Creating the Car of the Future: A Q&A With the Author of Zoom

It’s tough to imagine a world without cars. They serve as a base for our social and economic structure in a way that wasn’t thought possible a century ago. But the rapid growth of an automobile-based culture has produced economic and environmental consequences that, if left unchecked, could cripple society. As such, we’re facing a major dilemma: we can’t tell people not to drive, but we can’t survive if they keep doing so. What’s the solution?

Vijay Vaitheeswaran, a correspondent for the Economist, has set out to answer that question. His new book, Zoom: The Global Race to Fuel the Car of the Future, co-authored with Iain Carson, offers an in-depth history of the auto industry’s reliance on fossil fuels, and outlines the steps that should be taken to forestall a global crisis. Vaitheeswaran agreed to answer our questions about his book.

Q: What are the global trends in automotive ownership? How are they affecting the need for alternative fuels?

A: We are rapidly heading towards a world of a billion cars. The first mover was America, where there are now more cars than people with driver’s licenses, and three-car garages are becoming the norm in the suburbs and exurbs. However, the biggest force for change in coming years will be the rise of car use in India and China, both of which are motorizing from a very low base.

My co-author and I argue in Zoom that this rise in the number of cars, if done on a “business as usual” basis of burning gasoline in internal combustion engines, will lead to the twin disasters of global warming and geopolitically-induced economic shock. This could happen because oil is both incredibly concentrated (two thirds of proven reserves of conventional oil are located in the Persian Gulf), and a carbon nightmare (unlike coal, which can be used with gasification and sequestration, gasoline always produces greenhouse gases when burned, according to the laws of chemistry). That is why we argue that the world must move away from oil and turn to alternative fuels to power our cars, trucks, and buses.

Q: Given the cultural importance of cars as status symbols, it seems that the auto problem highlights the “individual interests vs. environmental interests” conflict dominating current environmental debates. How can these two forces (the desire to own and drive cars vs. the deleterious effects on the environment) be reconciled?

A: We don’t believe that people’s desire to have personal mobility is a fabrication of marketers over at the auto industry. Driving is a basic human need and an aspiration. Many people in the environmental camp love to demonize the SUV and tout a lifestyle with no cars at all. We argue in our book that the “abolish cars” view is only partially right. We also describe how public transportation in places like Curitiba, Brazil and Bogota, Columbia gives citizens real choices of transport that most Americans lack — and we argue forcefully for smarter investments in “green growth” approaches to future urbanization (citing examples from China and elsewhere, from which the U.S. could learn).

As such, the notion that the car is the chief problem and should therefore be abolished is unhelpful. Such an ideological stance is meaningless and counterproductive, given that 95 percent of Americans do not have the choices of public transport that most Europeans and Japanese have. That’s why we advise leaving ideology at the doorstep, and instead rolling up our sleeves to find a realistic solution to this problem. When you look closely, most of the serious problems associated with cars — smog and global warming, damage to human health, geopolitical complications in the Middle East — are really caused by petroleum, not cars. If vehicles were powered by cleaner, locally made, and locally distributed fuels, then those thorny problems would largely disappear. There could never be an OPEC cartel of hydrogen or biofuels, for example, because those fuels can be made by anybody anywhere, in all manner of ways.

Q: You argue that, right now, car design could be radically improved so the average car would have almost double its current fuel efficiency. How could this be achieved? Why hasn’t it been done yet?

A: There is absolutely no question that with today’s technology, cars could be much more fuel efficient. For one thing, Henry Ford‘s Model T got better gas mileage (about 25 MPG) than today’s fleet average for new American cars! (The Model T used a flex-fuel that ran on both ethanol and gasoline, by the way.) What’s more, the National Academy of Sciences did a serious study of this question recently, and concluded that Detroit could easily improve fuel economy by 25 percent using readily available technologies. And the auto industry could do even better than that with technologies (such as carbon fiber for lightweighting vehicle chassis) that are closely within reach.

So why hasn’t this been done? One reason is that both Detroit and American consumers were lulled into complacency by the unusual period of low and stable oil prices during the 1990s. At that time, Detroit’s bosses, with their eyes on the easy profits to be made from gas-guzzlers, diverted resources from efficient and alternative-fuel cars toward SUVs, Hummers, and the like. As oil prices now head for the triple digits, American consumers have become much more interested in efficient cars, and so Detroit is rushing to play a catchup game with the Japanese (who have stolen the lead with hybrid-electric cars like the Prius).

Q: In your view, what is the ideal car of the future? What is its energy source? Where is it manufactured? What does it look like? How much will it cost to produce?

A: The car of the future will involve big changes in both the Juice and the Jalopy. The Juice, i.e. the fuel, has been the focus of most analysts. Today, there are a range of competitors: hydrogen, biofuels like ethanol, electricity, and efficiency (which must be thought of as a rival fuel in that it displaces gasoline just as effectively as the others, often at lower cost). What we argue is that there is no silver bullet, that none of the rival clean fuels can topple gasoline all by themselves. One reason for this is that the petroleum enterprise is vast, well-funded, politically connected, chemically potent, and ubiquitous. The other reason, to be frank, is that every rival fuel has some snag, be it lack of fuelling infrastructure or cost or complexity.

That is why the essential enabler of the car of the future is not the fuel but the car itself, i.e. the Jalopy. Dramatic advances in software and hardware are now rapidly electrifying the automobile, which for a century has been a predominantly grease and grime, soot and sulfur mechanical device. As on-board diagnostic computers, hybrid-electric drives and other bits of smart software become commonplace, cars will be able to handle multiple fuels easily. Such “flex-fuel” technology is the key to overcoming the chicken-and-egg problem of fuel infrastructure, because once a car has a reserve tank of gasoline, consumers will have the confidence to try an otherwise risky new cleaner alternative. That means that adoption of clean fuels can happen much faster than is currently forecast.

As cars become the ultimate electronic accessory, they are also going to get lighter. Carbon fiber and other strong but light materials will replace steel, thus reducing the need for so much fuel in the first place. This is the technology that Formula One race cars use: super strong but super light carbon cages that prove that lightweighting cars does not necessarily lead to unsafe cars.

The super sleek, smart, software-rich cars of the future might come from Detroit, if the conventional automakers get their act together and look beyond the next quarter’s profit results. Toyota has shown it can do that by investing to bring hybrids like the Prius to the market. But it is entirely possible that the car of the future will come from disruptive innovators outside the conventional food chain. Look to Silicon Valley, and you find that Tesla Motors has come up with a stunning, all-electric sports car that is faster than a Ferrari and greener than a Prius. And the true disruptions will come from the software houses and electric car, battery, and fuel cell pioneers in China and India, which are even now forging ahead to build the car of the future.

Q: How did Toyota become the industry leader in fuel-efficiency and alternative energy? Will it stay on top in the next few years?

A: Toyota has risen from obscurity to become the world’s largest car firm this year, both because of its internal dedication to excellence — it is truly a learning organization, as our book describes in detail — and because its leaders have looked beyond quarterly profits toward longer-term trends. Perhaps because they come from a country with no natural resources, they have grown quite concerned about the twin threats of oil shocks and global warming regulations, and invested accordingly in long-term bets like hybrids and fuel cells.

Q: What are the most important changes the automotive industry needs to make to both maximize profits and solve the fuel problem?

A: After a century of cozy alliance with the petroleum industry, cars and oil are headed for a divorce. This could prove a disaster for some entrenched, backward-looking firms in the industry, as upstarts and disruptive innovators (be they Silicon Valley’s all-electric Tesla motors or India’s cheap and cheerful Tata motors) change the rules of the game. But as IBM showed when confronted with the disruptive personal computer three decades ago, dinosaurs can also learn how to dance. Rivals Wang Laboratories and Digital Equipment Corp. went bust because they could not adapt to a fast-changing world and the new business paradigm of decentralized computing, but IBM destroyed its business model and flourished. Today, the great question is: “Which of the Detroit dinosaurs will follow IBM’s lead?”

Q: Should economic incentives be placed on oil alternatives? If so, in what form? Could there be negative consequences to doing this?

A: We strongly believe that no subsidies should be offered for alternative (or any other) fuels or technologies. The right way forward is to level the energy playing field, which is now grotesquely distorted in favor of dirty fuels. First, we must strip away the tens of billions of dollars in subsidies, tax breaks, below market royalties on federal lands, and other giveaways that the oil and gas industries enjoy. Once those perverse incentives are stripped away, we must impose externalities taxes on dirty fossil fuels to account for those costs not accounted for by the pump price. Americans pay the price for the environmental and health damage done by gas burning, but we pay through the lost lives of children and damage to be endured by our grandchildren suffering from global warming — not through the pump price.

Similarly, the geopolitical costs of our oil policy are paid in the lives of troops lost in the Middle East and the vast military expenses involved in defending oil interests overseas. But because we pay for these as taxpayers rather than as gasoline consumers, we have the illusion that this fuel is cheap. Subsidy reform and externalities taxation will at last right this wrong, and level the playing field so that clean alternatives will finally have a fighting chance in the marketplace.

Q: How does fuel efficiency fit into the current political debate? What should the next U.S. President do first and foremost to address the problem? Which candidate, in your opinion, is the most likely to take that action?

A: We believe efficiency is often the best energy source, cheaper and cleaner than even many “alternative” fuels. The right way to encourage efficiency is not the controversial “CAFE” (Corporate Average Fuel Economy) standards. This bureaucratic, hugely distorting and overly politicized law is a clunker that should be scrapped in favor of an elegant, non-distorting economy-wide carbon tax. The best version of this would be revenue neutral: every penny earned through the tax would be returned to households as a refund check, or as cuts in social security/income taxes. This way, the price signal to invest in clean energy is clear in the marketplace, but ordinary Americans are not made any poorer thanks to that refund.