President Barack Obama has said that success in combating climate change depends to a significant degree on technological innovation. Perhaps no popular, carbon-emitting technology is riper for revolution than the automobile. There is disagreement among experts about whether a transformation will take two decades or three—but one is surely coming.
The automotive age that began with the Model T rested on three legs: Cars were privately owned, driver-operated, and powered by internal combustion engines. None of these three features is likely to be erased entirely in the future: Individual ownership may continue even for autonomous cars, gasoline or diesel engines may not be completely eliminated, and even autonomous cars may retain steering wheels, enabling us to take control when we desire. But the automobile industry is signaling that the era where all three legs of this triad coexist simultaneously is coming to an end.
Toyota has promised to sell only hybrid and hydrogen vehicles by 2050. China’s biggest car company has invested $3 billion in electric vehicles. Tesla founder Elon Musk predicted that half of all passenger trips will be autonomously controlled by 2030. Ford opened a “future of mobility” research facility not in Michigan but in Silicon Valley—the better to keep an eye on competitive moves by Apple, Google, Uber and Tesla. In early January GM announced a partnership with Lyft to work together for the development of autonomous vehicles, only weeks after Ford signed up with Google.
Meanwhile, during the recent climate summit in Paris, four European nations, including Germany and the United Kingdom, joined nine U.S. and Canadian states and provinces, including California and New York, in pledging an end to gasoline- and diesel-powered cars by 2050.
A green overhaul of transportation promises to be the real clean-tech revolution—more significant even than the expansion of wind and solar energy. And not all of the challenges are technical. For example, if future cars and trucks operate autonomously, the biggest occupational category in all over half of U.S. states, the job of “Driver” disappears. If almost all passenger vehicles are EVs, the world will no longer need expensive, far-flung, unconventional oil reserves; the low-cost fields of the Persian Gulf should meet global demand. (That’s excellent news for the climate, not such good news for the Russian budget.)
Most cars are parked 95 percent or more of the time. Freeing them for use by multiple travelers will shrink auto production lines by 80 percent or more. This would also shrink demand for parking space, enabling central business districts to reclaim land use for businesses and residences, increasing urban densities. As a result, the closer ring of suburbs may be hollowed out as inner cities were in the 1970’s. Manhattan, not Houston, will become the model of an American city.
U.S. must fight to maintain competitive advantage
The revolution has already begun. Ford’s ultra-expensive new GT sports car employs 28 microprocessors and more lines of code than a Boeing 787 Dreamliner. Tesla is experimenting with autonomous, robotic control features for cars. Like Tesla, Apple, and Google, the lead global brand for vehicle sharing—Uber—is based in California, the incubator of these new breeds.
Maintaining Silicon Valley’s technological edge is no sure thing, however. The U.S. led the development of wind turbines at NASA’s Sandusky, Ohio research lab, and of solar panels at the National Renewable Energy Laboratory in Colorado. Yet leadership in those emerging industries was ceded to Europe (wind turbines), and China (solar panels).
As we have with wind and solar, in transportation, we risk ceding our early advantage to competitors overseas.
Any hesitation in the march of innovation is punished.
The rewards of innovation are not captured by those who merely invent it. The value-added supply chain does not settle where a technology originates, but where the market for it scales. When Europe created a robust market for wind, technology and manufacturing crossed the Atlantic. When China became the world’s solar assembly line, innovators such as Applied Material shifted research to Asia.
Any hesitation in the march of innovation is punished. When the market for innovative batteries in the U.S. slowed in 2009, start-ups such as A-123 and Boston Power were acquired, and moved to China.
Automobile electrification, and its attendant economic and environmental benefits, is partly a function of public policy. Right now, markets using the same EV technology punch at significantly different weights due to differences in public support. In Norway, 14 percent of car sales are EVs; in California, it’s 5 percent. Meanwhile, in the U.S. overall, electric vehicles account for less than 1 percent of car sales.
In the U.S., support for transportation innovation is sporadic at best. The Obama administration is highly committed to clean energy, but it missed an obvious opportunity when it allowed the U.S. Postal Service to buy a new fleet of gasoline-powered vehicles instead of using its mass purchasing power to prime the market for electric vehicles (while also saving money on fuel). Georgia, which had one of the fastest EV adoption rates of U.S. states, this year eliminated its tax credit program. Sales plummeted.
California, where innovation has been burning brightest, just proposed slamming the brakes on the revolution by banning fully driverless vehicles and autonomous commercial cars. However, on the bright side, the federal Department of Transportation jumped in to propose rapid development of national guidelines for autonomous vehicles, which promised to be more accommodating of innovation.
China threatens to outpace the United States
By contrast, the Chinese government set a target to put 5 million EVs on the road by 2020. Chinese investor Sunny Wu is one of the middlemen accelerating the transfer of clean energy technology from the U.S. to China, often before it even gets to market in North America. Fortune outlined his strategy as follows: “Buy Western companies that have good technologies but poor domestic growth prospects and bring them to China, where Wu and his contacts serve up the money and the market to help the firms grow very big, very fast.”
If global competitors outpace the U.S. in developing EV markets, the 2009 rescue of General Motors and Chrysler may turn out to have been a brief respite for the U.S. auto industry.
China’s embrace of the EV revolution is good for energy security and sustainability, and may be a vital step toward enabling China’s urban dwellers to breathe. Yet if global competitors outpace the U.S. in developing EV markets, the 2009 rescue of General Motors and Chrysler may turn out to have been a brief respite for the U.S. auto industry. If China dominates EVs, it will also be poised to license (or pirate) the software to render those EV’s autonomous. And a formerly collectivist society may have a distinct advantage in the cultural transition to shared ownership of automobiles.
If the U.S. wants high wages and economic returns from the emerging world of autonomous transportation, state and federal governments must go beyond promoting early innovation—we must help drive early adoption. Markets are what enable the social benefits of new technologies. Societies that don’t adapt to that reality risk getting left behind.