A New Set of Wheels

A fascinating group of news stories discusses the goal many auto companies have of building the next generation of really cheap cars for the 3rd world mass market.

Singing and Dancing into the Future

Businessweek reports –

Renault-Nissan Chief Executive Carlos Ghosn is betting that for autos, the magic number is under $3,000. At a plant-opening ceremony in India Apr. 4, he was already talking up the industry’s next challenge: a future model that would sport a sticker price as low as $2,500–about 40% less than the least expensive subcompact currently on the market. Renault-Nissan is the first global automaker to take up the gauntlet thrown down in 2003 by India’s Tata Motors, which plans to launch a $2,500 car next year.

India is target #1 on all fronts — design, manufacturing, marketing, and, of course, the ultimate consumer. Instead of looking outside for economic growth, this is a story of internally sourced, created, and most importantly executed growth.

One aspect of the story is a classic Innovator’s Dilemma problem — incumbent producers not just ignored but actually ridiculed the new low end market. Businessweek continues –

When Tata made its vow to build a $2,500 car, many Western auto executives ridiculed the project, dubbing it a four-wheel bicycle. They aren’t laughing anymore. Tata’s model is a real car with four doors, a 33-horsepower engine, and a top speed of around 80 mph. The automaker claims it will even pass a crash test. And while the car probably won’t win any beauty contests, it’s no ugly duckling either, according to the handful of industry insiders who have been given a glimpse. The rest is top secret, but Tata engineers are already testing a prototype as the clock ticks toward a late 2008 launch. The key is India’s low-cost engineers and their prodigious ability to trim needless spending to the bone, a skill developed by years of selling to the bottom of the pyramid. “You have to cut costs on everything–seats, materials, components–the whole package,” says Tata Group Chairman Ratan N. Tata.

Of course, in most of the cases chronicled in Innovator’s Dilemma, the new, low end market entrant eventually absorbs the upstream market through incremental features… In this case, however, there is at least 1 large hump that Tata et. al. will have to cross before their $2500 car can become a reality in the US –

Forbes quotes consultants at Roland Berger as estimating that it would cost as much as $4,000 on top of Tata’s $2,500 price to engineer the car to meet U.S. safety and emission regulations, transport, pay tariffs, market it, pay lawyers and other warranties.

As many an economist has noted, never underestimate the power of the regulatory apparatus when it comes to locking existing fat cats in their place.

57 thoughts on “A New Set of Wheels

  1. The reason for the $2500 limit is because they’re trying to make the first Rs. one lakh car. The market for that (unless the car really sucks) is huge.

  2. I’m following the growth of the Indian economy and India’s entry in a big way into the global business and finance scenes with great interest!

    I hope social change that this will bring about is good and absorb-able.

  3. Oh the horror! Someone might actually have to prove their vehicle is safe before selling it. Stupid regulators.

  4. Isn’t India all set to get a major shipment of Harleys? Speaking of regulatory apparatus, I heard that the Indian government was actually pretty lax about the Harleys’ emission outputs compared with other Indian bikes. So it’s a give and take.

    Another interesting thing about the article was how it highlighted the demand for similar low-priced, no-frills cars in Europe. I know I wouldn’t mind having one of these myself. I mean…$15k for a Corolla in the States? Come now.

    I’m just concerned about the environmental impact about all this in already-polluted Indian metros. And the safety impact…they’re cutting out airbags, etc. Then again, one of that Tatas said that he’s seen whole Indian families getting around on one motorbike, so I guess this would be a safer alternative!

  5. What about the roads? In ’90s, 400 new cars were registered in Mumbai alone. I can only imagine what that no. is today. The massive interstate highway project is promissing but city commute is a nightmare.

  6. Uh, Saheli, it is possible that not all regulations are inherently good and are part of the essential drag a bureaucrat has on the world. There is that possibility. Did you read the entire list? It’s not all setting up reasonable emissions standards. EVen if you set up a standard, there are more efficient ways of doing it and less efficient ways of doing it. What are the odds the standard bureaucrat picks the more efficient one?

  7. Someone might actually have to prove their vehicle is safe before selling it. Stupid regulators.

    The question, as with many economic vs. govt issues, is NOT “safe vs. not safe” but rather whether there really is $4000 worth of safety being created by the regulatory environment — esp. when the car itself is only $2500.

  8. The reason for the $2500 limit is because they’re trying to make the first Rs. one lakh car. The market for that (unless the car really sucks) is huge.

    Didn’t the first Maruti 800 cost about Rs. 80,000 in 1980? Of course it costs a lot more now. Do they mean first indigenously produced car, since a large fraction of Maruti parts were imported originally and the project was in collaboration with Suzuki?

  9. I am really happy w/ TATA’s success. Not from a rah-rah tricolour angle though. For many years western car manufacturers used India as dumping ground for crappy jalopies. 118 NE neone? They even had the nerve to advertise is as state-of-the-art technology. Govt’s restrictive policies / Maruti favouritism didn’t help either.

  10. What are the odds the standard bureaucrat picks the more efficient one?,

    Not necessarily so low? Why does everyone always assume that the standard bureaucrat is such a cretin? Why should I have so much less faith in the standard bureucrat at a government saftey agency–who’s probably an engineer with a good education in statistics and mechanics–than I do in either the politicians who willfully slash at that bureacracy to score ideology points or the business people who have a strong and vested interested in cutting cost and a willingness to gamble on the consequences? Those bureaucrats have built a lot of useful infrastructure and saved a lot of lives, and I’m tired of demonizing them. $2500 is as low as it is partially because the manufacturing is in India. $4000 is a as high as it is partially because it’s a totally new car—the cars we currently have already paid the bulk of their dues back in the day pre-inflation–and because the labor that goes into handling those regulations will happen in the United States, where wages are much higher. Everything else on that list except tarrifs had nothing to do with the government at all—of course they have to bring the cars here, market them, and write up warranties on them. Vinod could have made a point against tarrifs–and I might have even agreed with him–but instead he chose to make another snipe at the faceless bureacrats. Cheap, baseless points.

  11. Isn’t India all set to get a major shipment of Harleys? Speaking of regulatory apparatus, I heard that the Indian government was actually pretty lax about the Harleys’ emission outputs compared with other Indian bikes. So it’s a give and take.

    In exchange for mangoes– sweet treats. I guess these familymobiles won’t be pouring out of Singur inside a year, though, the way things are going. They will influence car design everywhere though, eventually, just like Toyota put paid to the cruise ships on the road here before.

    Thanks, Vinod!

  12. Vinod could have made a point against tarrifs–and I might have even agreed with him–but instead he chose to make another snipe at the faceless bureacrats. Cheap, baseless points.

    I thought he took a swipe at the big US car manufacturers for whom the regulatory apparatus works. Our very own license raj, if you will:

    As many an economist has noted, never underestimate the power of the regulatory apparatus when it comes to locking existing fat cats in their place.
  13. Saheli, I’ve worked in several teaching hospitals. Let me state more specifically: what I’ve seen is not good.

  14. he chose to make another snipe at the faceless bureacrats.

    Bureaucrats are bad, unless they wear uniforms and are called officers, in which case they are good 😉

  15. Dude, it’s 33 hp. My Honda is 140, and it complains when I load it up with groceries and try to get on the highway. I think it is still a good replacement for the motorcycle riding crowd …. if the motorcycle riding crowd likes getting stuck in traffic

  16. And what of the environmental impact of millions of little cars running around India (mentioned by Sai)? That impact might be mitigated if they’re designed to run on CNG as most auto rickshaws are not mandated to across India. Better yet, how about a biodiesel powered car for under 1 lakh rupees?? There’s plenty of Dalda and used cooking oil available all across the desh, let’s put it to good use!

  17. oops, meant to say above “as most auto rickshaws are now mandated”. stapud stupid typos.

  18. What about the roads? In ’90s, 400 new cars were registered in Mumbai alone. I can only imagine what that no. is today. The massive interstate highway project is promissing but city commute is a nightmare.

    The forum below gives you a glimpse of the types of cars that are on the roads of Mumbai, Chennai and Delhi these days.

    http://www.team-bhp.com/forum/super-cars-imports-classics-india/21829-pics-maybach-62-india.html

    http://www.team-bhp.com/forum/super-cars-imports-classics-india/21166-pic-red-yellow-orange-lamborghinis-delhi.html

  19. Millions of Indians have grown up without cars and cars in India are looked at as a lifestyle upgrade, a move from lower middle class to the middle class. It’s like a status symbol. Thus no matter how much one talks about the environment, the average Indian is not going on really care about it as much and will get the car he craved for for so long – whether he needs it or not. That coupled with the Govts apathy (or shall I say no action without corruption) results in a very poor overly burdened public transport system. All this does indeed make the cheap car segment really huge – anyone who can, is going to get one.

    I do feel that this sudden increase in the number of cars on the road will result in a few good things too. When every time a person steps out and is caught in a traffic jam, the Govt will be forced into taking notice and improving the road infrastructure. Similarly, as has been the case with Mumbai, more and more people will resort to public transport and thus that too will improve. Both these things are already happening in Bangalore and recently in Pune.

  20. Forbes quotes consultants at Roland Berger as estimating that it would cost as much as $4,000 on top of Tata’s $2,500 price to engineer the car to meet U.S. safety and emission regulations, transport, pay tariffs, market it, pay lawyers and other warranties.

    The devil may well lie in the details. I wonder what part of the cost is attributable to “safety and emissions regulations”. And how exactly do they advantage domestic manufacturers? A number of emissions regulations date back to the experience with smog problems in Southern California, back in the sixties (probably about the date). Without mandated catalytic converters (or maybe a type of tax that avoids a particular technology mandate) how does one avoid the prisoner’s dilemma inherent in the smog problem?

    It seeems like Hyundai managed to sell a fair number of cars on price alone. I still wouldn’t buy one though. But, I would much prefer that to a product of Tata. They do not have the best reputation for quality. The Japanese seem to have done just fine averting regulatory capture too.

    I want to add some more lines from the article that Vinod left out.

    And while $6,500 would still be lower than even the cheapest new car currently sold in the U.S. – the $10,560 Korean-made Chevrolet Aveo – it would then be competing with vehicles from America’s vast used-car market, where $6,500 can buy some pretty nice wheels. What will the $2,500 get an Indian buyer? While there are no pictures yet, the article makes it sound like this will be a small, bare-bones vehicle. (It brings to mind the Datsun 710 I drove more than 30 years ago.) I suspect it will be a car that not many Americans would want to drive.
  21. Hopefully the engineers are planning for the “fattening of the Desh” and don’t skimp out on the shock absorbers. As far as safety goes, anything is a step up from a motorbike carrying a family of four & groceries

  22. Nice discussion. Saheli and Quant-Trotsky – good points!

    I wonder what part of the cost is attributable to “safety and emissions regulations”

    Whatever that part might be, it can be reduced by outsourcing regulation! I mean, it seems pretty straightforward. If Saheli is right, the largest portion of the added price comes from the salary of the regulatory apparatus. The only way to reduce that is by outsourcing regulation. Just by chance, the SM News tab has a link to a Dilbert post on the subject – check it out and enjoy!

    The way the Japanese and Koreans got around the regulatory hump was by selling below cost in North America, and getting their home market to absorb the extra costs. Of course, low-cost financing guaranteed by the government also helped. I’m sure Tata has plenty of that.

    But what I don’t get is why Tata would want to export this particular car at this point in time, when the home market is so huge. A better strategy would be to build up capacity, both manufacturing and design, and then, with a different internal cost structure, attempt to enter the North American market, with the capability of offering both technological and design innovations.

    If the home market in India gets really huge, of course, eventually consumer pressure will bring in regulation comparable to North America. With this India-based regulatory apparatus in place, the outsourcing regulation argument becomes really strong!

  23. Chachaji, the Dilbert post was funny. Scott Adams is something of an Indophile, I guess. I am not so sure about the dumping part, as the practice you refer to is commonly called. At the time the Japanese cars started invading the US, it’s true that their home market was heavily protected. However, their internal market was/is intensely competitive. Even after the trade barriers came down, their auto market has been all but impervious, execept to the European luxury brands. No single manufacturer has/had enough monopoly clout to hold prices low in the home market to enable them to sustain dumping. What part am I getting wrong? Certainly, MITI provided them cheap financing, and that point I will concede.

  24. No single manufacturer has/had enough monopoly clout to hold prices low in the home market to enable them to sustain dumping. What part am I getting wrong?

    You mean hold prices high, of course. I’m not sure about the competitive Japanese home market bit – I imagined that as a classic oligopoly, need to look into that a little more.

    The imperviousness of the Japanese market is not, to me, necessarily a case of intense competition creating high effective barriers, but the effect of much better domestic car quality. Even there, the argument used to be that Japanese car makers sold inferior models to the home market, but in course of time that changed. Also, dealership networks are said to be partial to home producers. But really, I think it comes down to a quality, and perception of quality, why foreign producers can’t penetrate the Japanese market. This explains why only foreign ‘cars-with-cachet’ sell well – not coincidentally, they are of high, and high perceived, quality.

  25. Tata should try to make small electric cars, trucks etc, with a small removable generator that can also be used outside the car for home or commercial use. And maybe even try to use solar panels/paint on the car’s exterior to trickle charge the battery.

  26. Chachaji, my bad. I meant high. I remember reading in Fortune magazine, a long time ago, that the Japanese quality advantage was honed by competition between 5-6 manufacturers. Additionally, it is difficult in Japan to keep a car more than 3 years due to stringent pollution control regulations that make it mandatory to have expensive checkups. This means that their automobile generations turned over faster. They have some very high-performance microcars in their domestic market. These are quite unusual and are not exported. But their uniqueness makes it harder for foreign firms to succeed in the mass-market as well. By now, I am dangerously off-topic and will cease before I am forced to desist.

  27. Pagla (16):

    Dude, it’s 33 hp. My Honda is 140, and it complains when I load it up with groceries and try to get on the highway. I think it is still a good replacement for the motorcycle riding crowd …. if the motorcycle riding crowd likes getting stuck in traffic

    Modern motorcycles make far more than that. My old Suzuki SV650 (considered to be a “beginner bike” in America) was 65hp at the wheel.

    This thing would literally be unsafe on American roads. I cannot imagine it passing any regulatory or safety standards in America. Saheli, I’m with you. Those “bureaucrats” and their “annoying regulations” brought us: -seat belts -driver’s side bags -passenger airbags -side impact airbags -crumple zones -off-set impact testing

    and about a bazillion other things auto companies now call “features,” but earlier called “unsafe!” and “our economic downfall!” and “will ruin the car forever. FOREVER!” and other whiny shit.

    They’ve also helped develop standards for things like hydrogen fuel cell safety (who wants to rear end a big tank of compressed hydrogen?), hybrids, and fuel economy. These days they’re not generally stupid desk jockeys, bureaucrats are idealists with advanced degrees and tons of formal training. I should know, I used to be one, and I worked with some of the most brilliant people I’ve ever met at the US EPA.

    Prema, I’m kind of with you on the electric car bit, except that India is not necessarily the right place to roll out an electric car, conventional wisdom aside. First, an electric car presents another whole slew of issues that must be dealt with. India’s electric grid is, generally speaking, shitty. Some cities have more modern grids, some are right out of the dark ages. Supply is another problem; electricity is still hard to come by in places like Delhi. Imagine the nightly load of even 20,000 electric cars charging every night. The brownouts would turn to blackouts.

    Next, electric cars come with significant amounts of heavy metals (lead in particular) in the batteries and in the controllers. India has a very poor record of dealing with industrial waste in a proper fashion. I suspect most of that would wind up recycled, but in the way that is most horrifying: by poor people, without adequate safety equipment or training.

    Finally, that electricity isn’t cheap. It needs to be produced somehow, and these days that’s coming from coal, oil, and then to a lesser degree from hydroelectric and nuclear power. India is still a net energy importer, in spite of being the eleventh largest energy producer in the world. In all likelihood, this would only increase India’s oil imports.

    I’m not saying it’s a bad idea, per se. In the long term, it needs to be done. In the short term, India would benefit far more from having good environmental standards put into place and enforced, from having a more efficient infrastructure, from banning two-stroke engines, from putting emissions controls and safety regulations into place for all new vehicles, and from better roads and an efficient interstate highway system.

  28. Will the car run into image problems due to its cheapness. Buying it is like announcing your low-class status. I am waiting to see how tata brands it.

  29. Forbes quotes consultants at Roland Berger as estimating that it would cost as much as $4,000 on top of Tata’s $2,500 price to engineer the car to meet U.S. safety and emission regulations, transport, pay tariffs, market it, pay lawyers and other warranties.

    They don’t provide a breakup of that extra 4K. Transport, tariffs, marketing, lawyer and warranties are not regulatory expenses.

  30. India is not necessarily the right place to roll out an electric car, conventional wisdom aside. First, an electric car presents another whole slew of issues that must be dealt with. India’s electric grid is, generally speaking, shitty. Some cities have more modern grids, some are right out of the dark ages. Supply is another problem; electricity is still hard to come by in places like Delhi. Imagine the nightly load of even 20,000 electric cars charging every night. The brownouts would turn to blackouts.

    True that unlike most of the world, including many third world countries, India’s electrical infrastructure is inexusably primitive and unreliable. Which is why I emphasized the use of small electric generators in indian-made electric cars. Generators also greatly increase the range of electric vehicles. These generators could easily be made removable and portable, and thus be also useful at home or office to power appliances etc far more reliably than is the case currently with the grid.

    Next, electric cars come with significant amounts of heavy metals (lead in particular) in the batteries and in the controllers. India has a very poor record of dealing with industrial waste in a proper fashion. I suspect most of that would wind up recycled, but in the way that is most horrifying: by poor people, without adequate safety equipment or training.

    Does not have to be that way. Manufacturers should be responsible for recycling their products. Electric cars are far more modular than regular cars. All parts, including when broke, could have a certain price payable by the manufacturer who would then recycle or properly dispose of them.

    Finally, that electricity isn’t cheap. It needs to be produced somehow, and these days that’s coming from coal, oil, and then to a lesser degree from hydroelectric and nuclear power. India is still a net energy importer, in spite of being the eleventh largest energy producer in the world. In all likelihood, this would only increase India’s oil imports.

    Wrong. Electric cars use less energy than internal combustion engines. Just think of the amount of energy that is wasted when non-electric cars are idling in traffic for example. Braking also generates electricity in electric cars while it is a total waste of energy in regular cars. Plus electric cars are not tied to just one source of energy, imported oil. You can use any source of energy including renewable energy to power your car. Electric vehicles make the most sense.

  31. Ardy, you’re right. Tata is trying to do with cars what Reliance did with cellphones – bring it down to an affordable price so that the majority of India’s population could afford one.

  32. Generators also greatly increase the range of electric vehicles. These generators could easily be made removable and portable, and thus be also useful at home or office to power appliances etc far more reliably than is the case currently with the grid.

    Many cities in Delhi have generators a plenty. They’re two-stroke, and noisy, and terrible for the environment, and they burn…gasoline.

    There’s absolutely no sense in moving the gasoline consumption outside the vehicle any further. I agree with your points that electric cars use less power than many internal-combustion engines, but I disagree that they use less petroleum. The electricity comes from somewhere, and in India’s case, that’s coal, and petroleum, with some hydroelectric and nuclear.

    But mostly coal and petroleum. So now instead of burning the oil / coal in the cars, you’re burning it at the plant…and wasting 20% in transmission, under ideal circumstances (that’s assuming great line transmission and a good grid, plus short-term storage for off-peak production to compensate for peak production, as Canada, the U.S. and much of Western Europe has.

    Hybrids would do far more, and far better, than electrics in India. They’d reduce air pollution further (a small plus, since cars are not the major contributors to air pollution any longer), and increase fuel efficiency (a huge plus for the economy when petrol is Rs 70-something a liter, if I’m not mistaken), and would not involve any kind of new technology to build a new infrastructure.

  33. I agree with your points that electric cars use less power than many internal-combustion engines, but I disagree that they use less petroleum. The electricity comes from somewhere, and in India’s case, that’s coal, and petroleum, with some hydroelectric and nuclear.

    Think rationally. Since electric cars use less energy (which can come from all sources not just oil) how did you conclude that they must use more petroleum?

    So now instead of burning the oil / coal in the cars, you’re burning it at the plant…and wasting 20% in transmission, under ideal circumstances

    No one burns coal in cars. There is no 20% loss in transmission when you use petrol-burning generators in electric cars. Secondly, if the electric grid is used to charge the car batteries directly, the 20% transmission loss is more than made up by the better gas mileage of electric cars. Thirdly, reliance on indigenous coal or nuclear power and best of all, renewable energy, is nowhere near as bad as reliance on imported oil.

  34. Think rationally.

    Prema, this kind of phraseology is what makes it hard to have a civil discussion with you (as I experienced on a previous thread). Instead of sticking to the main points when you argue, you like to put in things like the above, which have NO place in a conversation like this. If you want to refute someone, do it without the patronising.

  35. Many cities in Delhi have generators a plenty. They’re two-stroke, and noisy, and terrible for the environment, and they burn…gasoline.

    That was another example of irrational thinking. For in the same post you talk about hybrid cars, which means you must know that generators are already being used in such cars in countries like Japan and America which are far more strict about noise pollution than India. Yet that did not stop you from making the absurd point above.

    Among the reasons for India’s backwardness is the culture of sycophancy, of praising mediocrity to the skies, of not questioning the irrational opinions of elders/superiors/friends etc

  36. Prema, count me in as another electric-skeptic. The range of electric cars is very limited and I do not have very high hopes for fuel-cell technology. Besides, I am not convinced that the CO2 savings are that significant when getting electricity off the grid. A lot of electricity is generated with coal and that is usually a very dirty fuel, particularly in India, because of the poor quality of coal there. The recall of Sony laptops should make it clear that increasing the power of batteries and making them smaller and smaller also makes them more unsafe.

    As for hybrids, the Toyota Prius does much worse than its rated fuel economy in practice. It does not seem to be reducing fuel consumption all that much.

  37. As for hybrids, the Toyota Prius does much worse than its rated fuel economy in practice. It does not seem to be reducing fuel consumption all that much.

    On a related note this post and it’s linked articles might be interesting.

  38. The suzuki swift is a damn good small car and prolly the only one i would buy in india. Its got a LOT of kit for what 6 lacs and pretty fuel effcient too.

  39. The picture in Vinod’s post seems amusingly inconsistent with the the current Indian automobile advertising. It looks like a color version of a 70’s ad for Fiat, or a cutting edge car ad from China. On the other hand, the “bursting into a ‘fillum’ song while out for a drive” imagery might be spot on for the target demographics for a 1 lac car. The ads for the more upscale Indian brands are quite different, though.

  40. I’m always amazed when large swathes of seemingly intelligent people completely miss the point, as is the case here. Small cars are uncomfortable, slow, and un-cool. A Hummer is way cooler, comfortable, and reliable. I live in the Middle East and filling up my Hummer usually costs me around USD. 12/- (that includes tips, newspaper, two bananas, and a bottle of water). What India needs is Hummers by the shipload. The state should provide incentives to the first manufacturer who comes up with a USD 2500/- version of the Hummer. Also, enough of this worrying about the price of gasoline. There are many small kingdoms in the Middle East that are oil-rich. India must immediately acquire one of these states using her military might. These oil-rich kingdoms will provide the millions of thirsty Hummers with cheap Petrol for many years. Since Hummers are sturdy vehicles meant for rough terrain, India can do away with road networks altogether. This will save the government substantial amounts of money; 75% of which can be offered as subsidies for the youth to “soup up” their vehicles, the remaining 25% can be used to create and sustain a small forest somewhere in the Himalayas to appease and accommodate (preferably, in mud huts) the Medha Patkar, Arundhathi Roy types. Youths of other nations will look upon the Hummer-wielding Indian youth with considerable envy and this can only be helpful in furthering India’s overall global credibility. Brothers and sisters, enough of scraping the bottom to come up with creative mediocrity that is small, cheap, and runs-on-nature-friendly-fart etc. True revolution demands fuel-guzzling monsters that will lead a great nation into further greatness without huffing and puffing at every molehill.

    Vroom, Vroom

    P.S:

    MSNBC/Newsweek,

    If you lot ever want to quote me in any of your articles, please also include my photograph. Many thanks.

  41. Vinod, As always love your posts. You’re the lone unabashed freemarketer at the Mutiny these days.

  42. The Tatas are, at the very least, not depending on the government to provide tax breaks for the consumer. Contrast this with the SUV loophole in the United States. In the U.S., the government provides significant tax breaks to purchasers of SUVs under the infamous SUV loophole.

    As part of a $350 billion economic stimulus package passed in May [2003], Congress quadrupled to $100,000 the amount business owners can deduct in the first year when they purchase a qualifying vehicle.

    The quirk is, the vehicle has to weigh at least 6,000 pounds GVWR.

    The original 1997 provision was intended to help farmers and small business owners to more easily buy light trucks, but guess what? It has since been used to sell more luxury passenger SUVs. The original provision was for a rebate of $25,000, but in May 2003, lawmakers in Congress increased the $25,000 taxbreak to $100,000. Check out this article from the Union of Concerned Scientists.

    It is nice that Congress has approved a tax break for hybrids as well. A figure of 3150.00 dollars or so. A round figure, but not quite as round as the other one 🙂

  43. No one burns coal in cars. There is no 20% loss in transmission when you use petrol-burning generators in electric cars. Secondly, if the electric grid is used to charge the car batteries directly, the 20% transmission loss is more than made up by the better gas mileage of electric cars. Thirdly, reliance on indigenous coal or nuclear power and best of all, renewable energy, is nowhere near as bad as reliance on imported oil.

    I don’t even know where to begin. First, two-stroke engines are NOT used in modern hybrids. They use FOUR-STROKE engines, albeit small ones. They are equipped with catalytic converters, and they meet all kinds of emissions guidelines set by the EPA.

    You’re just not making any sense. I mean, then you go on to say something about charging cars, so I must infer that you’re not talking about hybrids, you’re now talking electrics again. Then you talk about gas mileage in the same context, so now you’re talking about…what? Whatever it is, it’s not making much sense.

    And I never said anyone burns coal in CARS. I said that you generally need to burn something somewhere to create electricity. You seem to think that pushing the combustion process out to the individual automobile will somehow create a more efficient form of petroleum consumption, when the reality is that it would be far worse.

    What you’re recommending is, put a gas-burning generator in every car, and calling that an “electric” (FYI, that’s a “hybrid,” not an electric)… and then use that generator (some would call that an “engine”) to power a house when the car is not in motion? Because that will be…more efficient…somehow…than: -increasing the efficiency of existing internal combustion engines -developing actual hybrids -reducing the usage of two-stroke engines -increasing the efficiency of the long-haul transmission lines that India relies upon for its electrical grid

    And absolutely nothing about this idea seems remotely absurd to you?

    Look, generator usage for household use is far more common in India than in either the US or Japan, so you’ll need to cite a source for that claim. Speaking purely anecdotally, though, I don’t know of a single household in America OR Japan that uses a generator to augment its power supply. By contrast, every single one of my relatives in Delhi has a two-stroke generator that they fire up as soon as there’s a brownout in Delhi.

    Two-stroke generators (the norm in India) are incredibly polluting, very noisy, and very inefficient. Simply put, they’re a bad idea. That’s because two-stroke engines used for urban commuter-type vehicles, especially those not equipped with catalytic converters, are horrendous. And the Indian government doesn’t seem particularly rushed to push standards through on THOSE; I fail to see how they might rush into creating new safe standards for hybrids and electrics.

    And finally, per Amitabh’s point…I am continuing a debate / dialogue. I consider that rational. You’re trying for provocation. That’s not rational.

  44. You’re just not making any sense. I mean, then you go on to say something about charging cars, so I must infer that you’re not talking about hybrids, you’re now talking electrics again.

    You have obviously never heard of plug-in hybrids (PHEVs). The generator in the electric car I proposed is simply another way to charge the battery, besides plugging into the grid. That makes sense in a backward country like India with its unreliable electric grid. Your objection was that such generators will be too noisy. Heres news for you: there are such entities as quiet generators and they are widely available, and are already in use in cars including many of the hybrid cars you are talking about. Its irrational to make such absurd objections.

    What you’re recommending is, put a gas-burning generator in every car, and calling that an “electric” (FYI, that’s a “hybrid,” not an electric)

    A “hybrid” that uses only an electric engine to turn the wheels is an electric car. The generator only charges the battery.

    And you seem to be unaware that such cars already exist and many others are in the pipeline:

    http://www.wired.com/cars/futuretransport/news/2007/01/72424

    “General Motors……is about to roll out a unique, fuel-efficient sedan that could redefine electric vehicles.

    The new Chevrolet Volt, which premieres Sunday at the North American International Auto Show in Detroit, is a new spin on hybrids. The Volt runs exclusively on battery power, but a gas-fueled engine onboard runs the motor and recharges the batteries when they run low.

    The sedan uses liquid fuel in the form of gasoline, ethanol or diesel to power the 3-cylinder generator, extending the driving range. Its engine recharges the Volt’s batteries in approximately 30 minutes, says GM.

    It can go 600 miles or more before needing refueling or recharging, according to GM, and the batteries should last for about 40 miles without recharging. To reduce fuel consumption, drivers can plug the Volt into a standard 110-volt electrical outlet to recharge the batteries in approximately six hours.”

    “Combining electric batteries and plain old gasoline could be a winner because it would enable the Volt to overcome a key problem of previous battery-powered automobiles: going the distance.”

    “The electricity-generation system can be modified to run on gasoline, ethanol, diesel, biodiesel or even a fuel cell in the future, he said.”

    Substituting an electric generator for plug-in hybrids’ internal-combustion engine simplifies the engineering process because it doesn’t require managing multiple power sources, according to Posawatz, and it cuts costs by eliminating a mechanical transmission.”

    Look, generator usage for household use is far more common in India than in either the US or Japan, so you’ll need to cite a source for that claim.

    An irrational strawman argument. I was talking about generators being used in cars already, not the loud two-stroke indian household generators you continue to fixate on.

  45. Oh holy crap.

    Forget it. Whatever. You win. I don’t even know what you’re arguing about anymore. Clearly, you will single handedly bring electric cars to India, and they will be hybrid electric gasoline nookyoolar cars that run on steam, Jolt Cola and sheer Prema gumption, and will never provoke stupid emotional reactions just because you think they’re fun. The electric PremaMobile (nicknamed the “Preemie”) will be produced by Tata Corporation, and will only cost Rs. 4200, and will have free XM satellite radio right next to the toaster oven, which will serve as a “generator” because you said so. It will seat four and will not need to obey traffic signals or laws of physics, it will just cruise along purely on the power of your overuse of the word “irrational.”

    I wonder if it will make Korean boyfriends jealous enough to buy them, though? I dunno, I’ll write MSNBC and see if they can tell me.

  46. I don’t even know what you’re arguing about anymore

    Lesson: irrationality leads to mental confusion. It is the root cause of backwardness.

    I proposed electric cars with portable multi-purpose generators. You argued that generators are too loud, that electric cars are not energy-efficient. Both were laughably ignorant and irrational objections. Instead of being intellectually honest and acknowledging your errors, you chose to go on a childish personal attack. Grow up already; its not about me or you.