Will the economy force Obama to back off on efficiency plans?
When president-elect Barack Obama nominated Dr. Steven Chu to be the next Secretary of Energy last week, he made his stance on energy and the environment abundantly clear. Chu has long been outspoken as a believer in human-caused global warming and the need to address the problem aggressively. Part of that process needs to include making the vehicle fleet more fuel efficient and transitioning it away from fossil fuels. However, there is a very real cost to doing that in terms of the technology requirements. That has been true for a long time. As Obama approaches his inauguration, the problem has become significantly more serious. In just the last few months, vehicle sales in the United States have plummeted by as much as 40 percent. Until the economy starts to turn around, any significant change in the vehicle fleet is simply not going to happen. Obama will likely have to back off on some of his goals. With the distinct possibility that vehicle sales in the US may drop below 10 million units in 2009 (from a high of over 17 million just a few years ago), the new and more efficient vehicles that automakers are building will take a much longer time to replace existing vehicles. Micki Maynard takes a look at the problem in the New York Times today.
[Source: New York Times]
Reader Comments (Page 1 of 1)
Nixon 2:44PM (12/21/2008)
Has anybody considered that one of the contributing reasons why passenger car sales have dropped 40% is because quite a few people are waiting for all of the efficient cars that we've been promised? All of them seem to have a projected release date somewhere in the 2010-2012 timeframe.
I personally have no desire to buy any new car until the 2010-2012 timeframe because of that. I don't want to be the guy buying old technology just as the new stuff comes up for sale.
I think there will be an upswing in car sales in 2010-2012, IF they bring the right cars to market...
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nads 3:48PM (12/21/2008)
Dumb question. The reason US auto sales have fallen off is because the glut of the cars produced by US automakers are low efficiency (sales were already way down before the credit crunch). To say "lets forget about high efficiency cars because nobody will buy our low efficiency cars already available" is, simply put, STUPID. It also is a clear path to bankruptcy, not viability.
The automakers will want more money come March, and its very likely Obama will include strict mandates for high efficiency cars (and hopefully EVs) when that happens. The US automakers have NO CHOICE but to begin switch to high-efficiency models, otherwise they will simply not be viable competitors against the foreign automakers, and will face even lower sales in the future.
Lets put it this way. GM plans 10K units for the Volt (eventually going up to 30K), while Toyota is planning around 450K units for the plugin Pruis, and Honda is planning 200K units for the Insight (which will cost half what the Volt will). How exactly is the Volt going to be saving GM again?
"With the distinct possibility that vehicle sales in the US may drop below 10 million units in 2009 (from a high of over 17 million just a few years ago), the new and more efficient vehicles that automakers are building will take a much longer time to replace existing vehicles."
Huh? What do sales figures have to do with the time it takes to come out with more efficient models? Especially since those more efficient models would be "fast tracked" through cheap government loans, not money raised from current sales?
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Sam Abuelsamid 5:36PM (12/21/2008)
WRONG! By your reasoning Toyota would be selling Priuses as fast as they could build them rather than piling them up in the port of Long Beach. In October and November Prius sales dropped by nearly 50% compared to the previous year. There is virtually nothing on the market right now that is selling including high mileage cars. This drop in sales has everything to do with a severe lack of consumer confidence and a tight credit market. People who are afraid they are going to lose their jobs at any time are reluctant sign up for loans even if they can get them.
Sam Abuelsamid 5:38PM (12/21/2008)
Also toyota has never given any indication that they plan to build 450,000 plug in Priuses any time in the near to mid term. They are going to build a few hundred for testing by the end of 2009 but they won't be commercially available until about 2012 and then they will be expensive.
nads 10:18PM (12/23/2008)
"WRONG! By your reasoning Toyota would be selling Priuses as fast as they could build them rather than piling them up in the port of Long Beach. In October and November Prius sales dropped by nearly 50% compared to the previous year".
Yeah maybe because they had **less inventory** compared to the previous year. The US automakers are near bankruptcy because nobody wants the low efficiency cars, trucks, and SUVs they've built their profit margins off. The foreign automakers continue to sell more (even with the recession) compared to US brands because they offer more cars with good efficiency. Point blank.
Right now the Volt is GM's only serious high-efficiency contenders versus the future Insight or Pruis.....but GM's not taking it serious. Honda's projected figures of 200K is "taking it serious". Toyota's figures ramping up Pruis production by 60% to 450K globally (as reported by numerous blogs) is "taking it serious". GM's current business model of depending on low efficiency models with a couple Volts sprinkled around will leave them unable to compete and back toward eventual bankrupty 4 or 5 years from now. It is a DEAD END business model. There is no way GM can be viable and not include high efficiency models as a centerpiece.
But back to the big question you dodged:
What do sales figures have to do with the time it takes to come out with more efficient models? Especially since those more efficient models would be "fast tracked" through cheap government loans, not money raised from current sales?
There's no reason why the efficiency mandates couldn't go into effect, especially since the money ($15 Billion) has already been appropriated specifically for some retooling factories for high efficiency models. Obama would likely be more than willing to increase the amount of future aid to the automakers - if they said they needed additional $$ to cover a major transition to high efficiency & EV models - as part of their plan to become viable. Who seriously thinks the automakers can be viable with the EXACT SAME business model..plus a few Volts???
Arnold Schneider 3:53PM (12/21/2008)
I share the view from Nixon
Plus:
Has anybody thought about, that when Shai Agassi succeeds with his game-changer-plan, that FREE* cars may (only may) change the number of cars sold per year. But that is only a very vague assumption :-)
*: free as in: the car is been given away free to the consumer, if he is subscribing to a contract of monthly payments that are of the same weight as his current monthly fuel and maintenance cost. And that is possible because electricity + battery + infrastructure is considerably more cost efficient than the current petrol burning business.
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gorr 4:35PM (12/21/2008)
To date i see this guy as a communism type of personnality. What he say and what consellors he has hire tell that he will do nothing except more harm like bush did. At least if he stop the war in iraq and buy himself a car powered by u.s.a natural gas then he can do better then bush but bush is a complete nightmare where he and his friends tried like mad to regulate everything for himself and impeded everything that is not petrol related. That's why this site and almost everyone is proposing ridicoulous battery technology even if it never gonna work a single minute and at best displace 2% of petrol use because big trucks, ships, airplane will never run on batteries. As for green algae farming , if barack don't speak for it then it's because he's continuing the bush's policy of corrupting everything. This is a very sad planet with a big anti-jesus mentality preferring communism mentality and eradication from livingness.
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mmstowes 11:52PM (12/21/2008)
Before you begin attempting to talk down about someone else, perhaps you should work on your spelling and grammar because you look and sound like an uneducated imbecile. Your opinion, therefore, doesn't really amount to squat until the rest of us can understand what gibberish you're speaking.
Thanks.
meme 5:06PM (12/21/2008)
Come on -- the Obama administration is planning to pump a trillion dollars over the course of two years into jobs programs, and most of the jobs they've talked about are green. I think it's speculation against all available evidence to think that they're going to back off on efficiency. Quite to the contrary, it looks like their plans are going to be accelerated. It's the Shock Doctrine applied to cleantech.
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sh 8:36PM (12/21/2008)
Here comes the new boss...
Higher on rhetoric than any I've seen in my 58 years. He said he will do this & that, yet his cabinet picks are all political hacks as slick as oil.
I doubt that this revelation will crash your server, but he is already in panic mode: he said first that he will "save" 3 million jobs -- read that "forget green, forget creating any." That won't even keep up with the normal trend in job losses under the Bush administration.
Maybe he can create a new USAF squadron to service Pelosi's jet.
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mmstowes 11:57PM (12/21/2008)
*Yawn...*
As a side note to the whining above, has anyone considered perhaps car sales are down because the banks aren't a) lending credit and b) allowing cars to be moved off the lots? I'd like to see someone figure out how many dealerships are out of floorplan because that would prevent many of them from selling anything until the bank is paid. I'm willing to go out on a limb and say right now...probably nearly half of the dealerships who haven't already closed are out of floorplan. Worth investigation, no?
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Mike!!ekiM 9:52AM (12/22/2008)
Quick question: What does "out of floorplan" mean?
Sam Abuelsamid 9:12AM (12/22/2008)
When dealers order vehicles from the factory, they have to pay the factory for those vehicles. To cover the interval until a customer actually drives that vehicle off they lot they get what are meant to be short term loans, called floorplan loans. Traditionally the captive finance units like GMAC and Ford Credit supply very attractive terms on floorplan loans. Some dealers also just went through banks. In recent months dealers have had an increasingly difficult time getting floorplan loans making it harder for them to keep vehicles in stock.
Dolly 8:10PM (1/11/2009)
Surely you people that voted for this man, actually believed he was going to do all those things he promised? He is just now beginning to let you know, those were just "WORDS": He may have said them, but he had no idea how he could do them. He is now finding out there is so much more to do things than just saying them. There will many, many more things that he promised that he CANNOT do, just wait and they will allbe lined up. As he said, it is going to take a LITTLE more time than he thought to get the economy back and to end the Iraq war. JUST THE BEGINNING OF WHAT HE WILL NOT AND CANNOT DO!
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