Issue: Jun 2009


Start Your Engines: Sustainability and the Automotive Cultural Shift



by Stephen Stokes, AMR Research

 What follows is an excerpt from “Living (and Driving) in Electric Dreams,” available to AMR Research clients that subscribe to the Sustainability Strategies Service.
General Motors wasn’t broken as little as six months ago. Since then, high fuel costs and a global shift in perceptions of fuel consumption has threatened its very existence. Make no bones about it, GM has been subjected to a Clayton Christensen-type disruption of massive proportions. However, the disruption is less of a technology and more of a cultural shift. Instead of listening and innovating, GM merely continued on a path of short-term consumer demand satisfaction without developing any degree of future-proofing or product development agility. 

GM’s single substantial gesture toward the low-carbon economy, thus far, has been the installation of the world’s largest solar panel on the roof of its Zaragosa plant in Spain. It’s important to acknowledge a good call on its part, which may eventually offer as good an ROI, but it’s at the periphery of its business operations and in no way represents a game-changing action in response to the global energy challenges. Let’s hope its electric Volt auto, scheduled to arrive in 2010, reestablishes its credentials and share price. 

The one U.S. auto manufacturer that has caught our eye for doing better in terms of strategic sustainable transformation is Ford. Certainly it had one of the longest journeys from the fuel-guzzling vehicular indulgences of the 1990s and 2000s, and quarterly earnings reports suggest it is still hemorrhaging cash. But in building its Sustainability Mobility Governance structure as part of its sustainability management team—with direct involvement and input from President and CEO Alan Mulally—Ford is contemplating the future and potential disruption in its industry. 

What is most impressive is the extent to which Ford is willing to engage with the unknown over the coming three decades. It has established a multi-faceted Sustainable Technologies Migration Plan, which sets out innovation pathways for many vehicle attributes directly linked to the challenge of increased efficiency.
Instead of betting everything on a single strategy, it has multiple strategies over multiple time scales. By investing, innovating, and conducting R&D in a spectrum of energy source and power train technologies—EcoBoost GTDI and improved diesel engines, plug-in hybrid electric vehicles (PHEVs), and hydrogen and fuel cell vehicles—it is establishing a flexible future position, which may or may not involve plug-in electric vehicles. 

In it for the long haul 

Sustainably fueled vehicles are vital to our current and future transportation needs. But beyond the vehicles themselves, we need the infrastructure to support them. According to the U.S. Bureau of Transit Statistics, more than 250 million registered passenger vehicles were on the road in the United States in 2006. Of those, 135 million were classified as cars, 99 million were SUVs and pickup trucks, and 6.7 million were motorcycles. The small, efficient, and easily parkable cars of the future will likely be at least in part PHEV or electric vehicles. However, the greater range of other vehicle types and the cost-benefit of extending networks beyond high-density urban spaces make us ask whether there is virtue in organizations like Better Place, employing a territory-wide as opposed to high urban density model in its electric recharge grid rollout. 

In terms of energy and environmental efficiency, we may be better served in the future by not driving between urban centers or destinations at all. While apparently something of a national secret, for almost four decades Amtrak has followed a European model of offering train-based vehicle transport. In the fiscal year 2006, Amtrak’s electric-diesel Auto Train carried almost a quarter-million passengers, grossing $49.4M in ticket revenue, making it Amtrak’s highest grossing single train. It is also considered Amtrak’s best-paying train in terms of income versus operating expenses. How many 3PLs have considered incorporating such a transportation mode into operations? 

Transportation: making a difference today and tomorrow 

Electric vehicles offer the highest end-use energy efficiencies of all mobile power plants per mile (based on the U.S. combined driving cycle), and zero emissions at the place of operation. But should that engine be placed into a car? 

We do have to pose the question of just what the fundamental transport chassis should be. Do we need to rethink the passenger car, or are we content with single-occupant low-emissions PHEV and electric vehicle passenger vehicle congestion in the same fashion as the carbon emitting predecessors? Can the auto industry make the necessary shifts to support these demands? And can we build an infrastructure to support it? These are the questions we need to answer the next few years.
For more information about AMR Research's Sustainability Strategies Service or about becoming a client, contact info@amrresearch.com.


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