Sunday, April 23, 2006

The New Push For Alternative Energy Automobiles

One funny thing about a Republican presidential administration is that they will always do at least one thing that will really surprise even the wisest political pundits. With a Bush family background in the Texas oil business, and 42 members of the present administration who are either oil company executives or major stockholders, the new push for alternative energy automobiles by President Bush is both surprising as well as may offer the only issue in which Bush may be remembered for successful leadership. Like the Kennedy call for a man on the moon before the end of the 1960's decade, which laid down a challenge to science and technology to respond with the successful July 1969 moon landing, the new White House challenge presents a great goal for American industry.

With hopes for reshaping the MidEast into a democratic region largely in tatters, and the hope of the Iraq War to reshape Iraq into a model state for this new MidEast all but a complete failure, the hope of inspiring a resurrection of the ailing American automobile industry into a renewed force behind the strength of the development of new alternative energy vehicles is indeed a bold challenge by the President. Along with his strong post 9/11 response performance, the only real high water mark for this administration, this great new technology challenge may prove to be the only other issue on which Mr. Bush was seen as a real leader by the history books.

But some real technological and business problems remain for the two surviving American automobile companies that could doom even this bold challenge to reinvent the American automobile.

GM has spent $1 billion on mostly failed experiments to develop hydrogen fuel cell automobiles. GM has faced great technological problems with cold weather damaging sensitive membranes that convert the hydrogen into a usuable energy source, and storage problems with the hydrogen remain. Currently he cost of the technology would run as much as $70,000 per automobile. This needs to be brought way down, and the severe technological problems solved.

Anoher problem is the business model of GM itself. It is still run too much like the old Hyundai corporation business model which nearly failed because of very high top executive salaries that took way too much money out of the company, treating it like their own personal "piggy bank". Some GM executive salaries run very high at a time the company is facing difficult financial times and employees are asked to accept sacrifices. Hyundai also nearly failed because these high salaries forced real cutbacks in quality control as well. But a newer CEO at Hyundai turned around the company by dramaticly lowering salaries far closer to the production worker levels and dramaticly improving the quality of the products as well. Today both Hyundai and fellow South Korean electronics producer, Samsung represent a great level of quality for a reasonable price.

Unlike a small company such as the now defunct American Motors, which was able to develop new automobiles on a shoestring budget, GM has been largely a model of a very noncost effectively run corporation. With excessive executive salaries, huge largely wasted new product development costs, this company has managed to run into many serious problems that seriously impact it's future ability to survive.

In September of 1969, American Motors introduced the Hornet, which was developed for just $40 million in production costs and cost only $1,994. A few months later in April of 1970 they introduced the first modern American subcompact, the Gremlin model, for only $6 million in production costs and sold for just $1,879. From September of 1969 until part of 1987 in which Chrysler purchased the business assets of AMC, some production automobile model from this company was based off the Hornet/Gremlin type platform and included the Spirit, Spirit AMX, Hornet and Concord based AMX, Concord, and Eagle 4 wheel drive models. Even Studebaker/Packard was able to save money by some experimental models such as "Black Bess" which was a two door design on one side and a four door on the other. Some older Rambler designs were only half a car where a mirror was actually used to represent the other half. And some prototype models had one headlight on one side, and two headlights on the other. Small companies like AMC and Studebaker/Packard were masters are cost saving business models that neither GM or Ford seem to much follow today.

And some past older examples of alternate fuel vehicles were largely successful in the early days of American automobile building. A 1906 Stanley Steamer was able to post a top speed of 127mph. A model built for racing was able to post a 150mph speed. An experimental racing version of a Willian Lear steam engine based on a jet engine type design was able to reportedly run at 280-320mph. In 1909, a Baker Electric was able to travel 110 miles without recharging the batteries. College students have also built successful solar powered automobiles for environmental or racing events.

Small companies have produced viable models in the distant past that have worked reasonably well. But the hydrogen fuel cell model is so far a largely unproven design with severe cost and technology problems. It could well prove to be either the salvation or ruination of GM depending on whether the design succeeds or fails.

Toyota is already betting against GM. They expect the hydrogen fuel cell design to be a technological failure. Toyota has already predicted that hybrid gas/electric automobiles are the future of most automobiles within 10-15 years. With a relatively decent reliabity rate with very few new product problems, and quality batteries far better than in the days of the Baker Electric in 1909, the successful Toyota designs offer both a proven example to GM of a near copy design of the Toyota models or the development of electric automobiles that can greatly benefit from new advances in batteries.

The really alarming fact is that Toyota has consistently proven to have great business instincts. Few Toyota products have been a market failure or have had problems with new technology. GM has had a past history of some great problems in really new technology design. The rear engined Corvair of the 1960's was an interesting new automobile, but suffered from some strange handling characteristics and some other problems. The 1981 Cadillac V8-6-4 design was intended to be a new fuel saving technology, but only tended to disappoint many buyers with reliability problems. GM has never tried anything nearly as bold as the hydrogen fuel cell design and succeeded. Even the modern Chevrolet small block is largely the same design as original 1955 design, but with far more modern electronics and fuel management items connected.

Only the Japanese automobile manufacturer, Mazda, is a strong believer in hydrogen fuel cell technology. Mazda still believes that their largely discredited rotary engine design based of the 1957 design of the Felix Wanjel engine can be the engine of the future. Past problems with excessive fuel consumption and poor engine seals made the Wankel/rotary engine design largely a failure in all but the old RX7 sports cars. Even our old RX3 wagon was a real fuel economy disappointment that was quickly dumped by our family for a very dependable, but boring Plymouth Valiant model with a 225 slant six.

Mr. Bush has had a terrible track record for any real long term success as well. Even his strong approval ratings and post 9/11 performance quickly came down to earth with the war in Iraq, corruption scandals within his party, foreign policy failures, and a large public perception of ineptness or uncaring about concerns of the average citizen. It is a very important effort to seek a new nonpolluting alternative automobile, but it may well be that GM is the weakest pssible corporation to champion such a new technology effort, and that Mr. Bush is the weakest possible messenger to champion this bold new cause. Only time will tell.

But for the short term, whenever a motorist fills their automoble with $3 or $4 gas, it only adds to the anger of the voting public that this administration has grossly failed them. And with GM selling off assets and seeking to cut employee pension costs, they hardly represent the symbol of the greatest possible corporate strength to lead a new technology.


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