Commentary: The Price of Progress
Everybody wants cleaner burning cars and alternative fuels, but who's going to pay for it? And what will all this change mean for the future of the collector car hobby?
As everyone knows, there is a growing interest in moving the United States away from petroleum fuels for transportation and toward alternative fuels and advanced technologies. In fact, many long time observers of the auto industry feel that this growing trend is permanent and that we are witnessing a major paradigm shift away from the traditional combustion engine. Nowhere has the growing drum beat for alternative fuels, energy independence, and greater fuel efficiency been louder than in Washington, D.C.
When the 102nd Congress passed the Energy Policy Act of 1992 (EPAct), one of the major provisions required the purchase of alternative fuel vehicles by federal agencies and state governments. In addition, EPAct established a tax credit for the purchase of electric vehicles, as well as tax deductions for the purchase of alternative fuel and hybrid vehicles.
Other laws affecting alternative fuel and advanced technology vehicles include the Energy Policy and Conservation Act, which established fuel economy standards for passenger cars and light trucks. Also in the 90s came a number of amendments to the Clean Air Act, which now requires cities with significant air quality problems to promote low emission vehicles; highway authorization bills that established and reaffirmed tax incentives for ethanol and other fuels; and numerous laws that authorize federal research and development on alternative fuels, advanced technologies, and enabling infrastructure.
While a political push for cleaner burning fuels was arguably already happening, the BP Gulf Oil Spill has definitely solidified public interest in an even greater push to get there faster. And this has some people concerned.
New Era, Same Problems
One of the largest barriers to the development and wide scale production of an alternative vehicle is the same today as it was more than a hundred years ago when Detroit first dabbled in the production of electric vehicles—the price of production is quite high compared to the costs of manufacturing combustion engines.
In fact, according to a recent article in the Detroit News, the costs are proving so high that automakers are looking for private partners to help share the cost of developing the technology of the future.
The catch to this development is that there isn't a clear front runner technology that they can focus on with a high degree of certainty, so they're forced to either take a chance on a single technology or to diversify their efforts at a greater cost but potentially lower risk.
The last time the U.S. auto industry embarked on radical technological changes in a short time was in the 1970s and 1980s. Under pressure then from new regulations, as today, the result was a drop in vehicle quality that dogged Detroit automakers for years.
When pioneering new automotive technology, going cheap usually means the customer makes up the difference on the back end. Furthermore, while one of the supposed perks to driving alternative energy cars is that they're less expensive to operate the plain fact is that right now the technology to build one is anything but cheap. Consider the following:
- A hydrogen-powered fuel cell SUV costs four times as much to build as a conventional SUV.
- A transmission for a hybrid SUV costs three times more than a transmission for a regular SUV.
- Batteries large enough to power cars without assistance from a gas engine cost from about $12,000 to as much as $50,000 for a performance car.
- A hydrogen station costs upwards of $2 million to build.
Cue Political Tax Incentives
Ongoing developments pertaining to hybrid vehicles, fuel cells, and hydrogen fuel has raised key policy questions. These questions include whether more generous tax incentives for hybrid and fuel cell vehicles should be established; the costs associated with production of hydrogen as a major transportation fuel; and whether research and development funds should be focused on such potentially high-risk technologies as fuel cells or on near-term, conventional technologies, such as hybrids.
In light of these and other energy policy concerns, Congress has been working on comprehensive energy legislation since 2001. While many of these efforts have stalled at the committee level, President Obama has hinted at the fact that comprehensive energy legislation would be a high priority in the session immediately following the November General Elections.
With plug-ins like the Chevrolet Volt, the Nissan LEAF, and others coming to mass market in the next year with a recession still stubbornly lingering and with their high production and showroom cost, it would appear as though the automakers are convinced this is an unavoidable, significant, and permanent trend.
Regardless of the exact stimulus or response, for owners of historic vehicles this trend presents an interesting challenge. How do we strike the right balance between honoring this second age of invention and the future of the automobile while preserving the heritage, history, and infrastructure of all that came before it?