Eyeing a Future of New-Fuel Cars

The co-author of Zoom says cars and oil "are headed for a divorce" and though U.S. carmakers lag the Japanese, they're still in the game

Imagine charging your car the way you do your cell phone. Or software replacing oil in automobiles. The revolution that will come with these advances is quickly approaching, says Vijay Vaitheeswaran, a correspondent at The Economist and co-author of Zoom: The Global Race to Fuel the Car of the Future.

Unless you've been living under a rock, you know that Detroit's reign over the car industry has pretty much come to an end. You also know that the environment and being "green" is a top priority for companies with an eye on the future. And gas-guzzling cars are inefficient, costly, and produce a ton of pollution.

In Zoom, Vaitheeswaran and fellow Economist correspondent Iain Carson write that "oil is the problem and cars are the solution." The book was the authors' chance to share what's already happening in the automobile and oil industries and ponder the future. The book was recently named a finalist for the Financial Times and Goldman Sachs 2007 Business Book of the Year Award.

Vaitheeswaran is also an executive in residence at New York University's Stern School of Business, where he teaches the course, Energy & Environment: Business as Usual or Ripe for Revolution? In fact, his first set of business students previewed Zoom in the spring and gave him feedback, and the next set will have the benefit of reading the final product, says Vaitheeswaran, who started out teaching at NYU's School of Continuing Education.

Coming to this topic with healthy skepticism is what makes him able to connect with students, Vaitheeswaran says. He wants them to see the marketplace as the best friend of the environment by having environmentalists in their corner and harnessing tactics, such as emissions taxes, that can do good for shareholders and the world.

He recently spoke with BusinessWeek.com reporter Francesca Di Meglio. Here are edited excerpts of their conversation:

Do you think the corporate world's interest in being "green" is a passing trend or here to stay?
I think concerns about sustainability are among the great challenges of the 21st century, and business has to play an important role. This has both an upside and a downside for business. Those who want to be leaders of business tomorrow—even if they're not environmental themselves—better know how to handle the issues that are raised by global warming, fossil fuels, concerns about environmental pollution.

Entirely new industries are being created and will be created in the next few decades. This is part of what we argue in our book Zoom. Clean fuels are creating entirely new opportunities for entrepreneurs and innovators. You have to be aware of market potential. Equally, you need to be sure you don't get stuck in the past like the buggy whip manufacturers when internal combustion engines came along. Those guys didn't invest in the future or see a disruptive trend coming.

Simply doing a half-hearted job is no longer viable. "Greenwashing" is now pretty unacceptable. Companies that do a little bit and claim a lot for the environment are immediately denounced by activist groups and environmentalists, Web sites, and wikis. Customers are quite sophisticated now, and they have ways of making sure that companies keep their promises. This isn't just a fluffy thing to be outsourced to the marketing and PR folks. This is at the core of the CEO's job.