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The most provocative vision of the automobile isn’t coming from within the auto industry’s ranks. Rather, thinkers steeped in systems thinking—especially natural systems—are challenging the industry’s assumptions at its core. Authors Paul Hawken, Amory Lovins and Hunter Lovins, in Natural Capitalism Creating the Next Industrial Revolution (Little, Brown), propose a radically redesigned vehicle consisting of the best materials and technology for handling the mobility problem. Their proposed solution is a far cry from today’s iron chariots that require hundreds of thousands of firms to cooperate simply to get a vehicle in the driveway. Two key components in their Hypercar vision are ultralight, carbon-fiber composite bodies and hybrid-electric engines.

The authors contend today’s vehicle makes poor business sense. They argue that its two defining characteristics, a heavy, steel body and an internal-combustion engine, were great solutions—in 1920. However, both are passé today due to much better materials and power plants perfected over the last 10 years. Today’s vehicle must still push 1,800 pounds of steel (on the average) down the road.

The situation today is not unlike the typewriter industry in the 1950’s. Both industries were “married to metal.” Typewriter manufacturers persisted even as superior technologies and materials became available. That industry was locked into a particular product architecture. Its core competencies and infrastructure continued to be centered around metal parts despite better ways of delivering the same functionality. Most typewriter giants of the 1950’s are no longer around. Holding to an old paradigm leads to extinction.

The authors argue that enormous, unnecessary, business exposure accompanies the auto industry’s insistence on sticking to vehicle notions formed in the 1920’s. First, just developing that traditional vehicle requires a billion-dollar bet—all for a vehicle that consumers may simply not like. Much of that tooling cost is avoidable when using ultra-lightweight body parts.

In addition, enormous inventory costs accrue in today’s supply chain. Hundreds of manufacturers must contribute parts to a vehicle that is “the highest expression of the Iron Age—a complicated assemblage of 15,000 parts.” Building a vehicle jointly with all these suppliers is probably the most difficult coordination act ever attempted in the history of mankind.

The original equipment manufacturers (OEMs) intuitively know today’s supply chains are monsters of complexity and cash drains. They also know they must simplify to survive. Moving to more modular assembly, for instance, is one battle cry. However, in this vision the industry still produces the same vehicle from the same parts but just uses different firms to do it. Hence, the industry shouldn’t expect modularization itself to make much of a dent in the industry’s overall complexity problem and implicitly, its cost structure.

Lean manufacturing and supply-chain-optimization software are other tacks. Nevertheless, building a much simpler product will win out over any of these efficiency-oriented approaches: a “lean” product will triumph over the leanest processes used to make an unnecessarily complex product.

Hawken, Lovins and Lovins argue that the Hypercar will immediately reduce product complexity. At the same time, the Hypercar will deliver all the characteristics the market has come to expect: comfort,roominess, performance, safety, and so forth.

Any vehicle drastically lighter and using hybrid-electric power knocks mechanical complexity right out of the product. Today’s auto industry does the equivalent of trying to mass produce 1970’s-era mainframe computers. Those computing behemoths required costly accessories such as water cooling that led to their multi-million-dollar price tags. Today’s automobiles are even more complicated than those mainframes. Only the industry’s phenomenal ingenuity has enabled it to keep today’s vehicle cost below $50,000 a unit.

A major goal of the auto industry is to cut vehicle costs so dramatically that the average, global consumer can afford a vehicle. This will be possible only through a radical redesign of the product, rivaling the breakthrough product innovations of the computer industry. It will not occur through process improvements or supply-chain innovations alone.

Hawken, Lovins and Lovins envision that a six-passenger version of their Hypercar will weigh only 1,500 pounds. The key is carbon-fiber, advanced-composite body parts. Body manufacturing costs would plummet since these advanced-composite parts are formed in large pieces using only a few, complex-shaped molds. This contrasts with today’s tooling that requires hundreds of tool-steel dies, each costing $1-million, on average.

A fuel-cell-based engine contains few moving parts. An optimized light-weight vehicle eliminates a host of expensive components: power steering, power brakes, clutch, transmission, driveshaft, universal joints, axles, differentials, starters, alternators, etc. All of this adds up to needing a smaller, cheaper fuel cell to provide equal or better performance, while radically improving fuel efficiency and emissions.

Safety and regulatory requirements are adding on the average $2,000 to the cost of a vehicle. As pollution from tailpipes continues to threaten the planet’s air supply, vehicle manufacturers can only expect even more stringent government regulations. Many of these potential new costs will disappear with the Hypercar design. Hybrid-electric vehicles produce extremely few—if any emissions—reducing the need for catalytic converters, for instance. Their fuel economy also far exceeds that of even the most demanding regulations.

Given this compelling case for a new-generation of vehicles, it is not surprising that the auto industry has pumped some $5-billion into research and development of the underlying technologies. DaimlerChrysler is on record stating “the race to demonstrate the technical viability of fuel-cell vehicles is over . . . now we begin the race to make them affordable.” The key to doing that, say Hawken, Lovins, and Lovins is putting fuel cells in lightweight, low-drag Hypercars.

(The first alternative vehicles are already in production. Toyota has been building its Prius sedan in Japan since 1997 and over 20,000 are on the road. In December, 1999, Honda will begin selling in the United States its two-seater Insight, which gets over 70 miles per gallon (mpg) on the highway. Volkswagen has announced plans to sell 78-mpg hybrid-vehicles to be followed by 118-mpg and 235-mpg vehicles.)

Technical obstacles hamper the faster introduction of these vehicles. These include the high cost of the engine, the absence of fuel-distribution networks (in the case of fuel cells) and the high cost of advanced-composite materials.

Hybrid-electric engines must drop significantly in price for them to be commercially viable. Fuel cells, for example, currently produce electricity at a cost of roughly $500 to $1,000/kilowatt. This is five to twenty times more than what the market can bear.

In addition, new distribution networks are needed for drivers to get the new fuel.

The early Hypercars may have this problem solved for them by piggybacking on fuel-cell technology entering another market first. The versatile fuel cells could first deliver electricity and heat for home and commercial buildings, believe Hawken, Lovins and Lovins. Hence, fuel processors in these buildings could produce surplus hydrogen that, in turn, could be transferred to vehicles.

On-going engineering innovations are likely to get the engine and advanced-composites materials prices down to competitive levels by 2004. However, probably the biggest hurdles for switching to this type of vehicle relates more to human-resource and infrastructure issues. Much of the know how of today’s auto workers simply is not needed for Hypercars. Hundreds of thousands of workers will either need new skills or new industries to employ them.

In addition, the auto industry today has hundreds of billions of dollars tied up in “assets” for designing, building and maintaining steel-centric vehicles. Much of this has yet to be fully amortized. Clearly, wrenching social and financial changes will accompany the transition to tomorrow’s vehicles.

The spin off of Delphi may be the first structural change one OEM has taken to shed metal-centric assets. If the Hypercar concept continues to roll, watch for OEMs to divest their stamping and powertrain operations next.

On the other hand, massive Wall Street investment in key firms could accelerate the transformation to a next-generation industry. Indeed, the market capitalizations for firms developing Hypercar-related technologies have soared. Two such firms are Ballard Power Systems (Vancouver, British Columbia) and Mechanical Technology (Latham, NY).

In sum the industry is entering an extraordinarily high-stakes game. A radical new product design could revolutionize the industry at its core. This once-staid industry may never be the same.