Thursday, January 10, 2008

Add 40% more cars and...pray

Today, Tata Motors unveiled the cheapest car in the world: the Tata Nano, priced at $2,500 and in dealerships by year end. It is touted as the People’s Car, and opens up the option of personal car mobility for a huge new population segment. It was unveiled to the theme music of “2001: a Space Odyssey.”

And what does this future hold? An environmental and urban disaster.

The new Nano will add enormously to the numbers of underpriced and therefore overconsumed cars on our planet. The price of the Nano, to individuals and to society, is a heck of a lot more than $2500.

We can think of the cost of a car has having three components (and yes, for those life cycle sticklers, I'm simplifying by ignoring the horrors associated with manufacturing and disposal for this post):

THE CAR: purchase, depreciation, maintenance. In the US, that is about $8k a year. While I imagine maintenance to be significantly cheaper in India than here, I am sure it will be the same unanticipated and underappreciated cost it is here. Americans currently spend 18 percent of their household budgets on their cars, how sad it is to contemplate the effects of that percent of income being taken out of the wages of low-income Indians. And because of the size of these unplanned for maintenance needs, I can also easily imagine that many of these cars will end up very poorly maintained, much like the ubiquitous auto rickshaws that flood Asian cities and are some of the dirtiest vehicles around.

CAR STORAGE: People typically park their cars for “free,” even in dense urban areas where the value of street and sidewalk space is high. This free is dramatically undervalued to the other users of this public space. Just as we saw beautiful squares in European villages being turned into parking lots, and acres and acres of land in American suburbia being paved to accommodate the one peak day a year at the mall, so too we can anticipate that every single possible space in Indian cities, in Indian poor neighborhoods, in Indian village squares, on what few sidewalks there were, will soon be filled with beautiful shiny Nanos. I can see the crowded sidewalk clearing for the Nano that pulls in and parks. The driver walks away and the crowd of pedestrians is left with less space. Gone will be places to play, places for markets, places to walk in narrow old neighborhood streets.

CAR DRIVING: Most people think that the cost of driving is just the cost of gas. In the US, this amounts to about 7% of the total costs that we account for and actually do pay. In India, one can imagine that fuel costs will feel like a heavier burden to those driving the Nanos. But the costs of gas are just a very tiny part of the whole. As we have seen from the wave of cities exploring congestion pricing (unfortunately no Indian cities). Congested roads, jammed past capacity already, will become gridlocked. The scooter that has a family of four on it, will be replaced by the safer-for-the-family Nano that occupies four times the amount of space.

What is to be done? Is it fair to deprive lower-income people the opportunity to travel more conveniently and more safely? No. But we need to make every driver pay the real costs of using a car. Those real costs include market prices for storage; road taxes high enough to adequately maintain them once they’ve been built; congestion pricing as appropriate, and carbon taxes on emissions. More details can be found in my other posting on this subject.

Once driving personal cars becomes appropriately priced, we choose to use them == rather than other modes of travel -- when they are the best value for our need.


Dannykim8379 said...


The average income is $3800 and there was 10% price increase last April for petrol So it is now $.58 opposed per liter opposed to $.51.

Considering 18% of there income is $750.00

Total population is 1.12 billion (July 2007)

250 million is below the poverty line

400 million are consider the lower class (estimated)

Consider 3 year financing for $2500. That is $69 per month or $833 per year or 21% of the average income.

Adding 7% of there for gas is $266

The middle class is 300 million (30%)

I am estimating that the upper class is 2% 2.05 million

So that is 303 million potential buyers.

But they have to sacrifice $1099 or 28% of there income tha tisn't including insurance if that is even possible.

I can see families who can barely afford the car to actually go ahead and purchase the Tata to help pay for the gas and by creating an informal car pool / private taxi system, strangers hailing drivers hitch hiking there way around the city.

Parking yes a big problem. No Doubt. are we all going to hell? probably.

well it looks like it is a pretty efficient engine and I am not familiar with the quatily of Tata motors. who are a pretty large car / truck / utility manufacturer.

Kai Carver said...

How underpriced are scooters? I've heard those two-stroke engines pollute 10 times more than cars (my nose and lungs can anecdotally confirm that). Scooters are also probably ten times less safe than cars (especially with a family of four on them!). So, counting those environment and human life costs, maybe the switch from scooter to car isn't such a disaster?

It baffles me that in Paris, scooters and motorbikes are given a free pass that underestimates how noisy, polluting, and dangerous they are. But that's just a pet peeve I guess, and not significant since there are so few scooters in comparison to cars. Though their numbers are going up.

I was amazed in Taipei at the number of scooters. There's 20 or more at every stoplight. Maybe that's the future, yay. No, let's be positive. Maybe the future is electric, speed- and acceleration-limited, sharable scooters (ok and cars, gotta love cars)?

Anonymous said...

If the car were to replace only existing cars, it would be benign: lower gas use and pollution, more yielding exterior body panels if striking a pedestrian, and lower top speed (only able to do 100 kph, just about the highest speed limit).

But Robin correctly points to the probable outcome: it will mostly replace walking, cycling, and scootering, eating up space and conviviality as it goes.

We should be exporting instead a different model of transportation: the shared car as utilitarian mover.

The fact that its purchase cost in India will represent a higher percentage of household income means it will be used even more than in developed countries.

To get enough space to let them move somewhat unfettered will bankrupt municipal goverment. The loss of revenue to transit will cause the latter to also need higher subsidies.


Robin Chase said...

Here is a link to an article a couple of people sent me offline:

Why critics of the Tata small car are barking up the wrong tree

I don't think today's status quo of rich people driving big cars should be exempt from the externalities I cite.

What I was trying to say, and perhaps need to say louder than the first time, is that we desperately need to rationalize our transportation choices by putting price tags on many more externalities than we do today. These new costs, associated with weight of vehicle (wear and tear on the road), size (relating to space consumption), tailpipe emissions (by the pound), time of day (congestion pricing) are the only ways we will slowly change what we do today, and move toward the place we want to end up: a diversity of cost-effective, space-efficient, and clean (as possible) mobility options that work for people of all incomes, ages, and family status.

As to scooters and motorbikes, they are a conundrum. If we could make them quieter, cleaner, and follow traffic rules, wouldn't we love them? Seems like that wish list would be easy to come by through simple regulation and enforcement.

camilla said...

The real issues are:
* Creating public transport alternatives to personal car journeys
* Reducing the need to travel by having mixed use development and people living closer to where they work
* Enhancing the opportunity to cycle
* Creating walking environments that are safe and attractive

Camilla Ween

The Bookshelf said...

Tata Nano is a solution to the urban disaster we are facing in INDIA today.The photo on your blog is the current scenario. Nano will replace those smoke oozing vehicles used by us. The Indian Middle income group is using these vehicles because of economically suitable to pockets. Nano will be less polluting because of euro standard in it and will carry 4-5 passengers then 2 carried by bikes and scooters.

Budd Campbell said...

A recent issue of the American Economic Assn's Journal of Economic Literature has an article you may find interesting.

Automobile Externalities and Policies

Journal of Economic Literature

Volume: 45 | Issue: 2 Cover date: June 2007 Page(s): 373-399

Author(s): Ian W. H. Parry 1, | Margaret Walls 2, | Winston Harrington 3


This paper discusses the nature, and magnitude, of externalities
associated with automobile use, including local and global pollution, oil dependence, traffic congestion and traffic accidents. It then discusses current federal policies affecting these externalities, including fuel
taxes, fuel economy and emissions standards, and alternative fuel
policies, summarizing, insofar as possible, the welfare effects of those policies. Finally, we discuss emerging pricing policies, including congestion tolls, and insurance reform, and summarize the appropriate combination of policies to address automobile externalities.

Author's Affiliations
1Resources for the Future.
2Resources for the Future.
3Resources for the Future.

Dannykim8379 said...


So I interviewed Dr. V Sumantra. Former CEO of TATA motors at the systems, cities, sustainable mobility summit at Artcenter Pasadena. I asked him why The nano? His answer: "The market in India was right...The price for mass transit, which is the obvious solution, is too expensive. The Indian government doesn't have the money to mobilize everyone with public funds...with the Nano we looked for a dignified & effective solution in right price spectrum."

Later in his presentation I saw pictures of Indian mass transit, buses were so jam packed w/ men and women partially hanging on the outside of the cabin. Dignity.

Considering pollution of a 623cc engine. His answer: "Look at the total CO2 output of all the countries in the world, India's current levels are only a fraction where the US is today...we felt it was not so much of an issue." Very telling tale of the US's position as a role model for developing countries.

But never the less He was very concerned with the future of mobility and global warming. Most likely why he spoke at the conference.