If you were to believe the mainstream media, the future of transportation is electric. And so it seems: In the coming year or two, we'll see a parade of electric vehicles (EVs), hybrid-electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and extended-range electric vehicles (EREVs) — and probably a few variations on those themes — all of which employ kilowatts where gasoline once reigned. They're coming from both the world's biggest car companies and some of the smallest.
But the conventional gas-powered internal combustion engine (ICE) won't be going away any time soon. While the spotlight belongs to electricity, off in the shadows the auto industry remains in high gear to ensure that the century-old ICE technology doesn't go the way of the buggy whip.
There's good reason: Even the more optimistic estimates put sales of all of types of EVs at only 20 percent of the U.S. market by 2020. That's a good start, but it leaves millions of new car sales employing ICE technology, not to mention nearly a billion ICE-power cars already on the roads, hundreds of millions of which will still be on the road a decade from now.
As a result, the world's major car companies, in both collaboration and competition with dozens of Fortune 500 companies and startups, are turning up the heat on ICE technology, seeking to improve the fuel and greenhouse gas performance of both new and existing vehicles.
The fortunes of some of these firms rose last week when the Obama administration set new greenhouse-gas emissions standards for automobiles and light trucks, a long-awaited and much-needed move to prod the U.S. transportation system in the right direction. The first-ever national greenhouse gas emissions standards "will significantly increase the fuel economy of all new passenger cars and light trucks sold in the United States," according to the U.S. Department of Transportation and U.S. Environmental Protection Agency, which jointly issued the standard.
Of course, the big automakers, not to mention the rest of the free-market crowd, viewed the standards as a needlessly expensive, technologically infeasible, and counterproductively intrusive mandate that will crush a U.S. car industry just coming out of bankruptcy, along with the jobs that come with it. And it will raise car prices, too, though the added cost will be more than covered by fuel savings.
But improving ICE technology turns out to be not that hard, technologically speaking. And much of the technology already has been invented, as the Wall Street Journal pointed out last week, referring to "a number of more mundane solutions to reduce fuel consumption of vehicles that look and operate like cars now."
Among some of the incremental solutions: more-efficient tires, low-friction engine lubricants and added gears. Auto makers also will use technology to build four-cylinder motors that can deliver the power of six-cylinder engines and replace V-8 motors with more efficient six-cylinder versions. More use of turbocharging allows for reduced engine size while maintaining performance.
There's no shortage of companies working on these things. A January report on the topic by analysts at the financial services firm Robert W. Baird & Co. listed some of the products and technologies that can improve internal-combustion engines, along with estimates of their benefits. They include diesel (30% to 35% potential fuel-efficiency improvement), turbocharging (7% to 8%), direct injection (11% to 13%), cylinder deactivation (6% to 8%), variable valve timing (4% to 6%), continuously variable transmission (5% to 7%), automated manual transmission (5% to 15%), stop-start ("micro-hybrid") technology (7% to 9%), and low-resistance tires (1% to 2%). Many of these are in the market, or close to it. Behind these are still other technologies, says Baird, with exotic names like "homogenous charge compression ignition" and "advanced torque transfer technologies," each of which brings further improvements.
Put several of these together — and throw in some lightweighting, thanks to advanced carbon-fiber materials — and suddenly, Obama's new standard — fuel economy of 2016 model cars about 34 percent better than last year's models — seems like a relatively low bar.
Such technologies represent a significant business opportunity for the auto industry's biggest suppliers — companies like BorgWarner, Eaton, Johnson Controls, Navistar, TRW, and Visteon — as well as dozens of startups — firms with a far, far lower profile than electric-vehicle darlings like Tesla and Better Place, among them Achates Power, EcoMotors International, Pulstar, Fallbrook Technologies, Transonic Combustion, and Zajac Motors.
And then there's the question of what to do with the current stock of cars on the road. Is there a way to retrofit them with enhanced technologies, or to convert them to hybrids, plug-ins, or other EV technologies?
Felix Kramer believes there is. The founder of the California Cars Initiative, better known as CalCars.org, last year launched an initiative "to 'fix' a large fraction of the 250 million U.S. vehicles and 900 million globally to run partly or fully on electricity, thereby gaining millions of cleaner, more efficient vehicles that are cheaper to drive, while creating many jobs and providing new revenue streams to automakers from vehicles they've already sold."
Kramer and his team point to a a dozen or so companies and organizations already in the process of converting ICE cars to hybrids, including ALTe, Bright Automotive, ElectraDrive, Linc Volt, and Poulsen Hybrid. It's a market that's scarcely tapped, with blue-sky potential — literally and figuratively.
What will it take to turn this potential into real business — and jobs? It won't likely happen through individual consumer purchases of these upgrades. More likely will be fleet buyers — the thousands of government agencies, taxi companies, rental car companies, and corporations that own hundreds or thousands of vehicles — that will create a demand for ICE upgrades and retrofits. (My colleague, Tilde Herrera, recently reported on the billions in fuel savings fleet buyers will enjoy from the new Obama emissions standard.) But what will motivate them? Tax incentives? High gas prices? A price on carbon? Public pressure?
Another key challenge is how to accelerate the pace of innovation in the design of new cars, shortening the long product cycles now typical of the major car companies, thereby allowing more rapid adoption of new technologies. The Chevy Volt, for example, an EREV that will be in the market this fall, was first unveiled in late 2006 and formally announced in early 2007. Assuming its conception goes back at least a year earlier, that suggests the Volt took fully half-a decade to get to market. Even then, Chevy plans to make only about 10,000 of them in the first model year. How can tomorrow's cars get to market in half that time?
That will be a challenge for car makers going forward: creating scale and speed. We know how to make cars, even green cars, accelerate wicked fast. The next hurdle will be to bring new, clean technologies to market at similarly impressive 0-to-60 speeds.
Of course, all of this addresses only automobile technology — the nature of the vehicles themselves. That omits the larger picture — the notion of buying mobility services, as opposed to owning vehicles. There's vast opportunity for innovation in business models that provide alternatives to owning vehicles in the first place.
Until entrepreneurs and big companies focus their sights on that part of the transportation picture, all these techno-fixes will drive us to making good time going in the wrong direction.