The US automotive industry is about to go through a historic transformation.  It is very possible that by the year 2020 we will have largely weaned ourselves off of the pure internal combustion engine.  The key is to make the right decisions about the next 12 years in the next 12 months.  To initiate a transformation of such a huge and critical industry takes planning, investment and a long term view.  Here is a very realistic view of what the US automotive and transportation industry can look like in 2015 and 2020.

The first thing to mention is that there is now a global awareness about the need to find an alternative to the gasoline internal combustion engine.  This form of power pollutes our environment, has driven CO2 to record levels in our atmosphere, and is based upon a finite fuel resource that will be gone by the end of this century.

In addition to these macro issues is the reality that combustion of any type creates heat in and of itself; that is a fundamental law of physics.  Keep this in mind as we consider such combustible alternatives to gasoline as the various types of ethanol available.  While switch grass and sugar cane ethanol may well be renewable it does generate heat, and if one is concerned about global warming, excess generation of heat by humans is an issue. The second law of thermodynamics applies here. By the way, the bandwagon of corn ethanol has clearly gone down a dead end street. Of all alternative energies being considered, corn ethanol has the worst ratio of energy units used to create energy units. In a world where starvation has been a constant, the idea of taking one of the major foodstuffs away from humans to feed automobiles is fundamentally ludicrous.

The two fuels that are most developed and ready to replace gasoline are electricity and hydrogen.  Both have the built in advantage of human habit.  We are all used to plugging things in, electric, and we are all used to going to fueling stations, hydrogen.  Everyone reading these words uses electricity everyday.  Few, if any of you reading these words currently use hydrogen.  This is the reason that every major car manufacturer in the world has started with electric and has announced an electric hybrid and many have also announced a pure electric plug-in. These vehicles will start rolling off production lines in 2010 and 2011.  Innovative companies such as Tesla and Aptera are already producing pure plug-in vehicles that get 200 plus miles per charge.  In the case of Tesla, production has just increased from 20 to 30 vehicles per week and they are sold out through October.

While much is known about companies planning on electric vehicles, less is known about company’s plans for hydrogen fuel cell vehicles.  As of right now, GM, Honda, Daimler have fuel cell cars on the road; I have driven all three of them.  In addition all the major auto companies, GM, Honda, Daimler, BMW, Ford, Toyota, Hyundai/Kia, Volkswagen, Nissan, and Chrysler have hydrogen fuel cell programs.

During the past three years I have written and spoken about 2010-2015 being the beginning of the age of the electric car.  This will be the five year period when production can and should reach a scale that will begin to noticeably affect our consumption of oil for transportation.  Aside from scaling up production, the two other issues that need to be addressed are: how is the electricity used for transportation produced and the need to rewire our electric grid for the 21^st century.  If all the electricity used to charge our cars come from dirty coal powered electric plants we have only partially solved the CO2 and climate change issues we are threatened by today.  If we do not fundamentally rewire our country, a country whose landscape has been created based upon the premise of cheap gasoline, we will not get to scale.

Think about where you live and work.  If you live and work in high rise buildings, think about where you park your cars during the day and night.  Are there conveniently located electric outlets available for charging near where you park your car?  Probably not. Could you drive between cities and get battery charges?  Absolutely not!

Hydrogen has the same current problems to resolve.  How is it produced and how do we develop an infrastructure of refueling?  The need for electricity and hydrogen to be produced cleanly and to have a refueling/recharging grid developed are the two issues that through time will need to be solved if we are to completely and systemically solve our global transportation.

Right now there is a premium in the purchase price of electric cars and hydrogen cars.  Electric hybrid and electric plug in vehicles have about a 25% or greater premium in price over similar sized internal combustion vehicles.  Hydrogen vehicles have about an 800% premium in purchase price, which is why Honda has leased its fleet of fuel cell cars in Los Angeles.  Honda currently has 10 hydrogen fuel cell vehicles on the road in the LA area and is ramping up to 200 total in the next two years.  I say this to quiet those that ignorantly think that the hydrogen fuel cell car is decades away.  People are driving them today in the largest car market in the US.

In the next column we will look at what the automobile landscape can look like in 2010-2020 if we make intelligent decisions in the next year.  For those of you in media and advertising, consider this: in the coming decade there will be dozens of car companies manufacturing alternative energy vehicles and dozens more converting internal combustion engine vehicles into hybrids.  As the age of consolidated mass media gives way to micro media, so will the consolidated age of mass car manufacturers give way, to some great degree, to micro car manufacturing.  Welcome to the 21^st century automobile business!