Sean Olender

Tata Nano About to Give Detroit a Run for Its Money

Yes, this is embarrassing to write that a US release is coming in July 2009. A quick review of the papers would tell you that Tata isn't releasing anything in the United States and merely plans to in about three years. It is likely that a US model would cost a bit more, but maybe still less than $5,000.

The American car market is a joke because they require all of these expensive safety features like airbags and certain front and side energy impact performance, but they allow the sale of 8,000 pound SUVs that are raised high enough where the bumper doesn't contact the other driver's car and this actually results in decapitations not infrequently.

Small, light cars are safer unless you have big, heavy cars. A small light car hitting a fixed object like a wall, tree, lightpost, etc. will release less energy and result in less damage and injury to the car's passengers than a heavy car hitting the same thing. It's a principle of physics. Small cars are very dangerous in the United States because when they are hit by a big car, especially one raised off the ground so that the bumper impacts the small car well above the bumper, even at slow speeds it can kill the small car's occupants and the bumpers, seat belts and air bags don't matter at all. A real reduction in auto fatalities and radically improved gas mileage, reduced air pollution and even reduced traffic could result from a stringent regulation of auto size and weight.

What some people also don't realize is that the United States uses more than 40% of the world's refined gasoline (not oil, refined gasoline), so when 50% of Americans moved to SUVs that get 11 to 15 mpg, it had a significant impact on WORLDWIDE gasoline consumption. It affects everyone. When you go to buy gas at the gas station, a significant part of the cost is reflected by demand and demand is reflected by gas mileage multiplied by miles driven. So when you see someone pull their 8,000 pound Ford Expedition into the gas station, realize that no matter what sort of car you drive, your gas is more expensive because they are bidding against you to use a whole lot of it. The proliferation of heavy, low mileage cars absolutely and undeniably and powerfully affects gasoline prices.

So let's look at the Nano. It gets between 50 to 60 miles per gallon, weighs 1,300 pounds and has a top speed of 75 miles per hour. To many Americans this may seem like a sad joke. But it's not. You aren't supposed to drive faster than 70 miles per hour in California and many other states and even those with faster speed limits only allow 75 except for a small part of Western Texas that allows 80.

"What about passing?" Oh shut up! It's illegal to exceed the speed limit while passing. It's one thing to say, "Well, everybody does it" and other to say that cars must be minimally designed to allow or even encourage people to break the law.

43,000 Americans a year die in car accidents. There are 6 million accidents annually and 3.5 million result in injuries. An incalculable amount of taxpayer money goes into the happy motoring project from ambulances and funeral parlors, to body shops, highway patrol, the ridiculous car/ticket/court/traffic school/insurance racket. The cost of owning and operating an automobile doesn't register in most Americans' minds because it is distributed. Imagine the cost separately of your garage at home, your parking at work, insurance, auto repair, gasoline, tickets, licensure, parking fees, bridge tolls, parking tickets, car washes. It's such a suck of resources that it is incredible.

Then there's the cancer. Did you know that if you live within half a mile of a gas station, researchers have found that your children will have seven times the likelihood of getting leukemia? Gasoline and its distillates have polluted so much soil and ground water and the automobile has caused so much lung cancer, so many deaths from respiratory illnesses in the very young and very old. 20% of children living in US urban areas have asthma due specifically to air pollution which is 60% to 80% caused by automobiles.

What about risks to the continued existence of modern civilization? Food production is petroleum based and global oil production is falling. From the evidence we have at this point, it seems highly unlikely that oil production will rise. It will be almost impossible to find and develop sufficient new production to keep depleting fields from dragging down overall production.

As oil prices rise, food prices will rise because modern food is petroleum (petroleum based fertilizer, petroleum based pesticide, petroleum fueled farming machinery and petroleum fueled transcontinental food shipping). Modern food is petroleum.

The Nano and China's Chery cars will have the unfortunate effect of driving up oil prices and rapidly depleting reserves because they will get a lot of people who previously didn't drive in India and China to start driving. The result will be catastrophically higher prices for food and fuel worldwide.

Americans may indeed start buying subcompacts like the Nano, not because they want to, but because they have to. If gasoline prices rise up to $5-$7 a gallon as a recovery takes hold next year or in 2011, happy motoring will resume its growth and probably take prices to $8 to $10 a gallon when combined with reduced worldwide production by 2012-14. At those prices, the exurbs will become ghost towns. Only the top 20% of income earners will even be able to afford fuel to make very long daily commutes and that to 20% isn't the group that moved out to the sticks to buy a cheap McMansion anyway.

My fear isn't gasoline prices because that will drive a much needed reduction in car sizes and car driving. America needs that and it would make for less respiratory illness, less asthma, fewer car accident deaths, less cancer, and less offensive noise and dust that keeps most Americans from even walking to the store because it's a dirty factory out there.

My worry is that it will cause food prices to skyrocket. A "successful" American family will be one that can afford food and fuel. It may become the new bling. "Did you see the Johnsons next door came home from the grocery store with four bags of groceries and they drove! They must be doing well." Americans will get gasoline company credit cards that tie into home equity loans while the Federal Reserve and US Treasury claim that Fannie, Freddie and FHA need to refinance borrowers to help them "afford" fuel and food by using their homes to finance those weekly consumption expenses over 30 years.

Anyway, this is a rant, but I had to do it. The Nano would be great for the US, but Americans don't get where things are going yet. The US uses twice as much energy per capita as Europe and Japan. That means that as energy costs rise, the US will be hurt twice as much as Europe and Japan. An American with an 11 mpg truck designed to ferry agricultural workers but sold to the gullible as a "luxury vehicle" because it has a ridiculous Cadillac emblem on it will suffer four times as much as gas prices rise as a European driving a 44 mpg subcompact. And it's worse, most Europeans and Japanese who take electric subways and trains will suffer even less of an impact from that gasoline price increase.

Combine that with American urban development where the suburbs are so far from work centers and miles of tract homes are connected to "office parks" by freeways, and you have a disaster on the horizon. What's coming will hurt everyone, but it will hurt much worse here because of the way this place is designed.

There is a limited amount of time and a limited amount of resources going into this. It will take huge cultural shifts and hundreds of billions of dollars, maybe trillions, to rework the way we do things here to avoid a catastrophe. Arrogance will probably stop that from us even talking about it.

But if you take a calculator and figure that the average American will have to pay 4x or 6x as much as the average European or Japanese to maintain current habits per unit of gasoline price increases, you can see how this will cost jobs, production, economic activity. It will change American behavior by force. Instead of embracing the future and doing our best to meet its challenges, the future will bring us to our knees and from that uncomfortable position, we will make practical choices.

Maybe we should all buy some knee pads.