The Partnership for a New Generation of Vehicles: Status and Issues

The Partnership for a New Generation of Vehicles: Status and Issues

Order Code RS20852
Updated January 22, 2003
CRS Report for Congress
Received through the CRS Web
The Partnership for a New Generation of
Vehicles: Status and Issues
name redacted
Environmental Policy Analyst
Resources, Science, and Industry Division
Summary
The Partnership for a New Generation of Vehicles (PNGV) was a cooperative
research program between the federal government and the “big three” American
automakers, Ford, DaimlerChrysler, and General Motors. It was financed by private
contributions and the re-channeling of research funds for ongoing federal programs.
Partners agreed to share research responsibilities and achievements. The goals of the
program were to improve domestic manufacturing capabilities and to develop prototypes
of a mid-sized family car with three times the fuel economy of a comparable 1994
model. All three manufacturers developed concept cars, but there were problems with
the development of production prototypes. The partnership was criticized for several
reasons, and in the second session of the 106th Congress, the House of Representatives
voted to eliminate funding for the program, although this funding was later reinstated.
Under the George W. Bush Administration, the program was cancelled and funding for
this research was redirected to a new program, the “Freedom CAR” program, which will
focus on fuel cell vehicles and the related support infrastructure. This report provides
background information on the PNGV program and discusses the program’s
accomplishments. In addition, it discusses some of the key issues which surrounded the
program.
Introduction
On September 29, 1993, the Clinton Administration announced the Partnership for
a New Generation of Vehicles (PNGV). The program was created as a public/private
partnership between the federal government and the major domestic automakers to
improve domestic automobile manufacturing capabilities and significantly increase the
fuel efficiency of family cars, while maintaining performance, safety and cost. On the
federal level, the program simply coordinated previously authorized research among
agencies. Therefore, there was no specific authorizing legislation or executive order that
created PNGV. Instead, the basis for the program was a Declaration of Intent signed by
the auto manufacturers and then-President Clinton. The partnership was formed to
promote automobile research that would not be otherwise undertaken by American
manufacturers, and therefore promote energy security.
Congressional Research Service ˜ The Library of Congress

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Participants
The Department of Commerce (DOC) was the lead agency for the program, and
coordinated partnership-related research among federal agencies. Other government
participants included the Departments of Energy (DOE), and Transportation (DOT), as
well as the Environmental Protection Agency (EPA), and the National Science
Foundation (NSF).1 These agencies were partnered with the United States Council on
Automotive Research (USCAR), which represents DaimlerChrysler AG, Ford Motor Co.,
and General Motors (GM) Corp. Other partners included industrial suppliers,
universities, commercial research and development institutions, and entrepreneurs.2
Funding
There was no direct federal funding for the partnership per se. The combined
research budgets for PNGV-related activities at five agencies made up the funding for the
Federal participation in the PNGV.3 Federal programs included research on technologies
such as advanced engines, hybrid systems, fuel cells, emission controls, and lightweight
materials. The federal government spent approximately $250 million per year for
research related to PNGV, more than half of this through DOE’s energy conservation
budget. On many projects, industry shared research costs with the federal government.
In other cases, research was conducted solely by the industry. According to industry
estimates, the auto manufacturers spent approximately $800 million annually on PNGV
and related research.4
Goals
According to the PNGV Program Plan, the program had three key goals:5 improving
manufacturing, implementing new technologies, and developing a “supercar” with three
times the fuel economy of a baseline passenger car. However, the third goal was often
the only one mentioned in discussions of PNGV. This was because the third goal could
be easily measured, while the first two could not. This focus on goal three led to debate
over the accomplishments and effectiveness of the program.
The first goal of PNGV was to “significantly improve national competitiveness in
manufacturing.” This included minimizing production costs and lead times, improving
productivity, reducing environmental impacts, and improving product quality.
1 Other agencies are also considered partners in the program, but federal funding for PNGV only
comes from these five entities.
2 Partnership for a New Generation of Vehicles (PNGV), PNGV Program Plan. November 29,
1995.
3 U.S. General Accounting Office (GAO), Results of U.S.-Industry Partnership to Develop a New
Generation of Vehicles. March 2000.
4 Emilia Askari, “At Last! The Supercars Arrive,” Detroit Free Press. January 6, 2000.
5 PNGV, PNGV Program Plan. November 29, 1995

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The second goal of the partnership was to “implement commercially viable
innovations from ongoing research in conventional vehicles,” including development of
technologies that improve fuel economy, reduce emissions, and maintain safety. Ideally,
these technologies would then be incorporated in conventional production vehicles.
The third goal of PNGV was to develop a “supercar.” Specifically, the program
planned to increase fuel efficiency to up to three times the average of 1994 family
sedans–which was 26.6 miles per gallon–without reducing performance, safety, or
affordability. The baseline comparison vehicles were the Chrysler Concorde, Ford
Taurus, and GM Lumina. Key performance parameters for goal 3 are shown in Table 1.
Table 1. Performance Parameters for the New Generation of
Vehicles6
Vehicle Attributes
Parameters
Fuel Economy
80 miles per gallon
Number of Passengers
up to 6
Operating Life
100,000 miles (minimum)
Emissions
meet or exceed EPA Tier 2 standards
Recyclability
80 percent
Safety
Meet Federal Motor Vehicle Safety Standards
Utility, Comfort and Ride Handling
Equivalent to current vehicles
Purchase & Operating Cost
Equivalent when adjusted for economics
To guide work on goal 3, three major milestones were identified:
1.
By 1997, the key technologies with the greatest likelihood of meeting the
performance parameters were identified. To meet the goal, manufacturers planned
to use diesel/electric hybrid engines. These drive systems combine an advanced
diesel-powered engine with an electric motor. They tend to be more efficient than
conventional vehicles and thus have higher fuel economy.7
2.
By 2000, each manufacturer was to develop a “concept car” that would be used to
evaluate the technical feasibility of the components when integrated for the first
time.
3.
By 2004, all three manufacturers were to develop a “production prototype” which
would demonstrate manufacturing feasibility and meet the performance parameters
6 From Table ES-1, PNGV, Program Plan. November 29, 1995. p. ES-3.
7 For more information on hybrid vehicles, see CRS Report RL30484, Advanced Vehicle
Technologies: Energy, Environment, and Development Issues.

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of goal three.8 After a production prototype is presented, it is usually another three
to five years before the vehicle is mass-produced
Accomplishments
According to the National Academy of Sciences, PNGV made significant progress
in achieving the first goal of the program. Accomplishments included process
improvements in producing aluminum sheets and carbon-fiber composites. In addition,
manufacturers made advances in cost reduction and improved recycling of composite
materials.9 However, the General Accounting Office (GAO) questions whether it is
possible at this time to assess the potential effects of PNGV on U.S. manufacturing
competitiveness.10
Both NAS and GAO agreed that progress was made on the second goal. All three
manufacturers have reported an increase in the use of aluminum and other lightweight
materials, as well as improved combustion technologies, in their production vehicles.
In addition, significant progress was made on the third goal. As of February 2000,
all three manufacturers had introduced concept cars for the program. These vehicles were
the DaimlerChrysler Concept ESX3, the Ford Prodigy, and the GM Precept.11 All three
vehicles achieved 70 miles per gallon or more, through the use of hybrid drivetrains,
lightweight materials, and other efficiency improvements. In addition, all three
manufacturers expected to introduce production prototypes by 2004.12 However, because
of cost constraints and other technical issues, mass-production of these vehicles seemed
unlikely. High costs forced Toyota and Honda, which were already selling small gasoline
hybrid vehicles in the U.S. market, to heavily subsidize their vehicles to make them
affordable.
Issues
Some key issues were raised concerning PNGV. The first is that although the
program’s purpose was to develop highly-efficient vehicles, there was no federal
requirement that these vehicles ever be produced and sold. Environmental groups were
concerned that the vehicles would therefore never be produced. In addition, they were
concerned that the use of diesel engines would lead to higher pollution, and pollution
with potentially more dangerous health effects, such as fine particulate matter.13 Another
issue was that although the other parameters of the program may be met, it was unlikely
8 PNGV, Program Plan. November 29, 1995. p. 7-1.
9 National Academy of Sciences, Review of the Research Program of the Partnership for a New
Generation of Vehicles: Sixth Report. 2000.
10 GAO, Results of U.S.-Industry Partnership to Develop a New Generation of Vehicles. p. 10.
11 Secretary of Commerce William M. Daley, Statement on the Unveiling of the Partnership for
a New Generation of Vehicles' Concept Cars. January 11, 2000; Catherine Strong,
“DaimlerChrysler's Hybrid is Affordable,” Detroit Free Press. February 23, 2000.
12 GAO, Results of U.S.-Industry Partnership to Develop a New Generation of Vehicles. p. 32.
13 See CRS Report RL30737, Diesel Fuel and Engines: An Analysis of EPA’s New Regulations.

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that the vehicles could be as affordable as conventional vehicles if they were produced.
A final issue was that some questioned whether the federal government should be
supporting such research at all.
Mass Production Questions. Although it was a goal of the program for each
manufacturer to develop a prototype, manufacturers were not required to mass-produce
the vehicles. Therefore, environmental groups questioned the value of the program.
Further, they argued that PNGV was used to forestall any increase in federally-mandated
Corporate Average Fuel Economy (CAFE) standards.14,15 However, as was stated above,
some new technologies developed through PNGV are being used in conventional
vehicles, indicating that manufacturers saw opportunities in the technology.
Use of Diesel Engines. Another key concern with PNGV was the planned use
of diesel engines in the hybrid designs. Some critics argued that even advanced diesel
engines would not meet the new Tier 2 emissions standards,16 and that even if these
vehicles were produced, they would be illegal to drive under Clean Air Act limits on
particulate matter.17 For this reason, a considerable portion of PNGV funding was
focused on reducing emissions from the diesel hybrid engine. According to some critics,
the program should have focused on cleaner technologies, such as fuel cells.18
High Cost. The potential cost of these vehicles was also a key issue. According
to GM, the use of advanced lightweight materials in its Precept made it too expensive for
production.19 In order to control costs, DaimlerChrysler chose to develop a concept that
had lower fuel economy than the target (72 mpg instead of 80). Nonetheless, the ESX3
was still approximately $7,500 more expensive than the Intrepid, the manufacturer’s
family sedan. However, according to DaimlerChrysler, this was an improvement from
its earlier model, the ESX2, which would have cost $15,000 more.20 It remained to be
seen whether consumers were willing to pay such a premium for these vehicles, but
successes among smaller hybrids like the Honda Insight and the Toyota Prius were
promising. Despite an incremental purchase price of approximately $7,000 for the Insight
as compared to a conventional Civic hatchback, Honda expects to completely sell its
14 Union of Concerned Scientists (UCS), “‘Supercar’ Program’s Mid-Course Report Card: ‘D’
for Diesel,” News Release. September 24, 1998.
15 For given model year, the average fuel economy of automobiles that a manufacturer sells must
be 27.5 miles per gallon or greater. For more information on CAFE standards, see CRS Issue
Brief IB90122, Automobile and Light Truck Fuel Economy: Is CAFE up to Standards?
16 On February 10, 2000, EPA finalized stricter rules for vehicle emissions that will take effect
in model year 2004. For more information on Tier 2 emissions standards, see CRS Report
RS20247, EPA’s Tier 2 Emissions Standards for New Motor Vehicles: A Fact Sheet.
17 David Malakoff and Dennis Normile, “U.S. Supercars: Around the Corner or Running on
Empty?” Science. July 30, 1999. p. 680-682.
18 UCS, “Gore and Carmakers Tout Flawed ‘Supercar’ Program,” News Release. March 30, 2000.
19 “GM Unveils Concept Car that Gets 80 Miles a Gallon,” Reuters. January 1, 2000.
20 Catherine Strong, “DaimlerChrysler’s Hybrid is Affordable,” Associated Press. February 23,
2000.

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production runs for 2001 and 2002.21 However, the premium would have been
considerably higher without subsidies from the manufacturers to promote sales.
What is the Government’s Proper Role? Another issue that was raised was
whether the federal government should support this research at all, and that the program
amounted to “corporate welfare.” According to the Cato Institute, “taxpayers should not
be forced to help private companies develop profitable new products in the first place.”22
This concern contributed to a June 14, 2000 House of Representatives vote to eliminate
funding for PNGV in the FY 2001 appropriations bill (P.L. 106-291), and to use the funds
for debt reduction. In the final conference, PNGV funding was reinstated. Because
consumers generally do not make fuel economy a high priority, supporters of PNGV
argued that it may be necessary for the federal government to intervene to limit petroleum
dependence. Further, according to industry estimates, auto manufacturers spent three
times as much as the government per year on PNGV research. A related issue is the
question of whether the program “picked winners” through its selective technology focus.
Critics argued that too much funding was being directed at the technologies chosen for
implementation in goal 3 of the partnership. PNGV supporters countered that research
was continuing on topics unrelated to goal 3 (the supercar), but which may have helped
the partnership meet goals 1 and 2 (improved domestic competitiveness, and
implementation of new technologies in conventional vehicles, respectively). These
technologies included research on fuel cells and other advanced technologies. Other
concerns that were raised at the beginning of the partnership centered on questions of anti-
trust and intellectual property rights.
Current PNGV Status
On January 8, 2002, the George W. Bush Administration announced that the PNGV
program would be replaced with a new initiative, the “Freedom Car” program.23 This new
program will still be a partnership between USCAR and the federal government, but with
DOE taking the lead role. While hybrid vehicle research will continue,24 the program will
focus on the research and development of fuel cell vehicles, and the infrastructure
necessary to support them.25
21 James R. Healey, “High-Profile Drivers Crave Hybrids,” USA Today. March 14, 2001. p. B1.
22 Dean Stansel and Stephen Moore, Cato Institute, Federal Aid to Dependent Corporations:
Clinton and Congress Fail to Eliminate Business Subsidies. May 1, 1997.
23 Neela Banerjee, “U.S. Ends Car Plan on Gas Efficiency; Looks to Fuel Cells,” The New York
Times. January 9, 2002. p. A1.
24 For FY03, the Administration’s budget request to congress reallocates PNGV/Freedom CAR-
related research funds among various research objectives, but does not significantly change the
overall funding level.
25 For information on fuel cells, see CRS Report RL30484, Advanced Vehicle Technologies:
Energy, Environment, and Development Issues.

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