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The modern car needs to be functional, aesthetic, safe, fuel-frugal, and affordable. Makers of cars and public policy often assume that efficient cars must be small, sluggish, unsafe, ugly, or costly. But integrative design and new technologies can achieve all desired car attributes, today and tomorrow, simultaneously and without compromise.

We therefore will not need high fuel taxes or efficiency standards to induce people to buy unattractive cars; rather, they'll want to buy the super-efficient cars because they're better, just as most people prefer digital media to vinyl records.

For conventionally improved cars that do cost more up front, car buyers' short view—looking at just the first two to three years' worth of fuel savings—is a big obstacle. High fuel prices discourage driving but have little effect on car choices because they're diluted by nonfuel costs, then heavily discounted.

The most powerful way to influence car choice is "feebates." Within each size class, new-car owners pay a fee or get a rebate—which and how big depend on a car's efficiency—and the fees pay for the rebates.

The modern car needs to be functional, aesthetic, safe, fuel-frugal, and affordable. Makers of cars and public policy often assume that efficient cars must be small, sluggish, unsafe, ugly, or costly. But integrative design and new technologies can achieve all desired car attributes, today and tomorrow, simultaneously and without compromise. We therefore will not need high fuel taxes or efficiency standards to induce people to buy unattractive cars; rather, they'll want to buy the super-efficient cars because they're better, just as most people prefer digital media to vinyl records.

For conventionally improved cars that do cost more up front, car buyers' short view—looking at just the first two to three years' worth of fuel savings—is a big obstacle. High fuel prices discourage driving but have little effect on car choices because they're diluted by nonfuel costs, then heavily discounted. The most powerful way to influence car choice is "feebates." Within each size class, new-car owners pay a fee or get a rebate—which and how big depend on a car's efficiency—and the fees pay for the rebates. The increased price spread encourages a buyer to buy an efficient model of the size he or she prefers. The buyer saves money; automakers make more profit; national security improves. Such feebates, now starting to emerge around the world (in Canada, France, and some states in the United States), are more effective and politically attractive than fuel taxes or standards.

The car-efficiency revolution faces many challenges, but each can be overcome. Hybrids, invented by Dr. Ferdinand Porsche in 1900, were reengineered nearly a century later by Japanese automakers with strong leadership and balance sheets. These popular hybrids now offer up to doubled efficiency, many with boosted performance as a free bonus.

U.S. automakers are playing catch-up and need help with retooling and retraining (which needn't cost the Treasury). Their choice is stark: whether America will continue to import efficient cars to displace oil, or make efficient cars and import neither oil nor cars. A million jobs hang in the balance. But the process Austrian economist Joseph Schumpeter called "creative destruction" is sweeping the overbuilt auto business: The market will change either the managers' minds or the managers, whichever comes first.

China's and India's ambitious automakers will quicken the pace, leapfrogging over Western technology. And countries without an auto industry may choose to start one of a wholly new kind—not based on steel, but more like making computers with wheels than cars with chips.

Altogether, tripled-efficiency cars, trucks, and planes are feasible with today's technology, repaying their extra cost in a year or two. More efficient use of oil in buildings and industry, and substituting saved natural gas and advanced biofuels, could together eliminate U.S. oil use by the 2040s, revitalize the economy, and stop 26 percent of carbon dioxide emissions. Getting off oil altogether would cost an average of $15 per barrel (in year 2000 U.S. dollars)—a fifth of the recent world oil price—so the transition will be led by business for profit.

A U.S. version of such a transition was mapped by my team's 2004 Pentagon-cosponsored study Winning the Oil Endgame, and implementation is under way—for example, Wal-Mart doubles its heavy trucks' efficiency, Boeing markets the 20 percent-more-efficient (at no extra cost) 787, and the Pentagon explores radically more efficient military platforms whose technology could transform civilian vehicles much as military research and development created the Internet. Other countries can do as well or better if they just aim high, think boldly, and take markets and technological progress seriously. Super-efficient cars, and their analogues in other kinds of vehicles, are among the best ways to make the world richer, fairer, and safer.

 
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