X-PRIZE's Cahill: Advancing An Automotive Revolution

X-PRIZE's Cahill: Advancing An Automotive Revolution
Teams in the Progressive Insurance Automotive X PRIZE competition are vying for a chance to mass-produce vehicles whose fuel efficiency exceeds 100 MPG.
Eric Cahill, Senior Director of the Playa Vista, California-based X PRIZE FoundationEric Cahill

The Energy Independence and Security Act of 2007 aims to raise the Corporate Average Fuel Economy (CAFE) standard for the U.S. fleet of cars and light trucks to 35 miles per gallon (MPG) by the 2020 model year. Teams in the Progressive Insurance Automotive X PRIZE (PIAXP) competition are vying for a chance to mass-produce vehicles with nearly triple that level of fuel economy a mere four years from now.

"The Progressive Insurance Automotive X PRIZE competition model has been designed specifically to foster 'out of the box' thinking -- something that is done but not always able to be acted upon within the major automakers," said Eric Cahill, Senior Director of the Playa Vista, Calif.-based X PRIZE Foundation. "Consequently, we hope and expect to see some novel and innovative technologies and business approaches. For example, we hope to see teams explore market segments that are either over-served by the established players or have been ignored or deliberately abandoned."

The $10 Million Carrot

The foundation states on its web site that the ultimate goal of the competition is to usher in "a new generation of viable, safe, affordable, and super fuel efficient vehicles that people want to buy." The competition, which began early last year with 111 teams from 10 countries, calls on participants to engineer environmentally friendly, production-capable vehicles whose fuel efficiency exceeds 100 MPG or its energy equivalent (MPGe).

The ultimate goal of the competition is to usher in 'a new generation of viable, safe, affordable, and super fuel efficient vehicles that people want to buy.'

The PIAXP's format mimics that of the Ansari X PRIZE, which used a $10 million prize as an incentive to create a new industry: private-sector, personal space travel. In 2004, the foundation selected the reusable space plane SpaceShipOne as the winner. The company Virgin Galactic, part of the Virgin Group headed by U.K. billionaire Richard Branson, has already begun selling tickets at $200,000 each -- for "space tourists" to ride into the earth's orbit on a commercial-scale version of the aircraft.

Although experts from the auto manufacturing community comprise some of the PIAXP teams, backyard inventors and other amateurs are participating as well. Through a series of periodic qualifying events, judges determine which teams' vehicles are worthy of advancing to the next round of competition. Forty-one teams are still in the running at this stage, but only three will share the $10 million in prizes at the concluding awards ceremony this September.

Teams affiliated with established automakers may be able to provide a greater depth of knowledge and experience, but Cahill contends that the more limited perspective of smaller teams is not necessarily a disadvantage. "The small, entrepreneurial-minded teams that have continued to move forward in our $10 million competition also have the advantage of speed and nimbleness compared to established auto manufacturers, and they value the potential revenue streams that these products might offer," he said. Indeed, winning teams will have the opportunity to build relationships with the production partners, supply network, and distribution channel providers critical to bringing their vehicles to market.

A Balancing Effect

Gasoline prices have been particularly volatile in the past two years. Cahill believes that introducing new super fuel-efficient vehicles into the marketplace could mitigate this issue and boost the national economy. "The U.S. economy is particularly vulnerable to sudden increases in gas prices, based on the current model," he said. "Two-thirds of the US economy is driven by consumer spending and a substantial portion of American households do not have options apart from the automobile for their commute. Consequently, sudden increases in gas prices can quickly push the U.S. economy into recession."

Cahill believes that introducing new super fuel-efficient vehicles into the marketplace could mitigate gasoline price volatility and boost the national economy.

Facilitating ways to increase fuel efficiency and introducing energy sources other than gasoline to power automobiles might temper gasoline price instability, Cahill continued. He acknowledged, however, that dramatic increases in gasoline prices more instability would be a necessary step toward achieving this end.

"Future large spikes in gas prices would likely result in a sharp shift in consumer buying behavior toward fuel-efficient vehicles of the kind witnessed in 2008, but if other technologies were introduced, we could create such a 'balance," Cahill said. He added that considerably higher market saturation of more fuel-efficient vehicles such as gasoline-hybrids, plug-in hybrids, and electric vehicles (EVs) might offer the refining community greater predictability. "Presumably, anything that reduces large price swings would be welcomed by the oil and gas industry," he noted.

Gas Electric Hybrids

Vehicle designs in the Progressive Insurance Automotive X-PRIZE range from conventional to exotic. A goal of the competition is to make highly fuel-efficient vehicles available to consumers by the middle of the decade. Photos courtesy of the Progressive Insurance Automotive X-PRIZE.
The Decade Ahead

When the PIAXP competition concludes in September, Cahill anticipates the three winning teams will help to usher in a period of unprecedented growth in the super fuel-efficient vehicle market as long as gasoline prices remain volatile and somehow factor in a carbon pricing mechanism. "Assuming gas prices resume their climb when the economy exits recession, carbon is priced into fuel cost to some degree, and/or policy tools such as credits or fee-bates for alternatives, I would feel confident in predicting that 10% of the light-duty fleet and 20 to 30% of new sales will be vehicles incorporating some form of electrification in the year 2020," he said.

'Presumably, anything that reduces large price swings would be welcomed by the oil and gas industry.'

Cahill envisions that battery costs, currently approximately $1,000 per kilowatt-hour (kWh) and a major obstacle to greater market saturation, will fall below $400/kWh. He also foresees the introduction of a new, non-lithium-based battery chemistry, which he contends will be the "next big enabler" for EVs to be feasible for larger vehicle platforms. As a result, automakers could cater to a larger base of consumers. In addition, he expects that a shake-out period within battery manufacturing will result in a more competitive battery market sector by 2020. "Significant over-capacity will result in the failure of many battery start-ups and consolidation to a handful of battery-makers with significant battery production and manufacturing experience," he said.

According to Cahill, the "fueling" infrastructure necessary to support EV use within a broader geographical area particularly charging stations at retail outlets should also proliferate over the next 10 years. In fact, he anticipates that infrastructure availability will advance the point where the early adopter and early majority segments of the EV market will be adequately served within their respective localities and regions. This geographical focus would support another of Cahill's predictions: EVs will cater to specialized, mission-specific markets.

"For example, we will see EVs adopted to fulfill the specific role of urban driving or for short- to mid-distance commuting," Cahill said. "This focus will free vehicle designers to explore alternative designs and architectures that trade off reduced utility sized appropriately for the commuting mission and increased fuel economy."

Manufacturing super fuel-efficient vehicles also should become a more economically attractive enterprise over the next decade, Cahill continued. "A small handful of new entrants, including two to three American start-ups, and at least one Progressive Insurance Automotive X PRIZE entrant -- whether U.S. or internationally based -- will have achieved profitability by tapping over-served customers of established auto manufacturers or market segments ignored or abandoned by the established manufacturers," he said.

Consumers at the dealership also may discover a less formidable cost disparity between electric-drive vehicles and conventional cars and trucks, thanks in large part to technological improvements. "Novel combinations of technologies, such as batteries coupled with ultracapacitors, could help close the gap in purchase cost between EVs and conventional vehicles while improving battery performance," he added. "Combined with increased gas prices that tip the scales of operating cost over the period of ownership in favor of electrics, we could very well see more widespread adoption."

In the end, the wildcard is indeed gasoline price behavior. "So much of this depends upon gas prices," Cahill concluded.

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at mveazey@rigzone.com

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Matthew V. Veazey
Senior Editor | Rigzone
 -  BLOG: The Best and Worst Places in the... (Aug 17)
 -  HOW COOL IS THAT!: Geologist, Author, ... (Aug 17)
 -  How to Sell Yourself in the Job Search... (Aug 14)
 -  How to Sell Yourself in the Job Search... (Aug 8)
 -  How to Find the Needle in the Big Data... (Aug 3)


Most Popular Articles

Brent Crude Oil : $52.72/BBL 3.31%
Light Crude Oil : $48.51/BBL 3.01%
Natural Gas : $2.89/MMBtu 1.36%
Updated in last 24 hours