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Advancing Innovation?

Getting a new technology into full-scale commercialization in the automotive industry may be what Thomas Edison had in mind when he said that genius was 1% inspiration and 99% perspiration.

Getting a new technology into full-scale commercialization in the automotive industry may be what Thomas Edison had in mind when he said that genius was 1% inspiration and 99% perspiration. Even inventions that appear to have obvious merit face considerable obstacles, hurdles, challenges, and resource requirements. The impediments to acceptance can be cultural or behavioral (e.g., inertia, risk aversion), organizational (e.g., division of responsibility, unclear authority), and financial (e.g., switching costs that would be incurred by a change in approach). The biggest hurdle, though, is usually technical: developing persuasive evidence that leads to a consensus on the performance, durability, and benefits of an advancement.

The history of the industry is replete with hardy individuals or companies throwing themselves into this fray. One recent example is the Scuderi Group, which is promoting a split-cycle engine where the work of a piston for intake, compression, ignition and exhaust is divided across two cylinders (intake/compression, combustion/exhaust). The result is that each turn of the crankshaft generates a power stroke, as opposed to a four-stroke engine, where two full turns are needed to create power. Retired inventor Carmelo Scuderi came up with the design in 2001 and died in 2002, but the development continues. The company unveiled a cutaway prototype at the 2009 Society of Automotive Engineers World Congress, citing fuel efficiency improvements of 25% to 50%, nitrous-oxide emission reductions of up to 80%, and greater torque over conventional gasoline and diesel engines.

That sounds great, so what's the hold-up? Qualifying a new engine design is, as a former colleague would put it, "not a trivial task." It is probably one of the most extreme examples of the innovation "valley of death." Carmelo Scuderi began working on the split-cycle engine full-time in 1998, so this is 11 years into the process and counting. As of 2006, the Scuderi Group had raised $8.1-million (including a $1.2-million federal grant) and contracted with the Southwest Research Institute to produce the design. Bosch Engineering joined the effort to define the technical requirements, including component specifications, in 2008. Scuderi is reported to have received $20-million in venture equity funding at the beginning of 2009, and announced in July that an independent laboratory had successfully fired a working prototype and confirmed a key operating principle for the engine (the ability to fire after top dead center). With more than 200 patents already filed in 50 countries, there is still more to know; observers say at least two more years of development will be required in order to fully understand how the engine will react and withstand different speeds and temperatures.

Consider this information against the backdrop of another news story of 2009: the September 15, 2009 announcement of a joint proposal from the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) for a coordinated program to improve fuel economy and reduce greenhouse gas emissions under a unified national standard. The model-year-by-model-year roll-out for MY2012-2016 sets increasingly stringent expectations amounting to a 5% increase in fuel economy each year and an overall reduction of carbon dioxide from the U.S. light duty fleet by about 21% in 2030. The initial reaction from the automakers was that it will be extremely helpful to have a single set of rules (as opposed to different and conflicting standards from the two federal agencies and California). In addition, the official response was confidence that the standards can be met. Although the targets are demanding, the reformed CAFE structure announced in 2006 will also be to the automakers' advantage, since it established a specific target for each vehicle size. It is no longer the case that each manufacturer has to meet a single fuel economy average regardless of their model line-up.

The key question going forward is this: knowing that the pressure is going to be ratcheted up to achieve meaningful improvements in oil conservation, air quality, and impact on climate change, what should be done differently to facilitate and accelerate the process of introducing new solutions? At a minimum, we would call for more activism on the part of the OEMs. The pattern of behavior in recent years has been for the automakers to place the lion's share of the burden of justifying a new material or technology on the suppliers and innovators. The philosophy, "If they build it, we might come," has worked for the purpose of shifting investment and costs onto the supply base, but it ultimately has not served the OEMs very well in controlling their destinies. Expecting entrepreneurs and innovative companies to bootstrap their way from concept to production volumes has a number of consequences, including longer development cycles (e.g., Scuderi's 11 years and counting), movement of wealth to investors outside the industry (e.g., venture capitalists), and erosion of the leadership positioning of major automakers. The Scuderi engine may or may not be the answer to the regulatory wish list, but thinking in terms of playing offense and accelerating consideration of the set of emerging technologies would be a good strategy for the OEMs in a new era of regulatory activism.
 

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