12.02.07
What are the international business implications of the proposed higher fuel efficiency standards for the US market?
My fellow board member on Clean Tech Bay, Olaf Groth (http://www.linkedin.com/in/olafgroth) sent around a provocative question about what would be the impact of higher auto fuel efficiency standards. One point that he made was that he felt that despite the efforts of the auto makers to fight the standards that the efforts of the Western states would lead to the higher fuel efficiency and that in any event people will drive fewer conventionally powered cars in the future.
What would be the implications for international business?
- My guess is that US car makers would be the least agile in responding to shifting market demand and that the Japanese would be come out best. The German auto makers have not responded much to higher fuel efficiency but have shown a better track record of accomodating market demands.
- With more non-conventional cars and with better fuel efficiency, oil demand will gradually drop. This will shift back again the advantage to non-oil exporting countries and allow greater consumption by consumers.
- If there are breakthroughs in electrical storage, electric cars will have a tremendous advantage – fewer parts, lighter, maybe eliminating transmissions, etc. This will eliminate the traditional barrier to entry (a expensive motor and transmission) for existing manufacturers (note each has the word motors in their company name – Ford Motors, General Motors, Toyota Motors, Bayrische Motor Werke,). With those barriers gone, we may see new entrants to the market (China, India, Google Auto? )
- For those on the venture capital side, I’d be looking for innovations in storage technology and electric motors/controls. Those won’t necessarily come from the US, but anywhere in the world.
What do you see as the implications?
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