Detroit's downshifting

January 18, 2001|By Bruce Piasecki

TROY, N.Y. -- With high gasoline prices and concerns about global warming, we've heard a drumbeat of criticisms of four-ton, 10 mile-per-gallon SUVs.

But what we haven't seen front and center will be on display at the Motor Trend International Auto Show in Baltimore this week. Once kept behind the scenes, manufacturers are proudly rolling out models that promise nothing less than an environmental revolution in mass transportation.

Aside from the innovative technologies, there are two remarkable features about these new cars.

First, they were not developed to meet consumer demand, but to satisfy the manufacturers' need for public relations.

Second, American car companies are once again following the lead of Japan into a new era of energy efficiency. A quarter-century ago, U.S. automakers fought Japanese efficiency and took an expensive beating. This time -- in a triumph of globalization -- U.S. manufacturers are seeing the Japanese innovators not as competitors, but as their partners because of the interlocking arrangements among the world's major auto companies.

Whatever the motive, these technologies are becoming available just when they are needed. Consider the new products:

Ford claims its TH!NK, an electric vehicle, is being sold faster than it can be built.

General Motors proudly displays the sleek, aerodynamic Precept, featuring one of the lowest drag coefficients ever, which may ultimately be powered by a hydrogen fuel cell.

Nissan's Sentra CA (Clean Air) is the only gas-fueled vehicle in the world to receive California Air Resources Board certification as a super-ultra low-emissions vehicle.

DaimlerChrysler has already released something resembling the ideal goal of environmentalists: the ESX3, a hybrid that gets 72 mpg because of a plastic body that weighs 46 percent less (and costs 15 percent less) than steel, while providing equal protection.

Why the innovation? The primary reason is improving image.

"Our decision to be environmental leaders was not customer-driven back then and still is not customer-driven today," says Art Garner, manager of public relations for Honda, a car company that purports to be No. 1 when it comes to the environment. Mr. Garner says that Honda was the first to deliver ultra-low-emission vehicles, nickel-metal hydride batteries and a gas/electric hybrid -- the Insight -- to the U.S. market.

While the death of the combustion engine may have been exaggerated, Dennis Minano, GM's chief environmental officer, says that the industry knows its days are numbered. In fact, today analysts and executives alike are much more optimistic about hybrid engines (part electric, part internal combustion) and eventually fuel-cell engines powered by hydrogen.

"Five years ago, a hydrogen economy seemed like a distant fantasy," Mr. Minano said. "Today, the fuel cell is evolving, and there is an enormous potential for energy savings and environmental performance." In fact, this month BMW announced it will bring its fleet of 750hL sedans to the United States, which it claims is the world's first fleet of hydrogen-powered cars.

The biggest question looming is not how to get Detroit to produce such cars, but how to get consumers to buy them. Gas prices and environmental concerns are part of the answer. But basic utility is also essential. Consumers want additional seating space and cargo room, things missing in electric vehicles and early hybrids.

Toyota's hybrid five-passenger sedan, Prius, seems to have the edge in that category. More than 30,000 are on the road in Japan, and there is a long waiting list in the United States. Meanwhile, Dodge has rolled out a hybrid Durango SUV, and Ford and GM have versions ready as well.

At today's gas prices, the average driver would save $300 a year at the pump driving a car like the Prius instead of a typical sedan while being able to travel 600 miles between fill-ups and reducing emissions by as much as 84 percent.

The car company that will win the race to build the future's superior car will have to fashion a corporate strategy that drives emissions toward zero while providing the owner with performance and comfort. An intelligent blend of bold vision and practical incrementalism will be necessary to bridge the gap between today's traditional car, loved by consumers, and the new alternative fuels of the near future.

Though its reasons may not be noble, the industry seems to be on the right track.

Bruce W. Piasecki is director of the Environmental Management Program at Rensselaer Polytechnic Institute's Lally School of Business and Technology. He is the author of "Corporate Environmental Strategy" (John Wiley and Sons, 1996).

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