Is the federal R&D relationship with industry structured to encourage maximum innovation?

There is a continuing debate about the way federal R&D finding can best catalyze the emergence of advanced vehicle technologies. On the one hand, there are advantages to supporting work by the major automakers and their suppliers, because the automakers are in a position to rapidly commercialize a successful innovation in mass-market vehicles.

On the other hand, many observers are concerned that federal efforts to develop leapfrog vehicle technologies rely too heavily on the existing industry, which, they argue, has a considerable stake in maintaining the status quo. In their view, more agile small and medium-sized companies are best able to commercialize novel technologies, particularly in niche markets that may be initially too small to attract the attention of the major automakers.

Innovative Ideas

OTA’s investigations for this study suggest that many small and medium-sized U.S. companies have developed innovative advanced vehicle technologies not currently being displayed by the 31 automakers. 80 Most of these small companies recognize that successful commercialization of these innovations will require partnering with a large company in the industry.

The automakers for their part recognize that small entrepreneurial companies have important contributions to make to solve the many challenging problems. These considerations suggest that the federal advanced vehicle R&D program should maintain a balance between small and large company participation to ensure maximum potential for a successful outcome.

Historically, DOE advanced vehicle technology programs have worked primarily with large companies: defense contractors, automotive suppliers, or the Big Three themselves. To the extent that small or medium-sized companies have participated, it has generally been as part of a subcontractor team.

Innovation in Vehicles

The Cooperative Research and Development Agreements with federal labs are also difficult for small companies to participate in, owing in part to the 50 percent cost-sharing requirements. PNGV, which is structured to work as a partnership under the leadership of the Big Three, seems likely to reinforce the large company orientation of the federal effort.81

Recently, other government programs, such as NIST’s Advanced Technology Program, and ARPA’s Electric and Hybrid Vehicle (EHV) program and Technology Reinvestment Project (TRP) have begun to provide significant funding to contractors outside the traditional auto industry, especially to small- and medium-size companies.

Final words:

The administration, however, has requested no finding for EHV in FY 1996, and substantial cuts in TRP and ATP are being debated in Congress. If these cuts are made as threatened, the federal program would become even more dependent on the traditional industry than it already is.

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