former heads of the Environmental Protection Administration and the Central Intelligence Agency, and a codirector of the NRDC's energy program, was to issue a report early next year. Disconcerted by the low profile of energy policy during the presidential campaign, the group accelerated its work to get a proposal on the table soon after the election. The commission was still at work when this issue went to press, but some attempt to resolve the fuel economy impasse is expected to be a significant component of its plan.

"That's where the hope is -- environmental groups, labor, and industry finally working together and presenting a solution to the political leadership rather than a problem," says Gupta. "If we can't get together and solve this, we can't expect our elected officials to do it. The hope is we will be able to hand them a solution and something will actually happen this time."

Which would be a good thing, since time is running out -- whether it's measured in terms of climate change, our dependence on foreign oil, or the national security risks inherent in that dependence. Meanwhile, the benefits of such a solution -- cleaner air, lower fuel prices, energy independence -- are immeasurable. We could do this. And the road ahead -- for us, for Detroit even -- would be bright indeed at the wheel of our shiny new automobiles.

SIDEBARS

The Automobiles of Tomorrow

[For photos, see page 2 of the original article.]

If Detroit ever gets its act together, a host of cool new fuel-efficient cars could arrive sooner than you think at a nearby showroom. The prototypes and concept cars shown below offer a variety of power trains, from combination hydrogen-gasoline to fuel-cells that derive hydrogen fuel from home supplies of natural gas.

Photo of a G.M. Autonomy
1. This model of a G.M. Autonomy is powered by hydrogen fuel-cells. Even more revolutionary is the vehicle's "by-wire" technology: traditional mechanical systems of cables, rods, hydraulics, and levers are replaced by electronic controls. With this technology comes radical design freedom. Push the motors into the wheels and the rest of it can fit into what looks like a skateboard. You could own a single skateboard and several bodies that could be switched by turning just a dozen bolts.

Photo of a Suzuki Covie
2. This experimental two-seat Suzuki Covie electric vehicle uses a hydrogen fuel-cell generating system and is designed to travel only short distances; ideal, perhaps, for use in crowded urban areas.

Photo of a Mazda hydrogen rotary engine
3. In this Mazda hydrogen rotary engine, hydrogen is injected in a gaseous state. The engine prototype has already been tested in a special-edition Mazda RX-8 equipped with a dual fuel system consisting of a high-pressure hydrogen tank and a separate gasoline tank. The car can run on either fuel.

Photo of a Toyota Motor Triathlon Race Car
4. The wheels of this Toyota Motor Triathlon Race Car each have their own electric motors, powered by a fuel-cell stack. The zero-emissions vehicle is designed to compete off-road, on city-street circuits, and on racetracks.

Priming the Pump

According to data compiled by the Center for Responsive Politics, the auto industry contributed more than $15 million to presidential and congressional campaigns during the 2004 election cycle. Democrats got only about 22 percent of this largesse; the other 78 percent went to Republicans. Of that $15 million, $2 million came from car manufacturers; car dealers selling domestic models, as well as those that sell Japanese models, donated $9.4 million.

George Bush received $2.25 million in auto industry donations, as compared to a relatively measly $243,159 for John Kerry. Hmm...

Finally, this direct political spending is just part of the picture. The automakers spend big bucks on armies of Washington lobbyists. In 2000, for example, DaimlerChrysler's lobbying budget amounted to $6.3 million, Ford spent $8 million, and G.M. $5.5 million. Given the shamelessly low standards for fuel economy in our country as established by the federal government, the car industry's hefty investment in politicians appears to be paying off -- so far.

Greener Markets

A key antidote to the regulatory stalemate between the auto industry and government involves the crafting of financial incentives to reward reductions in fuel use. Ecos Consulting, based in Portland, Oregon, has advised the National Commission on Energy Policy on devising such programs. Here are a few examples:

CASH BACK Through a system of fees and rebates, manufacturers, dealers, or consumers would pay ever larger fees for vehicles that are less efficient than average; those fees would in turn fund ever larger rebates on vehicles more efficient than average. What better way to encourage fuel savings than to price them into the vehicle at the time of sale?

FILL 'ER UP Instead of paying a fixed amount per year for basic liability coverage, drivers would buy coverage incrementally, with each fill-up. The money would go into a shared pool of funds. (This would have the added benefit of cutting down on the large percentage of uninsured motorists.) Why shouldn't people who drive less or choose more efficient vehicles pay less for insurance? Such programs are being developed in several states.

TRADE UP The federal government or states would offer a financial bounty to retire older, less efficient, less safe, more polluting vehicles. This would complement fees and rebates for new cars by further increasing the efficiency of the existing vehicle fleet. It would also be an economic boon to low-income drivers.

CHECK THE OIL Shift oil industry subsidies to cost-effective oil savings. The federal government currently gives $1.5 billion in annual subsidies to oil companies, regardless of how much oil they find. This in spite of a projected 2004 net profit for the seven largest Western oil companies in the amount of $71.3 billion, according to the Wall Street Journal. Gee, do they really need government subsidies? Instead, that $1.5 billion could be invested in innovative private sector programs to save gasoline. Programs to accelerate sales of more efficient tires and motor oil look especially promising. For each gallon of gas saved, the government would pay only $0.25 to $0.45, substantially less than it now spends on new oil subsidies per gallon discovered. Ultimately it would be cheaper for the government (and certainly better for the planet) to fund ways to save oil rather than drill for new sources of oil.

For more details and related ideas, see Winning the Oil Endgame, a new book by the Rocky Mountain Institute.


Erik Ness and his wife share a Volkswagen station wagon with their two children. On most days it sits parked at their home in Wisconsin while Ness writes about science and the environment for such publications as Discover, Grist, and Preservation.

Editorial Notes: The article describes the importance of developing fuel-efficient vehicles and explains why Detroit isn't doing it. The problems are seen as global climate change, dependence on foreign oil and pollution. Peak Oil is not mentioned. From the point of view of Peak Oil, the article does not go far enough. It represents what Richard Heinberg has called the techno-fix response. If one accepts the reality of Peak Oil, than individual motorized transport itself is up for question and a massive retooling of the auto industry may be misguided. The article appeared in onearth, an environmental magazine published by the National Resources Defense Council (NRDC). According to the NRDC website: "NRDC is the nation's most effective environmental action organization. We use law, science and the support of more than 1 million members and online activists to protect the planet's wildlife and wild places and to ensure a safe and healthy environment for all living things." NRDC has a section of its website devoted to energy: www.nrdc.org/air/energy/default.asp . -BA

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