A good leader can tell you that encouragement is a subtle process. One size does not fit all. Not only do different people need different incentives, and different outcomes need different incentives, but different combinations of people and outcomes need different incentives.
Knowing this, it’s interesting to watch attempts to reapply the latest hot incentive system to every problem. The X-Prize incentive system is the latest hot item. While it makes sense in some cases, it doesn’t in others.
Prize incentives work for one-off creations, not mass production. Only one (or very few) lunar landers are necessary. The software for a robotic car needs only be written once (and tuned/enhanced thereafter). But to save gasoline and lower emissions, you need hundreds of millions, or even billions of high mpg cars, not one 100 mpg car.
An X-Prize for a 100mpg car would generate some ideas. The already existing automotive X-Prize already is. But I don’t expect this type of incentive to result in a production ready, marketable car, much less actually get millions of them on the road. Reading the contest rules for the existing rules (PDF) show many of the difficulties. In order to make the incentive at all valuable, a number of bars have been raised very high. 100mpg is no easy. The real difficulty is:
“Vehicle cost at a production rate of 10,000 units per year must be within levels that the market is likely to bear.”
Honestly, depending on the judge, that’s an immensely difficult standard to meet without any other requirements. A winner must have a car that they can prove will sell at least 10,000 units per year, and do so at a profit. Assuming the car would sell somewhere between $25,000 and $75,000, that is a market between 250 and 750 million dollars per year. A $25 million dollar prize seems paltry in comparison.
So would raising the prize to a billion dollars help? Oh maybe, but what if we do? We need millions of cars, not 10,000 per year. And even if a judge decides 10,000 people would line up to buy the winner’s car, doesn’t mean they actually will. And what if someone other than one of the established automobile manufacturers win? It’s likely even with a billion dollars in pocket that they would have significant difficulty in avoiding the anti-competitive behavior of their the established manufacturers and their lobbies and actually getting to market.
Short version, if you want to get millions of more efficient cars on the road, incentive that goal directly through taxes and/or tax breaks on the individual vehicles. Raise the CAFE numbers. Or reform CAFE’s flaws. Or best yet, use a gas tax instead. All of these would produce results much sooner and much more broadly.
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