Rantings on Markets, Economics and Business Strategy: Automobile Fuel Efficiency Or Lack Thereof

About Me

Location: United States

I'm an electrical engineer and mathematician by training. My career has spanned diverse areas of expertise from being part of a team which designed the world's most powerful computers to corporate consulting around business transformation and information-based solutions to being a corporate sales and marketing executive in the information technology and business consulting space. I’ve led teams responsible for innovative and transformative solutions and been part of teams that helped set strategy for many of America's greatest companies. Two of my interests are econometrics and quantitative - qualitative analysis. Over the years I have developed risk-based models and trading systems meant to identify significant investment opportunities and periods of extreme risk. My blog is an outlet for another of my passions, writing. I generally consider myself a contrarian. Therefore, many of my rantings are meant to encourage people to question what they believe to be true.

Monday, December 11, 2006

Automobile Fuel Efficiency Or Lack Thereof

It's no secret the automotive industry isn't known for its innovation. While I highlight the American auto manufacturers as being generally unresponsive and delivering terrible products over the last half century, there's plenty of finger pointing when it comes to energy efficiency innovation. Getting significant gains out of the standard four stroke internal combustion engine is a slow and arduous process. Even if auto makers were able to achieve theoretical efficiencies, and they never will, we aren't looking at engines capable of hundreds of miles per gallon in a family sedan. In fact, we probably aren't looking at more than 40-50mpg in a gasoline powered family sedan. But, GM has spent more money on research & development since the 1970s than it took to develop whole new ranges of technology and put a man on the moon in the 1960s. Yet, for this we get a 2007 subcompact, the Aveo, which appears to get worse gas mileage than a 1975 or 1985 Chevette. Below is a headline news story from 1975 showing what appears to be the combined EPA mileage for a 1975 Chevette being 33mpg. Below that is a 1985 (The oldest model year I could find) Chevette with statistics pulled from a U.S. government page showing combined mileage of 31mpg with a manual transmission. And, below that is the 2007 Chevy Aveo subcompact with mileage numbers worse than a 30 year old GM car.

Is this what a shareholder of GM gets for its research dollars? A smaller car with less efficiency than a thirty year old car. Imagine if IBM or HP delivered a computer with less capability than thirty years ago. Now, I realize the comparison is not fair. But, what is fair is that GM and other auto makers have not really made any significant innovations as it pertains to environmental or fuel efficiency issues. They would tell me that it is because the market hasn't demanded it. I would tell them that it is their responsibility to create new markets. To tap into latent or unknown demand. To create demand around a relevant marketing message. So, did people not care about the environment for the last thirty years? Oh, that's right. Those people were radical liberals. An image reinforced by the automobile industry and its politician buddies.

So, does anyone have a 1975 Chevette? I'm concerned about the environment and the impact of high fuel prices on my wallet. I'd like to buy one. It's the best gas mileage of any car in the GM global portfolio of products. And, that is pathetic.

CBS Evening News for Monday, Sep 22, 1975
Headline: EPA Tests / Gas Mileage
Abstract: (Studio) Environmental Protection Agency tests on gas mileage show American car to be 1 of top gas sources.
REPORTER: Walter Cronkite
Environmental Protection Agency films shown. Tests report 12.8% average m.p.g. increases in 1976 cars from 1975 cars. Cars tested on dynamometer. Mileage winners are: Datsun B-210 at-33 m.p.g.; Chevette (98 cubic inch) at 33 m.p.g.;