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Counterpoint: Forces against Rapid Technological Change

There are excellent reasons why automobile manufacturers may hesitate to make large, rapid changes in vehicle technology, including shifts to electric drivetrains or alternative energy sources.

First, the baseline fuel-gasoline-is in many respects an excellent fuel. Its petroleum feedstock is available in abundance, despite the jitters of the 1970s, and current worldwide proved reserves are higher today than 20 years ago.

Worldwide oil prices, corrected for inflation, are at extremely low historical levels; even after adding refining costs, gasoline prices (before taxes) are lower than those of virtually any other processed liquid, including, in most cases, bottled water. Gasoline’s energy content, about 125,000 Btu/gallon (higher heating content), is substantially higher than proposed alternatives such as compressed natural gas, ethanol, methanol, hydrogen, or electricity stored in batteries, and recent improvements in gasoline’s composition have improved its emissions performance.

Technological Change

Furthermore, engine designers’ long familiarity with gasoline and its combustion properties provide it with a strong competitive advantage over alternative fuels.

Second, decades of experience with innovation has taught automobile designers that performance in the “real world” of spotty maintenance, wide ranges of driving patterns, unpredictable repair efficiency, and extremes of environmental conditions is often quite different from performance under test conditions, even when these conditions attempt to reproduce actual in-service conditions.

All technological managers in the industry are familiar with the many notorious failures of innovative vehicle systems and subsystems such as the Chevrolet Vega’s aluminum engine or Mazda’s early rotary engine. In today’s business environment, automobile purchasers have come to expect extremely high quality levels, and a major technological failure would likely exact a substantial penalty on a company’s future market share. Further, in today’s litigious environment, any adverse safety consequences, perceived or actual, stemming from a technological change could be extremely costly.

Final Words:

Third, the task-of designing a new vehicle is lengthy and expensive-generally five to seven years from concept to showroom, with a required investment of a billion dollars or more. If the model is a market failure, not only is the investment largely lost, but producing a replacement model for that market segment will take an additional several years. The daunting size of this task, as well as the fin.

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