John McCain has announced $300 million prize money to the inventor of an efficient car battery to power hybrid and electric vehicles which includes plans to offer tax credits to consumers (up to $5,000), to make hybrids and electric cars an attractive buying option. The funds required for this plan would translate to roughly $1 in tax for every man, woman and children in the country, which according to Mc Cain is “a small price to pay for helping to break the back of our oil dependency”.

However, McCain did not elaborate on the impact of this initiative or his approach and plans to lower the US fiscal deficit. In addition, the parameters for judging the efficiency of batteries, as defined by McCain are vague and obscure. The prize money would be awarded to a battery system that delivers required power at 30% of the current costs and has” the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric” This approach has a fundamental flaw because the current market for hybrids is not explicitly defined and the performance of a hybrid is open to a wide array of interpretations.

Hybrid or electric vehicle performance is generally measured by the power delivered by them, their range of operation and their capacity to vary power according to demand. There is currently no universally accepted benchmark to gauge the performance of hybrids and electric vehicles. Additionally this policy completely ignores alternative power technologies such as ultracapcitors, which hold immense potential to power hybrid vehicles. As Gerband Ceder, professor of materials science and engineering at MIT says, “It’s hard to measure without a benchmark,” and promptly dismisses McCain’s new plans as a “political stunt”. Secondly, only zero emission cars would qualify for maximum tax credits of $5000. Hence, only fuel cell powered cars would qualify as zero emission vehicles and entail maximum tax credit. However, these are currently very expensive and well out of the reach of the masses.

McCain in his zeal to promote electric and hybrid vehicles fails to see the other end of the spectrum on this issue in my opinion. Assuming a mass adoption of such cars, there would be a tremendous demand for electricity to charge up such vehicles. McCain’s advisor Doug Holtz-Eakin suggests that such cars could be plugged in at night when energy demand is the lowest. He also suggested that the energy required to power up these vehicles could come from clean-coal and nuclear power plants. This approach certainly addresses the issue. However, a comprehensive analysis of the clean power generation and utilization for hybrids and electric vehicles is imperative before their adoption. The lack of such a roadmap would essentially mean that we are trading tail pipe emissions form cars to more wastes from coal/nuclear plants.

Although beset with a number of challenges as highlighted above, McCain’s new initiative is laudable as it steps away (even if only slightly!) from his “oil for energy” philosophy.  $300 million represents a substantial increase when compared to U.S. Department of Energy(DOE) previous expenditure on battery technology. In 2008, (DOE) devoted nearly $50 million to research and development for vehicle-related energy storage. Critics say that instead of being given away as prize money this amount should be directly invested in research and development activities

Hybrids employ a combination of the ICE and the battery for power generation. An onboard computer processor is employed that determines the right combination of battery and ICE under varying conditions of operation. Such an arrangement however is complicated and adds to the cost of the vehicle. Furthermore, batteries need to be charged repeatedly and replaced frequently, adding to the cost. Proponents of hybrids argue that their high cost would be offset by the reduced use of gasoline over a period. They however stop short on the cost incurred on battery charging.

Thus, the challenge in commercialization of hybrid technology may be considered a classic chicken and egg problem. In order to reduce manufacturing costs there has to be an increase in volume (the number of units sold), which is possible only with a decrease in price.

In this regard, it is heartening to note the availability of financial incentives in the US for boosting the sale of hybrid vehicles. A significant federal tax credit of twelve thousand dollars is currently available on purchasing of certain basic hybrid vehicles. Some states and municipalities also provide additional tax relief and incentives to specific hybrid vehicles. Rhode Island tax credit for electric vehicles and Oregon business energy tax credit are some major programs. The state of California also provides emission reduction funding to certain hybrid vehicles, if these are used primarily in California.

The advantage of such tax credits was identified early by Toyota unlike carmakers like GM, Ford and Honda. In early 2005, Toyota had a strategy for the sale of nearly 100,000 units of Pirius whereas Honda anticipated sale of only about 20000 units of its Accord hybrid. Toyotas vision paid off and the sale of its Pirius model accounted for nearly half of the total hybrid sale in year 2006. Toyota is now lobbying with the Australian government for incentives to produce the next generation hybrid - Toyota Camry. Toyota aims at production of Camry by 2011 for Asian markets. Emboldened by the success of Toyota, other carmakers are also running to grab a pie of the hybrid market.

Hybrid Technologies (HT) a company founded in 2000 and headquartered in Mooresville, N.C aims to develop, and manufacture lithium based battery systems for a variety of vehicles such as scooters, mopeds, and passenger cars.  HT seems to have taken a very bullish attitude towards the hybrid vehicle segment as evident by a large variety of electric vehicles in its product lineup.  At the top of its product lineup is the magnificent sports car – LiV. The international automotive supplier, Continental also plans to launch the production of lithium-ion batteries for hybrid vehicles by 2008.

These batteries are expected to be utilized in the Mercedes S class Blue hybrid. Ford Company is also embarking on a major revamp process to kick-start the development of mass produced hybrids. It has recently purchased a majority interest in the in Norwegian-based PIVCO industries known for its “Think” prototype.

So, do hybrids provide the only alternative for environment friendly power? Definitely not, research is also being pursued for development of vehicles that operate on power of fuel cells, or completely on electricity. Honda motors recently unveiled its fuel cell powered vehicle FCX clarity at the Los Angeles auto show. GM has also developed its Chevrolet Equinox FCEV (Fuel Cell Electric Vehicle).

Furthermore, the impact of hybrids on the environment is not clear. The efficiency of hybrid is dependent on the extent of utilization of battery power. The greater employment of battery power, lesser the use of ICE .This in turn would entail smaller consumption of gasoline and consequently lower emissions. However, greater utilization of batteries would also imply frequent charging. The charging of batteries is done through electricity mostly generated by fossil fuel powered electric stations. Therefore, in a sense hybrids would involve trading of lower emissions from vehicles and passing them to the power stations. Further research and development may be instrumental in determining the “green” efficiency of the entire hybrid vehicle operation.

The Smart Car solves many of the problems of navigating the urban jungle. It is a bite-sized nugget of a car that was designed by a Swatch manufacturer to careen through windy, narrow European streets and to fit into a fraction of a parking space. In fact, two Smart Cars can fit into one parking space, and when it comes to fuel efficiency they get 33 mpg in the city and 41 mpg on the highway. While an all-electric Smart is in the works, for now the perks of the Smart Car are its gas efficiency and its compact nature. That being said, the Smart is essentially a moped with a roof. While it’s a smart product, the percentage of people the Smart Car caters to is about the size of its trunk.

Coming in three models, the Smart Fortwo Pure, the Smart Fortwo Passion Coupe, and the Smart Fortwo Passion Cabriolet, Smart Cars are just about the opposite of the mid-life crisis car. Speed peaks at 84, as its size combined with a lead foot make it a safety hazard. Consumers report that wind from bigger automobiles on the road sway the Smart, and its zero-to-sixty in 13 seconds puts it in a dangerous position on the highway entrance ramp. Worse, its boxy shape pushes the boundaries of style, sort of like the PT Cruiser. As much as they try, they just won’t ever be able to sit at the lunch table with the cool kids. Despite the success of the Smart Car in Europe, critics prophesy gloom and doom for the Smart: its “efficient” and “convenient” features are neither efficient nor convenient for most Americans. Americans value large amounts of private space, and for many the car is a roving home. No one can deny that the Smart is not ideal for the majority of Americans who tow kids to school, shop for a week’s worth of groceries, and travel vast distances to visit family.

The Smart is, unfortunately, counter-intuitive for suburban and rural America, dwarfed by its over-developed peers on the highway and stylistically odd. Its popularity struggles against hybrid technologies, like the Toyota Prius and the Honda Civic Hybrid, which are flying off the lot. When compared to members of its fuel-efficient genus, the Smart comes in behind the Prius and Civic at 36 mpg combined highway and city driving, as opposed to 46 mpg and 42 mpg combined, respectively. But with a price tag at $11,590 for the Pure and $16,590 for the Cabriolet, it is a more fiscally conservative investment.

The futuristic nature of the Smart Car is its blessing and curse: it is the most socially responsible way to drive, but it can’t matriculate into the mainstream American market. The best place to be a Smart owner is in the city, where trips are short, parking is limited, and smog hovers. (However, in some cities parking two Smarts into one space is illegal, actually creating a waste of space!) Like the Mini Cooper, women, who look like Barbie dolls in the convertible Cabriolet, are more of a target market than men, who look stuffed into a matchbox car like Jean Reno in the 2006 Pink Panther remake. Despite the size, the Smart is considered to have plenty of legroom and a panoramic moon roof that gives the illusion of space. The modest trunk can fit a grocery load or luggage, and the front seat folds down for extra capacity.

The Smart Car’s funky features may be impractical for some and an eyesore for others, but Smart drivers cause heads to turn. It may not be the BMW Z4, but consumers report receiving interested, good-natured comments, questions, and chuckles at stoplights and parking lots. Like the VW Bug (“it’s ugly, but it gets you there”), the Smart could be a harbinger for the future of American driving. As fuel prices increase, we can hope that cars will begin to get smaller again, to the point that maybe soon the Smart will actually be the smartest car out there.