We probably don't spend a sufficient amount of time thinking about externalities because, oftentimes, they are non-obvious to us, and we have more things on our mind. Consider, for example, the Eyjafjallajökull volcano. Not only did that rip through the world's airlines causing all manner of inconveniences including losses that are substantial even by automotive metric, but even had the consequence of affecting vehicle manufacturing as critical components were unable to be delivered by suppliers to OEMs in the U.K. and Germany. Certainly there was probably no way of predicting that in particular, but who was thinking about the impact of some major event on their supply chain? Most companies have contingency plans in place for suppliers going on strike, but a volcano?
The tendency we all have is to consider our own things in a limited context. This struck me by two independent but related things: a seminar and a book. The seminar was hosted by Toyota, and the subject was sustainable mobility. Yes, there were discussions of the Prius Plug-In Hybrid vehicle and the Fuel Cell Hybrid Vehicle-Advanced. (I had the opportunity to drive both and can report that the experiences were underwhelming, which is a good thing: the Prius and the teched-out Highlander drive like a Prius and a Highlander.) For a vehicle manufacturer, that would be its "own things": a car and a CUV. That's what vehicle manufacturers do: design, engineer and produce cars and trucks. But that's not dealing with the externalities, the environment in which those vehicles operate. So it was somewhat disconcerting (which is a good thing) to hear Gordon Feller, CEO of the Urban Age Institute (urbanage.org), announce that what he and other people were there to talk about was not just about "metal boxes on rubber wheels," not about "the physics of stacks, durability, and the range of vehicle travel," but "about societal, political and economic situations." He said the issues are about the implications in a larger context "as we make a transition to different fuels, vehicles, and mobility systems."
Then there was Michael H. Glantz, who told me about his early days working as a metallurgical engineer at the Ford Rawsonville plant in Ypsilanti, Michigan. Since then, Glantz has traveled far and wide, and is now the director of the Consortium for Capacity Building at the University of Colorado (ccb.colorado.edu). During his presentation, Glantz said that one of the consequences of the sudden interest in biofuels was a rush to buy land in Africa for a pittance, and foot riots as grains are diverted from kitchens to cars. "There is a link between whatever you do to fuel a car and elsewhere." And speaking of "elsewhere," Glantz cited the Four Laws of Ecology attributed to Barry Commoner, which includes: "Everything must go somewhere." Glantz said that we often talk about "throwing something away," but he pointed out, "There is no such place as 'away.'" It is always somewhere.
And there were other presentations that looked at everything from the nexus between water and energy (if you think the potential diminishing oil supply is a problem, you ain't seen nothin' yet) to the negative consequences of political acts on the economics of carbon. These are all seemingly external to the auto industry. But they are there, connected, if not obvious and apparent. They are not "away."
The second thing is Reinventing the Automobile: Personal Urban Mobility for the 21st Century (The MIT Press) by William J. Mitchell, director of the Smart Cities research group at the MIT Media Lab; Christopher E. Borroni-Bird, director of Advanced Technology Vehicle Concepts at General Motors; and Lawrence D. Burns, former vice president of R&D and Strategic Planning at GM. While the apparent focus of the book is "reinventing the automobile," with the reinvention giving rise to what they call the "USV"—the Ultra Small Vehicle, an electrically powered, two-person vehicle weighing about 1,000 lb. with a footprint about one-sixth that of a conventional car, a top speed of 25 mph, and a cost of under $10,000.
While the USV is and of itself interesting, the real argument that the writers make is that it is the surrounding context of the vehicle—other cars, people, streets, parking lots, regulations, etc.—that need to be considered, particularly as issues related to increasingly crowded and congested cities and energy use are taken into account, things that could be considered externalities. While it is interesting to consider the technology of the USV—from the in-wheel motors to the ability to connect like a node on the Internet—what is probably more critical for the auto industry is an understanding of the potentially disruptive environment that the USV or other vehicles will exist in.
While it is important to focus on efforts to design, engineer and produce better products, be they plug-in hybrids, fuel-cell powered vehicles, or USVs, we can't let that focus blind us from that volcano that just might erupt.