In the last column here, I suggested that any bailout of the Big Three include alternative energy metrics against which the three companies compete for better loan repayment terms.  In the week since that column was published there has been much discussion about whether America can afford to allow its’ auto industry to go down the tubes.  This implies that the Big Three represent the totality of America’s automotive production.

Of course there are the U.S. based factories of the German and Japanese manufacturers, which, while they produce cars here, are controlled and largely owned by other countries.  These factories have nothing to do with the Big Three except they are producing cars here but are making a profit.  Even beyond these companies, I would like to suggest is that the future of the automotive industry in the U.S. may well lie largely outside the Big Three.

In the early part of the 20^th century there were initially dozens of companies that produced automobiles.  Up until Henry Ford created mass production, Americans purchased cars from numerous producers that supplied limited scale but provided a great variety of internal combustion engine vehicles.  The history of the automobile business through the 20^th century is essentially one of consolidation so that by the last decade there were three standing.  During this last decade these three companies were exclusively focused on selling big vehicles with internal combustion engines that produced big profits. Prisoners of legacy thinking, all three of these companies were content to enter this new century operating on last century’s thinking.

I suggest that the internal combustion engine is not only a product of the 20^th century, it is a product contained within that century.  Just as there was a decade or more of spillover of the horse and buggy into the 20^th century, there has been a decade long spillover of the internal combustion engine into this century. Any adult in this country grew up in a car culture, just as anyone who grew up in the latter part of the 19^th century grew up in a horse and buggy culture.  Our entire landscape is predicated on the automobile.  What we need to now do is separate the internal combustion engine from the definition of the automobile. We can still largely remain a “car culture” but with radically different sources of power.

We all know that internal combustion engine vehicles are not something we should double down on as the central component of our individual transportation future. I think that it should be considered a product of the last century that no longer fits into the realities of this new century.  That is why it will be so interesting to see how the Big Three come back with a plan for spending $25 billion toward a new definition of the automobile. Right now they are actualizing a business plan that has resulted in the production of products that no one wants and no one can buy.  I will be very pleasantly surprised if the plan is a clear road map to what must be done for personal transportation in America in the 21^st century.

If the American taxpayer is called upon to spend billions on the auto industry, they should at least be able to consider investments that have nothing to do with internal combustion vehicles.  In hindsight, would it have been an intelligent act of Congress in 1908 to bail out the horse and buggy industry?  In the next column I will look at other areas and other companies where tax payer money might be better spent.