As I was preparing for this event, I couldn't help but think back to a time exactly 30 years ago this week. Honda was introducing a new technology that would make us the first automaker to meet the challenging standard for tailpipe emissions established by the U.S. Clean Air Act of 1970.
I had joined Honda in 1969. As a university student training to be a chemical engineer, my senior thesis was an analysis of nitrogen oxides. It was probably the first NO2 study in Japan. I did this study because I wanted to join Honda. Honda was famous in Japan as the first company involved in Formula One auto racing. And this was very exciting to me.
But just as I joined the company, Honda quit racing. Our founder, Mr. Soichiro Honda, said that the company needed to focus all of its energy on meeting the clean air challenge. A team of Honda engineers was already at work on this challenge. So we began a different kind of race - a race to find technology that could improve the quality of the air we breathe.
My first project was emissions research for a catalyst system. At that time, there was no honeycomb type design, so I used a pellet type. Unfortunately, as soon as we started driving, the metal pellets dissolved into the exhaust gas, actually making it more toxic.
I remember Mr. Honda began yelling at me. He was passionate about meeting this challenge. And he was always watching our results. After we failed again, he said: "Don't just think about a system to treat the exhaust. Think about a clean engine system."
Then we began developing the Civic CVCC engine. There was no catalytic converter. This was lean burn technology that produced fewer emissions based on the enhanced performance of the engine. And on October 11, 1972, we introduced the new CVCC technology that would enable Honda to be the first to meet the new law - and without a catalyst.
Honda had only been selling cars for a few years. So, I don't know if anyone believed we could do it. At an EPA hearing in Washington a few months later, everyone was saying it couldn't be done. But we succeeded. The EPA later certified the Honda CVCC Civic as the first car to pass the emissions requirement of the Clean Air Act. And we got an extra prize. EPA gave it the top rating for fuel economy as well. It was a very proud moment for all of us at Honda.
The key was that we made the commitment to work on this challenge by creating a new engine - not simply an add-on technology. Today, reducing emissions requires a number of strategies - including catalysts. But I think it is significant that Honda's basic strategy has continued to focus on this same clean "engine-out" design.
Thirty years later, we are still talking about technologies to make cars cleaner. Of course, today, I plan to discuss the Civic GX - our natural gas model. Based on our experience producing, selling and refining the Civic GX, we have great confidence in our ability to build a natural gas powered car that meets the needs of our customers and society. But on a global basis, the full potential for NGVs is unclear. Much depends upon social acceptance, supportive governments and the actions of automakers in each market.
Today, the environmental challenge is more important than ever. There are more cars in the world than ever before - not just in a few major markets, but in developing nations as well. This increases concern for three key issues -- tailpipe emissions, global warming and the world's limited supply of petroleum-based fuel. In partnership with all of you - the transportation industry must continue to play a leadership role in meeting this environmental challenge.
Some automakers might claim they are "fuel neutral." Thus, they will make ethanol cars, battery electric cars, and other technologies -- without giving any direction to the marketplace about what they believe in. Honda, on the other hand, is focused on providing new value to society and our customers. So, we make some tough choices. Honda's approach has always focused on those vehicle and fuel options we believe have the greatest real world potential.
The goal is not engineering prizes or newspaper headlines - we want to make environmentally friendly products that our customers want to buy.
We believe it is important to invest in the continued advancement of internal combustion engine technology. The gasoline-powered Honda Civic is an Ultra Low Emission Vehicle nationwide. Two years ago, an Accord became the first gasoline-powered car sold in California to meet the Super Ultra Low Emission Vehicle standard. And this year, we introduced a new generation of gasoline engines around the world that provide extremely low emission levels and increased fuel efficiency -- while still improving driving performance.
Toward improving energy efficiency, we have developed gas-electric hybrid vehicles that achieve ultra-high fuel economy. This includes the Civic Hybrid - the first mass-market car with hybrid power. This vehicle, too, is being introduced globally.
Developing vehicles that use sustainable energy sources is perhaps the ultimate direction. Hydrogen-powered fuel cell vehicles have great potential for the future. Honda has developed the first fuel cell electric vehicle in the world to be certified by both the EPA and the state of California. And, as we announced yesterday, we will deliver the nation's first fuel cell vehicle for commercial use to the city of Los Angeles before the end of this year. But widespread application of fuel cell technology remains many years away -- and another alternative to petroleum is natural gas.
Significantly, our effort in each of these areas is based on investing in our own technologies - through the efforts of Honda engineers. And based on our experience with all of the technology options, we believe that natural gas vehicles may be the best current solution to the environmental challenge.
Honda sells more than six hundred thousand Civics a year globally. So, why do we bother making just one-thousand units of the Civic GX? First, because our customers know what to expect - a Civic based vehicle is familiar to them. And by using existing internal combustion technology, we can work from our existing supplier base.
Also, Honda has always targeted mass-market models in order to have the greatest impact on clean air and fuel economy. The Honda Civic is one of the best-selling cars in the world. It is at the core of the Honda brand. And yet we have the confidence to introduce our latest technologies through this lineup.
Importantly, at the heart of Honda's corporate culture is the willingness and determination to take on new challenges. The development of a near zero emission NGV with the performance level to satisfy our customers was such a challenge.
Manufacturing this product is also a challenge - and an indication of our commitment. We build the Civic GX at Honda of America Manufacturing in Ohio on the same assembly line with the regular Civic lineup. When Honda launched the first NGV five years ago, I was president of this operation.
I recall how difficult it was to produce an NGV in small lot sizes on the same line with the standard Civic. There are unique parts - like the fuel tank - made by CNG parts suppliers who are here today. Some might argue that it is not worth the trouble. Yet, we continue to make NGVs on the mass production line in Ohio.
In the Civic GX, we didn't just make a car. We went all out to create new values. We began by trying to understand the market - and issues like packaging, cost and infrastructure. We were determined to create a dedicated fuel vehicle that runs only on CNG. Some companies simply adapt gasoline cars for CNG. We approached the challenge from scratch - to apply our best technology.
We advanced the technology to give it exceptional new levels of performance, durability and reliability. The first generation Civic GX was introduced in 1998. A number of these cars now have more than 100-thousand miles of service with exceptional near zero emission performance. We also gave the GX exceptional range - the second generation Civic GX now has a range of 225 miles per tank.
And the GX hits all three of our environmental targets - low emissions, high fuel economy and use of a cheap, North American based alternative fuel.
The Civic GX has the cleanest emissions of any internal combustion engine in the world. And the second generation model was the first car certified as an "Advanced Technology P-ZEV" vehicle by the California Air Resources Board.
In fact, during testing, we found that hydrocarbon emissions were so low we had to develop new techniques to measure them.
The entire Civic lineup ranks among the most fuel efficient cars in history. But the Civic GX reduces CO2 by 25 percent compared to the gasoline model. But, as I said, Honda is not just making an environmental statement. The strongest message about the Civic GX is that we didn't design it just to satisfy fleet customers, or government customers. Our dream is to sell Civic GXs to any Civic customer, and know they will be satisfied with the performance.
The Civic GX features all of the advancements found in the gasoline Civic Sedan. Performance usually suffers with small displacement engines. But we offer a great balance of torque and horsepower similar to a gasoline engine by using a high compression engine design and optimizing other engine parameters.
Our commitment is more than just technology. First, with electric vehicles and, now, with NGVs we went out in the market - gaining real world experience - to truly understand the customer of alternative fuel vehicles. We have researched the factors effecting both the purchase decision and the ownership experience.
From a technology perspective, the battery electric vehicle helped us accelerate development of both hybrid and fuel cell vehicles. From a marketing perspective, our experience with customers charging the Honda EV at their homes, helped us understand the challenges facing natural gas vehicles. As with EVs, natural gas lacks a widespread public fueling infrastructure. This makes it more challenging to establish a consumer market for NGVs.
The fuel infrastructure is an issue that must be addressed in any market interested in an alternative fuel. Many people have complained about the "chicken and egg" problem - and whether to begin with the car or the available supply of fuel. We developed the car because -- compared to any fuel type -- NGVs are clean, fuel efficient, and use a fuel that is in abundant supply. And we believe the development of an NGV will support the development of other environmental technologies.
Our commitment includes trying to develop a market for these vehicles. Two years ago, we established a partnership with Fuelmaker Corporation, one of the leading producers of fueling devices. We began working with Fuelmaker because our research indicated consumers like to fuel their vehicles at home.
Home fueling can have a huge impact on the future of NGVs. And Honda and FuelMaker now have a working prototype for an affordable home fueling appliance. Later today, in the exhibit hall, you will see the introduction of this unit. It uses natural gas from existing home gas lines, and will run on existing 110-volt AC household current. The home fueling unit will be able to "slow-fill" an NGV overnight.
Of course, our customers will not buy these technologies just because we offer them. We have tremendous challenges ahead of us. That is why it is so important for government to support innovations, like the Civic GX and the FuelMaker Home Fueling Appliance.
The CLEAR Act now before Congress is a positive example of how industry and government can work together to promote sales of vehicles with outstanding environmental performance. Honda was an early supporter of the CLEAR Act because it addresses three key barriers to advanced technology vehicles - the vehicle cost, the fuel cost, and infrastructure requirements.
We think that new concepts - such as "safe and convenient home refueling" - may create new customer values that will benefit us all. And governments can help these ideas catch on.
Toward this end, Honda is prepared to increase the availability of the Civic GX. In the past, sales targeted primarily fleet buyers, about 1,000 a year. With a small number of consumer sales. But with home fueling, we believe there is growth potential for the consumer market. And we are prepared to respond to increased demand with increased production.
Home fueling for natural gas might also serve as a pathway for fuel cells, eventually leading to an infrastructure and technology for hydrogen fuel. But even before we get to fuel cells, Honda believes NGVs offer new values for the customer and society. Thirty years ago, I remember the excitement as we prepared to introduce our new CVCC engine technology. The key to that challenge was not just the success of an engine - but learning something that we continue to apply to our vehicles.
In the same way, what we do now with NGVs - with your clean fuel, with the technology and with our marketing efforts - will help shape what we achieve later for the environment and the customer. At Honda, we consider this our responsibility. And we are optimistic about the future.
Thank you for your attention.