For over two decades 570 KLIF AM has broadcast my daily automotive news report; not that it’s important, but the fact that I keep a database containing every script may actually have some value. A simple search of the scripts shows that on September 21, 1997, I reported that Jack Smith, then chairman of General Motors, was going to throw more money at building environmentally friendly engines. That same day, however, researchers in Washington claimed a breakthrough in a gasoline-powered fuel cell that would revolutionize the auto industry.
Just three days later Bernd Pischetsrieder, at the time head of BMW and speaking at the Tokyo Auto Show, said forcefully, “… hybrid electric cars are not the future, hydrogen fuel cell vehicles will rule.” On December 3rd of that year, Mazda announced that it had built its first hydrogen fuel celled car. Thirteen days later, Ford said it would jump into a nearly $1 billion joint venture with Mercedes and Ballard Systems to create a hydrogen fuel celled car, with Daimler claiming such a vehicle could be ready by 2004.
Within a few years, “hydrogen fuel celled vehicles” was the mantra of the world’s automakers, and joint ventures to make this a reality were in place all over. By the turn of the century, major players, including GM, were claiming that by 2010 – 2015 the internal combustion engine would be dead, replaced by hydrogen.
In case you hadn’t noticed, that still hasn’t happened.
That’s not the only key point of this walk down automotive memory lane. Untold billions of dollars have been spent on research into how to build an inexpensive hydrogen fuel celled vehicle, and only a few automakers have leased a handful of them on the West Coast. But from time to time I go back and read my old news scripts covering the auto industry since late 1995, and one thing jumps off the page and hits me square in the face: Some 80 percent of the many stories I’ve reported never came to fruition.
Oh, sure, the money was spent, the promises were made; but in the end the original story was a promise of hope and hype, not reality. Over the past 22 years the term “fuel cell” shows up in these news reports 151 times — but as of yet, it’s just not happening. This should remind us that all the promises being made today of a future world of nothing but electric cars, self-driving cars, and ride sharing are no more likely to happen than the previous promises that hydrogen fuel celled vehicles would kill gasoline engines.
To be fair, the world’s buyers have already purchased hundreds of thousands of electric cars, and more new models are on the way. But by and large, the auto industry today, 20 years later, is still turning its major profits off trucks and SUVs and a handful of automobiles (such as the Camry, Corolla, Accord, and Civic). Other formerly high-volume cars such as the Ford Taurus sell only a fraction of their former volume.
In a nutshell? Nothing has really changed — at least, not in the way we were promised. True, automobile quality is light-years better than it was during the second Clinton Administration. And technology has made huge advances in automobiles, and great styling has returned as a primary driver of passion for would-be new car buyers. So it’s fair to say that what makes modern vehicles so great is not what the automakers promised over and over again— which didn’t happen at all — but the basic stuff that was already in place and simply being perfected.
Case in point: Most don’t know that the first in-dash navigation system came from Honda right around 1980. Nothing like today’s systems, of course; it was based on a gyro that was turned on at the very end of the assembly line. It was so precise that it would show you where you were in Japan within feet — as long as the car’s battery didn’t die and the gyro along with it. From that primitive beginning grew the navigation systems we have today.
Likewise, the 1989 Mazda Miata may actually have launched the modern age of automobile design. It was a gutsy design move. Convertibles had died in America in 1976; the last one, the Cadillac Eldorado, was in such high demand that they were selling for $60 – 70,000 over list. Really.
Of course, the market collapsed almost immediately after that, giving us the highest-depreciating car in history. Still, that 1989 Miata brought us a retro-looking roadster convertible; and, after 13 years with no new soft tops, the car-buying public went crazy for it. Yet it should also be noted that just two years later, Ford brought out its first Explorer, changing the auto industry’s top profit center to more rugged-looking vehicles.
It is possible to spot a major change in direction for automotive buyers, if one is paying close attention. Still, the question is whether today’s hype on self-driving or electric cars is justified — or even real at all.
The future may well have changed last week in Traverse City, Michigan, during an industry conference on the future of vehicles. According to the Automotive News, those who gathered there were far cooler and more cautious on the future of autonomous and even electrified vehicles than any public relations statements yet. Don Walker, head of Magna International, the largest parts supplier in North America, said, “If we went all in on electric vehicles, and we thought it was going to be 20 percent penetration in 10 years, and it’s only 8 percent, we’ve overcapitalized.” Denise Carlson of Denso Corp., another major worldwide parts supplier, said it’s far more important to plan decades ahead, rather than the next four or five years. What apparently wasn’t said out loud was how great and profitable this new future will be for the world’s automakers and parts suppliers. Instead, everyone was questioning the amount of R&D money flooding into trying to make these futuristic technological changes a reality.
Then Reuters carried another column from the German side of things, quoting an unnamed board member of a German automaker as saying, “Although [self-driving cars] is a substantial market, it may not be worth the scale of investments currently being sunk into it.” And John Hoffecker, vice chairman of AlixPartners, said flatly, “It’s impossible for me to believe there will be 50 successful autonomous vehicle software producers.” He’s right. There will be one, maybe two self-driving systems that will one day form the bulk of all said vehicle sales.
Techno Déjà vu
We’ve seen this happen before in the technology industry. Think compact discs and home video recorders.
Sony had been perfecting digital audio recording since 1970, and by late 1977 showed off the first working model of what we now know as compact discs for music. (Sony had actually performed digital audio recording by altering its BetaMax system years earlier.) That division published a technical paper in the spring of 1979. Days later Phillips showed off its prototype, which gave us this new product’s name. In the end, parts from the Phillips system and other parts from Sony were merged together in a joint venture for the final manufacturing guidelines for all.
Without going into too much detail, the early Eighties also gave us laser discs for movies and an RCA Selectivision system that played movies like a record player played music. In the end, DVDs became the standard, again thanks to the collaboration of Phillips and Sony. All the other would-be competitors failed to make their marks in the home entertainment arena.
But maybe the one application that didn’t work out was home video recording. Sony came out with its superior BetaMax system, but its tapes couldn’t be made to record full-length movies. Phillips’ VHS system, meanwhile, put out a lower quality image, but as a result could in fact hold a full-length movie. Guess which way Hollywood went when it decided to sell its warehouses full of film libraries to the public? Yes. VHS won out with consumers, but Sony’s BetaMax became the “go-to” video recording system for TV and local news departments.
That may be what eventually happens with self-driving cars: One system will become the superior system for personal automobiles and possibly another for commercial use, such as large trucks. But there won’t be 50 differeent self driving car systems. Or maybe it never really happens at all, because there is no political will to improve the nation’s highways — without which self-driving cars will never function properly.
The other warning sign, analogous to hydrogen fuel celled vehicles 20 years ago, is that automakers are starting to partner up for investments in autonomous vehicles, to cut down on their own outlays of working capital. Mercedes and BMW announced just such a venture, along with auto parts suppliers to their companies. Quick Trivia: Can you name the two biggest car companies that partnered in 1997 to jointly fund and research fuel celled vehicles? Exactly; nobody remembers. [They were GM and Toyota.]
Electric cars are real and growing in numbers worldwide. In Europe Renault continues to sell the most electrics with its Zoe model, followed by the Nissan Leaf, BMW i3, Mitsubishi Outlander PHEV and finally the Tesla Model S. But true widespread adoption of electric cars will happen only when gasoline goes to $10 a gallon — and then you can’t buy it every day, even at that price.
As for self-driving cars, at least completely autonomous ones, they may no more become a reality than the promise we’d all be driving hydrogen fuel celled car by now. Because the hype is cooling, and cooler heads are saying, “It may be nuts.”
© Ed Wallace 2017
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: firstname.lastname@example.org