The Wall Street Journal-20080114-Eyes on the Road- Detroit Show Illustrates Industry-s Push for the Future- A Circus With Serious Intent- Online edition
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Eyes on the Road: Detroit Show Illustrates Industry's Push for the Future; A Circus With Serious Intent; Online edition
DETROIT -- New wine in old bottles isn't the catchiest marketing idea, but it fits to explain what big auto makers are doing at this year's Detroit auto show.
After spending the past two decades inventing new vehicle packages to wrap around century old internal combustion engine designs, auto makers are now focusing their creative energy on putting new, fossil fuel-conserving technology under the hoods of the crossovers, sedans, coupes, pickup trucks and sport utility vehicle designs they already build.
The North American International Auto Show, which kicked off Sunday for the media, is a circus with serious intent. Chrysler LLC took the honors for goofiest stunt, staging a cattle drive in downtown Detroit, complete with a herd of longhorns, to promote the latest version of its Dodge Ram pickup. The odor from the cattle lingered around the big Cobo Hall convention center for hours, reminding us that not all global warming gases come from the tailpipes of Hummer SUVs.
Speaking of Hummers, General Motors Corp. showed a concept vehicle SUV powered by a V-6 engine designed to run on ethanol. By 2010, all Hummers will come with biofuel options, GM's North American sales chief Mark LaNeve said.
"You've come full circle when you're involved in a press conference with Hummer and the environment," he said.
Quite so. GM, eager to reposition itself as a forward-thinking company, announced a deal to take a stake in a fledgling biofuels company, Coskata Inc., that hopes to build plants that can transform all sorts of waste -- not food grains like corn -- into ethanol. The venture is backed by Silicon Valley venture capitalist Vinod Khosla, who appeared at GM Chairman Rick Wagoner's side in Detroit to talk up the deal.
Detroit and Silicon Valley are oil and balsamic vinegar, culturally. But these unsettled times make for unusual bedfellows. Mr. Khosla wants to profit by upending the old energy system -- much as technology upstarts have demolished the old telephone monopolies or the business models of the print media. But Silicon Valley's eco- capitalists -- "pragmentalists," to use Mr. Khosla's term -- will need help if they want to grab away business from the well-capitalized giants of the oil business.
"Detroit has to be part of the solution," Mr. Khosla says, explaining his deal with GM.
People with long memories will recall that past Detroit auto shows have been used to trumpet commitments to fossil fuel freedom before -- in the early 1980s, the early 1990s and just about every other time there's been a whiff of trouble from lawmakers or noisy green action groups about the auto industry's contributions to the consumption of foreign oil or the degradation of the planet. These past efforts dissipated when the political heat and oil prices cooled down.
This year, some things are different. For the first time in more than 30 years, auto maker face a significant new federal mandate to boost fleet-wide fuel economy to 35 miles per gallon by 2020. GM Vice Chairman Robert Lutz said technology to meet that new target will add $4,000 to $10,000 to the cost of each vehicle. Granted, incomes should rise by then, he said. But the days when consumers could expect vehicles to get cheaper relative to their incomes could be over for a while.
The 2008 show marks the official start of the auto industry's effort to regear its marketing machines to make us want to pay for new technology. Wouldn't you pay more for a Hummer that burns an extract of banana peels and other household trash, like Doc Brown's DeLorean from "Back to the Future?" GM Chairman Rick Wagoner hopes that you will. Likewise, Ford Motor Co. Chairman Bill Ford hopes you'll be as impressed by the company's shorter-term move to "EcoBoost" engines that use turbochargers and direct-injection systems to boost fuel efficiency without sacrificing power.
For luxury car buyers, this year will mark the launch of the war between hybrids and diesels for the hearts, minds and wallets of the wealthy and environmentally conscious. BMW AG, Daimler AG's Mercedes- Benz brand and Audi, Volkswagen AG's luxury brand, all displayed diesel-powered models or concepts in Detroit, and all plan to make pushes to counter Toyota Motor Corp.'s hybrid Lexus models.
BMW, which will launch U.S. diesel versions later this year of its 3-Series sedan and X5 crossover, hired a troupe of dancers to show their enthusiasm with an athletic display of martial arts inspired moves.
World-wide, 40% of BMW's are sold with diesels, but many of those are helped off the showroom floor with local tax breaks that offset the higher cost of diesel motors and diesel fuel.
The bigger challenge, though, will be how to get mass market, budget conscious consumers to embrace alternative fuels such as cellulosic ethanol -- call it Cellulol for short -- and costlier alternatives to gasoline-fueled engines such as diesels and poly-fuel vehicles capable of burning everything from petroleum to distilled grass clippings.
"Gucci bags don't reach 99% of the population," says Mr. Khosla. In other words, the auto industry needs technologies that can make curbing oil consumption and carbon dioxide production a smart choice from a pocketbook perspective. The talk and the show cars in Detroit don't guarantee that the auto industry has answers. But they signify that, once again, the industry's leaders are taking the questions seriously.
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