Future Role of Federal R&D Programs.
As Congress debates the future of federal advanced vehicle R&D programs, several issues
should be considered:Issue 1: Should Congress continue to support advanced vehicle R&D?During the past 20 years, government policies at the federal and state levels have been the
principal impetus for leapfrog vehicle development. Auto manufacturers and their suppliers are
anxious not to be blindsided by new technologies, but have had little market incentive to invest in
developing leapfrog technologies on their own.^79 The rationale for this government involvement
has been that the benefits offered by these vehicles—improved air quality, enhanced U.S. energy
security-are social benefits that do not command higher prices in the marketplace.
Government policies to stimulate advanced vehicle R&D have been of two types: “carrots”
such as R&D contracts or procurement subsidies for advanced vehicles; and “sticks” such as
higher regulatory standards for emissions control and fuel economy. Regardless of one’s view of
California’s ZEV regulations, for instance, it is undeniable that they have stimulated extensive
research on batteries and fuel cells that would not have advanced in their absence. In addition,
numerous small, entrepreneurial companies producing small numbers of electric vehicles and fuel
cell prototypes are dependent on the ZEV regulations for their continued existence. The
automakers, however, have fought bitterly against these regulatory mandates, claiming that they
are forcing technologies into the marketplace before they are ready.
This lack of market demand for advanced vehicles seems unlikely to change in the foreseeable
future absent a major oil price shock or other unforeseen developments. With real gasoline prices
at historic lows, and urban air quality improving, car buyers care more about such attributes as
good acceleration performance and carrying capacity than about increased fuel economy and
reduced emissions. This is especially true if these attributes carry a higher price, as OTA’s analysis
suggests. Thus, if government wishes to continue to pursue the goal of super-efficient vehicles, it
will likely need to continue its involvement, whether through R&D finding, mandates, or other
incentives.
Issue 2: Is the federal advanced vehicle R&D effort coherent and consistent with national
needs?
Government policies toward advanced vehicles have been driven by a diverse set of concerns
including the desire to improve urban air quality, reduce oil imports and, more recently, to avoid
global climate change. This diverse set of concerns has led to a patchwork of legislation and
programs that attempt to address the concerns through different technical and economic
approaches. The result has been a federal effort that has been poorly coordinated and that lacks
clearly defined relationships to national needs.
(^79) Historically, industry cost sharing on government R&D contracts to develop risky, long-term technologies (e.g., gas turbines and fuel cells) has
generally been less than 20 percent. In some recent program such as the DOE R&D contract with the automakers on advanced batteries and hybrid
vehicles, industry cost sharing is around 50 percent.