Aerial view of Honda test site, north of Ellsworth on Research Park Drive.

The existing 19,357-square-foot building, built in 1975 and used for vehicle testing, is located at 3947 Research Park Drive on a 2.72-acre site. The proposal calls for building a two-story, 24,116-square-foot addition. Part of that square footage includes a basement level.

During a public hearing on the project, a representative of American Honda Motor Co. reported that the expansion will include a state-of-the-art environmental testing chamber, to help Honda develop vehicles with cleaner fuel emissions.

The project would also entail removing a fence from a parking area in the back that has 26 parking spaces. The fence would be replaced with 10-foot-high privacy panels. Four bike hoops would be installed in front of the building, with additional bike spaces inside. There is no stormwater treatment on site, so the project includes building a below-grade infiltration system with a connection to the city storm sewer. One footing drain disconnect will be required, as part of the city’s footing drain disconnect program. That part of the project will be handled by CDM Smith, according to a staff memo.

Two of the site’s seven landmark trees would be removed, and mitigated by planting six new trees. In addition, 32 shrubs will be planted in front of the new addition. A 5-foot public sidewalk will also be built along Research Park Drive.

The site is zoned RE (research district) and no rezoning is requested. The expansion will increase the number of American Honda Motor Co. employees who work at the site from 6 to 10, according to the planning staff.

The project is being managed by Poggemeyer Design Group in Bowling Green, Ohio. The estimated construction cost is $4.3 million. A variance related to the size of the existing curbcut will be needed from the city’s zoning board of appeals, which will consider the item at its Aug. 28 meeting.

The entire proposal requires approval by the city council. The site is located in Ward 4.

This brief was filed from the second-floor council chambers at city hall, 301 E. Huron. A more detailed report will follow: [link]

Rob Cleveland

Growing up, luxury vehicles for me essentially included anything brought over from the European continent – from the classics like Mercedes-Benz and BMW to Audi, Saab and even the short-lived Peugeot 505 sedan (although looking back on it the Peugeot might have been a bit of a reach). A generation before, it was Cadillac and Lincoln marques that were held up as aspirational vehicles, with stories of people working their entire lives to finally afford a Cadillac in the driveway.

So when a colleague brought in the new Hyundai Genesis sedan to our Ann Arbor shop and described it as an early Lexus LS, I just had to see if this newest introduction to the luxury sedan segment was really as advertised.

Hyundai began making noises about entering into the luxury stratosphere just a couple of years ago, accompanied by chortles from the media and perhaps even from consumers too. No more. The Genesis won North American Car of the Year in 2009 – an award compiled from automotive media voting on dozens of new models from multiple pricing segments.

The car has been reviewed to death in other publications so I won’t say much more than it checks all of the boxes for a luxury sedan: quiet, smooth ride, luxurious interior ensconced in leather, a full spate of electronic gear. The catch – a $40,000 price tag versus $50,000 and up for other comparable sedans of this size and equipment level. The Mercedes-Benz E-Class, the BMW 5-series and Lexus GS are targeted rivals in this segment.

Hyundai plans to introduce another luxury model even above the Genesis later this year, the Equus. It will go up against the big flagships: Mercedes S-Class, Lexus LS450 and BMW 7-series. And if their pricing strategy holds, this model too is likely to come in under the high price tags seen in this segment. Rumors have it pegged at $60,000 but the company has yet to confirm pricing and it’s not clear if that is with or without heated tilting seats and TV screens … in the back.

This rollout strategy is nothing new. Lexus debuted in the American market with pricing well below its competitors, and sustained those prices for several years until Americans were willing to give the tires a kick. In fact, the prices were so low compared to the competition that Toyota was accused of “dumping” vehicles on the market in order to gain market share.

Now it’s Hyundai’s turn. And the question is whether or not consumers are willing to see the brand in a new light. Instead of an inexpensive transportation option with a legacy of quality issues (issues that more recently have been resolved just to note), Hyundai is asking buyers to see the Genesis and its larger kin Equus as luxury vehicles with equal gravitas as a Mercedes, but at a lower cost.

Hyundai isn’t the only one pushing this paradigm. Buick has recently set its sights on Lexus, positioning its Buick Lacrosse squarely against the Lexus ES model. The model is comparable in almost every way – from equipment to design and appointment – but comes in well below the cost of the ES. In fact the loaded Lacrosse can be had for slightly less than the base Lexus ES. Some auto reviews insist that the Lacrosse is even superior to the ES model, leaving only the brand itself to differentiate the two models.

Cadillac too is trying a sort of renaissance, pushing more aggressive design and more youthful advertising into its brand in an effort to tamp down a median buying age that at one point was so high that the company stopped releasing the figure for some time.

In the wake of last year’s economic pub crawl into the gutter, and the hangover that still ensues, perhaps these new, or renewed brands have a better chance of getting noticed than ever before. As they make their value proposition, cost-conscious consumers may drop their prejudices towards luxury staples of years past, and give these new and revised brands a more serious look.

By the way, consumers may want to do that sooner rather than later. As some of these new efforts gain market share, automakers are likely to push their pricing strategies up, opting to compete head-to-head and taking a bigger margin on each unit sold.

Meanwhile, car shoppers looking in or at least around the luxury sedan segment have many more options than ever before and will likely be surprised at how far their dollars will go … as long as they can see the car behind the badge.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.

Rob Cleveland

Toyota is something of an instant Greek tragedy as of late. Having displaced General Motors as the world’s biggest automaker, the gods of conveyance quickly punished the Japanese automaker for hubris and success, leaving the company wandering dazed and confused in the loneliest place on earth … at number one.

But the story is more than technical problems resulting in Toyota’s largest U.S. recall ever.

It also is about Toyota’s culture and how their approach to communications during this crisis exacerbated an already difficult situation.

The facts, as they appear now, anyway, seem to indicate that Toyota had a clear understanding of the defects for many months and had ample time to respond to the acceleration issue, with serious investigations underway as early as last August following a crash killing four people. The problem originally was blamed on the design of the floor mat and the matter seemed to be closed, at least in Toyota’s eyes.

This initial milestone was the first in a series of missteps driven by the company’s culture. Although Toyota is famous for its “andon cord” – a cord next to the assembly line that lets anyone stop production if they see a problem – the Japanese corporate culture is very top down. When a supervisor, or someone with significant authority, renders a decision, it rarely is challenged from people below.

That management approach may have precluded engineers and other managers from offering other points of view: points that became increasingly relevant as other theories about the acceleration began to manifest.

Gas pedals in contemporary vehicles typically do not have the kind of mechanical links to the throttle compared with older models. Instead they rely on sensors and software to not only provide direction to the engine’s throttle control, but also tactile feedback to the driver’s foot.

When a second theory began to surface around a malfunction of the pedal sensor itself in early January, Toyota was caught flatfooted and there was no communication whatever to the public.

Instead, the media picked up the story first: an incredible blunder. Had Toyota come out in front of the story, the media would have picked up the facts both from Toyota and other sources, but instead they ran with what they had – speculation and theory from “experts” in the field.

This information vacuum was driven from the top down too. Toyota President Akio Toyoda, grandson of the company’s founder Kiichiro Toyoda, made only a passing comment to a Swiss journalist before calling a hasty but belated press conference a week later to apologize for the problems. In a stark illustration of Toyota’s problem, Japanese journalists chastised Toyoda for calling the press conference with little advance warning, and then saying nothing of any substance except his expression of regret. That kind of aggressive journalism is very rare in Japan where the media and large corporations share a relationship more described as cooperation than investigation.

Here culture again played a role. Japanese companies in particular are very deliberate in their message – there is no such thing as improvisation. Announcements and directives are carefully vetted weeks before delivery. Nothing is left to chance. The president of Toyota did not come out with a clear message for the media and for customers about a solution to the problem because they simply were not ready (unlike American media responses thrown together so quickly that they often forego proper grammar.)

Jim Lentz, president and CEO of Toyota Motor Sales, did make an attempt at reeling back in the story by appearing on the Today Show with host Matt Lauer, one of several TV and radio stops made that day in an effort to quell the rising frenzy. No luck. For a guy covering sextuplets and travel destinations, Mr. Lauer deftly put the thumbscrews to Mr. Lentz, whose answers rang more as coached than genuine.

And it kept coming. The last lesson of a crisis with this magnitude is that there always are aftershocks.

The first of these aftershocks came from U.S. Transportation Secretary Ray LaHood. In an interview, LaHood suggested that Toyota owners should consider not driving their cars. In the context of the interview, the comment was offhanded; clearly not a prescription or a remedy being endorsed by the federal government. LaHood later retracted his comment, offering further clarification. But the damage was done and out of the interview, the media focused on the sound bite that made the biggest headline.

Next came the revelation that the antilock braking system on the Prius was under a recall too, adding another log on the fire and threatening one of Toyota’s most valuable and successful models from a brand perspective.

Had Toyota’s voice been out in front of the discussion, these corollary issues would have been muted, but because the media was driving the bus, each problem amplified the original acceleration problem. Even with no direct link between the Prius brakes and the larger throttle problem, the media made the connection declaring a wider, more systemic breakdown at Toyota.

And that is unlikely. Toyota has led the approach to – and results in – quality for decades. It would be irresponsible to marginalize these quality issues in the light of the fatalities that resulted. But there have been much larger recalls. Ford’s 1996 recall for a faulty ignition switch still ranks at the top of the list, and the Firestone tire debacle also ranks as one of the most publicized recall episodes in automotive history. But in these cases, Ford was out in front of each issue. Bill Ford himself was on the television attempting to reassure customers during the tire recall that the company was taking every measure to resolve the problem quickly and safely.

And GM. Having walked over hot coals last summer through their bankruptcy to emerge not only intact from a brand perspective but actually gaining ground in the public eye is the result of herculean efforts from their communications machine. The value of the results probably can be quantified with some clever math. And I would bet they are in the billions.

Toyota does now have a “mea culpa” marketing program running in an attempt to repair the damage. But the story still is resonating on the front page of newspapers and the lead in news broadcasts. The longer the story stays current, the harder it will be for dealers to get cars off of their lots. As a result, Toyota now is trying to run with big cash incentives to get buyers back. Just ask General Motors how that strategy plays out in the long run.

Is it fair to penalize Toyota for not having experience with recalls? Probably not. But Toyota is the largest car company in the world today (for the moment) and even if the excuse is having gotten it right for the last 50 years, a company of this size and scope has to have all of its disciplines executing at the highest level to stay that way.

It’s time for Toyota to learn once again from a pivotal moment in their brand’s history, and create a culture that allows the company to open up clear and frank dialogue with its customers and from people at the execution level, not executive. It will be an absolute must if they plan to hold on to that number one spot … that is, if they want it anymore.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.

Rob Cleveland

The media days preceding the 2010 North American International Auto Show in downtown Detroit kicked off to a pace that indicated far more optimism than the subdued, wake of an auto show that ran in 2009. At last year’s show, little did we know what was in store for us in the coming months – GM and Chrysler filing for bankruptcy, the lowest vehicle sales in 25 years – and it isn’t likely 2010 will be any less entertaining.

Optimism, though, seems to permeate through the show this year. Ford Motor Co., the only domestic automaker not to take bailout loans from the government, swept the North American car and truck of the year for the 2010 Ford Fusion Hybrid and 2010 Ford Transit Connect. Only two other automakers have taken the double header in the 17-year history of the award.

And GM’s chairman and CEO Ed Whitacre told reporters at the show that the federal government “had made a great investment” in effectively purchasing GM, and that he expected some $6.7 billion in loans to be paid back this year.

There still are sobering issues to deal with, though, and product will trump any good intentions as the year winds on.

For the Detroit show, GM unveiled two concepts: the Buick Regal GS concept car and GMC Granite concept crossover. Concepts are meant to show GM’s design direction on new product moving forward, but the final production models are what sells.

And Ford clearly has struck a positive cord with its new 2012 Focus due to go on sale early next year. If Americans are going to start buying compact cars from domestic automakers, this is it. The Focus has been referred to as “stunning” by some automotive pundits and I’m not inclined to argue. Ford says it is using a new 2.0-liter four-cylinder engine with direct gasoline injection with its Ecoboost system to boost performance while cutting fuel consumption. The combination of outstanding design and competitive fuel economy is likely to win some converts from foreign competitors like Toyota and Honda who have dominated the compact car segment for decades.

Chrysler Battles Back … Slowly

And then there is Chrysler. Still a mystery with its plot yet to unfold, Fiat executives who are now squarely entrenched in the day-to-day activities opted not to hold a press conference largely because the Chrysler stand did not have any significant new product. Executives insist the first big wave of new activity will come from Chrysler later this year. It remains to be seen if that will be soon enough.

That didn’t mean the Chrysler stand was empty – far from it. House Speaker Nancy Pelosi spoke to reporters from the Chrysler stand, effectively confirming the government’s decision to step in on GM and Chrysler, and saying she was returning to Washington D.C. “with great optimism.” It wasn’t clear if Ms. Pelosi ever finds herself behind the wheel of a vehicle, or has any real grasp of the auto market and the possible roadblocks ahead to recovery, but like a veteran politician her spin was upbeat and completely void of any facts.

Another politician arguably more in tune with the trials of the auto business also visited the stand. Michigan Gov. Jennifer Granholm took a few minutes to chat with Fiat CEO Sergio Marchionne and grabbed some photo opportunities.

But Chrysler made the most news off the show floor at a dinner during the Automotive News World Congress at the Marriott, where no less than three different individuals heckled Marchionne for a range of perceived transgressions, from a plant closing in Italy to a car-hauling deal gone sideways with the Teamsters, to a woman who blamed the company for the untimely demise of her spouse. Benvenuto a Detroit.

Other carmakers were more subdued – in particular the Japanese and Koreans, who are likely to wait until other auto shows later this year to unveil major product, given the immense focus on Ford, GM and Chrysler this year in Detroit. But they were far from silent. Honda introduced a new hybrid, the 2011 CR-Z two-door hatchback, designed to give a little zing into the otherwise staid hybrid sedan market. And Toyota looks like it may be expanding its hybrid/Prius line with the introduction of a FT-CH hybrid concept that, if or when in production, would come in under the current Prius as an entry-level variant.

From Germany, with Love

The Teutonic automakers appear to be embracing the concept of electric vehicles, despite their continued push to sell more diesels here and their long history of selling exceptional diesel powertrains all over Europe. BMW announced the ActiveE, an electric-powered vehicle based on its one series, following suit with BMW Group’s MINI-E introduction last year (BMW Group owns the MINI brand). The vehicle will use lithium-ion batteries and BMW says it has a cruising range of 100 miles.

And Audi rolled out the E-Tron “Detroit Concept,” which is a smaller variant of its E-Tron concept rolled out in Frankfurt last year. Nomenclature aside, the concept sports two electric motors to drive the rear wheels, putting out 204 horsepower. The car also is listed as putting out 1,995 foot-pounds of torque, representing more of a mathematical interpretation of a torque curve rather than the possibility of snapping your neck in two at every traffic light. But Audi insists these EVs will be rolling into production in 2012, getting 150 miles on a single charge.

If 2009 is remembered as a disaster for the auto industry, perhaps 2010 will mark the beginning of the recovery from that disaster, with the byproduct being a better industry with new, innovative models that reduce the auto industry’s footprint on the environment.

Or it will be the year where the industry misses real opportunities to change for the better, and the status quo simply comes back as sales volume rises. If that’s the case, we can expect another catastrophe somewhere down the line.

Editor’s note: The 2010 North American International Auto Show runs through Sunday at Cobo Center in Detroit.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.

Ann Marie Sastry, CEO and co-founder of Sakti3, at her company's booth at the Detroit auto show. (Photo by the writer.)

But Sastry and her company, Ann Arbor-based Sakti3, is far from “out in the cold.” They are in the auto business for the long haul and do not plan on being relegated to a basement booth forever. Eventually, if all goes well, her company’s battery technology will be powering the cars upstairs on the main show floor’s Electric Avenue.

What is it about the “Eureka moment” in her UM lab that prompted her to help found a company two years ago? What is it that turned the heads and opened the wallets of the Michigan Economic Development Corp. and cleantech venture capitalist Vinod Khosla, who chipped in $2 million out the gate? What exactly is her company’s battery technology?

Here’s her answer: “We’re interested in both materials and manufacturing technologies at Sakti3. So, we’re sort of looking at the intersection of those things.”

She pauses. She grins slightly, then says somewhat apologetically: “Sorry, I know that’s not good enough.”

This is Sastry’s polite way of saying that any further information is proprietary. She will only add that, “We are working on a manufacturing technology, and we think that’s one of the bottlenecks.”

It’s not surprising that she is guarded. The future of the auto industry is electric – at least, so says Michigan’s governor – and the future of electric plug-in vehicles depends on some big technological leaps in battery technology. If you think you have the secret sauce, you’re not going to tell everybody. Eventually, Sastry says, “We’ll all duke it out in the marketplace.”

Technology Transfer: From Academia

That kind of unabashedly capitalistic tough talk would have been practically unheard-of coming from a university professor in eras gone by – when academics were supposed to be in research for purely academic reasons.

David Cole, who heads the Center for Automotive Research in Ann Arbor, remembers the ’70s, when it seemed like a dirty little secret for an academic to commercialize a technology he or she developed. In some cases, Cole says, it’s about academic purity. In other cases, it’s jealousy. “Some people work on technologies that can be commercialized, others do not.”

Sastry says the technology developed in her lab could have gone a number of ways, but in the end she chose automotive battery development rather than pure academics.

“When the founders looked at some results we had, some technology we were looking at, they thought, ‘OK we could absolutely write more papers on this subject and go down that road and try to really focus on this as an academic exercise or we could really go down another road, which is to take what we have and see if we can build it in the steps required for commercialization.’ Both things are difficult. They’re just different.”

Sastry is fortunate enough to work in an academic culture where commercialization is not only no longer frowned upon, but actively encouraged – especially by UM President Mary Sue Coleman.

“The culture has totally turned around,” Sastry says, and not just at UM but in academia broadly.

“There is this space between what we do in our laboratories and getting into commercialization that we have to address,” Sastry says, speaking of a disconnect between the basic research done at universities and their transitions into tangible benefits for consumers. “And we have to help address it. It can’t be all just (marketplace) pull. There has to be some (academic) push.”

Sastry credits Coleman for pushing this cultural turnaround at UM. “Our president has been very specific. She believes that we need to enable tech transfer, and has funded more offices and centers to do that.”

But, she says, no matter how much help a company gets, it’s tough out there.

“It’s a high degree of luck, there’s a high degree of naïveté, there’s a high degree of optimism,” Sastry says, of founding a company.

“In our case, we want to put batteries in cars, so we have a lot to learn about cars.”

The university did not push her in the direction of automotive, she says. The University of Michigan has to rely on the “passion and vision of researchers” to determine where things are going to go. The university, as a whole, starts up very diverse types of companies, from nanotech to biotech to energy and materials.

Cole says that most technologies emerging from blue-sky research can go in multiple directions.

Technology Transfer: What Direction?

“I don’t think Sakti3 would see themselves as … a battery manufacturer,” Cole says. For that to happen, it takes extra push – a combination of public and private funding, in Sakti3′s case – to transition from idea to an actual company that makes things. And Sakti3 is still early stage.

“You see, the one thing that is true with intellectual property is that it’s actually fairly inexpensive,” Cole says. “It’s when you go to commercialize it, put in manufacturing capabilities, that it becomes a different story.”

To help move the “story” along in 2008, the MEDC designated Sakti3 as a Michigan Center of Energy Excellence and awarded the firm $3 million to accelerate its efforts to move to a prototype and to partner with the University of Michigan. This was added to an initial $2 million in financing from Khosla Ventures, led by Silicon Valley venture capitalist Vinod Khosla. Khosla has his hands in many alternative energy and automotive enterprises, including Fisker Automotive.

“We were really lucky to engage with Khosla Ventures almost as soon as we decided to do a company,” Sastry says. “There’s a real similarity in approach there, which is great.

“Working with KV is incredible because they really know what they’re doing. They really know a lot about building businesses. We think we know something about building batteries, so that’s really good,” Sastry laughs.

It’s a marriage that works out because there is only so much a bunch of academics can do. You need expert venture capitalists to take it to the next level. “In terms of the mechanics of a business, how to raise funds, how you price real estate, these are things that venture capitalists know a lot about,” she says.

Technology Transfer: Timing

So, when will Sakti3′s materials, or manufacturing technology, or process, or combination of all of them – she is still vague on that “proprietary” stuff – actually see the marketplace?

“We’re a few years off yet,” she says.

Five years? 10 years?

“A few years off,” she repeats.

Then Sastry decides to be somewhat more charitable with her information.

“To be very honest, it depends on a lot of things,” Sastry says. “Depends on how fast we run, depends on the dollars that come in, it depends on how successful and, sometimes, how lucky you are in doing the technology. So, there are a lot of variables. You know, starting a business is very risky.”

It also helps that Sakti3 has a development agreement with GM and – with her university hat on – she runs a development center called ABCD (Advanced Battery Coalition for Drivetrains) to help the automaker develop next-generation batteries.

Sakti3 currently employs fewer than 20 people in Ann Arbor, but Sastry expects that number to grow. And it will grow in Ann Arbor.

But what if, say, a Boston-based company eventually wants to buy the business, she is asked.

“It’s a fair question,” Sastry replies. “I mean, what we decided to do is to start a company to advance our technology to get it into vehicles. And so, where we’re at as an entity five or 10 years from now, I hope that we’re kicking out a lot of batteries that are going into really good cars. There’s a lot of steps between now and then.”

So, at this stage of the company’s development, Sakti3′s goals match those of the University of Michigan to commercialize its basic technology and the goals of the state of Michigan to make the state a center for next-generation automotive battery technology and manufacturing.

“The thing that’s nice about our situation is that the government of the region that’s most important to us – where our customers live – is also strongly supportive of what we’re doing,” Sastry says. “How often does that happen?”

Veteran journalist Howard Lovy has focused his writing the last several years on science, technology and business. He was news editor at Small Times, a magazine focusing on nanotechnology and microsystems, when it first launched in Ann Arbor in 2001. His freelance work has appeared in Wired News, Salon.com, X-OLOGY Magazine and The Michigan Messenger. His current research focus includes the future of the auto industry.

Gov. Jennifer Granholm and David Cole, chairman of Ann Arbor's Center for Automotive Research, talk batteries and electric cars during a press preview day for the Detroit auto show. (Photos by the writer.)

It is the first day of the press preview for the 2010 North American International Auto Show and Ann Arbor’s David Cole is strolling down “Electric Avenue.”

The “Avenue” is an actual strip of Cobo Center real estate where electric-vehicle makers show off their wares. But it is also a branch of a metaphorical road, paved with “green technology,” that is supposed to lead to Michigan’s future.

Cole is skeptical. Not that he doesn’t think that the auto industry is getting cleaner and greener – he and his Ann Arbor-based Center for Automotive Research (CAR) have been instrumental in steering Detroit down this path. But he is skeptical that it is happening as quickly as many in politics and the media have hyped it. And the hyperbole has been flying fast and furious so far at this year’s Detroit auto show.

Green Dreams

A self-described natural introvert, Cole is nevertheless not shy about throwing just a little cold water on green dreams to whomever will listen. And, as Cole is one of only a handful of first-tier automotive analysts, a great many people listen.

On the first day of the auto show press preview, those listeners range from a reporter for a small Canadian newspaper to the governor of the state of Michigan.

In fact, Cole is talking about how all-electric vehicles will remain nothing but a niche product for the foreseeable future, when Gov. Jennifer Granholm strolls by, going the other direction on Electric Avenue.

“Governor, how are you?” he says, as Granholm steps away from her entourage and warmly greets him. The two of them launch into a conversation that one senses is a continuation of a previous dialog, or an ongoing one, that they have been engaging in for some time. It’s about battery technology – a topic that is near and dear to Granholm and her vision for Michigan’s economic revival as a center for automotive battery manufacturing.

Cole is repeating his mantra that the batteries that will power the plug-in electric vehicles – which the federal and state governments are pushing – are still not ready to transform and revive the auto industry, no matter how hard the government hypes them.

“The concern that I have is that we drive it too hard before the battery is economical,” Cole tells Granholm. “And for the next five years, it’s just not going to be economical.”

The governor responds that federal and state incentives – for battery makers to improve the product, and for consumers to buy them – should help bridge that gap.

Cole: “As long as there’s a realistic approach on the regulatory side so that you don’t drive things faster than …”

“… what’s doable,” Granholm interrupts.

“… than what’s doable,” Cole continues. “And it looks like zero to five years is not going to be economical. But once you get five-plus, that’s where the numbers start to kick in.”

Granholm has a rebuttal for Cole, but to understand where the rest of the conversation is going, let’s rewind Cole’s auto show tour about an hour, and listen in on a discussion he had with a Canadian journalist.

Norman DeBono, of the London (Ontario) Free Press, interviews David Cole.

Norman De Bono of the London (Ont.) Free Press approached Cole following a Toyota press conference to talk about the revival of the U.S. and Canadian auto industries.

During the interview, De Bono makes a statement rather than posing a question. “This comeback is going to be a green comeback,” he says, echoing sentiments often repeated as fact among the auto show press corps.

“Well,” Cole said, drawing out the word for emphasis, “this is a really big issue because, frankly, we don’t know whether the price of fuel next year or in five years is going to be $1.50 a gallon or $5 a gallon.”

A buck fifty, even two bucks, consumers don’t care so much. Five dollars a gallon and, yes, the green auto revolution is on.

Right now, though, the reason the auto show is filled with small, efficient hybrids has little to do with what consumers want. It’s about meeting new government fuel efficiency standards. This is a government push, and not a consumer pull. What is uncertain in all this is where exactly the consumer fits in, along with the price of fuel. That’s a “wildcard,” Cole said. And with all the alternative fuels and new battery technologies available, he suggested, we’re likely to see less-expensive gas.

That point brings us back to Cole’s conversation with Granholm over on Electric Avenue, where he tells the governor that it will be another five years before the cost of new lithium-ion batteries will become “economical.”

“When you say ‘economical,’ you’re referring to economical for the company,” Granholm says.

“No,” Cole replies. “I’m saying economically in terms of consumer purchase.”

“Well, except for the (federal and state government) incentives,” Granholm says, hopefully.

“Yeah, the incentives are a bridging strategy,” Cole replies, then quickly adds. “But it’s not there yet.”

What Cole is doing in this exchange with the governor is what he always does no matter what the audience: be sober, be realistic, don’t let anybody get too carried away or too short-sighted.

“One of the things that we’ve tried to do is to get people to think very realistically about technology, to not get really too far out or too far behind on it, but … focus on what’s … realistic, and we have a pretty good feel for that,” Cole says. “It’s easy for people to get caught up in the hype of technology.”

Stone Cole Sober

This kind of sober analysis has worked for Cole and makes his advice and analysis very much sought-after by the news media and auto industry leaders. An example: Chrysler/Fiat CEO Sergio Marchionne, in town for the auto show, called Cole and wanted a meeting. Note that Cole did not need to call Marchionne.

Cole dismisses the attention and just says that he is quoted a great deal in the media simply because he is old enough to be in a lot of Rolodexes. Really, he’s much more comfortable out of the spotlight.

“I’m an introvert,” Cole says. “It’s not easy. I’m not a sales type of guy at all. I act like an extrovert when I’m out and about, but that’s not my normal inclination. I would tend to be more in the back row rather than somebody that sits in the front row.”

“Out and about” at the auto show, one could hardly tell Cole is an introvert. Auto racing magnate Roger Penske passes Cole in the corridor and waves. “It’s a good place to wander around and make connections,” Cole says of the auto show.

David Cole chats with Bruce Brownlee, senior executive for external affairs at the Toyota Planning Center.

Cole runs into Bob Larsen, of Argonne National Laboratory, a Department of Energy facility in Chicago. He talks to Larsen about developing a “portal to get IP in and out of the auto industry,” and wants the DOE to be involved.

“I’d love to chat about it with you, but I’ve got to go say hello to this guy over here,” Cole says, turning to Bruce Brownlee of the Toyota Planning Center in the Ann Arbor area, to whom he speaks quietly – a conversation clearly not for public consumption.

Asked later what he and Brownlee were discussing, Cole said, “There’s a legal case where I happen to know both sides pretty well and it’s a bad situation. They need to settle it.” Cole will not say what the case involves, except that it’s “something related to technology.”

Window into the Soul

Moving past the Ford displays and a giant robot arm, Cole stops to chat with Doug Pergament, automotive vice president for Sirius XM Radio. They briefly chat about business. Cole: “Are profits starting to come together?” Pergament: “Yes, we’ve had three consecutive quarters of positive cash flow.”

Then they talk about what could be described as a window into Cole’s soul: Which of the 130 or so satellite radio stations does he listen to?

The orange device behind David Cole is a robot arm used in auto manufacturing.

“Now, I’m a pretty conservative guy,” Cole says. “I listen to Fox News.” He also loves Laugh USA because of its good, “clean” comedy, and Radio Classics – old shows like The Lone Ranger and The Shadow – because it makes him “feel younger.”

Howard Stern? Well, when he signed on to Sirius, “for both my wife and I that was a negative.”

Pergament says he understands that Stern is controversial, but getting him on board helped satellite radio achieve “critical mass.”

There may be a good business reason behind Sirius signing Stern, which Cole can appreciate, but he remains unimpressed. “There are some people that are into his humor,” Cole says. “I am not.”

Moving along, a freelance writer for The New York Times decides to politely chide Cole for his conservatism. They talk about President Obama’s proposed health-care plan. Cole is opposed because he has a problem with that massive of a “government takeover.” The NYT writer’s trap is set, and he springs it. “You conservative guys jumped over the fence for a little while,” he says, when it came to a government bailout of the auto companies.

Well, that’s different, Cole says, refusing to be baited. Bankrupt auto companies “would have taken the whole supply structure down, and then taken the industry out,” he says. So, government-run health care? Bad. Government bailout of auto companies? Good.

He has no problem balancing the two, just as he has no problem working with people of all political stripes.

Where’s Ann Arbor?

This takes us back to Gov. Granholm, with whom Cole enjoys a good “apolitical” working relationship despite philosophical differences. “In terms of auto, we are politically, absolutely neutral and our focus is to make sure that we use the best knowledge that there is,” Cole says.

Granholm confirms this relationship.

“Part of our strategy – the battery strategy we’ve taken on as a state – was thanks to the advice of Dr. Cole’s group,” Granholm says. “If CAR had not advised us that this is where it’s headed, we wouldn’t be doing this.

“A year ago, I signed the bills here for the battery incentives, and here we are this year, when coupled with the federal, Michigan really is going to be the battery capital of the world. So, yeah, CAR has been instrumental.”

If Michigan is truly going to be manufacturing batteries, then Ann Arbor’s role will continue to be the intellectual property hub.

“Ann Arbor’s a unique community,” Cole says. “We’re probably never going to have anybody make anything there,” but it is the place where the ideas come from – largely through University of Michigan President Mary Sue Coleman’s variation on the old academic mantra, “Partner or perish.” UM is aggressively pursuing business relationships to turn academic ideas into business realities.

“Ann Arbor’s got a community where you have critical mass in some important areas related to people that generally are on the front edge of technology,” Cole says.

It also doesn’t hurt that, especially in a region that gets a bad rap nationwide, Ann Arbor is seen as a tolerable place to live.

“One of the real values of Ann Arbor, particularly in southeast Michigan, is it’s a place where you can get people to come from outside,” Cole says. It’s very difficult to get, say, technically skilled people to come from other areas. You can do it, but it’s hard because of the state of the economy, the state’s reputation and the state of the state.

Cole then adds something that could also describe his own role at the Detroit auto show.

“Ann Arbor has some ability to attract.”

Veteran journalist Howard Lovy has focused his writing the last several years on science, technology and business. He was news editor at Small Times, a magazine focusing on nanotechnology and microsystems, when it first launched in Ann Arbor in 2001. His freelance work has appeared in Wired News, Salon.com, X-OLOGY Magazine and The Michigan Messenger. His current research focus includes the future of the auto industry.

Rob Cleveland

Toyota’s Prius arguably is one of the most notable, and most recognized hybrids in the marketplace today. It’s seen as a symbol of an emerging trend here in the U.S. that embraces environmental responsibility and stewardship. In its draft, the Toyota brand has built a green, eco-friendly image that has often mitigated criticism of the company’s other pickups and SUVs with considerably poorer gas mileage.

A decade from now, though, I predict the Prius will be less known for its short-term contribution to the Toyota brand or CO2 reduction, and better known for galvanizing hybrid technology in the U.S. marketplace, catalyzing the introduction of dozens of other hybrid vehicles by nearly every car company selling here.

With roughly 21 hybrid models in showrooms right now, and other 20-plus models planned for production in the next four years, its legacy will have far more impact than any one vehicle with a 50-mpg rating.

A Changing Market, But Hybrid Sales Still Low

Some forget that the Prius wasn’t the first hybrid vehicle in the U.S. market. Honda’s Insight was the first to debut here in 1999, with the Prius following a year later. But Toyota’s hybrid proved to be the perfect combination: styling unique enough to set it apart as a new type of vehicle, but close enough to a typical compact 4-door to make it far more practical and usable versus the 2-seater Insight.

That combination of design and functionality allowed the Prius to become a moral statement for some in the face of global warming’s increasing celebrity. For others, it was an opportunity to hedge against the cost of vehicle ownership – an experiment in thrift against the rising tide of oil and gasoline prices.

Now hybrids are nearly ubiquitous – especially in green-leaning cities like Ann Arbor. Even those holdouts that insisted hybrids were likely a fad are rolling out hybrid powertrains that offer modest to major fuel economy ratings.

Sadly, hybrid sales still represent just 2% of total vehicles sold so far this year: approximately 240,00 were sold through October 2009 (Prius represented almost half, at 118,290) versus 8.6 million total vehicle units in the same time period. By comparison, Ford Motor Co. sold 334,922 F-150 pickup trucks alone in the same time period.

But between 2010 and 2013, there could be another 20-plus models released by manufacturers in a broad range of categories and price ranges. With more models to choose from, the sales numbers may improve as the economy’s pall lifts and people, once again, are willing to pay a premium for environmental advocacy.

And while the free market dictates that, one day, Prius will lose its diminutive crown as king of the hybrids to a competitor, all that come after it will have to recognize that the Prius sits at the trunk of this genealogy tree and pay homage to Toyota’s combination of product genius and uncanny market timing.

The Coming Lineup

Beginning in 2010 and looking forward, here are a few hybrid highlights to watch:

• Honda. Although Insight and Civic hybrid sales are only a fraction of the Toyota Prius sales, the Honda brand, year in year out, has stood more for innovation and creativity than volume (except for the Accord, of course). And so the Honda Fit Hybrid is next on the company slate, expected to debut late next year. Rumors have its mpg rating posted in the high sixties – a remarkable achievement but not entirely unexpected given the Fit’s size.
• BMW X6 and 7 Series. BMW calls their hybrid powertrain “ActiveHybrid” in an effort to differentiate between the thrifty but sluggish performance of hybrids like the Prius and Insight, and the main focus of BMW’s brand – the driving experience. Nonetheless, the ActiveHybrid is expected to provide 20% better fuel economy than comparable performance internal combustion engines, giving BMW owners an eco-option without compromising driving performance. The X6 is being rolled out now, and the 7-series will debut next spring.
• Porsche Cayenne/VW Touareg. If you’re not sure how to pronounce these two SUVs, you’re not alone. I’m not even sure the spelling is correct. But the Porsche and VW hybrid versions of these SUVs will debut in 2010 and 2011, respectively. While the individual marques go out of their way to differentiate the two models, they share much of the same underpinnings. In a spate of Teutonic SUV offerings due next year, German manufacturers are beginning to play catch up to Japanese and American OEMs who have had hybrids out in this category for some time.
• Audi Q5 Hybrid. Not to be left behind, Audi reportedly will launch a hybrid version of its Q5 SUV. The announcement comes as a surprise to hybridophiles who expected Audi’s first hybrid to be their bigger Q7. The dilemma could stem from the fact that Audi, like most German manufacturers, also is pushing diesel powertrains in some of its models (also offering great fuel economy performance, by the way) and offering a Q7 in both diesel and hybrid versions is likely to make heads spin at the dealership.
• Mercedes ML Hybrid. That didn’t stop Mercedes Benz from offering its ML-class SUV in three versions: gas (petrol for the euro crowd), diesel or hybrid. The gasoline engine gets 15 mpg, the diesel 18 mpg and the hybrid 21 mpg. How’s that for progress? The ML is on sale now.
• Hyundai Sonata. It was a great year for Hyundai, despite the recession, as buyers looked for cars with good value but lower stickers. The company’s first hybrid, the Sonata, will test Hyundai’s value/price formula since it will undoubtedly sell for more than the gasoline version. It remains to be seen if the translation can be made from a Toyota hybrid to a Hyundai with the same conquest rate as traditional gasoline engines.
• Buick Crossover Hybrid. As GM continues to massage its Buick brand, a hybrid is expected to debut in 2011, likely in the form of a crossover or small sport-utility vehicle. GM had slated the Saturn Vue to be its hybrid candidate in this class, but the brand didn’t make the bankruptcy cut. Some reports have this vehicle pegged to hit as much as 70 mpg if it is fitted with some of the same technology and powertrain configuration as the Chevrolet Volt.
• Superclass. If you’re looking to execute conspicuous consumption and then throw environmental superiority on top of it, in a couple of years, your options will grow substantially. Porsche is expected to launch a hybrid version of its new luxury 4-door sedan, the Panamera. Infiniti has a hybrid version of its M sports sedan reportedly in the works, and a new company, Fisker, will produce a plug-in hybrid sedan called the Karma coming in at around $90,000. These models might be a bridge too far for some tree huggers, but now even the rich Sneetches can have environmental stars on their bellies.

Some Final Thoughts

Many of these vehicles still are based on the same hybrid powertrain concepts pioneered by the Toyota Prius and Honda Insight. On the horizon: the plug in hybrid (PHEV), offering more range on electric power and thus even lower fuel consumption.

Still, there is some controversy about hybrids: whether or not they get the fuel economy they report in real commuter driving cycles, whether or not owners really recoup the premium they pay for a hybrid over the life of a vehicle.

But with so many hybrids coming into the market, consumers appear to be telling focus groups that they just don’t care. That means hybrids have likely graduated from a fad borne in bad economic times and environmental handwringing into a long-term option for carbuyers. So years from now, you may get to tell those bored grandkids (from the back seat of their hovercraft) about the Toyota Prius, the car that started it all.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.

Rob Cleveland

When I talk to out-of-state relatives, they begin the conversation with the same pity-laden inquiry: “So how’s it going out there?” By “out there” they mean the state with the worst unemployment figures, rampant foreclosures, corrupt former mayors, headline-grabbing corporate meltdowns and enough clinical depression to put a squeeze on the country’s Zoloft supply.

Michigan’s slide into unwanted notoriety has been led by the collapse of the domestic automobile industry – once an engine for the economy, and now a drag both here at home and across the nation.

But unlike last winter (and spring, and summer), the news is looking a little brighter lately. Mind you, I’m not declaring “Mission Accomplished,” but the collective headlines that came out just this week could mean the auto industry, and by association the state of Michigan, could be on the mend.

Some Positive Signs at Ford, GM

The brightest news this week: Ford Motor Co., the only domestic manufacturer that opted not to take loans from the federal government, posted a near-$1 billion profit for the third quarter, built in part from a profit of $357 million from its North American operations. That is the first profit Ford has seen from its domestic unit since 2005.

Ford’s turnaround is tenuous, though. It still is sitting on a mountain of debt: more than $23 billion. That’s the equivalent of getting a job after a year of unemployment, and only now being able to face up to the maxed-out credit cards and home equity loans. And while Ford has some decent product out now, it is going to find it difficult to sustain a pipeline competing with other companies who shed their liabilities through bankruptcy, and now can devote more dollars to new cars and trucks.

It beats getting poked in the eye, though, and CEO Alan Mulally is predicting a return to annual profitability in 2011. Just one more year…

Meanwhile, east of Dearborn at the RenCen, the surviving General Motors crew is crawling to shore after the ship went down this summer. The public ire over billions of dollars in federal loans has apparently abated and they are buying GM cars again, up 4% versus October 2008 and up 13% over September 2009.

Perhaps more telling than sales, though, was GM’s decision to keep its European car unit, Opel, after a protracted effort to sell it to Magna – a giant Canadian parts supplier – and a consortium of Russian investors. The decision to keep Opel can only be based on optimism from the executive suites and a bullish forecast for the coming year.

In calling off the deal, GM managed to outrage both the German and Russian governments who had their own agendas and expectations built into the buyout. At least the taxpayers are getting some entertainment out of the federal loans, if nothing else just now.

What’s Up with Chrysler?

And then there is the plucky Chrysler that just won’t say die. In an all-out corporate marathon, Fiat/Chrysler-boss Sergio Marchionne took six long hours to outline the next, long five years that will pave the way to a Chrysler revival, largely on the backs of Fiat production platforms.

If the plan holds true, Fiat will do more for Chrysler in just two years, in terms of product sharing, than Daimler did for Chrysler during its entire ownership tenure. And Americans may, once again, be able to buy Fiats and Alfa Romeos at local Chrysler dealerships.

There are plenty of industry analysts and home-schooled amateurs who are writing Chrysler and Fiat off. Marchionne reminded the audience that the same dire predictions were made about Fiat before he took the helm there, and the company wound up turning a record profit in 2008.

Mind you, 2009 isn’t looking nearly as hot for Fiat but no one is lighting cigars with hundred dollar bills these days. If someone is going to try and revive the clinically dead Chrysler, it might as well be someone who has been through it all before.

The Road Ahead for Michigan

The slow and painful return of these three companies could mean better times ahead for Michigan. But that shouldn’t mean Michigan should give up its efforts to bring diversity to its business base. Foregoing efforts to bring other high-tech companies and industries into Michigan would mean that we’re back here a decade from now when the automobile industry takes another bad turn. And anyone who thinks the Big Three will ever have the same headcount it did five years ago is delusional.

Conservative groups are calling for elimination of tax breaks and subsidies to attract businesses here to Michigan. They claim it is a waste of time, and that those expenditures haven’t lived up to the forecasts for new jobs. That’s precisely the same short-term thinking that has put Michigan at the head of the pack when it comes to economic blight. Spending tax dollars to attract new businesses like high-tech software firms and new industries like the film business is a long-term investment: it won’t bring in jobs overnight but it beats the heck out of doing nothing and then whining about it when there are no results.

We can all hope and believe that the auto industry will come back. But Michigan needs to plan with the expectation that it might not. In the best-case scenario, more car jobs return to Michigan on top of jobs from other industries. Maybe then, the pity permeating over the telephone lines when out-of-state friends and family call may begin to dissipate.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.

Rob Cleveland

One thing is certain in the automobile business. When you start peeling back the onion on the performance claims and quality ratings made by and for all of the automobile manufacturers, you better have a bottle of ibuprofen at the ready. General Motors’ recent announcement that the Chevrolet Volt will get 230 miles per gallon (mpg) certainly is no exception.

First, some disclosure for your reference. I have been a big fan of GM’s efforts to create its hybrid electric vehicle and felt for some time that the car could be a positive step forward for transportation in general. I’ve been a strong supporter of GM’s many efforts in alternative transportation, from hydrogen to ethanol, as well. There are plenty of detractors around these programs – and some of the criticism is warranted. But for a company so maligned by the public as being out of date, I’ve always felt GM got a bad rap seeing how they are doing at least as much as any other car company to find solutions that take petroleum out of the transportation equation.

With that said, I found myself scratching my head trying to absorb this latest news out from GM. In principle at least, it seemed as if the Environmental Protection Agency (EPA) had just given the Volt a 230 mpg fuel economy rating, more than 10 times the average fuel economy of other cars on the road. Fantastic or fantastical?

One can be excused for having pitched one’s eyes in that too familiar arc with an element of pessimism upon hearing this. In the midst of a political, fiscal and public relations nightmare, GM manages to pull this arrow out of its R&D quiver, hitting a bulls-eye with the news media. Let the conspiracy theories begin: the EPA, the federal government agency charged with developing rules for fuel ratings, just created the rule that calculates the Volt fuel economy at 230 mpg – more than 10 times the average vehicle on the road today. And GM’s principle owner, at 60%, is … the federal government.

Or just maybe we’re witness to something genuinely revolutionary – an opportunity for those who have been railing about automobiles for years to climb off of their green dais built of cork and mud into – gulp – a Chevrolet. Perhaps after all of the chatter and hype, the American public is finally getting what it has been clamoring for, and GM is really capable of changing with the times after all.

Being in a university town, hopefully more than a few folks here will wonder what exactly is behind GM’s lofty number. Well, that is where it get’s fun. My breakdown is below but I’m hopeful that people with more alphabet soup after their last name will weigh in on the comment lines.

Get Out Your Calculators

Here is some background to provide the proper context for the subsequent calculations. The EPA is chartered with coming up with the formulas and testing procedures that dictate how car companies will calculate fuel ratings to their cars. This isn’t just an exercise. Automakers can incur heavy fines if they can’t demonstrate that their fleets meet the Corporate Average Fuel Economy (CAFE) benchmarks mandated by the government.

For the Volt, and other electric vehicles, the EPA calculates the rating, in part, based on how many kilowatt hours (kWh) are used to go 100 miles. GM says the Volt will use about 25 kWh.

So with that, let’s do some math. To do this I offer you no less than four calculations and ratings.

For the first number we have my math, which I would call the “simple” formula, seeing that it took me 10 minutes to come up with it.

If it costs about 11 cents on the average for a kilowatt-hour (the national average), to go 100 miles using 25 kWh would cost approximately $2.75. Compare that to a car getting 20 mpg – about the average for cars and light-duty trucks on the road right now. Using a national average of $2.60 per gallon of gasoline (visit GasBuddy.com to see your region), the same mileage costs $13 on our benchmark “pretend” gasoline vehicle. So the straight math tells us that the gasoline equivalent is about 4.7 times as much, putting our “simple” calculation for the Volt at about 95 miles per gallon. Not bad, but not anywhere close to 230 mpg. Yes, this calculation is imperfect, as it does not take into account whether or not the car ran all-electric or in both electric then gasoline modes. And of course as the price of gasoline fluctuates and the benchmark vehicle changes, so does the answer. But it is a simple start.

Of course, the EPA doesn’t like things to be that simple, otherwise I could just run the whole place myself with a laptop and a Twitter feed. Instead, they have conducted studies on the driving patterns of about 80,000 people and, based on those driving patterns, concluded that the average Joe (or plumber or six-pack drinker) is driving in a particular way. These “driving cycles” are used in coming up with the mileage.

The EPA takes these driving cycles – there are different ones for different scenarios like city and highway, by the way – and calculates the fuel efficiency of the Volt over a cycle, assuming one starts out with a full charge on the battery pack.

A Little More Complicated

Now we explore the second number, 230 mpg. The cycle is roughly 50 miles, and the fully charged Volt goes 40 miles on its initial battery charge, and then consumes a fifth of a gallon of gasoline to go the remaining 10 miles.

The very simple math – no more complicated than the scenario above – says that if the car made it 50 miles on one-fifth of a gallon … guess what? The car will go 250 miles per one gallon (250 mpg). The test cycle itself isn’t quite 50 miles, and there are some inefficiencies one needs to build into any powertrain system versus the theoretical world, so in the end, 230 mpg was probably a safe bet and one GM was willing to stand by, assuming everyone is inclined to take this approach at face value.

But hang on – what about all of the “fuel” that goes into that first charge of the battery pack? Surely we can’t ignore that. Seeing that electricity isn’t free at the moment, and has its own inherent energy capacity, what is the mileage relative to gasoline (if you’re not a fan of math or making life more complex than it needs to be, skip ahead six or seven paragraphs.)

And so we have the third number.

Gasoline has an energy density of 114,000 BTU/gallon. A kilowatt hour has 3,400 BTUs/kWh, so it takes 33.59 kWh to equal one gallon of gasoline (which, by the way, is why gasoline has been so popular).

This puts the conversion factor at 33,590 from watt hours to gasoline. Unfortunately, the EPA gets 33,705 so I will use their number instead, since I am using the calculator on my Mac.

Now take the fuel economy in terms of watt hours to go 1 mile (remember GM says 25 kWh to go 100 miles, so 250 watt hours to go 1 mile) and divide that into the conversion factor: 33,705/250(wh/mile) = 134.8 mpg. So in electric mode, the Volt is getting 135 mpg – much closer to my “simple” calculation result.

Of course, now this completely ignores the gas mileage that ensues after 40 miles when the onboard gasoline-driven recharger kicks in to top off the batteries. It does this when the battery is at 30% capacity and tries to keep things above that line until you can recharge.

Here GM provides us with our fourth and final number. When the engine is on, the Chevy Volt is getting 62 mpg – about 12 mpg better than a Prius, but nowhere close to the jaw-dropping 230 mpg previously stated.

What to Believe?

Deciding which answer to believe is complicated in itself. After all, it is the EPA’s own rating formula that provided the 230 mpg and GM is unlikely to make such a dramatic claim without some way to use the EPA as a backstop for the media’s fastball pitches. On the other hand, it doesn’t stand to reason that the car can get 135 mpg in electric mode, 62 mpg in gasoline/electric mode and somehow walk away with 230 mpg.

My only thought is that the EPA’s complete model for fuel economy calculations is so complex and so outdated that trying to assign a fuel economy rating in miles per gallon to an electric vehicle is like trying to publish a web page with a Heidelberg four-color offset press.

This is likely to get even more complicated as the EPA considers rules that will provide ratings for electric-only modes and composite modes (sort of the city/highway equivalent). And the EPA already is running for cover, having issued this statement the day after GM’s 230-mpg revelation: ”EPA has not tested a Chevy Volt and therefore cannot confirm the fuel economy values claimed by GM.”

To make matters worse, Nissan just unveiled its Leaf all-electric vehicle – no onboard recharger fueled with gasoline. The company says it can go 100 miles on a single charge (of course, when you run out, you better be close to a wall socket).

Taking the EPA’s formula using the LA4 driving cycle, Nissan calculated that the Leaf – a four-door sedan much like the Volt – gets 367 mpg, trumping the Volt by a wide margin (apparently Americans can’t even make fuel efficient cars fuel efficient.) Note that the 367 miles per gallon rating is for a car without a drop of gasoline, never mind a gallon, on board.

Luckily for GM, Nissan and the EPA, the public isn’t likely to dive too deeply into the calculus. NBC’s Today Show swallowed the fuel economy rating whole, with no mention of how GM or the EPA arrived at the number. CNN ran the 230 mpg number in their endless news cycle without any reflection on the calculation. As far as the news media seems to be concerned, if the government says it’s true, it must be true. Great.

What the public is more likely to listen to will be the sticker price on these new EVs. GM has floated that the Volt will come out around $40,000. Just by comparison, a 2010 Mercedes Benz C-Class, roughly the same size as the Volt, comes in just over $35,000 nicely loaded.

And therein lies the rub – whether it is flying cars, high-speed rails, or electric vehicles. Worse than not getting what we want can be getting what we want. And now the bill for what we all asked for incessantly – incredibly high fuel economy in a four-door sedan – appears to be coming due.

In truth, I hope the calculation proves to be true through some far more complex equation that takes into account the vagaries of regenerative braking and the leftover 30% battery capacity after the driving cycle is finished. I wish I could explain the number just so I could be more preachy and tell GM’s critics  to kiss Rick Wagoner’s posterior (some folks in the Senate get first pucker), as the Volt was conceived under his watch. Having a vehicle that provided 10 times the fuel economy of today’s average car would solve an extraordinary set of seemingly intractable problems, from Middle East oil imports to climate change and the environment.

But for the public to buy into the hype, the car companies had better be sure they all are speaking from the same playbook. In principle, that’s the EPA’s job, but in fact we don’t buy cars from the EPA (well, sort of, if you think about it). It’s up to GM, Nissan and the half dozen other manufacturers planning all-electric or hybrid electric vehicle production in the next few years to give car buyers something solid that really justifies the added cost of owning an EV.

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Grange Kitchen and Bar in Ann Arbor.