Bob Lutz can't seem to decide on just what impact CAFE legislation has
A common auto industry argument against CAFE - regulation that requires automakers to make their overall vehicle fleet get more miles per gallon - is that it will just force small cars on the road and big vehicles off. The argument goes that the automakers will not be able to improve cars and the only solution will be for automakers to build small cars, which get higher miles per gallon simply because they are small. This not only degrades choice in the market but it hurts the car companies because they are making a product people don't want. Here is GM vice Chairman Bob Lutz saying CAFE won't change what consumers want when he spoke with Inside Line last December:"As long as [gas] is around $2 per gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all. ... Forcing us to alter the fleets to hit some theoretical average won't change what consumers want, or what they'll buy."
This would seem to contradict what he said in an interview with Autoline Detroit last month, which you can watch below the fold. In that interview Bob seems to say, CAFE laws actually change what people want but in a way that just might surprise you. Here is that quote:
"If we really get say every vehicle with that jump, the same thing will happen that happened last time. People don't keep the size of car they had and say, oh, this is wonderful, I am now saving $30 a month on my fuel bill. They say, oh, this is wonderful now I can pay for fuel for the next larger size. That was happening with the last CAFE legislation. People abandoned cars and went into full size V8 sport utilities."
Even if this is a not a direct contradiction, the idea that CAFE caused the SUV fad and CAFE will only push us into vans, explains a few things like GM's unusual interest in making very large hybrids. GM must think larger, more efficient vehicles are the future, popular vehicle choice. (Tip: Watch the entire video below the fold to hear Bob talk about his 3 Segways.)
[Source: Autoline, Inside Line]
Reader Comments (Page 1 of 1)
emdee 4:29PM (10/24/2007)
The only way to set everyone on the same line would simply be to ban large cars. The problem with CAFE certainly is the fact, that since car companies are still allowed to build large cars, and people want those cars, they companies are forced to sell small cars at a loss.
The way around that is to ban large cars. Perhaps make a rule where maximum engine size for all cars is 2.0 liters of displacement. Obviously some exceptions would have to be made for work trucks etc, but with even that kind of reduction the effect would be quite substantial.
Personally I'd be willing to go lower than that, slowly reducing engine sizes to 1.0 liters over say a span of 20 years. That would probably be a huge shock to the car industry and would probably have strange effects, such as making old cars worth more than new ones.
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Phil L. 6:17PM (10/24/2007)
emdee -
Interesting idea. But a ban won't happen.
Who decides what "big" is? I have 3 kids, all still in car seats. There aren't that many vehicles with 3 LATCH safety seat positions, particularly if you're trying to avoid thirsty SUVs or vans. What about families with more than 3 children? Do they need multiple vehicles and drivers? OK, we'll says that's an "exception". Who decides how to handle the exceptions? How do you do this rationally in a nation with several hundred million vehicles on the road?
If the government makes such decisions, you can guarantee that the effect won't be what was originally envisioned. And political reality sets in, creating loopholes and exceptions the weaken laws. The law of unintended consequences always gets its due.
If legislators make overly unpopular decisions, they are voted out and replaced by those who promise to do something different. Gutsy politicians who are truly thinking of the future may be punished at the ballot box before their plans are complete.
As I review this post, I realize I'm not creating a very hopeful view of the future. I'm a big believer in the power of the marketplace - but US petroleum is hardly an unfettered market. We've based much of our economic structure on ensuring cheap, dependable energy supplies - which makes it difficult to measure the true cost of alternatives. It also makes it agonizingly slow to effect significant change.
Still, I grew up in the 70s - and recall the irony of seeing two distinct types of cars on the road: Big old American iron (typically RWD, V8, 3-speed auto) and new small cars (many FWD, I4, lots of manuals). This change happened remarkably quickly, but not without pain for many.
How can we create an environment suited for effective, intelligent change?
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kballs 7:58PM (10/24/2007)
CAFE has good intentions that pave the road to hell. The only way to get people to save fuel is to gradually raise fuel taxes over the years, which gradually raises the per mile operating cost, which gradually gets people into more efficient vehicles the next time they buy. This in turn forces the automakers to build more efficient vehicles anyway because that's what the market wants.
In reality though, to maximize the speed of this change, you need both CAFE and higher fuel taxes. If you have higher fuel taxes but not higher CAFE, automakers will lag behind and consumers won't have as many choices for higher MPG vehicles. If you have higher CAFE but not higher fuel taxes, people move up in vehicle size and continue to burn just as much fuel. Higher fuel taxes alone could work (just a bit slower), but higher CAFE alone doesn't do anything.
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motorman 1:39AM (10/25/2007)
all the posters who think everyone should drive 1 or 2 liter cars do not drive cars or they live in the city. since most of the pollution is in large cities lets just make all those city people drive those cars and let us country folks alone. we need to pull our fishing boats,jetskis,dirt bikes and race car trailers so we need the larger more powerful cars or trucks.
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macmanic 2:44PM (10/25/2007)
Well I agree with kballs - without much higher oil costs (taxes or market driven) CAFE standards are just an eco-feel good idea that really won't do much. Americans won't get over their "bigger is better" mentality until shoved into it by cost. I've seen too many gigantic, hey look at how rich I am, SUVs road hogs being driven as commuter cars by one person to think drivers in this country will voluntarily cut back on oil - no matter what the car companies turn out.
What kills me are the plethoria of awesome looking and very efficient vehicles in Europe that are not available in the US. Why can't we have these choices in the States Bob Lutz? BTW, I find it hilarious that Lutz thinks he knows what the US consumer wants anyway. As far as this consumer (and apparently many others) is concerned GM has ZERO vehicles Americans want...
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Jibreel Riley 8:23PM (11/09/2007)
What have we become, COMMUNIST? Socialist? Really, like the market dictate what cars we buy. Toyota and Honda did not need any incentives to build fuel efficient vehicles (see there hybrids). I also bet non of you posters live near a GM or Ford plant. The UAW is just as corrupt with their sheep like voting patterns despite the environment lobby in Washington has way more clout. I'll be dammed if I'm told what to drive. Another thing, we possibly have as much gas as in the Middle East with in our borders if we was able to drill for it. I'm so heated right now. ugh
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Ok4phil 8:12AM (11/21/2007)
OK folks, what kind of Americans have we become? I for one am not some tree hugging socialist eco-Nazi who thinks government is the solution to all problems! How about this, make everyone pay taxes and end welfare as we have known it since the great crusade from the sixties and channel some of that money into new tech to find a solition. Use the rest of the money to provide food and basic shelter to the truely needy.
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Whopper 11:19AM (12/07/2007)
Bob Lutz' comment about CAFE was CAFE is like trying to get people to lose weight by restricting the size clothing available.
Basic physics should tell you that hybrids are inefficient - think people! An engine drives a generator to charge a battery to drive an electric motor to drive a transmission, with efficiency losses at each energy conversion.
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