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Energy and Environmental Challenges for the Japanese Automotive Industry


Research Report

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Suggested Citation:
Sperling, Daniel (2000) Energy and Environmental Challenges for the Japanese Automotive Industry. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-00-05

The turn of the century is proving to be a period of turmoil and uncertainty for the automotive industry. The industry confronts growing worldwide demands for greater environmental quality, but now benefits from an emerging technological revolution that provides them with the tools to respond effectively to those demands. Rapid innovation is occurring in lightweight materials, various ICE powertrain enhancements made possible by computer controls, energy conversion processes, energy storage, and communication and information technologies.

The challenge for automotive companies is to correctly anticipate policy and market demands, position oneself strategically with respect to environmental and other market issues – to distinguish opportunities from threats – and design and develop products accordingly. The most critical environment-related issues facing the automotive industry are regulation of particulate matter and greenhouse gases, and the development and marketing of electric drive technologies. Depending upon a company’s forecast and assessment of market demands, technological opportunities, and forthcoming regulations, it will invest in some mix of advanced diesel powerplants, direct injection gasoline engines, fuel cells, battery EVs, and various hybrid-ICE technologies.

Critical choices must be and are being made, by government and industry. Companies cannot afford to make serious commitments to these technologies and must make strategic choices, and policymakers and regulators must respect the large investments imposed on companies by their actions and must therefore also be strategic (and rational) in prioritizing and acting upon problems. The effects of government policies and rules can be unusually far reaching. Indeed, automakers are merging in part because many fear they can not afford the R&D investments needed to stay abreast of the many cusp technologies.

This report addresses environmental priorities and tradeoffs, especially as they relate to US public policy and Japanese automotive industry investments. The focus is on energy and air pollution issues associated with light duty vehicles.