I have a new Salon article, “Is Detroit worth saving?” It is built around my Monday piece here, but I have expanded on the sad story of the Big Three Medium Two walking away from the development of hybrid gas-electric vehicles in the 1990s.
I’ve been asked why I think they did give up on hybrids. The answer, I believe, is a very cynical one. If they had successfully demonstrated hybrids were practical, heck even desirable, cars, as Toyota later did, then they would no longer be able to lobby against fuel economy standards by claiming CAFE would drive Americans into smaller, foreign-made, fuel-efficient cars. Ironically and inevitably, of course, $4 gasoline did that anyway.
But Detroit has not only been suicidally lobbying against its own inescapable future of highly fuel-efficient cars — it has been lobbying against the future of all Americans who want to end our oil addiction, and against the future of all humans who want to preserve the health and well-being of our planet for future generations.
If you want to take a step to help ensure that the bailout has real restrictions and doesn’t just shovel money to greedy, myopic companies who will continue their four-year-long assault on regulations of CO2 tailpipe emissions by California and other states, then go to http://www.40mpg.org/bailout to send an email urging that the bailout restrictions be supported by their members of Congress and the transition team of President-Elect Barack Obama.
The press release of the new group explains what is at stake:
A total of 15 states have adopted regulations requiring automobile manufacturers to reduce significantly the greenhouse gas emissions of their cars and lights trucks. Under the uniform set of regulations adopted by these states, automobile manufacturers must reduce new vehicle greenhouse gas emissions by thirty percent over 2002 levels. The reductions are phased in over model years 2009 through 2016.
The regulations now under legal assault are all authorized by the “Pavley law,” a California state law enacted in 2002. The Pavley law authorizes the California Air Resources Board to regulate greenhouse gases from passenger vehicles. Under the federal Clean Air Act, California is entitled to set more stringent pollution regulations on motor vehicles than the federal Environmental Protection Agency so long as California receives a waiver from EPA. The federal law also allows any other state to adopt California’s more stringent motor vehicle regulations. This regime ensures that there can only be two kinds of cars: federal cars and California cars, thus easing the burden on manufacturers.
The U.S. automobile industry has been waging a four-year legal battle against state emission standards. They prevailed upon the Bush EPA to deny California a Clean Air Act waiver in a decision that was contradicted by the analysis of EPA’s own staff. This denial will be reversed one way or another: California has sued EPA to obtain the waiver and, like other states, is faring well in court. President-Elect Obama also has promised to reverse the EPA waiver denial.
California has adopted regulations under the Pavley law requiring significantly lower greenhouse gas emissions from new cars. At total of 14 other states have now adopted a set of identical rules for their states. It is estimated that 45 percent of the U.S. population lives in these 15 states. In 2016, when the regulations are fully phased in, the state regulations will avoid over 22 million metric tons of greenhouse gases per year. A next phase of regulations is already in the works that will increase this savings to more than 36 million metric tons per year by 2020. These greenhouse gas emissions reductions are over and above the incidental greenhouse gas benefits expected from fuel economy law enacted last year requiring 35 mpg by 2020.
Make no mistake. The Pavley targets would be tough for the auto companies to met, primarily because they have fought the Law for four years rather than aggressively developing the necessary hybrid vehicles to meet it across their model line. So if the Medium Two actually use the $25 billion Congress authorized in September for retooling their factories to make fuel-efficient cars, then that money will be going to good use.
The combination of much higher gasoline prices and growing desperation about global warming mean the cars that will be selling here and around the globe in 2015 and beyond will be much more fuel-efficient than the existing fleet.
If the car companies won’t build the cars themselves and won’t be pushed by Congress, then bankruptcy may be the best alternative. After all, the potential risks the bankruptcy of Detroit poses pale in comparison with the all-but-certain risks of continuing on our path of ever greater oil consumption and ever greater greenhouse gas emissions.
Previous in TP Climate Progress
Language Intelligence: Lessons on persuasion from Jesus, Shakespeare, Lincoln, and Lady Gaga
Joe, I wouldn’t say mean things unless I loved you. Your hydrogen book was excellent.
But I have to disagree with your article.
First, wasn’t the hybrid effort in the 90s being driven by zero emission concerns — not fuel efficiency. Yes, Detroit walked away. That is because people wanted to buy giant SUVs. There is a reason Toyota, Honda, Mercedes-Benz, BMW, Porsche, Audi and VW and Nissan all got into the giant SUV game as well.
[JR: No. The hybrid effort was strictly a fuel-economy effort, to build an 80-mpg family car. The giant SUV market was never as large as the entire car market and in any case hybrid technology can be applied to any model. And if you're saying that Detroit couldn't build a hybrid as good as the Prius, then you are merely describing an industry doomed to bankruptcy.]
Second, hybrids have been a failure — except for the Prius — but the Prius is a cult car. Mostly being bought for image by a small segment. Hybrids work if $4 gasoline, but as we’ve seen $4 gasoline tends to put the economy into slowdown.
[JR: The Prius is not a cult car. It is the only hybrid that really delivered no compromise energy efficiency because of a variety of superlative design features. It is not being bought for image -- any more than pretty much every car on the road is bought for image. And if you're saying $4 gasoline is somehow the highest price we're going to see because it always drive the economy into a recession, then I just think you're dead wrong. It is a once in a century credit crisis that has created the global recession that is driving down oil prices, probably for the last time any of us will live to see.]
Third, the DOE $25 billion package is doing exactly what you asking it to — forcing improvements in CAFE. That is such a flawed standard that I don’t want to start. And the problem isn’t BUILDING the cars — it is on the demand side. How do you make consumer want smaller cars? Higher gasoline (cough, tax) is one way. Hybrid tax credits is another. Taxes on larger engine (japan and china) also works. Extending the gas guzzler taxes to a V6s might also help. Taxing weight of cars (anything over 3000) is another idea. Some of these ideas don’t work when the problem is NOBODY is buying cars right now.
[JR: I can't agree with you here. People desperately want fuel-efficient cars even after two decades of nonstop advertising by Detroit pushing the phony benefits of SUVs, pushing the myth that SUVs are safer, when in fact they are more dangerous. If Detroit had developed hybrid technology back in the 1990s, they would have perfected by now like Toyota has, and be able to introduce it in multiple models, and ultimately bring down the incremental cost to under $2000, as Toyota and Honda expect to over the next several years, guaranteeing them larger market share once gas prices go back to four dollars and above. You are certainly correct that the credit crunch -- not gas prices -- has created the problem right now for car sales. But most people I talk to understand gasoline prices will go back up when the economy recovers, so good hybrids are going to be big market winners.]
But you’re avoiding the main point, which is right now GM/Ford don’t qualify for the $25 billion in DOE money because of their financial stability. Obama won this election because of a lot of blue collar workers voted for him in Michigan, Ohio and PA. Throwing them out of work isn’t change they need.
[JR: "Throwing them out of work"? You have that backwards. The government wouldn't be throwing them out of work -- unless you were talking about the conservative politicians who pushed through banking and other deregulation that brought us this credit crunch. The problem with your argument is that every single industry in the country can make that pitch. What about Circuit City and Best Buy? What about the steel industry? But in any case I'm not opposed to the bail out -- I'm just opposed to giving money to the same management team that 1) brought the auto industry to its knees and 2) spends millions lobbying against regulations that could have saved the industry.
You seem to be suggesting that we simply hand over the automakers whatever amount of money they say they need with no strings attached. Been there, done that.]
One of my beefs about the American car companies is their resistance to change. Knowing about oil future better than the average Joe on the streets I believe they have sseriously missed their chance for incremental change. Which is the smartest business route to take. Our smartest and brightest have myopia when it comes to looking into the future.
I would like every employee to be able to keep their job at the lower levels, but that would be resisting change also. A lot of workers will be lossing their jobs anyway no matter which it goes. It just needs to happen.
As far as the free market system, we as a country don’t want free market results in this case. Socialism to the rescue. But I’m not interested in the old thinking that got us here. I think we should help shape the car companies to be stronger in the future. I believe stronger means smarter and more willing to change.
The first to go should be the poor decision making and myopia.
One of my beefs about the American car companies is their resistance to change. Knowing about oil future better than the average Joe on the streets I believe they have seriously missed their chance for incremental change. Which is the smartest business route to take. Our smartest and brightest have myopia when it comes to looking into the future.
I would like every employee to be able to keep their job at the lower levels, but that would be resisting change also. A lot of workers will be lossing their jobs anyway no matter which way it goes. It just needs to happen.
As far as the free market system, we as a country don’t want free market results in this case. Socialism to the rescue. But I’m not interested in the old thinking that got us here. I think we should help shape the car companies to be stronger in the future. I believe stronger means smarter and more willing to change.
The first to go should be the poor decision making and myopia.
Joe, on my point #1, you were there, so you should know!
On point 2, the Prius IS a cult car (partly for reasons you identify, party because it sticks out and is effective branding). And $4 gas does trigger recessions (not only because of consumer gas costs, but commodity inflation). If you don’t understand that, you don’t know how
[JR: You are missing the point. The question is not whether $4 gas triggers a U.S. slowdown (as long as everyone keeps driving incredibly inefficient vehicles), it probably does. The question is whether it drives a severe global recession, and it probably does not do that, since much of the developing world is shielded from the full price rise and most of the rest of the developed world pays for such higher gasoline prices to start with that the incremental increase is small. But your underlying argument makes no sense. You seem to be saying that the country is shielded from much higher gasoline prices, say $6, because will always go into a recession at $4. I hope you realize how bizarre that argument is and ultimately self-defeating even if it were true which isn't. In any case, it doesn't argue against pushing Detroit into fuel-efficient vehicles. It argues for doing that.]
On my point 3, actually we’re in agreement: I have no sympathy for GM top management. Ford is OK. But I am all for throwing them out (and taking away their past pay). Bankruptcy has consequences. Chrysler is gone and can’t be saved at this point (no products)
However, you are reflecting a Beltway midatlantic mentality when you want to let Detroit die. GM/Ford — and their various suppliers — are much much larger than Circuit City. Letting Ford and GM die will push the unemployment rate up to 10% and cost the US taxpayers billions in pension/health care costs. It will turn a recession into a depression for Michigan and the midwest.
[JR: Again, where did I ever say I want to let Detroit die. I want to save Detroit in spite of itself. But you have bought into the notion that failing to provide even more money to the car companies will actually save jobs. There is no proof of that whatsoever, and indeed the recent Washington Post business column I cited in my previous column makes clear two things. First, Detroit's mismanagement makes further job loss in the hundreds of thousands of inevitable no matter what the government does. Second, bankruptcy may have its benefits for the companies.]
There aren’t any good answers right now, but the $25 billion DOE program is not a bad one. The real issue is how to get people to buy cars right now. And you’re dancing around the real issue, which is right now the car companies don’t qualify for the DOE loan program.
[JR: I have stated twice now that accelerating the $25 billion is fine with me -- with strings.]
Joe, thanks for the comments and argument.
My point about pricing — which I didn’t finish — is just that the consumer can tolerate $4 gasoline at the pump — but the economy can’t because of structural oil costs. Fertilizers goes up, trucking goes up, currency goes does down, etc. I’ve run the numbers — I could easily tolerate gasoline at $20 a gallon, but as I’ve said before would be in a depression long before that happens. It is one of your most powerful arguments about why we need to move off gasoline.
The reason I feel about the issue is after being in Ohio campaigning for the Democrats, the most powerful argument I found for changing people’s mind is asking who do you want in the White House when GM goes under? Yes, there is self interest there. And yes, GM is playing this to create a crisis (they should sell themselves to the Koreans). But bankruptcy isn’t going to help these workers. An UAW guy makes about 45K a year — and that doesn’t include taxes and forced furloughs. Letting GM void that contract under bankruptcy isn’t going to help. Firing the bosses — while delightful — isn’t going to solve them either.
Detroit is building the wrong cars at a bad time to be building such. How much money have they spent building, marketing, and lobbying for…the wrong cars in just the last year or 2?
What happens if they get $25bil? They hang on til next fall, hoping and praying credit magically re-inflates, all the while building and marketing and lobbying for the wrong cars. How do we not end up right back here next year? Talk about recyling…everytime I drive the the local GMC truck dealership I want to scream “Scrap them and start over!”
Is there a way…a fair and capitalistic way to take the good ideas from say Aptera, or Phoenix Motor Cars and give them access to the Big 3/Medium 2 methods and facilities of production? I know these changes are complicated and difficult. But we have few good choices.
I advocate giving Ford to Honda, GM to KIA, and Chrysler to Tata.
It would be like a present for them, sort of like an unwanted orange in a Christmas sock.
While it is a bad idea to rescue Ford and GM, Obama will do it anyway. He is too much in the pockets of the unions not to. And of course the unions are too greedy and myopic to help make the companies work.
If you want to know why American car companies are failing, go to a far left wing town like Boulder, CO. You won’t find anyone driving American there. And the reason that they aren’t has nothing to do with fuel economy. They are driving the big BMWs, Audis, Mercedes, Toyotas, etc. that were made for the American economy and the American taste. Driving foreign is a status symbol for the wealthy left, and so it doesn’t matter what Ford and GM produce. They will not buy it. They also won’t buy some piece of junk that is designed by Nancy Pelosi and Harry Reed. So any money that the government gives to Ford and GM will simply be pissed down the drain. But Obama will piss that money down the drain because the people that voted for him (unions) will demand it. Of course Pelosi and Reed will make a big show of cutting executive compensation, but it won’t effect the final disaster one bit.
What rubbish. The auto unions don’t have enough power to occupy the head of one of Michelle Obama’s needles.
McCain left his election watch party and drove himself home – in a Toyota SUV.
The Secret Service would never allow Obama to do such a thing, but he owns a Ford SUV hybrid.
“What rubbish. The auto unions don’t have enough power to occupy the head of one of Michelle Obama’s needles.
”
I said that he was in the pocket of the Unions, not just the Auto Unions. And there are enough union members to swing an election. All those Unions will be watching how he takes care of the Auto Unions.
“McCain left his election watch party and drove himself home – in a Toyota SUV.”
How is that relevant, exactly? Are you saying that McCain is careful with the tax payers money since he is driving himself.
“The Secret Service would never allow Obama to do such a thing, but he owns a Ford SUV hybrid.”
Wow, an SUV hybrid. That’s good for about 20 mpg.
If American car buyers think that the Prius is a cult car, we are doomed. We might as well move to higher elevations and build to withstand our deserved fate. We might not be popular with much of the world which we are dragging along, so we had better go to “fortress America” and develop the weapons necessary to hold our higher ground.
I think of the Prius as the reference which Detroit should at least be able to copy effectively, and I do not insist that Detroit’s products have to look like the Prius, just that they match the performance of the Prius machinery and come close to its aerodynamic performance.
The discouraging thing is that it is possible to build a personal car that is far more efficient than the Prius. But wide public acceptance is not something I expect to see in the near future, since it has to look very different from present cars. Click my name to see my example design. The Aptera could achieve similar mileage. From Europe there is also the Loremo. If our car development tended toward these examples, we might end up with real solutions to global warming. And the cost would be minimal.
It is quite obvious that both green advocates and black (oil and coal) advocates are no where close to be willing to make serious changes. My market studies make it clear that we are not even ready to give up our use of cars as status symbols.
At least we should try to not make things go hard in reverse. This will come about if Detroit is allowed to pass off huge and inefficient SUVs and such, as well as high performance cars, as fuel efficient vehicles, just because there is some kind of electric equipment or hybrid label attached. To avoid this, we need to insist that honest standards be applied. By honest I mean that there must be full recognition of the heat energy used to make electricity. There must no longer be mileage quotes in mpg that do not recognize the electric energy correctly. And no more “zero emissions” labels can be tolerated for electric vehicle operations. If we want to pretend we are a sophisticated nation, we have to know better than this.
Charlie at 11:24,
Just a small quibble. The GM/UAW base wage is $28.00 per hour. $58,240 p.a. vs. “45k”. Shift differentials, overtime etc. brings it to $39 and change.
See:
Wages and labor costs – UAW Bargaining 2007
A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor. Between 2003 and 2006, the wages of a typical UAW …
http://www.uaw.org/barg/07fact/fact02.php
Add in the $33+ in benefits and you have a situation that is unsustainable.
Goldman Sachs has set aside $6.8 billion for bonuses, and Morgan Stanley, $6.4 billion. A bailout means happy executives. So, why bail out GM and Ford? Because “Merika wants happy car executives. That was an easy one, Professor Joe.
H. Hill wrote “Driving foreign is a status symbol for the wealthy left….”
Really? I suspect that driving really good cars is a status symbol. Driving trendy cars is a status symbol. As much as some would like to make the “left” out to be anti-American (that appears to be the sub-text here), one could probably come up with other motivations for buying non-American cars, especially in the luxury class. At least, members of the reality-based community could. Of course, he ignored this little throw-away line of his when confronted with anecdotal evidence that taste for foreign cars isn’t really a “left” thing.
Joe,
I was a big fan of the Partnership for a New Generation of Vehicles and for the $1 Billion the government spent GM had a car that got 80 mpg, Ford and Chrysler produced two cars that got 72 mpg. Now having said that, the cars used light weight carbon composite materials and aluminum for the body and the frame of the car. This raised the price of the cars. I have heard that the cost of the cars would be $80,000 per car.
My question is if Detroit had produced the cars as the concepts were made wouldn’t the Detroit 2½ had trouble selling them at $80,000 a copy?
If you actually wanted to enjoy driving, your only choice for many years was a foreign car. Same for gas mileage and in most cases, reliability. Perhaps it’s “left wing” to enjoy driving and want good gas mileage and reliability?
When initial pollution standards were introduced, Detroit responded by coming up the the worst kluges they could dream up. My theory was they wanted people to scream and get law changed. Meanwhile, Honda said, “How can we make the engine less polluting AND give better gas mileage and performance?” That was over 30 years ago.
There are now some American cars I’d consider but by and large you could paraphrase Obama’s “It’s like these guys take pride in being ignorant” and change “being ignorant” to; “producing gas guzzling polluters”.
So yes, off with their heads and get someone competent to run the companies. Someone who accepts the fact of global warming for starters.
A definition of chutzpah:
“Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said he would not support legislation to aid the auto companies and seemed prepared to let one or all of them collapse.”
“The financial straits that the Big Three find themselves in is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force,” Mr. Shelby said in a statement. “The financial situation facing the Big Three is not a national problem but their problem.”
NYT, 2008/11/14
GM workers-new hires make $14.00 per hour and no paid benefits. The old days are gone. Stop talking about all this big money for workers. it’s over. As older workers retire or are laid off…GM wages will go down down. I don’t know why people think it’s a good thing to have America’s standard of living reduced but whatever.
A word on Sen. Shelby. He is also the guy who worked with Air Bus to bring about 2000 jobs to Alabama in a new fighter plane being built and let the French keep the rest of the billion dollars involved. Sen. Shelby is a moron.
The auto industry can become enormously successful, creating hundreds of thousands of new jobs by leapfrogging the competition technologically. That can be done by developing and switching to the turbine engine. This is discussed in http://www.economic-plan.com.
If we all drove a Prius, you better set aside a large area for a toxic waste site for all of those nickel batteries that cannot be recycled. GM, for the Volt, is going to use a lithium-ion battery, which holds a charge better and does not suffer from memory loss. Toyota does not have all the answers!
How about this, we merge the big 3. They can all work together to make a fuel efficent car. Alot of hybrids are cult cars. There are some people that buy them to show that they are better then everyone else; or in my terms they have their head up their ass. Why make hybrids look so hidious, well i think so they stick out. Make a normal looking car at a reasonable price. We have the technology to make a 4000lb SUV get 40mpg+ and and a 2000lb car get 60+ mpg. The problem is with this ressecion no one has the money to buy a $20,000+ car. Now lets talk about all this gas guzzler tax. What about the people who need that vehicle for work, should we tax their income even more so they can go to work, that is straight bullshit. Alot of the people who are bitching about this whole situation the most are the big guys that have money and that none of this will affect them. Say what you want for what i just said but it is my opinion and alot is facts.
1. Merge GM and Ford (maybe chysler)
2. Give them not 700 billion but lets say 50 billion to start, not to produce big ass gas guzzlers but some nice fuel efficent cars. See where that gets them. Put those techs to work, we have the technology.