How the Electric, Self-Driving Miracle Car Will Change Your Life

And save the world.

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Electric cars have been competing with the internal combustion engine for more than a century, and they have never won. Batteries are more expensive, have less range, and require more time to recharge than it takes to fill a gas tank. In late 2010, U.S. Energy Secretary Steven Chu himself articulated the challenge, stating that battery companies have to develop units that last 15 years, improve energy storage capacity by a factor of five to seven, and cut costs by about a factor of three in order for electric cars to be comparable to cars that run on gasoline and diesel.

U.S. energy policy has tried to address these challenges. The Energy Department and other agencies have supported the development of battery and recharging technology. In addition, the U.S. government has provided financial support to Nissan, General Motors, Tesla, and Fisker to develop and manufacture commercial electric vehicles (EVs). The government hopes such investment can spur economies of scale, thereby reducing unit costs and making new technologies viable.

So far, though, these efforts have failed to produce any game-changing breakthroughs. Battery range remains strictly limited, and electric vehicles remain disproportionately expensive, with batteries alone costing as much as $15,000. The plug-in, hybrid electric Chevy Volt retails for $40,000 before a $7,500 federal tax credit, and the all-electric Nissan Leaf starts at $27,700 after the tax credit. These vehicles are also less capable than their gasoline-powered counterparts, prompting Johan de Nysschen, president of Audi of America, to observe in 2011, "No one is going to pay a $15,000 premium for a car that competes with a [Toyota] Corolla." 

He has been proved right. In 2011, the Leaf sold only 9,700 units in the United States, and Chevy sold only 7,700 Volts. There were 13 million vehicles sold in the United States last year, meaning that electric vehicles comprised a meager 0.1 percent of the market.

It is hard not to be pessimistic about the future of electric cars, especially given that government funding is unlikely to increase. Not only has austerity become an economic reality, but electric vehicle funding has become something of a political liability. With the best of intentions, the government is subsidizing second cars for the very richest members of society. Both the Tesla (which has the body of a Lotus) and the gorgeous Fisker Karma sports car (created by BMW-designer Henrik Fiskar and assembled in Finland) retail for more than $100,000. These are not products for the top 1 percent; these are products for the top 0.1 percent.

The demographics for the Volt and the Leaf are only marginally better. According to Nissan, Leaf buyers are college-educated and have household incomes of $140,000 per year. According to General Motors CEO Daniel Akerson, the average Volt purchaser earns $170,000 annually. In short, electric car policy is helping precisely those who should not be subsidized by the government, and as a result, sustaining and increasing such funding will prove challenging.

Is the electric car then history? Will the Leaf and the Volt go the way of the ill-fated EV1, General Motors' electric car from the 1990s? If the status quo persists, they very well might. There are, however, reasons to believe that electric cars might find a viable niche after all -- if we use them in the right way.

For the last several years, Google has been testing self-driving cars, primarily in California and Nevada. Its vehicles use lasers, radars, and other sensors to establish their position and identify objects around them. This data is interpreted by artificial intelligence software that enables the vehicle to drive itself. Google's vehicles have now proved themselves in hundreds of thousands of miles on the road. And Google's not the only game in town. Bosch is also developing the technology, and Cadillac has promised to have a car capable of driving autonomously on the highway by 2015. Self-driving technology is gradually moving to commercialization, and when it does, it will liberate the car from its driver, enabling a vehicle to serve more users.

According to the Transportation Department, the average U.S. vehicle is used less than one hour per day -- a utilization rate of about 5 percent. Many Americans only drive their cars to work, park, and leave them until they drive home at night, making them essentially unavailable for use by others for most of the day. But if the car could drive itself, it could return home to take the children to school, members of the family shopping, and seniors to visit friends or keep appointments. If the vehicle served even one additional passenger, its utilization rate would double, and its capital cost per user would fall by half.

This is exactly the solution needed to remedy the poor economics that currently stymie electric vehicles. Even if better or cheaper batteries are not developed, electric cars could still be economically viable if their utilization rates were double those of today's gasoline-powered vehicles.

The viability of electric vehicles would be further enhanced if they were used as a service, rather than purchased as assets. For example, electric cars could be employed as driverless taxis. In some places, like New York City, taxis are ubiquitous because keeping a private vehicle is prohibitively expensive and inconvenient to park. In other parts of the country, taxis are scarce and expensive. In the town of Princeton, New Jersey, for example, taxis are found only at the train station, and the brief round trip from there to downtown Princeton costs approximately $40. Of this, only $5 represents vehicle-related costs; the remainder is attributable to the driver. At usage rates rivaling that of taxis -- perhaps 100 miles per day -- electric cars are quite competitive because of their lower operating costs. Thus a self-driving electric car could also make the same round trip at a cost of only $5. For a twice-daily, off-peak user, the monthly cost of vehicle access could be less than $300 -- much less than the cost of car ownership.

Consuming transportation as a service would also help compensate for three noneconomic weaknesses of electric vehicles: limited size and capacity, limited range, and extended recharging time. Most regular cars can seat four or five, be driven 300 miles, and carry a trunk full of goods. On most days, however, the typical driver uses only a fraction of these capabilities. As most households can only afford one car per driver, the consumer buys more vehicle than is strictly required for daily commuting in order to preserve the option of traveling greater distances with a large load and several people. General Motors has attempted to sell the Volt on just this limited-use basis, that most people drive less than 40 miles per day. True enough, but most consumers will buy a vehicle that they can use for all their activities, not just those on a typical day.

If transportation could be purchased as a service, however, this constraint would be lifted. Localities could have a fleet of electric vehicles on call for local trips, allowing EVs to operate within short distances only -- just as the typical taxi does. This would permit electric vehicles to find a successful niche without fundamental improvements in range or load. As such, an EV would not replace every car for every driver, but it could fulfill a key role in local transportation and reduce the number of vehicles per household or allow marginal users, like senior citizens, to maintain a high level of local mobility without having to own a car.

Purchasing transportation as a service would also reduce recharging requirements. Recharging technology is improving, but it remains to be seen whether EVs will ever be able to recharge as quickly as a gasoline tank can be filled. If transportation can be purchased as a service, then not every EV must be fully recharged at the same time, nor must each vehicle be fully recharged prior to use -- something that would present risk to an owner entirely dependent on a single EV. Thus, while faster charging is better, self-driving EVs -- used as a fleet -- would be able to function effectively even in the absence of superfast recharging.

In short, self-drive technology offers the promise of electric vehicles with economic and functional viability even in the absence of major technological improvements.

The market for self-driving technology is large -- my firm estimates it at $25 billion per year. The key customers would be senior citizens who do not wish to drive or are looking for more economical transportation; soccer moms, who often spend hours per day chauffeuring children back and forth from school and activities; and executives lured by the ability of the vehicle to drop them off and go park itself. Indeed, once the idea of sending the car to park itself takes hold, it is almost irresistible. Self-driving cars would be the biggest time-saving breakthrough since the washing machine.

Moreover, they offer an economical alternative to mass transit. Traveling by train is often touted as the wave of the future. In truth, Amtrak's prices don't compete with the cost of automobiles today, and they are horribly uncompetitive vis-à-vis intercity buses. Would hugely expensive bullet train infrastructure reduce the cost of a train ticket? It seems unlikely.

Nor are buses a realistic alternative for daily commuting for most people. A recent USA Today article recounts the story of a university employee in Arizona who lost her car to an accident and decided to take the bus instead. Her daily commute increased from 20 minutes to one hour each way. Do the math, and her monthly commuting time increased by the equivalent of three working days. Increasing the working month by three days is not social progress -- it is a social and economic catastrophe. By contrast, self-driving electric vehicles offer a more flexible and lower-cost solution that combines the custom experience of a car with the environmental and economic benefits of public transport. Think of self-driving EVs as customized public transportation.

Self-driving electric vehicles will also help compensate for a lack of oil. The oil supply has not increased materially for the past seven years, even as Chinese demand has soared. As a result, the Chinese are bidding away U.S. oil consumption, which has dropped 16 percent per capita since 2005. If we want to maintain our physical mobility, we will have to turn to other sources of energy. Self-driving electric cars will not dominate the future -- given a choice, consumers have time and again shown a preference for gasoline- and diesel-powered cars -- but they should find a viable niche in local transport, which constitutes the bulk of daily driving in the United States. By 2025, they could comprise 15 to 20 percent of vehicle sales. Thus, the road transportation system, which has been entirely dependent on oil-based fuels, will become more diversified. Road transport will come to look more like the power system, with oil, natural gas, and battery power all playing a role and filling different niches in different ownership structures. Relatively few people may own self-driving electric cars, but many people may rely on them for daily transportation.

Interestingly, neither the Republican Party nor Democratic Party has embraced self-driving technology. Either of them could. For Democrats, self-driving technology promises to be the enabler of electric vehicles, in which the party has vested so much emotion and prestige. On the other hand, Democrats seem viscerally incapable of proposing alternatives to oil that are economically viable or increase individual consumption. Will gee-whiz automobile technology find a home with the left?

For Republicans, anything to do with green technology carries a stigma. On the right, batteries and green technologies are the stuff of rent-seeking, bureaucratic-meddling, dead-end wastes of money. And self-driving technology could vindicate the left's investment in electric vehicles. On the other hand, self-driving technology could be good business and requires only a proper legislative framework, not an endless stream of subsidies.

Thus, both the left and the right have reasons to embrace or reject self-driving technology. But the technology will continue to develop and, bit by bit, be deployed commercially. It promises a brighter future, where technology once again helps improve lives and make the world a better place. For a country beset by economic stress and uncertainty, self-driving technology offers a vision of a better tomorrow, a more optimistic world. We should embrace it.



Processing Delay

The Arab-Israeli peace process has never been more irrelevant to developments in the Middle East.

Summer 2012. Israel's elections have been delayed until late next year by the formation of a new coalition government. The "Arab Spring" is producing Muslim Brotherhood victories, Salafi gains, chaos in Syria, disorder in Egypt, tremors in Jordan. Iran's nuclear program moves steadily forward despite tougher sanctions and ongoing negotiations between Iran and the world's major powers. In the United States, Barack Obama and Mitt Romney begin to face off in the upcoming presidential election.

Amid these developments, the so-called "peace process" will enter its 46th year on June 10. For it was on that day in 1967 that a cease-fire in the Six-Day War was declared, leaving Israel in possession of the West Bank, Gaza, Sinai, the Golan Heights, and Jerusalem but divided over what to do with its newfound gains.

Israel withdrew from the Sinai in 1982 and from Gaza in 2007, and no one is discussing the Golan these days due to Syria's internal crisis. But the future of Jerusalem and the West Bank remains a matter of intense international -- including American -- diplomatic effort. While professional peacemakers may want to get negotiations going again, the inconvenient truth is that none of the parties to this conflict have adequate incentives to take serious political risks right now. Forget about reaching a final settlement for the next year and likely far longer -- neither the situation on the ground nor the politics in Israel and among the Palestinians makes it at all likely.

In the fall of 2003, Israel took the first steps to withdraw its forces and settlers from Palestinian territories. Despairing of any possibility for productive negotiations while Yasir Arafat led the PLO, but under heavy pressure to make some move, Prime Minister Ariel Sharon turned to Gaza, which the old general viewed as a military burden rather than as an Israeli asset. After a grueling political battle that extended through 2004 and half of 2005, a resolute Sharon carried out his plan to remove Israeli settlements and military bases from Gaza in August 2005, breaking up his own Likud party over it.

This political move, which resulted in the creation of the Kadima party, would hardly have made sense had Gaza been Sharon's final plan. By late fall of 2005, Sharon had already fought and won in Likud for the Gaza disengagement. But he wanted, his closest collaborators believe, to go further -- to set Israel's borders in the West Bank more or less along the current fence line, taking in roughly 12 percent of the territory and protecting all the large settlements. In his view, that 12 percent would shrink in some future final status agreement with the Palestinians, but an interim move in the West Bank would provide defensible lines until then. It would also serve as the basis for a Palestinian state in the West Bank, thereby finally separating Israel from the Palestinians. It would allow Israel to act, not wait decade after decade hoping for the day when Palestinian moderation allowed the PLO's leadership to sign a deal.

Sharon's stroke in early 2006 did not kill that plan, and indeed, Ehud Olmert ran and won on something like it when he succeeded Sharon as leader of Kadima. Olmert called it hitkansut -- translated as convergence, gathering, or rallying together. The idea was the same: pull back from isolated settlements and set Israel's final borders.

Under pressure from U.S. President George W. Bush, Olmert agreed to wait and try to negotiate a deal with Palestinian President Mahmoud Abbas. In Bush's view, a negotiated deal would bring Israel the Palestinian commitments it needed, and bring Abbas the legitimacy he needed. Olmert, believing he had a full term of office before him, thought he could comply with Bush's wish and move unilaterally later if no breakthrough was forthcoming. He never had the chance, however, falling victim to a combination of personal scandal and Israel's disappointment with the outcome of the 2006 Lebanon war. Moreover, the June 2007 Hamas coup in Gaza left the Palestinian populace and leadership split, and it suggested to Israelis that withdrawal of any sort from the West Bank might permit the same sort of terrorist takeover that withdrawal had allowed in Gaza and in south Lebanon.

Now that former Defense Minister Shaul Mofaz -- who had previously presented a peace plan that would result in the creation of a Palestinian state in 60 percent of the West Bank's land -- has won control of Kadima and joined the government, there has been some speculation about whether the "peace process" will soon be revived. It will not. There have been no negotiations for three and a half years, the result mostly of foolish and inept diplomacy by the Obama administration. By declaring that a freeze on construction in settlements and in Jerusalem was a prerequisite for negotiations, Obama and his envoys (led by George Mitchell) cornered Abbas -- how could he appear less "Palestinian" than the Americans?

But the breakdown of negotiations presented Abbas with another problem. His greatest asset in his rivalry with Hamas was the claim that he could produce a state while Hamas could produce only violence. No negotiations, no state -- so Abbas has been forced to look elsewhere for validation during the Obama years.

In the absence of negotiations, Abbas has grasped for a unity government with Hamas. Despite previous failed agreements, notably a pact mediated by the Saudi king in February 2007, Abbas is now trying this route again. Talks beginning on May 27 were to select a new cabinet within 10 days, and though they have been delayed, they may succeed by the end of June. The plan is for that new government to rule for six months and then hold elections, but neither Hamas nor Fatah wants to subject itself to the unpredictability of the polls. For Abbas, elections might end his years of happy globe-trotting. He claims that retirement is his fondest wish, but if the Palestinian population will put up with him for a few more years, he will put up with them.

Elections aren't even the toughest challenge such a coalition would face. Security tops the list. Who would lead the Palestinian Authority's various forces? Who can expect Hamas to disarm when it has never been defeated by Fatah, either in combat or at the ballot box? Because "national unity" is widely popular among Palestinians, Abbas and Hamas will keep at it and may even briefly achieve a "unity government" -- but it won't last.

Even a short-lived unity government with Hamas would doom any chance of a negotiation with Israel, but that doesn't bother Abbas. He can't see a way to climb down from his demand for a construction freeze, and he doesn't have high hopes for negotiations in the first place. Negotiations demand compromises, and he knows that any he makes will immediately be denounced by Hamas as treason. Meanwhile, he's not in a good position for serious talks with Israel anyway. His minister for negotiations, Saeb Erekat, had a heart attack this spring, and the other old negotiating hands -- former Prime Minister Ahmed Qurei and PLO Secretary-General Yasser Abed Rabbo -- are out of favor.

All this leaves Abbas simply muddling through, declaring that he will go back to the United Nations, hold elections, or insist on a new government. But he's shuffling those claims like cards in a deck -- now one on top, now another. The shuffling will continue until the United States has a new president and Abbas can decipher what, if anything, the new administration will demand of him and of Israel. The most likely outcome for Abbas is more years that look like the last three: lots of travel, occasional efforts at the United Nations, and discussions of elections and unity governments that never get beyond the talking stage.

Don't expect any initiatives out of the United States until after the presidential election either. If Romney is elected, he and his new team will need time to get settled and will likely see Israeli-Palestinian negotiations as a bottomless pit for diplomatic energy rather than as a priority. If Obama is reelected, he will have no Middle East hands to whom he can turn. Mideast advisor Dennis Ross has left; Jeffrey Feltman, assistant secretary of state for Near East affairs, departed for a post at the United Nations; and Deputy Secretary of State Bill Burns will in all likelihood leave when a new secretary of state is appointed or a few months later.

In January 2009, Obama appointed Mitchell as special Middle East envoy on his second day in office. That kind of priority will not be assigned to the "peace process" in January 2013 -- no matter who wins.

The new Israeli coalition has some room to maneuver, but don't expect it to make diplomacy with the Palestinians a priority. It will want to make decisions on Iran first and see who will be the U.S. president for the next four years. An Israel that is worried about stability in Syria, Egypt, Jordan, and Lebanon and facing a growing Iranian nuclear weapons program is unlikely to take many risks in the West Bank.

That's not to say the new government can afford to ignore the Palestinian issue. Polls show that Israelis do want peace and do want separation from the Palestinians, but have little faith that much can be achieved. If Iran's nuclear program is halted, through either a bombing campaign or a negotiated deal, and Iran's ally, Syrian President Bashar al-Assad, falls, attention may turn back to the West Bank. An Israel that has defied the counsels of restraint from the United States, Russia, China, and all of Europe by bombing Iran may well seek to patch things up by appearing in a more "moderate" and cooperative light on the Palestinian issue.

Such peace talks, however, would likely fail. If the Palestinian president could not agree to the startlingly generous offer a falling Olmert made in late 2008, nothing Prime Minister Benjamin Netanyahu can offer will elicit a yes. This would leave Netanyahu facing two alternatives: continue economic and institutional development in the West Bank without talks, or undertake a Sharon/Olmert/Mofaz move in the West Bank.

Netanyahu's government could adopt some combination of consolidating (perhaps even annexing) the major settlement blocs while unilaterally pulling settlements back to the security fence. This would allow the Palestinians more political and security sway in large areas of the West Bank, while also compensating settlers who move "back" -- mostly to other, larger settlements, not behind the Green Line.

The problem with unilateral steps is that they go unrequited. Sharon, contemplating disengagement from Gaza, said this straightforwardly to Bush. In the absence of concessions from the Palestinians, he sought and received political and ideological compensation from the United States. This came in the form of Bush's April 14, 2004, letter to Sharon, wherein the United States said that there was no "right of return" and that the Palestinian refugee problem had to be solved in Palestine "rather than in Israel." It also affirmed that "it is realistic to expect" Israel would keep the major settlement blocs, which were "new realities on the ground."

Both houses of U.S. Congress endorsed these views soon after Bush articulated them, but the Obama administration foolishly devalued this compensation for Israel in 2009, treating the letter as a sort of private missive to Sharon that does not affect U.S. policy now that Bush is no longer president. They have thus made Obama's own words cheap and not acceptable as compensation for taking political and security risks.

Nothing this year or even next, when Netanyahu faces an election in the fall, would lead the prime minister to act unilaterally. Sooner or later, however, he may discover what Sharon did in 2003: Nature abhors a vacuum, and so do the European Union and many Israelis. The same may hold true for a reelected Obama administration. Attention is now on Iran, Syria, and Egypt, but in another couple of years attention could shift back to demands to "end the occupation," featuring a variety of proposals -- many of them foolish and dangerous -- for how to do so. At one point in 2003, Sharon caustically joked to me, "There is a boom in plans," referring to the various innovative proposals whose common denominator was that Israel should give up assets it held.

Pressures on Israel will mount. Take, for example, the "Quartet Principles," which require that Hamas recognize Israel, renounce violence, and adhere to all previous diplomatic agreements before joining any Palestinian government that the United States would recognize and assist. Remarkably, these principles have been supported by other members of the Quartet: the United Nations, Russia, and the European Union. That support, however, was less a matter of principle than the product of the absolute bloody-mindedness of Hamas. The Palestinian Islamist movement would not move an inch and would not give eager Russian and European diplomats even the slightest hint of compromise -- through ambiguous formulations of what "recognition of Israel" meant or how "adherence to" or "respect for" previous diplomatic agreements might be interpreted.

But that could change. Now, six years later, with its own popularity in Gaza at a low-water mark and its former ally in Damascus on the ropes, Hamas may decide to encourage those diplomats who are determined to be encouraged. That wouldn't take much of an ideological shift on their part. After all, not only European but American diplomats are happily engaging the Muslim Brotherhood in Egypt without imposing demands on it to change positions on women, Copts, or sharia, much less Israel.

The damage of an EU decision to deal with Hamas would be unavoidable. First, Israelis would be further confirmed in their belief that the Europeans could not be trusted, diminishing even further the European Union's role in the Israeli-Palestinian conflict. Second, such a move could only undermine Fatah and the Palestinian Authority, which view Hamas as an enemy to be defeated rather than as a genuine partner. Third, peace talks would themselves be impossible if Hamas were part of the Palestinian government or, worse yet, of the PLO, which is the formal negotiating body for the Palestinians.

So why would the Europeans be tempted to do it? Frustration, for one thing. Nothing is moving, so let's shake things up, the argument would be. Such wishful thinking would then produce learned arguments about how Hamas is changing, how the "military wing" is declining in power while the "moderates" are rising, and how no peace is possible without Hamas's buy-in.

But these arguments, honest or disingenuous, are only part of the picture. The truth is that domestic politics push European leaders to take such stances and condemn Israel. This is one of the few genuinely new developments since the "peace process" began. In many constituencies across the continent, Muslims now comprise a significant minority of voters. France's recent presidential election is instructive. One poll found that a remarkable 93 percent of Muslim voters went for François Hollande, while 7 percent voted for Nicolas Sarkozy; another leading poll found that Hollande got 85 percent. The usual estimate is that there are 2 million Muslim voters in France; if 85 percent of them supported Hollande, that translates to 1.7 million votes. As Hollande's margin of victory over Sarkozy was 1.1 million votes, the impact of the Muslim voters was clear.

This is a point well worth remembering when Europeans condescendingly point to U.S. politics as the source of America's support for Israel -- as if their own policies emerged from some Platonic ideal of a foreign ministry or think tank. It is difficult to believe there will ever again be a constellation of European leaders as sympathetic to the Jewish state as figures like British Prime Minister Tony Blair, Italian Prime Minister Silvio Berlusconi, Spanish Prime Minister José María Aznar, Sarkozy, and -- the lone survivor among them today -- German Chancellor Angela Merkel.

The prevalence of anti-Israel views among the European left also helps explain why EU governments are increasingly critical of Israel. This is a dangerous development for Israel, but one over which it has little control. The Israelis cannot ignore Europe because of its economic importance to them: 30 percent of Israeli exports go to the European Union. So they are condemned to fighting efforts at boycotts and divestment year after year, country by country, battle by battle, and one need only chat with any Israeli ambassador in Europe to discover how difficult, and how tinged with anti-Semitism, those battles now are.

Combine all these factors, and it becomes clear that there are few reasons for Netanyahu or Abbas to take risks to revive the "peace process." If not dead, it is dormant, quiescent, moribund -- choose your synonym. Any remotely likely change will leave Abbas worse off than he is today. Whatever action Netanyahu might take would bring enormous political problems in Israel and few gains outside it. Sooner or later Israelis will have to once again make decisions about their relations with the Palestinians, but not while the outcomes of the "Arab Spring," the Iranian nuclear program, and the U.S. presidential election remain unclear.

As Israeli and Arab journalists, diplomats, and political leaders pass though Washington, I sit down with them on occasion for an hour. I watch the clock, and when the hour is up I find I can say, in meeting after meeting, "We've been talking about the Middle East for an hour, and neither of us has said the word 'Palestinian.'" That's an issue for next year, or the year after that.