Friday, December 12, 2008

Why We Should Let the Big Three Fail

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[This blog originally appeared in New Scientist. See the original here.]

The second attempt at a federal bailout for the Big 3 US automakers fell apart early this morning when their union refused to trim their workers' rather cushy benefits packages.

I say good riddance. Let the dinosaurs die. It's time for auto industry version 2.0.

One alternative getting a lot of attention recently is Better Place, a Silicon Valley start-up with a business model that could quickly turn the automotive industry on its head.

Basically, it's a refueling system for all-electric vehicles that, if successful, would lead to a complete gutting of the internal combustion engine.

Better Place doesn't sell cars; rather, it sets up a national grid of refueling stations, ideally powered by renewable energy. Drivers swap out their drained batteries for fresh ones at their stations in a matter of minutes and pay Better Place by the mile, like buying minutes for a cell phone.

Israel, Denmark, Australia, and, as of last week, Hawaii are all on board. Renault-Nissan will provide the cars with the easy-to-swap batteries, and Japan is testing the company's stations for a remake of their transport system.

Tom Friedman plugged this new model earlier this week - and dissed what was then a likely bailout for the Big 3 - in an editorial for the New York Times saying:

"Our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay... into the CD music business on the eve of the birth of the iPod and iTunes... into a book-store chain on the eve of the birth of Amazon.com and the Kindle... into improving typewriters on the eve of the birth of the PC and the Internet."
The Better Place model may be a part of the solution, but until heavy, steel-body autos go on a serious diet, battery-driven cars are going to be prohibitively expensive.

Amory Lovins of the Rocky Mountain Institute gave a great talk at Harvard last week on Hypercars or ultralight vehicles made of advanced composites (that is, carbon fibre instead of steel) that, by virtue of their light weight, are 3-5 times more fuel-efficient.

Advanced composite car ideas have been batted around for years: GM did a one-off concept car back in 1992, but it seems no one has been able to get the economics right for mass production. Until, perhaps, now.

This summer, a Japanese paper reported that Nissan, Honda, and Toray - the largest carbon fibre manufacturer in the world - are coming together with the goal of making vehicles 40% lighter than today's models.

Last week I proposed giving the Big 3 whatever they asked for so long as the money was tied to significant CAFE standard increases. Now, I'm taking it back. The automotive industry is changing too quickly and GM, Ford, and Chrysler are too far behind.

I say if the US is going to compete in a new, fuel-efficient world, it will be with scrappy start-ups that aren't tied to 20th-century pensions. What do you think?
(image: Wikimedia Commons)

2 comments:

Matt said...

Right on Phil, I agree completely but have had trouble coming to terms with this position.

As much as we'd like to see traditional American car manufacturers innovate, they have had opporunities to do so and have fallen short of even trying!

One universal constant is change, and as far as things at home go, America has seized on change to reinvent itself many times over.

We should all start looking at it as an opportunity and not a catastrophe. Sometimes a clean break is better than a slow, inevitable decline.

But on the other hand, it's hard to turn one's back on the workers and families and communities that would bear the burden of the collapse.

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