TCS Daily

Third World's Realities

By John Baden - February 6, 2008 12:00 AM

Will Tata Motors' Nano be the Third World's Model T Ford? Sixteen million Ts were produced during its 20-year lifespan from 1908 through 1927. It initially sold for $850, about $15,000 in today's dollars. By 1915, due to the advantages of mass production, the price dropped to $440. It had a 2.9-liter engine, ran on either gasoline or ethanol, developed 20 HP, and got 20 MPG.

By giving affordable independence and mobility to the workingman, it changed the world. Now, 100 years later, Tata Motors of India announced the Nano, a car far superior to the T, for a mere $2,500. In constant dollars, this is only one sixth the price that seduced Model T buyers. The Nano gets 50 MPG, two and a half times that of the T‹and gas is cheaper today.

Private autos involve sociology and anthropology as much as engineering and metallurgy. They are freedom machines and individuals believe access to them dramatically improves everyday life.

The evidence supporting this is compelling and remarkably consistent across time and cultures. There are a few highly congested places; NYC is one, where most individuals prefer public transportation to private vehicles. But overall, kids everywhere crave their own car and adults get them. In India, the Nano will transform the car from a "want to have" to a "gotta have." And if sold at the projected price, the number of Indians who can afford a car will increase by 65 percent.

Yes, from the Green perspective the emerging Indian middle class may want the "wrong things," but the force underlying this desire, individual advantage, is encoded in our DNA; it flows from evolutionary pressures.

Caste remains important in India and cars have divided the upper from the lower. The Nano will erode these divisions. Today less than 1% of Indians own a car. Three quarters of all vehicles are two-wheelers‹often carting four or even five people. No, the Nano is neither a Volvo nor a Suburban with airbags, but it's a huge improvement over two wheels. Safety alone should sell millions.

Cost reduction drove design. It has no radio, power steering, AC, and only one windshield wiper. The headlights don't self-level like ours‹$10 saved.
The wheel bearings are of hay-baler quality‹good up to 45 MPH even though the top speed is 65. Like today's airplanes, its body parts are glued, not welded, together.

Competitors will replicate these cost saving strategies. Even if the Nano fails, its prospect has changed the dynamics of Third World auto production.
The competitive price bar has been moved downward by half.

Consider the after-market potential! If this car takes off, India in a decade will resemble WWII California. We'll see something analogous to hopped up, tweaked, and tuned Model Ts, As (1928-31), and Bs (1932). Imagine a Nano with an engine from a BMW Dakar Scrambler.

Among its other advantages, the Nano demonstrates that richer is safer and cleaner. As Indians become richer, they too will opt for safety and ultimately higher environmental standards. Isn't this something to celebrate?

Of course not all agree. Here's a recent letter to the New York Times:

"Tata Motors of India is proud of bringing its $2,500 car to the people of India, but this is a symbol of India's backward thinking, not its progressiveness.

"The last thing India's choked roads need is more cars on themŠ.

"Instead of creating a new vision, India is content to copy mid-20th-century Western patterns of unplanned, unsustainable, highly consumptive development, even though these proved deeply flawed long ago."

The Nano and its competitors will force those concerned with global warming to confront an important fact; 15 percent of the world's population, the West and Japan, own two thirds of its vehicles. China has the same ratio of vehicles per capita as the US did in 1918, and India only half of that. This implies a huge pent up demand in nations whose economic growth, nearly 10 percent, doubles in a decade.

If one assumes that anthropocentric CO2 causes global warming, and that on balance this is harmful, policymakers face huge and unprecedented problems. The atmosphere is a giant commons in which individual and collective rationality diverges. And not all problems have acceptable solutions.


TCS Daily Archives