Tuesday, March 21, 2006


Last summer I suggested that it would be a great idea for the government to establish incentives for energy technology milestones, along lines similar to the X-Prize. As either a supplement to or substitute for funding specific technologies, this approach would set out the results we want and the reward for delivering them, and then let ingenuity and the magic of the market deliver something we might not get any other way. Well, private enterprise has jumped ahead, with the same organization that set up the X-Prize for space announcing an X-Prize for cars.

As reported in the Detroit Free Press, it appears that the X-Prize Foundation is attempting to spur development of an automobile that would get the equivalent of over 200 miles per gallon of gasoline. The winner will probably be subjected to a test of commerciality and affordability, such as selling 10,000 units before qualifying for the $25 million prize. (Final rules and criteria will apparently be announced within a few months.) The result might resemble the plug-in hybrid cars I mentioned yesterday, or it could be something radically different.

Just as a $10 million prize for reaching sub-orbital space wasn't intended to send NASA and its major contractors into a frenzy, neither is the X-Prize for cars liable to excite GM, Ford, or Toyota. Instead, this approach relies on the equivalent of Wozniak and Jobs in a garage somewhere, dancing a jig at the prospect of lining up support for something they are probably already doing on a shoestring.

Perhaps that isn’t very practical, when a new car factory costs upwards of a billion dollars, and the cost of merely tooling up for a new model can hit a hundred million. But at the same time, if a 200 mpg car that people would buy is possible with anything close to current technology, the chances of it being produced by companies with billions invested in the status quo--and in their own ideas about shifting it--seem low. That's not because these companies buy up ideas like this and suppress them, as countless conspiracy theories suggest, but because this kind of radical innovation doesn't usually flourish in organizations with a principal focus on capital discipline and detailed strategic planning and a deeply embedded corporate culture.

This X-Prize will also provide the acid test for ideas that have been floating around for years. Amory Lovins, for example, has long suggested that the auto industry is ripe for a bottom-up revolution, using small-scale manufacturing techniques, new materials and highly efficient next-generation power sources. I wouldn't be surprised if his organization, the Rocky Mountain Institute, had some influence in the creation of this prize. If not, I'll bet they're giving serious thought to how they might win it.

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