Big Three Blowing Hot Air - Forbes

Another Guest Editorial From Jerry Flint

August 12, 2002. It was 30 years or so ago--and I missed a story.

The vice chairman of Ford Motor was dedicating an arboretum in Ann Arbor, Mich., and I skipped it. Arjay Miller chose this event to say that Ford would mass-produce an electric car within five to ten years. Hot news and I missed it.

My competitor splashed it on page 1--and I was angry. I jokingly called this future electric car "the Arjay Straight Eight" and predicted that in his next arboretum speech Arjay Miller would announce "the electric tree."

Of course, Ford's target date for the introduction of its electric car continued to slip into the future. At one point Ted Mecke, a Ford vice president, told me: "Jerry, you don't understand: This is a running target. It is always five to ten years off."

This incident ran through my mind the other day as I watched a General Motors presentation in New York City's Central Park. GM is taking this show across the country to emphasize its work on hydrogen fuel-cell engines--allegedly for cars of the future.

GM executives said the company will produce such cars by 2010, and GM wants to be the first automaker to build 1 million of them. GM let me and other members of the press drive or ride in hydrogen fuel-cell cars as well as vehicles with diesel and hybrid engines.

But will GM really build it?

Fuel-cell vehicles promise high mileage without earth-warming carbon-dioxide emissions. The only "exhaust" of a fuel-cell reaction is water.

In my years covering Detroit I have been through many a GM research presentation on engines of the future. Trust me, they never make it to market. But still, I wondered why GM was putting on its current show.

Then I figured it out.

In terms of fuel-economy/earth-warming publicity, GM is far behind the competition. Its electric car, the EV-1, which cost $1 billion to build--but found only 700 customers--was a total failure. Who would want a car with a range of less than 100 miles?

Meanwhile, in Europe, millions of cars have higher-mileage diesel engines. But even over there GM and Ford's European operations are far behind the leaders in diesel technology (PSA--i.e., Peugeot/Citroen, BMW, VW and Mercedes all have great diesel motors).

In both Japan and America, Toyota and Honda are years ahead of Detroit in hybrid (electric plus gasoline) power trains. The two Japanese manufacturers already have 35,000 hybrid cars on American roads. In fact, there are signs that the Japanese now have a lead over GM in fuel-cell cars.

Detroit is getting a terrible black eye on the green scene. Except for a few of GM's fuel-cell city buses running on the West Coast and Ford's plans to eventually build some Escape sport utility models with Japanese hybrid technology, the domestic manufacturers have little to brag about to environmentalists.

That is why GM put on what I call its hydrogen pie-in-the-sky routine--to polish its image.

The truth is that Detroit has good reasons for its slow response:

1. Diesels are quite popular in Europe, but won't meet future U.S. emission standards--that is, unless the oil companies get sulfur out of diesel fuel. The oil companies are resisting this change (with Bush Administration backing), so it is not surprising that Detroit doesn't want to invest billions in engines that may not be usable after just a few years.

2. Hybrid power plants work but they don't make economic sense. The Japanese hybrid cars that get 50 miles per gallon probably would get 35 mpg with ordinary small gasoline engines. The hybrids are expensive to build, because making a car with two engines--gasoline and electric--costs more than making a conventional car. The Japanese charge $20,000 a vehicle and probably are absorbing large losses on each unit they sell.

The big problem in the U.S. is all the pickups and SUVs that get 16 miles per gallon. Hybrids, alas, improve efficiency only 10% to 12%, which might sound large but works out to only one to two miles per gallon for the bigger trucks. In order to save $100 to $150 worth of fuel a year, is it worth spending an extra $3,000 to $5,000 for a hybrid engine system?

In previous columns I wrote, "no, it wasn't worth it." But losing the public relations war is another story.

GM knows this. That's why the company reinstated plans to build a hybrid pickup truck. The project was killed but it has been revived. GM needs something in the propaganda war, especially if Ford is going to have its hybrid Escape.

I think that the domestic manufacturers need to build some modern turbo-diesel vehicles and electric/internal combustion hybrids with either gasoline or turbo-diesel engines. Such products might not make much economic sense but would show the American public that Detroit is serious about the environment and fuel economy.

In this war it is also important to win hearts and minds.