Chris Berry On The Net

While grandstanding politicians and the mainstream media continue to fan the flames of populist rage over the AIG bonus scandal, little attention is being paid to other critical issues taking place in Washington. Even though GM and Chrysler have yet to submit their viability plans due on March 30th, the Obama administration has already announced that it will divert $5 Billion in TARP funds to bail out automotive parts suppliers. If we’re preparing to bail out the suppliers, is there any doubt that the automakers themselves will receive another round of taxpayer funded assistance, regardless of the plans they submit? There would be no point in keeping the suppliers afloat if the government had any intention of allowing the automakers to fail.

Hardly a day passes that President Obama doesn’t talk publicly about massive taxpayer investments in new vehicle technology, particularly for electric vehicles and plug-in hybrids. Under the Bush administration, Congress already passed the $25 billion fund known as the Advanced Technology Vehicle Manufacturing Incentive Program, to be administered by the Department of Energy. Is President Obama talking about additional billions on top of this existing program, even though the DOE has yet to make the first loan?

It has been widely reported that the intended purpose of this fund was to help automakers retool to build more fuel efficient vehicles, with the assumption being that the funds were specifically set aside for GM, Ford and Chrysler. This is simply not true. The act specifically stated that the Department of Energy should use the funds to provide “grants and loans to eligible automobile makers and component suppliers for projects that re-equip, expand, and establish manufacturing facilities in the U.S. to produce light-duty vehicles and components that make meaningful improvements in fuel economy.” Any company that meets the technological and financial requirements set forth by the DOE is eligible to participate. Nothing in the act indicates that the Big 3 are the intended recipients of the funding.

In spite of all the President’s talk of creating a new automobile industry for the 21st century, the actions of the Department of Energy tell a very different story. Rather than focusing on dramatic innovation, the policy of the government seems to be preservation of the status quo. What’s unclear is whether this is a result of lack of imagination on the part of the regulators, or commitment to the preservation of union jobs by the administration.

What is clear is that the automobile hasn’t really changed very much in the 122 years since the first practical car was invented. We’ve made remarkable advancements in performance, emissions control, and safety, but the basic concept of a large four wheeled vehicle, constructed primarily of steel, and powered by an internal combustion engine remains the same. The reason that the basic concept hasn’t changed is that the companies that design and produce automobiles have substantial investments in manufacturing capabilities that lock them in to this basic formula.

As a nation, we must realize that the main source of innovation in automobile design will not be the existing automakers. Just as we cannot expect the oil companies to jeopardize their primary business by developing alternative energy sources, we cannot expect an entirely new concept in automobile design to come from companies with a vested interest in the status quo. While certain auto makers such as Toyota and Honda are known for being innovators within the industry, even their most dramatic concepts tend to fit the conventional mold. The fact is that true innovations are most likely to come from outside sources.

Enter Aptera Motors. This California based start-up has developed a stunning new concept in automotive design that shatters the existing mold. Intended primarily as a commuter vehicle, the 3 wheeled Aptera will be available in both electric and plug-in hybrid models. The electric model will have a range of 100 miles on an overnight charge from a standard 110 volt outlet. It takes advantage of lightweight composite construction to reduce weight to roughly half that of the average car on the road today. Aptera has already received more than 4000 advance orders, and is scheduled to begin delivery of the first vehicles in California later this year.

This is exactly the kind of innovative company that would seem to be an ideal candidate for loans under the ATVMI program. Unfortunately, the Department of Energy has a different view of things. Aptera designers chose a 3 wheel configuration for aerodynamic efficiency and reduced rolling resistance, resulting in a 25% improvement in highway mileage. DOE officials claim that since the vehicle only has 3 wheels, it cannot be considered an automobile, and is thus not eligible for loans under the program.

Under Federal and most state laws, 3 wheeled vehicles are classified as motorcycles. As such, they are not required to meet the crash safety standards of passenger cars. From the start, Aptera engineers have insisted that their vehicle will meet those safety standards, in spite of the fact that they won’t be subject to testing. The vehicle is built around an aluminum and composite safety cage, and is equipped with a full complement of airbags. This thing may not meet the current Federal definition of a passenger car, but it certainly not a motorcycle. Perhaps the most absurd consequence of the motorcycle designation is the fact that most states will require Aptera drivers and passengers to wear helmets.

If we are truly seeking to develop an automobile industry for the 21st century, federal and state regulators must abandon their 19th century concept of the passenger car. Legislation has been introduced that would open ATVMI funding to 2 and 3 wheeled vehicles, but it remains to be seen whether it will be defeated by the entrenched interests who are more concerned with the preservation of union jobs than in promoting true technological advancement.