The Free Market
The Free Market 15, no. 8 (August 1997)
Our domestic automakers produce fine cars and trucks that people freely choose to buy. They make lots of money doing this. So why is the federal government shoveling hundred of millions of dollars annually in corporate welfare their way?
Uncle Sam says it's all in a good cause, funding research to build an 80 mile-per-gallon "Supercar" that will "revolutionize" transportation. The money rolls in under the auspices of the Partnership For A New Generation of Vehicles (PNGV). That's the way it's been since the project's inception in September 1993, when the PNGV soupline was announced to the public at a glitzy White House ceremony with Bill Clinton and Al Gore taking turns laying on the oleo.
Four years and more than $1 billion later, the illusive Supercar remains more a gleam in the eye than a practical reality. PNGV officials like Chrysler's Tim Adams concede it may take another 6 years, until 2003, before the first 80 mpg prototype is ready. A commercially viable, production ready version may never arrive, though, because of the exceedingly high costs of the elaborate technology needed to produce such a vehicle.
Building a car capable of traveling 80 miles on a gallon of gas isn't the hard part. In fact, that's already been done. Single-seat, experimental models with lightweight carbon-fiber bodies and lawnmower sized engines have eked up to 100 miles out of a gallon of gasoline. The real challenge remains designing a vehicle that gets that kind of mileage while retaining acceptable performance, room for four adults, and adequate cargo carrying capacity.
Supercar also has to be safe, have dual airbags, crumple zones, and 5-mph bumpers. All these add weight. The more a car weighs, the harder its engine must work, and the more gas it burns. Tripling the fuel economy (of the average car today) without sacrificing price or passenger comfort will be harder than putting a man on the moon, admits Robert Chapman of the Commerce Department.
There are subcompact economy cars on the market right now, among them the Geo Metro and Ford Aspire, that can get 50 mpg or more. But these cars do not sell well because of their extremely small size and comparatively feeble performance.
Industry insiders call them loss leaders, a reference to the fact that each manufacturer builds and sells these cars at a loss to satisfy federal Corporate Average Fuel Economy standards. If CAFE didn't exist and the manufacturers were freed from the necessity of having to build cars to satisfy federal regulations instead of their customers, these models would vanish from the marketplace.
Engineers working on the PNGV effort recognize this problem and have set parameters of roominess, utility, safety, and performance standards that Supercar must meet, in addition to returning 80 mpg. They know better than anyone that high gas mileage is important but not all important. They need to be able to produce a vehicle that people will actually want to buy.
An 80 mpg family sedan is a long way off. Privately, industry sources concede such a machine is unlikely to be ready by the target date of 2003. Meanwhile, the public continues to pay through the nose.
Federal spending on PNGV and its parent organization (U.S. Council for Automotive Research) rose from $251 million last year to $263 million this year. The Clinton administration has asked Congress to bump that up to $281 million for 1998.
That the GOP-controlled Congress can't bring itself to put an end to this munificence is dispiriting but typical. While preaching austerity on the one hand, congressional leaders seem unwilling to turn the spigots off when it comes to charitable causes they deem worthwhile, which include multinational corporations.
Being on the receiving end of all that money appears more "reasonable" to the recipient than the coerced donors. After all, no one is suggesting the work being done by PNGV is a waste of time. Some of the technology in the pipeline—flywheel powered cars, hydrogen fuel cells, etc.—is genuinely exciting.
But that's the point. If these advances are useful, they would have been achieved without PNGV funding. GM, Ford, and Chrysler all have a stake in keeping abreast of new technologies and applying what they learn to their products. To suggest, as some have, that the automakers would abandon research into new technologies absent federal financing is ludicrous.
If the Big Three can develop a workable 80 mpg car that has commercial appeal, it could indeed revolutionize transportation. But the question remains: why do multi-billion dollar private corporations need or deserve to have their research funded by struggling taxpayers?
Eric Peters writes on automotive issues for the Washington Times
Cite This Article
Peters, Eric. "Supercar, Superscam." The Free Market 15, no. 8 (August 1997).