Sunday, December 07, 2008

Argh, No!

Thomas Friedman again announces how the auto industry must design future products if it is to be rescued:
You want my tax dollars? Then I want to see the precise production plans and timetables for the hybridization of all your cars and trucks within 36 months. I want every bailed-out car company to move to hybrid electric drive trains, because nothing would both improve mileage and emissions more - and also stimulate a whole new 21st-century, job-creating industry: batteries.
Hybrids represent a tiny percentage of the domestic auto market, and represented a tiny percentage even when gas prices peaked. Hybrid technology is expensive. The cheaper, more efficient batteries Friedman wants? They're still vaporware - they don't exist. And there aren't factories lined up to manufacture millions of batteries for new hybrids - with the increased demand for the Prius this past year, Toyota had to disappoint prospective purchasers with long waits because the supply of batteries is limited.

If anything has been vindicated by the fall of the Big Three, it's Friedman's long-standing (and sometimes peculiar) call for higher gas taxes. What happened when gas prices hit $4/gallon? Friedman's dreams came true - the conspiracy between the Big 3 and Congress to carve enormous exceptions to CAFE standards collapsed, and the market for gas guzzling vehicles plummeted. That is to say, until Congress grows a backbone, the better approach to trying to change the vehicles that Americans buy is by hitting them in the pocketbook.

If Friedman's ideas are adopted, domestic autos may be modestly more fuel efficient than imports, but due to the cost of the hybrid technology it will cost about $2,000 more for a roughly equivalent car. People already have the choice of paying a premium for hybrid technology and, in overwhelming numbers, they're keeping that $2,000 in their pockets and buying more fuel efficient, conventionally powered vehicles.

Set an even floor. If it makes sense that every vehicle on the road be a hybrid (and, as the owner of a hybrid, in my opinion it does not make sense), then require that of every car manufacturer serving the U.S. market. Don't handicap the domestic manufacturers at a point in time when they're struggling to stay alive by pricing them into a segment of the market that, even as gas prices peaked, couldn't get more than 3% market penetration. Given Friedman's concern for emissions, it's worth noting that battery technology is pretty dirty - mining and smelting nickel is dirty enough, but Friedman's demand for instant hybrid gratification will probably lead to the wide use of lead-based batteries.

Meanwhile, perhaps Friedman should take a step back and ask, which car company is it that's trying to use breakthrough, cleaner battery technology in a future generation of hybrids. Not that I want to diminish the advances Toyota has made with its NiCad hybrids, but, could it be... GM with the LIon-powered Chevy Volt?

Friedman also presupposes that nothing better will come along. Forcing the domestic auto makers to spend tens of billions locking themselves into a 100% hybrid fleet, and to do it so quickly that they really have no other room for R&D (even assuming Friedman's proposed law permits them to explore other technologies), may make Friedman feel better, but it puts them at a disadvantage in developing other forms of clean, fuel efficient vehicles.

Yes, the Big 3 need to change their ways. Yes, their past contempt for fuel efficiency is part of why they're in so deep a hole. Yes, their past contempt for environmental concerns is reproachable. (And is it ancient history to bring up how they helped destroy public transportation?) But for all of their faults, dictating the details of their future products has the potential to impair their future competitiveness, preventing them from developing fuel-efficient gasoline and flex fuel vehicles, while impeding the development of cleaner, more fuel-efficient non-hybrid vehicles.

At the end of the day, it's a bit like calling on Congress to legislate that the New York Times overcome its financial struggles and create a newspaper for a new century by publishing entirely through Twitter. It's one thing to know enough about something to be dangerous; Friedman's not even quite to the point of knowing that much about cars.

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