The Automotive X Prize: Ladies and Gentlemen, Start Your Ingenuity

The Automotive X Prize is coming out of the gate this week, a high-profile competition aimed at jumpstarting the somnolent automotive industry to produce high-mileage vehicles, and lots of them. The Draft Competition Guidelines, released today at the New York Auto Show, describe the myriad criteria the cars must meet -- performance, fuel economy, emissions, creature comforts, and all the rest.

Getting the competition rules right has been a mammoth job to date. I've had the privilege of playing a small supporting role as one of two dozen advisors to the competition. It's been a fascinating process, and what shows up in the 1-page Competition Guidelines Overview (Download - PDF) and the detailed, 37-page Draft Competition Guidelines (Download - PDF) belies the many debates that ensued and the dozens of good ideas that, by necessity, were left on the shop floor.

First, the basics. The Automotive X Prize (AXP) has been developed by the X Prize Foundation, the folks behind the $10 million Ansari X Prize that successfully challenged teams to build private spacecraft to open up the space frontier, among other competitions.

This time around, the goal is more down to earth: design and build super-efficient, production-capable vehicles that exceed 100 miles per gallon or its equivalent. There are two vehicle classes: "mainstream" vehicles must carry at least four passengers and have at least four wheels; "alternative" vehicles must carry at least two passengers with no minimum wheel requirements. Both classes have the same requirements for fuel economy and emissions, though they have different design constraints.

The winner of the multi-million-dollar prize (the amount is still to be determined) will be judged not just on the car's design and its performance, but a business plan that shows that the car can be manufactured profitably in volume, and with the comforts and features that consumers want. The winning team will have to compete in two races that showcase the car's speed and handling, as well as all of its performance characteristics, including high fuel economy and reduced emissions.

In other words, this isn't about designing concept cars or other such science projects. It's about bringing to market comfortable, affordable vehicles that can be built using current technology and sold successfully to today's consumers.

Designing such cars won't be easy, but neither was the process of designing the competition, which took place over the past year.

"The axioms we began with were that 'the technology exists' and 'the market must be a central determining actor in awarding the prize,'" Mark Goodstein, the Auto X Prize (AXP) executive director, recalled last week. The first big idea was that the prize would be a sales race -- a competition to see who could sell the greatest number of the most efficient vehicles. But that led to a number of complex issues. For example, a sales race would favor companies that had existing sales channels and marketing budgets, leaving smaller companies in the dust. And what happens if a company sold cars for little or no profit? Again, this could favor large, well-financed companies that could afford to absorb a loss (much as Toyota did for years with the Prius).

"We couldn't come up with a mechanism to get over all the objectives," Goodstein told me. "So we abandoned it."

Sustainability was another challenge -- whether and how to consider the cradle-to-cradle impacts of the materials and manufacturing processes used by the competitors. This turned out to be another complex issue. For example, it was determined that any cradle-to-cradle criteria would likely burden smaller players who don't have extensive procurement departments or dedicated sustainability staff. "We realized, after talking to some start-up owners and the [big automakers], that this would put the start-ups out of business," says Goodstein. In the end, AXP decided not to focus on the environmental details of vehicle production, recycling, and destruction.

There were still other challenges: what metric to use (fuel economy, fuel cost per mile, etc.) in designing the goal; which fuels would be allowed; and how to measure the carbon equivalency of different fuels -- gasoline, biofuels, electricity, hydrogen, and combinations thereof. None of these is an exact science, and each required a great deal of back-and-forth discussions, not to mention more than a little number-crunching.

"We've created and thrown out all sorts of guidelines," says Goodstein with a sigh.

Perhaps most contentious was AXP's decision to cap fuel economy at 100 miles per gallon equivalent (MPGe). Why 100? Why not, say, 150? Goodstein admits that 100 is a "nice round number," but beyond that is another calculus: going beyond 100 MPGe creates diminishing returns and increases the chances that the resulting car designs won't be very appealing.

As the Draft Guidelines explain:

At 20 MPG, it takes 5 gallons to go 100 miles. At 100 MPG it takes 1 gallon so you save 4 gallons. Double it to 200 MPG and it takes 1/2 gallon, so you save only 1/2 gallon more. In fact, an 80 MPGe vehicle achieves 94% of the energy savings as a 100 MPGe vehicle.

Thus, for example, achieving 150 MPGe offers only a relatively modest increase in fuel saved, but likely at the expense of the features, performance, and safety that are needed to make these cars attractive to consumers.

Not everyone agreed, countering that every gallon of gas and barrel of oil saved is important, and that the 100 MPGe cap could stifle breakthrough ideas and designs. But in the end, AXP chose the nice round number.

Some of these issues will be mitigated in what's being called the AXP Awards, a still-evolving series of J.D. Power-like awards to recognize such achievements as highest fuel economy, lowest carbon emissions, and most sustainably manufactured vehicle. These would at least acknowledge extraordinary cars and technologies, even if they don't win the grand prize.

There are miles to go before all this plays out, of course, the first step of which is the 60-day comment period for the newly minted Guidelines. Based on public reaction, they could be revised, or even overhauled.

Will it all be worth the effort? Goodstein and his team are convinced that AXP will lead to dozens of new car designs, many of which will go into production, helping to influence the $1.5 trillion spent annually to build cars. And that the AXP logo that finalists will be allowed to use will be a marketable badge of honor that will help innovators succeed on the showroom floor.

They also point to the salutary effect all this can have on the future of car designs. One inspiration for the original Ansari X Prize was the Orteig Prize in 1919, which offered a $25,000 bounty for the first aircraft to fly nonstop from New York to Paris. A 25-year-old named Charles Lindbergh won that race in 1927, and within 18 months the world saw the number of aircraft increase fourfold and airline passenger traffic increased 30-fold, with concomitant take-offs in the numbers of airports and pilot licenses.

Will the Automotive X Prize similarly lead to sales of high-mileage vehicles soaring to new heights? This time, the race isn't simply to more efficiently traverse our planet, but possibly to save it altogether.

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