Tuesday, April 1, 2008

Progressive underwrites fuel-efficiency prize

Progressive Insurance announced today that it is underwriting a $10 million prize to the team that builds the best 100 miles-per-gallon car.

Best known for awarding $10 million to the first team that launched a private spaceship into orbit in 2004, the X-Prize Foundation plans to hold a series of road tests and races in 2009 and 2010 to determine the winner.

Chuck Jarrett, Progressive's vice president and chief legal officer, said the company will spend $12.5 million to support the Progressive Automotive X-Prize, $10 million for the prize itself and another $2.5 million to help support the races and the foundation.

Jarrett said inventor Dean Kamen, a member of the X-Prize Foundation's Board of Trustees, approached Progressive about sponsoring the contest last year. Progressive was the first company to offer insurance for Kamen's Segway scooters.

"It's the most unique opportunity that I've seen that could affect peoples' lives and change the world," Jarrett said.

Also, putting Progressive's name on an effort to dramatically improve fuel economy shouldn't hurt its corporate image, he added.

With gasoline prices rising, fuel economy is on the minds of lots of consumers. Being seen as a company trying to help find solutions to those problems should benefit Progressive.

In addition, the X-Prize Foundation hopes to conduct its races in major cities during 2009, and as the title sponsor, Progressive's name will be plastered on signs, posters and T-shirts in those locations.

"There's a lot of positives for us as a corporation to be the title sponsor about this," Jarrett said.

Unlike the space-race X-Prize, the Automotive contest will be able to take place in the full view of the public, X-Prize Executive Director Don Foley said in January during an interview at the North American International Auto Show in Detroit.

"We want middle America to see these races and these vehicles to see that they work, that they're something to consider," Foley said.

He added that the foundation would love to have one of the race legs in Cleveland.

"It's one thing to put a car in the desert and put a 90-pound guy in it with a solar panel and no brakes," Foley said. The foundation wants to test vehicles that can stand up to snowy streets in Cleveland, potholes in Detroit and steep inclines in Denver.

While many of the cars that will compete will feature unusual engines and probably some combination of electrical and gasoline power, Foley said they all must be marketable four-seat cars.

That means they must be "reasonably" priced, a vague term that eliminates $1 million hydrogen-powered cars. They must have modern amenities such as CD players and air conditioning. And they must meet all U.S. safety and emissions standards.

"Nobody's telling us it can't be done. Nobody says the bar is too high," Foley said.

Over the next year, the foundation will choose its race cities and accept applications from teams that want to compete. About 50 teams have already signed up.

An experimental high-tech vehicle is on display at the New York International Auto Show to promote the Progressive Automotive X-Prize. Progressive announced Thursday that it will fund the $10 million prize to the team that builds the best car capable of 100 miles per gallon.


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