Dreamcast18
06-06-2006, 09:05 AM
http://www.taemag.com/issues/articleID.19166/article_detail.asp
The Car of the Future?
By Eli Lehrer
As Congress tackles high gasoline prices and fuel standards, TAE looks back at one instance in which the markets, rather than governmental intervention, produced an energy-efficient, high gas-mileage, top-notch vehicle. This report originally appeared in TAE’s September 2001 issue.
The Toyota Prius has reclining bucket seats, a CD player, a digital instrument panel in its dash, and shiny stainless steel buttons for its climate control system. The trunk holds five grocery bags and the backseat has room for six-footers. To a casual observer it looks like a typical Japanese economy-size car with a slightly bigger than normal interior.
Looks deceive. A peek under the hood reveals a big difference: A battery about half the width of the car sits next to a small four cylinder engine. The car’s hybrid gas-electric propulsion system combines electric motors that drive the car much of the time with a conventional gasoline engine that applies supplemental power and driving range, along with mechanisms that recycle leftover energy into fresh battery charges. Any time the driver steps on the brakes, power is transferred from the car’s forward motion back to the battery.
When the Prius runs on battery power—which is most of the time during city driving—no pollution at all issues from its tailpipe. When a driver wants to go fast, additional power comes from the engine. Because the car can use its battery and recover more energy from braking in low-speed, stop-and-go city driving, the Prius’ fuel economy reverses that of conventional cars: it gets 52 miles per gallon in the city and 45 on the highway. In theory at least, the Prius can travel about 600 miles on a single tank of gas. And you can buy one at just about any Toyota dealer.
The Prius isn’t an anomaly. Also available today is Honda’s Insight, a sleek, sporty hybrid gas-electric vehicle that gets up to 68 miles per gallon with a manual transmission. But the Insight is a niche product that seats only two and has virtually no cargo space. Next year, Honda will sell a gas-electric version of its popular Civic sedan. Meanwhile, a current diesel powered Volkswagen Jetta with a manual transmission sips even less fuel than the Prius while on the highway (although it pollutes as much as some SUVs). Nissan, on the other hand, markets a conventionally powered version of its Sentra coupe that is tuned to pollute as little as the Prius. And General Motors has recently updated some fuel-saving 1980s technology by letting eight cylinder cars shut down four of their cylinders while running at low speeds.
The Prius, in other words, doesn’t involve any miracle technology that isn’t also being marketed somewhere else. But it brings together a lot of interesting features in one package. What the car offers is a glimpse at the way steady, incremental, market-driven steps are bringing us vehicles that save energy and pollute less—without harsh or utopian government mandates.
The Prius is an important case study because it involves a curious reversal of poli-economic stereotypes. Under the Clinton administration, the U.S. government tried to get its auto manufacturers to build cars that could do what the Prius can—through what was called the Partnership for a New Generation of Vehicles. This was America’s first major effort at peace-time government-driven “industrial policy” for a consumer product. And it was a major flop. Meanwhile, Toyota developed the Prius without any real input from the Japanese government. As a result of Toyota’s nimbleness, and the clumsiness of the “government-business partnership” attempted in the U.S., the Prius enjoys a four-year head start on similar products from America’s auto makers.
At the height of Japan’s bubble economy in the 1980s, many Americans thought the United States should imitate Japan’s national industrial policy. In the late 1980s and early 1990s, writers like James Fallows and politicians like Paul Tsongas claimed that Japan and social-democratic European states like France and Germany had faster growth rates and lower unemployment than the United States because they had industrial policies. Industrial policy might be thought of as a less intense version of Soviet-style central planning. In nations with industrial policies, companies remain privately owned and profit seeking, but government agencies work with corporate executives to choose new technologies and production goals. Anti-trust enforcement goes away, banks and unions cooperate with industry, and government subsidizes research and development efforts.
Contrary to the claims of its backers, the overall record of industrial policy is dismal. Japan’s subsidized efforts to create high definition television, breakthrough computers, and Internet companies ended up spending billions of dollars to produce products nobody wanted to buy. Most of Japan’s current malaise is a result of economic misallocations and overproduction created precisely through government industrial policies. Meanwhile, less regulated sectors in Japan like auto manufacturing have provided the bulk of the nation’s trade earnings, and, perversely, the rising tax revenues that subsidize continued industrial policy.
In Western Europe, things went even worse. Largely as a result of their ham-handed central planning efforts, most EU countries experienced almost no net private-sector job creation during the 1980s. When their semi-planned economies faltered (as the United States boomed) European industrial policies lost their luster.
This record of failure, however, didn’t stop efforts by American policy-makers to copy Euro-Japanese industrial policies. In response to Tsongas’ successes in the Democratic primaries, Bill Clinton and Al Gore endorsed some industrial policies. Industrial policy also gained popularity among a few conservatives through Pat Buchanan’s drumbeating for nationalistic government-led economic policies.
It was within the Clinton administration, however, that American industrial policy became a reality. The taste for planning and subsidies combined with a Clinton-Gore desire to serve their environmentalist constituency, and the result was the Partnership for a New Generation of Vehicles. Meeting under the sponsorship of Vice President Gore in February 1993, the otherwise ruthlessly competitive U.S. car makers announced they would work together to develop an ordinary family sedan that averaged 80 miles to the gallon, paid heed to environmental concerns, and sold for about the same price as existing cars. Prototypes of this new “Supercar” would be finished by 2004, and the vehicles would be in consumers’ driveways a few years later, the Vice President and his allies promised.
Despite well over a billion dollars in funding, the Supercar program has gone nowhere. From the beginning, the project’s scientists and executives gravitated toward diesel-based technology because it offered the only practical way to achieve the 80 mile per gallon requirement at the heart of the government pipe dream. While diesel cars get better gas mileage than their non-diesel counterparts, they also produce far more smog-causing pollutants. As a result, the Supercar never gained support from its intended natural constituency in the environmental movement. A 2000 report from several leading environmental groups recommended its abolition.
“This is corporate welfare at its worst,” gripes Erich Pica, an analyst with Friends of the Earth. Skepticism also runs rampant in Congress. “There’s a feeling that the companies are always holding back their best technology for competitive reasons, and there’s no forward progress as a result,” says one House Science Committee staff member who has worked on the subject. Conservatives hate the very idea of the government meddling with the economy. “It’s a stupid government trick,” says Erik Gustafson of Citizens for a Sound Economy. “The government just set a goal with no basis in the market and no idea if the engineers can really achieve it.”
In the early spring of this year, the Bush administration announced plans to replace the Supercar program with a much more modest effort to improve fuel economy in minivans and pickups. Since these products already produce the largest profits and sales volume for the Big Three American auto makers, it’s hard to see why even those subsidies are needed. Soccer moms and dads in suburbs all over America would leap for an SUV that could make a fill-up a less wallet-emptying experience. The government seems embarrassed about the whole Supercar mess: While a high-ranking PNGV official eagerly defended the program to TAE, he said he couldn’t speak on the record. An Energy Department spokesman, meanwhile, didn’t return repeated telephone calls seeking more information.
The auto industry, however, likes the program, with its steady subsidies and politically correct patina. “By aiming high, we made some real breakthroughs. It’s difficult to see how they would have happened without the project,” says Bob Culver, a Ford executive who serves as director of the United States Council for Automotive Research, the Detroit-based consortium the major auto makers set up to accommodate the Supercar plan. Culver, however, concedes that USCAR abandoned the 80 miles per gallon goal even before the Bushies modified the program’s objectives. While some show cars met the goal, production models would have had to sell for more than twice the price of comparable conventionally powered vehicles.
Culver insists that the Prius’ existence doesn’t really concern the American auto makers. “It’s essentially a beta test project. Not a real, profitable car,” he says. Culver points out that all of the Big Three have announced plans to market hybrid gas-electric vehicles by 2004, the year when they were supposed to manufacture production prototypes under Supercar. “So in an important way we’re ahead of schedule,” he concludes, sounding very much the good bureaucrat.
While the Big Three may feel they are ahead of some goofy government timetable, Toyota—which started Prius development at roughly the same time the Supercar project began—has been taking paid orders for about a year. Work on the Prius began in earnest in 1993 when Toyota executive Yoshiro Kimbara announced a company initiative to find vehicle ideas for the twenty-first century. An engineering team defined the project’s fundamental goal: a vehicle slightly bigger than an ordinary economy-size car and half-again more fuel-efficient.
These objectives had a practical, profit-driven basis: In Toyota’s Japanese home market, gas sells for up to five dollars per gallon, so fuel economy improvements are much more attractive to consumers than in the United States. Toyota also used the Prius development process to catch up with some American design advances: The car incorporates so-called cab-forward principles pioneered by Chrysler, which allow cars to have bigger interiors for a given wheel base and exterior size. Toyota reports that the company received no subsidy in developing the Prius. Japanese tax laws, though, do allow companies to write off more research and development expenditures than American laws, and even give tax credits for certain R&D activities.
Toyota realizes that the Prius is an incremental step on the way to building an even more attractive car. “The Prius is no diversion,” says Toyota executive Shinichi Kato. “The Prius is merely the first example of new thinking to reach the market.” This stands in stark contrast to the calamitously impractical all-electric cars marketed recently by GM. These were an attempt to satisfy government mandates that “zero emission” vehicles be sold in significant numbers in California and elsewhere by the year 2003. But the 100 percent battery-driven vehicles turned out to be so hopeless they had to be abandoned.
What of Culver’s claim that the Prius isn’t a real car but a technology beta test? Toyota spokeswoman Martha Voss concedes that Toyota loses some money—although not a lot—on each Prius that it sells. Consumers buy the car for $19,995, while similarly equipped Japanese cars such as the Toyota Corolla and Honda Civic cost about $3,500 less, and American models like the Dodge Neon and Chevrolet Cavalier are around $4,500 less. (A limited supply means nobody pays less than full retail price for a Prius.) On the other hand, selling innovative new products at a loss often makes good business sense in the auto industry: The experience of producing the cool-but-impractical Viper and Prowler models gave DaimlerChrysler the experience to come up with today’s hot-selling, profitable PT Cruiser.
Unlike the exotic sports cars and wild-looking roadsters that many companies market to build their identities and attract loyal customers, the Prius appeals to very normal buyers. Washington, D.C. computer consultant Geoffrey Forman is a pretty typical example. He bought the car out of a mix of environmental concerns and admiration of its technology, and uses it as his family’s only car. “It’s a good, normal family car,” he says. “I use it for grocery shopping, car pool, you name it.”
The Prius needs refinement before it will attract lots of customers without environmentalist concerns or a desire to own the newest technology. Because they recover energy from the car’s momentum, the brakes grip hard and made my stomach jump when I came to a stop sign. Thanks to the quick stops and lack of road feel, the Prius isn’t particularly fun to drive. But then again, neither are most other family cars. The vaunted fuel savings don’t always pan out either. Batteries react poorly to cold, and a March 2000 Car and Driver test pointed out that a week of driving in below freezing temperatures resulted in ho-hum gas mileage of 35 miles per gallon.
But the Prius also has a lot to like. For the most part, the Prius drives like any other car. It climbs hills and merges into high-speed traffic just fine. The floaty steering that was annoying in the city and along winding roads is a pleasure on the freeway. The car’s lack of engine noise means that the rest of life is a lot more audible—in the Washington suburbs I heard birds chirping by the side of the road. And the car holds enough gas to make a round trip from Washington, D.C. to New York City without refueling.
It’s likely that in the near future just about every major carmaker will produce hybrid gas-electric cars. For now, we have the Prius. It’s not for everyone, and it’s not yet profitable. But it is a real, practical automobile, which is more than Al Gore can say about his Supercar.
Washington-based journalist Eli Lehrer is a TAE contributing writer.
The Car of the Future?
By Eli Lehrer
As Congress tackles high gasoline prices and fuel standards, TAE looks back at one instance in which the markets, rather than governmental intervention, produced an energy-efficient, high gas-mileage, top-notch vehicle. This report originally appeared in TAE’s September 2001 issue.
The Toyota Prius has reclining bucket seats, a CD player, a digital instrument panel in its dash, and shiny stainless steel buttons for its climate control system. The trunk holds five grocery bags and the backseat has room for six-footers. To a casual observer it looks like a typical Japanese economy-size car with a slightly bigger than normal interior.
Looks deceive. A peek under the hood reveals a big difference: A battery about half the width of the car sits next to a small four cylinder engine. The car’s hybrid gas-electric propulsion system combines electric motors that drive the car much of the time with a conventional gasoline engine that applies supplemental power and driving range, along with mechanisms that recycle leftover energy into fresh battery charges. Any time the driver steps on the brakes, power is transferred from the car’s forward motion back to the battery.
When the Prius runs on battery power—which is most of the time during city driving—no pollution at all issues from its tailpipe. When a driver wants to go fast, additional power comes from the engine. Because the car can use its battery and recover more energy from braking in low-speed, stop-and-go city driving, the Prius’ fuel economy reverses that of conventional cars: it gets 52 miles per gallon in the city and 45 on the highway. In theory at least, the Prius can travel about 600 miles on a single tank of gas. And you can buy one at just about any Toyota dealer.
The Prius isn’t an anomaly. Also available today is Honda’s Insight, a sleek, sporty hybrid gas-electric vehicle that gets up to 68 miles per gallon with a manual transmission. But the Insight is a niche product that seats only two and has virtually no cargo space. Next year, Honda will sell a gas-electric version of its popular Civic sedan. Meanwhile, a current diesel powered Volkswagen Jetta with a manual transmission sips even less fuel than the Prius while on the highway (although it pollutes as much as some SUVs). Nissan, on the other hand, markets a conventionally powered version of its Sentra coupe that is tuned to pollute as little as the Prius. And General Motors has recently updated some fuel-saving 1980s technology by letting eight cylinder cars shut down four of their cylinders while running at low speeds.
The Prius, in other words, doesn’t involve any miracle technology that isn’t also being marketed somewhere else. But it brings together a lot of interesting features in one package. What the car offers is a glimpse at the way steady, incremental, market-driven steps are bringing us vehicles that save energy and pollute less—without harsh or utopian government mandates.
The Prius is an important case study because it involves a curious reversal of poli-economic stereotypes. Under the Clinton administration, the U.S. government tried to get its auto manufacturers to build cars that could do what the Prius can—through what was called the Partnership for a New Generation of Vehicles. This was America’s first major effort at peace-time government-driven “industrial policy” for a consumer product. And it was a major flop. Meanwhile, Toyota developed the Prius without any real input from the Japanese government. As a result of Toyota’s nimbleness, and the clumsiness of the “government-business partnership” attempted in the U.S., the Prius enjoys a four-year head start on similar products from America’s auto makers.
At the height of Japan’s bubble economy in the 1980s, many Americans thought the United States should imitate Japan’s national industrial policy. In the late 1980s and early 1990s, writers like James Fallows and politicians like Paul Tsongas claimed that Japan and social-democratic European states like France and Germany had faster growth rates and lower unemployment than the United States because they had industrial policies. Industrial policy might be thought of as a less intense version of Soviet-style central planning. In nations with industrial policies, companies remain privately owned and profit seeking, but government agencies work with corporate executives to choose new technologies and production goals. Anti-trust enforcement goes away, banks and unions cooperate with industry, and government subsidizes research and development efforts.
Contrary to the claims of its backers, the overall record of industrial policy is dismal. Japan’s subsidized efforts to create high definition television, breakthrough computers, and Internet companies ended up spending billions of dollars to produce products nobody wanted to buy. Most of Japan’s current malaise is a result of economic misallocations and overproduction created precisely through government industrial policies. Meanwhile, less regulated sectors in Japan like auto manufacturing have provided the bulk of the nation’s trade earnings, and, perversely, the rising tax revenues that subsidize continued industrial policy.
In Western Europe, things went even worse. Largely as a result of their ham-handed central planning efforts, most EU countries experienced almost no net private-sector job creation during the 1980s. When their semi-planned economies faltered (as the United States boomed) European industrial policies lost their luster.
This record of failure, however, didn’t stop efforts by American policy-makers to copy Euro-Japanese industrial policies. In response to Tsongas’ successes in the Democratic primaries, Bill Clinton and Al Gore endorsed some industrial policies. Industrial policy also gained popularity among a few conservatives through Pat Buchanan’s drumbeating for nationalistic government-led economic policies.
It was within the Clinton administration, however, that American industrial policy became a reality. The taste for planning and subsidies combined with a Clinton-Gore desire to serve their environmentalist constituency, and the result was the Partnership for a New Generation of Vehicles. Meeting under the sponsorship of Vice President Gore in February 1993, the otherwise ruthlessly competitive U.S. car makers announced they would work together to develop an ordinary family sedan that averaged 80 miles to the gallon, paid heed to environmental concerns, and sold for about the same price as existing cars. Prototypes of this new “Supercar” would be finished by 2004, and the vehicles would be in consumers’ driveways a few years later, the Vice President and his allies promised.
Despite well over a billion dollars in funding, the Supercar program has gone nowhere. From the beginning, the project’s scientists and executives gravitated toward diesel-based technology because it offered the only practical way to achieve the 80 mile per gallon requirement at the heart of the government pipe dream. While diesel cars get better gas mileage than their non-diesel counterparts, they also produce far more smog-causing pollutants. As a result, the Supercar never gained support from its intended natural constituency in the environmental movement. A 2000 report from several leading environmental groups recommended its abolition.
“This is corporate welfare at its worst,” gripes Erich Pica, an analyst with Friends of the Earth. Skepticism also runs rampant in Congress. “There’s a feeling that the companies are always holding back their best technology for competitive reasons, and there’s no forward progress as a result,” says one House Science Committee staff member who has worked on the subject. Conservatives hate the very idea of the government meddling with the economy. “It’s a stupid government trick,” says Erik Gustafson of Citizens for a Sound Economy. “The government just set a goal with no basis in the market and no idea if the engineers can really achieve it.”
In the early spring of this year, the Bush administration announced plans to replace the Supercar program with a much more modest effort to improve fuel economy in minivans and pickups. Since these products already produce the largest profits and sales volume for the Big Three American auto makers, it’s hard to see why even those subsidies are needed. Soccer moms and dads in suburbs all over America would leap for an SUV that could make a fill-up a less wallet-emptying experience. The government seems embarrassed about the whole Supercar mess: While a high-ranking PNGV official eagerly defended the program to TAE, he said he couldn’t speak on the record. An Energy Department spokesman, meanwhile, didn’t return repeated telephone calls seeking more information.
The auto industry, however, likes the program, with its steady subsidies and politically correct patina. “By aiming high, we made some real breakthroughs. It’s difficult to see how they would have happened without the project,” says Bob Culver, a Ford executive who serves as director of the United States Council for Automotive Research, the Detroit-based consortium the major auto makers set up to accommodate the Supercar plan. Culver, however, concedes that USCAR abandoned the 80 miles per gallon goal even before the Bushies modified the program’s objectives. While some show cars met the goal, production models would have had to sell for more than twice the price of comparable conventionally powered vehicles.
Culver insists that the Prius’ existence doesn’t really concern the American auto makers. “It’s essentially a beta test project. Not a real, profitable car,” he says. Culver points out that all of the Big Three have announced plans to market hybrid gas-electric vehicles by 2004, the year when they were supposed to manufacture production prototypes under Supercar. “So in an important way we’re ahead of schedule,” he concludes, sounding very much the good bureaucrat.
While the Big Three may feel they are ahead of some goofy government timetable, Toyota—which started Prius development at roughly the same time the Supercar project began—has been taking paid orders for about a year. Work on the Prius began in earnest in 1993 when Toyota executive Yoshiro Kimbara announced a company initiative to find vehicle ideas for the twenty-first century. An engineering team defined the project’s fundamental goal: a vehicle slightly bigger than an ordinary economy-size car and half-again more fuel-efficient.
These objectives had a practical, profit-driven basis: In Toyota’s Japanese home market, gas sells for up to five dollars per gallon, so fuel economy improvements are much more attractive to consumers than in the United States. Toyota also used the Prius development process to catch up with some American design advances: The car incorporates so-called cab-forward principles pioneered by Chrysler, which allow cars to have bigger interiors for a given wheel base and exterior size. Toyota reports that the company received no subsidy in developing the Prius. Japanese tax laws, though, do allow companies to write off more research and development expenditures than American laws, and even give tax credits for certain R&D activities.
Toyota realizes that the Prius is an incremental step on the way to building an even more attractive car. “The Prius is no diversion,” says Toyota executive Shinichi Kato. “The Prius is merely the first example of new thinking to reach the market.” This stands in stark contrast to the calamitously impractical all-electric cars marketed recently by GM. These were an attempt to satisfy government mandates that “zero emission” vehicles be sold in significant numbers in California and elsewhere by the year 2003. But the 100 percent battery-driven vehicles turned out to be so hopeless they had to be abandoned.
What of Culver’s claim that the Prius isn’t a real car but a technology beta test? Toyota spokeswoman Martha Voss concedes that Toyota loses some money—although not a lot—on each Prius that it sells. Consumers buy the car for $19,995, while similarly equipped Japanese cars such as the Toyota Corolla and Honda Civic cost about $3,500 less, and American models like the Dodge Neon and Chevrolet Cavalier are around $4,500 less. (A limited supply means nobody pays less than full retail price for a Prius.) On the other hand, selling innovative new products at a loss often makes good business sense in the auto industry: The experience of producing the cool-but-impractical Viper and Prowler models gave DaimlerChrysler the experience to come up with today’s hot-selling, profitable PT Cruiser.
Unlike the exotic sports cars and wild-looking roadsters that many companies market to build their identities and attract loyal customers, the Prius appeals to very normal buyers. Washington, D.C. computer consultant Geoffrey Forman is a pretty typical example. He bought the car out of a mix of environmental concerns and admiration of its technology, and uses it as his family’s only car. “It’s a good, normal family car,” he says. “I use it for grocery shopping, car pool, you name it.”
The Prius needs refinement before it will attract lots of customers without environmentalist concerns or a desire to own the newest technology. Because they recover energy from the car’s momentum, the brakes grip hard and made my stomach jump when I came to a stop sign. Thanks to the quick stops and lack of road feel, the Prius isn’t particularly fun to drive. But then again, neither are most other family cars. The vaunted fuel savings don’t always pan out either. Batteries react poorly to cold, and a March 2000 Car and Driver test pointed out that a week of driving in below freezing temperatures resulted in ho-hum gas mileage of 35 miles per gallon.
But the Prius also has a lot to like. For the most part, the Prius drives like any other car. It climbs hills and merges into high-speed traffic just fine. The floaty steering that was annoying in the city and along winding roads is a pleasure on the freeway. The car’s lack of engine noise means that the rest of life is a lot more audible—in the Washington suburbs I heard birds chirping by the side of the road. And the car holds enough gas to make a round trip from Washington, D.C. to New York City without refueling.
It’s likely that in the near future just about every major carmaker will produce hybrid gas-electric cars. For now, we have the Prius. It’s not for everyone, and it’s not yet profitable. But it is a real, practical automobile, which is more than Al Gore can say about his Supercar.
Washington-based journalist Eli Lehrer is a TAE contributing writer.