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"In 50 years, we’ll look back on the internal combustion engine and see it as a giant anachronism, like the steam locomotive.”  So declares Elon Musk, a software entrepreneur turned energy pioneer who sold PayPal to eBay for $1.5 billion. He has since put a big chunk of the proceeds into Tesla Motors, the first new American car company in years. The iron nexus of the internal combustion engine and gasoline has ruled in Detroit for a century, and upstarts like Tesla haven’t fared well. “The last successful car start-up in America was 100 years ago,” Musk observes. Even so, he thinks the time has come for change.

Detroit is about to be upended by a technological discontinuity even more disruptive than the arrival three decades ago of the personal computer: the rise of electric drive. Today, electronics make up nearly a quarter of a car’s cost, and by 2010, experts think it could reach 50 percent. Electrification started with simple things like CD players and seat warmers, progressing to individual systems like electronic disc brakes and onboard diagnostics. Today, however, a cutting-edge car like the BMW 7 series contains more than two dozen interlinked computer systems and dozens of intelligent chips and circuits. Thanks to dramatic advances in batteries and power electronics, mass-market cars may get the jump to go fully electric.

The arrival of the Tesla vividly captures the twin pathways of alternative fuels and alternative technologies that together are shaking up the world of cars. Simply put, both the juice and the jalopy are being radically transformed. This marks a significant departure from the past, when engineers sought a silver bullet in one alternative fuel or another. But the truth is that gasoline-burning car engines are much too good at what they do to be replaced by any one fuel or engine technology yet. That’s why both must change — and why the future belongs to an exciting portfolio of alternatives.

On the one hand, alternative fuels are challenging gasoline’s grip. Electricity, ethanol, hydrogen and even efficiency can all be seen as rival “fuels” displacing gasoline. But alternative fuels by themselves will not be enough to break the world’s addiction to oil, given its power of incumbency. Consider the Toyota Prius. The car’s innovative hybrid-electric drive greatly increases fuel economy, thus tapping the alternative fuel of efficiency. However, even if Priuses replaced every one of America’s cars overnight — a seemingly green utopia — we would still suffer from local and global pollution and remain hooked on oil. After all, gas keeps the Prius going when its battery runs low.

Kicking the petroleum habit requires electrifying the jalopy, too. The basics of auto manufacturing are changing from a grease-and-grime approach to one that treats the whole car as the ultimate electronic device. Electrification matters because it has the potential to suddenly level the towering barriers to entering the auto industry that have helped prop up Detroit’s dinosaurs.

Yet electric cars aren’t guaranteed to replace their gas counterparts. Electric cars undeniably reduce oil consumption; and studies show they are greener than gas-powered cars, even though they run on coal-derived grid power. But all that said, cars that require an overnight charge aren’t as convenient as those that only need a splash of gas.

The road ahead, in other words, is full of forks — but as the great Yogi Berra put it: “When you see a fork in the road, take it."

NEXT: Flex-fuel vehicles >

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It must rank as one of history’s least likely conversions: President Bush is an oil man, a longtime Texan, and a reformed alcoholic. But in his 2006 State of the Union speech, the president said America is “addicted to oil” and trumpeted the virtues of an alternative in the form of ethanol. Bush called for a vast expansion of the country’s crop-based fuel industry. He focused on cellulosic ethanol, a less energy–intensive, less-polluting biofuel made from tough plant material. Cellulosic ethanol, he said, could be commercial within six years. The auto industry’s juice of the future had seemingly been declared.

Cellulosic ethanol, when and if it arrives, could potentially curb our addiction to oil. Dozens of firms, including agri-business giants, chemical companies, and biotech start-ups, are now working furiously to move this technology from the lab to the market. General Motors (GM) announced this year that it’s investing in the  promising cellulosic-ethanol maker Coskata. (The firm is already backed by legendary Silicon Valley venture capitalist turned green investor, Vinod Khosla.) Still, Bush’s optimism notwithstanding, commercialization could be many years off.

There are already 5 million flexible fuel, or “flex-fuel,” cars in the U.S., with engines tuned to run on either gasoline or ethanol. For years, these have been a running joke in Detroit: Carmakers only made them to collect credits that would let them off easy on fuel-economy standards. Many of the millions who own flex-fuel cars don’t even know they bought one. But the political push by Bush, and the broader biofuels boom, has changed that. GM trumpeted this newfound seriousness about ethanol with an ad campaign launched during the 2006 Super Bowl that encouraged drivers to go green by “going yellow” (as in the color of corn). Detroit’s leaders now promise to double the output of flex-fuel cars quickly.

Ethanol is currently blended into gasoline in small quantities. The greener version is called E85 because its blend is 85 percent ethanol and only 15 percent gasoline. But America’s corn ethanol requires a lot of energy and petroleum-based fertilizer to get to the market. It’s far less efficient than its Brazilian counterpart, made from sugarcane. Even greenies worry about a big scale-up of ethanol because of the pesticides and soil erosion likely to accompany it.

Other people have pinned their hopes on biodiesel, a biofuel made from a variety of crops that can be blended into conventional diesel fuel. Country singer Willie Nelson drives around in a Mercedes powered by his own brand of the biofuel, BioWillie, which is made from vegetable oil. Rival blends use soy beans, grapeseed, switch grass, and even garbage and turkey fat.

Biofuel has two main advantages. First, politicians love to shovel subsidies toward the Midwest’s politically powerful farmers, and crop-based fuels provide another opportunity for such handouts. Second, biofuel doesn’t immediately need new infrastructure to support its rollout. However a concern for some is the increasing use of monoculture crops to make biofuel — people worry when they see Malaysian and Indonesian rain forests cleared to make way for palm oil plantations. Ethanol, on the other hand, can be blended into gasoline in lesser concentrations, and existing oil refineries can support production. But for these very reasons,  these fuels could perpetuate the world’s addiction to unsustainable crop-based fuels and oil, respectively, instead of ending the dependence on both.

Stateside, if crop-based alternatives are to ease our reliance on oil, we will need a nationwide network of filling stations offering blends with high concentrations of ethanol. Creating such a vast infrastructure won’t be easy, given that only a few thousand of America’s estimated 170,000 gas stations now offer E85. Cleaner diesels and better internal combustion engines will contend as alternatives, but these are essentially incremental technologies that defend the vested interests of oil. So while there’s plenty of juice to the juice argument, there’s more for the case of the jalopy.

NEXT: Smart electronics >

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The radical leap forward in the automotive industry will start with its convergence with smart electronics. The car of the future is going to be wired — or, if you have a satellite hookup, your ultimate wireless accessory. Thirty years ago, electronics accounted for only about $110 of the cost of the materials in a car — around 5 percent. Today, at $1,400 to $1,800, various electronics devices add up to 20 percent of the materials cost. But industry experts reckon that electronics now account for as much as 90 percent of innovations. The traditional carburetor was little more than a bucket for pouring gas into each cylinder. Today’s finely calibrated injection systems operate like space rockets in comparison.

The first of the innovations are those smart electronics that allow a normal internal combustion engine to run on alternative fuels carried onboard in separate tanks. Brazil has perfected this flex-fuel technology originally invented in Detroit. Some 80 percent of Brazil’s new cars can run on either ethanol or gasoline. In fact, Brazilian drivers typically flip-flop between the fuels based on which one is cheaper on a given day. BMW has also developed an internal combustion engine that runs on either gasoline or hydrogen fuel.

Hybrids are another revolutionary innovation. They offer a huge boost to the efficiency of the internal combustion engine by making the petroleum last longer. The upside — indeed, the real significance — of the hybrid is that it incorporates all the incremental improvements to internal combustion engines while contributing to further advances. The lighter batteries and more compact, lightweight control electronics systems developed for hybrids are preparing the way for fuel-cell electric cars in the future.

Curiously, while the mainstream auto industry is moving ahead with hybrids like the Prius — electrified cars that you don’t plug into the wall — a group of nerdy but influential enthusiasts in California is tapping into a different automotive future that utilizes hybrid technology only as a starting point. Greg Hanssen’s license plate on his Toyota Prius reads “100 MPG.” And it turns heads. Open up the back and you see his secret: an ordinary electric plug. Hanssen hacked into the Prius’ software and fitted the car with a bigger, more robust battery. The result is a vehicle that can be used for almost-pure battery driving. It still has a gas engine in case the battery runs down, but otherwise, the battery can be recharged overnight. Plugging in during the evening means cheap, off-peak state electricity rates, reducing fuel costs by 75 percent.

NEXT: Battery barriers >

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Instead of the nickel-metal-hydride battery Toyota uses, Hanssen opted for the superior lithium-ion technology found in laptop batteries. He also tinkered with Toyota’s software to prevent the gasoline engine from kicking in until the car reaches high speeds. In Hanssen’s car, the battery provides up to three-quarters of total power at 55 mph. And his modified Prius can do some 30 miles in all-electric mode, compared with less than 2 miles for a normal Prius. By whipping up so much media attention and grassroots clamor for plug-ins, Hanssen and like-minded activists have shamed Toyota into action. The company now promises plug-in hybrids within a couple of years — a claim that GM echoes in its big marketing push for the plug-in Chevy Volt, which the carmaker says will hit American roads by 2010.

The story behind the story is that what the car of the future looks like will be decided by batteries (for more on lithium-ion batteries, see page 39). At the North American International Auto Show in early 2008, plug-in hybrids owned the spotlight. Both GM and Toyota announced aggressive plans to bring their pet versions of this technology out within five years. One vital difference between the two firms was revealing: GM plans to use sexy lithium-ion technology — the same as Hanssen and Tesla motors — while Toyota is sticking with nickel metal hydride. That’s despite the fact that lithium batteries promise greater range. Toyota’s reasoning is that lithium technology is still not battle-tested, as Tesla has discovered: Tesla originally planned for a late 2007 launch, but problems related to its batteries and to the manufacturing process have resulted in delays. GM is forging ahead anyway, investing in lithium battery firms like MIT spinoff A123. Unlike GM, however, Toyota has a long history of underpromising and overdelivering.

When the plug-in bandwagon really gets rolling, it will do more than reduce oil consumption. It may also bust the century-old oil and car oligopoly and tear down the great wall separating the electric power and automotive industries. Once cars can connect to the grid to take power, they should be able to give power back to the grids, too. Google.org, the charitable arm of the search engine giant, unveiled a “vehicle-to-grid” project in mid 2007. The plan is to put precisely such seditious plug-in cars on the road in hopes of expediting change. This great convergence has been forecast by energy guru Amory Lovins, who thinks that super-green HyperCars will eventually be powered by fuel cells.

NEXT: Game-changing fuel cells >

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Increasingly, fuel cells are viewed as part of a solution by more than just progressive thinkers or companies outside the Big Three. Ford Motor Company Executive Chairman Bill Ford has predicted that “fuel cells will end the century-long reign of the internal combustion engine.” And Larry Burns, the vice president of research and development and strategic planning at GM, was one of the first in the industry to step firmly toward the view that one day the fuel-cell electric car will replace the gas guzzler. His reasoning is simple: The automobile industry depends on petroleum; that dependence leads to global volatility, political risk, and greenhouse gas emissions. As a portion of the 2.5 billion new people expected in the world by 2050 adopt the automobile, Burns believes that only hydrogen-fuel-cell electric vehicles will do the job without ruining the planet. (These cells would combine hydrogen fuel with oxygen from the air to create electricity that can run a laptop, a house, or an SUV. The hydrogen can be made from either a hydrocarbon fuel like natural gas or by splitting water with electricity.) If the hydrogen is made from renewable or nuclear power, then these cars produce no global warming gases — the only thing they emit is drinkable water.

Whenever a suitable network of hydrogen filling stations comes into place, GM intends to be ready to gear up to make a million of their revolutionary Volts at prices ordinary Americans can afford. Mindful that the oil giants have been slow to build out a hydrogen network, California’s green governor, Arnold Schwarzenegger, has been forging ahead with a plan to roll out hydrogen infrastructure from Tijuana to Vancouver. If Toyota is the hare, sprinting ahead with the Prius, GM could one day be the tortoise, winning in the long run with the fuel-cell car.

Later this year, the first fleet of those all-electric Tesla Roadsters hits the open highway. A two-year waiting list and $100,000 starting price make it prohibitive as a mass-market option. But the smoking-hot, two-seat sports car accelerates from zero to 60 miles per hour in just four seconds — faster than a Ferrari. Equally impressive is the fact that it can travel 250 miles on an overnight charge from a household 240-volt socket (not the public charging stations required by the previous generation of electric cars). Thanks to its use of advanced lithium-ion batteries and its lightweight carbon-fiber bodywork, the Roadster gets the equivalent of 135 miles per gallon of gasoline. Don’t blink or you’ll miss it.

What you can’t miss, though, is this: The great global race to fuel the car of the future is on. There are sure to be plenty of losers among the rival fuel and engine firms, but there may be surprising winners, too. Perhaps even a resurgent Detroit. More important, the innovation and creative destruction to come promises to liberate the automobile from the tyranny of petroleum and produce a cool, clean car of the future.

NEXT: Exciting times ahead >

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Even though there are plenty of obstacles ahead, the surge of investment in cleaner fuels and engines is more exciting than anything the auto industry has seen since the turn of the 20th century. There is no single answer for drastically improving today’s fuel consumption and cutting emissions of global warming gases. Lightweight vehicles, advanced diesel and gasoline engines, hybrid gasoline-electric technology, powerful new lithium-ion batteries, and biofuels will all play some part. For example, you can go to a car dealer today and buy more than a dozen hybrid-electric cars, ranging from the original superstar Prius to luxury Lexus hybrids to several big-name SUVs. You can get several models of American midsized sedans and pickup trucks in flex-fuel versions that run on ethanol; and if you’re not feeling flush enough for Tesla’s Roadster, wait a few years until their second model, dubbed White Star, rolls off the New Mexico assembly line — the company claims that the all-electric family sedan will come at half the price of the sports model. In the more distant future, the cost of hydrogen could decrease enough to end the dominance of the internal combustion engine altogether.

The forward-thinking transformation of the juice and the jalopy will help us maintain the mobility and freedom that are the oldest aspirations in this country of endless frontiers — even as it helps us meet the modern aspirations of preserving our environment for future generations. The road ahead will undoubtedly have some bumps and forks, but there is every reason to think that the world will keep on motoring.

Story by Vijay V. Vaitheeswaran. This article originally appeared in Plenty in March 2008.

Copyright Environ Press 2008

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