Government bailout does not mean EV mandates for GM, Chrysler
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GM and Chrysler may have gotten government help totaling almost $40 billion, but that money does not come with strings attached demanding that the two companies build electric or high-mpg cars. Government task force head Ron Bloom told Reuters that, "We obviously would be very happy if Chrysler and GM were making lots and lots of high mileage cars. It's not a prerequisite. It's not an obligation."
While the U.S. as a whole would benefit if the cars on the road were more efficient, the government's stance is understandably self-serving. The market for EVs isn't that big, and if the U.S. wants the loan money returned, they need GM and Chrysler to build vehicles they can sell. Another reason is that the government doesn't want to get involved in making specific business decisions, and is deferring to the management teams at both companies on these issues. Chrysler's team has decided to disband its ENVI group while GM keeps moving forward with the Volt program. One way the government can get cleaner cars to the market is to raise CAFE standards, which they did earlier this year.
[Source: Reuters]
Reader Comments (Page 1 of 2)
Joeviocoe 9:28AM (11/19/2009)
On one hand, you don't want GM to truly be "Government Motors". Free market principles should guide the company not mandates.
On the other hand, the automaker lobby has kept CAFE standards lower than what they could effectively be.
They should raise the CAFE standards.
Get rid of the loopholes...
like not counting each gallon of ethanol in E85 as a full gallon in the "miles per gallon" calculation. (which is why so many SUVs went flex-fuel). Flex-fuel cars are cleaner when running E85 but they should not be treated special because there is no way to guarantee the use of E85.
These strict standard will give enough incentive for them to shift to EVs and PHEVs.
If GM (or others) think they can lobby their way to lower standards so they can sell lower MPG cars/trucks, then they will beaten again by the Japanese. And this time, there will be no rebuilding the Death Star.
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SkiD666 9:45AM (11/19/2009)
I don't think you should be too concerned with GM, since they have the Spark, Cruze, Orlando and Volt coming out soon and already get very good mileage figures from the Malibu, Equinox and Traverse. They will still of course produce Trucks, SUV's and sports cars, but they only make what buyers want (up the price of gas and these sales will fall off).
Chrysler is more of a concern - take their current lineup and add Fiat 500 - not really competitive is it?
Boyprodigy1 12:29PM (11/19/2009)
Actually on the contrary i think there really should be mandates. Look, i was never for bailing out GM in the first place, but i for DAMN sure do not want to have to do it again, which is what is going to happen if they don't get it through their thick skulls that me an a whole lot of other people want EV's (and small ones at that *GASP*)
Jimbo 8:43AM (11/20/2009)
Small cars are a break-even proposition at best, and in most cases unprofitable. Unless people are willing to pay in the mid-$20k range for a car like the Fiesta or accept the fact that those cars would need to be built in places with even lower labor costs than Mexico, which in both cases most Americans are not, it is not in the best interest of any car company to focus on small cars. Americans want and are willing to pay for midsize cars. The only small car that has been a sales success is the MINI.
EVs are in the same boat. I wouldn't mind getting one, but it would need a range of at least 200 miles (in winter conditions) to handle my daily driving needs. Something like that either doesn't exist or won't cheap. Even though most people don't have daily drives like I do, 200 miles is a magic number that will get people to buy EVs. Anything less and they will remain a niche vehicle.
Poopy 5:48PM (11/20/2009)
There are plenty of small car options with great fuel economy on the market. That said, they must be flying off the lots due to how much the government is pushing them.
Oh wait....
They aren't...
Most people are buying mid sized sedans and crossovers. Little econo crap boxes can be absolutely stolen off of used car lots right now because so many people bought them during the recent gas crunch and then realized they weren't willing to deal with the compromises after fuel prices dropped down.
I've got a better idea. Let the market do it's own thing with fuel economy. That way I'm not forced to buy a car for $1500 more than one that may have gotten 2 MPG less. I'll never be able to recoup the costs unless it's a large truck. Let me vote for vehicles with my wallet. "May the best car win."
I have no problem with government safety standards because that not only affects me but anyone else I may "take out". But with man made global warming being a sham, government fuel economy regs are BS.
Blacksabre 12:38PM (11/20/2009)
Joe, as far as I'm concerned, the environmental and safety lobby are the groups most responsible for the demise of the American auto industry. Their mishmash of conflicting and differing regulations (can you say California?) they created when they demanded both heavier, stronger cars, and at the same time lighter cars with better mileage and emissions, created an insoluable pradox for the car makers.
To blame GM and Chrysler for failing to succeed in satisfying both demands is shortsighted and inobservant. Demanding EVs and hydrogen vehicles, neither of which have any infrastructure to serve their needs, is actually dumb. No one is going to buy an electric car that they cannot charge wherever they stop, and no one will buy a hydrogen vehicle that cannot be refueled at all, except for buying an expensive fueling station yourself.
Car makers worldwide are having trouble. You'll note Honda lost billions, last year. Governments are bailing out all sorts of car makers. GM and Chrysler are not unique.
Joeviocoe 4:37PM (11/20/2009)
There are many "myths" here.
@Jimbo
"Even though most people don't have daily drives like I do, 200 miles is a magic number that will get people to buy EVs. Anything less and they will remain a niche vehicle."
That is a contradiction. If you drive that much in a day, YOU are the niche.
The range anxiety phenomenon is for those who do not understand. People are such creatures of habit. The habit is that a car must carry enough energy to last a week, because they cannot fathom thinking about fuel more than once a week. EV drivers will plug in daily and therefore only need twice (maybe three times) their daily range. That's only 80 miles.
Nobody who has been driving an production EV really worries about being stranded. They can plan trips and read a gauges.
@Poopy
Do you live in central Texas by any chance? I am sorry, but you need to cite your sources. You are sorely misinformed about the national average car sales. Around MOST of the U.S., it is the SUV and crossovers that cannot be sold. And the smaller cars are flying off the lots.
@Blacksabre
Who demanded heavier, stronger cars? They wanted to sell those because the profit margin was higher. They kept saying how much safer they where because of how many other heavier, stronger SUVs were on the road. American over-consumption is to blame. Just like our declining collective health.
You could blame Unions and expensive Labor for more of the premium of domestics than on the environmental regulations.
"No one is going to buy an electric car that they cannot charge wherever they stop". You do not understand the EV market at all. People like you cannot differentiate between conventional fuel (something only provide through select stations) and electricity (something provided where you sleep and work).
100 years of gasoline dominance has made folks like you lazy and set in your ways! The EV revolution will simply pass you by until you wise up.
Jimbo 4:59PM (11/20/2009)
Joeviocoe: Obviously you are not from a rural area, nor have any idea about life in that vast expanse of land between the coasts. It is very common in rural midwestern areas for people to drive 100-200 miles round-trip each day for work. If you want a good paying job but want to live in the country and support small towns, you have to commute long distances. Of course, you could be one of those ignorant jackasses that WANTS rural America to die off.
Heck, none of my coworkers has less than a 60 mile round trip per day and they live within the metro area. A car like the Leaf might work for them in the summer, but I doubt they'd achieve that necessary 60 mile range in the winter. My 70 mile drive even takes less time than their 30 mile ones some days. Care to guess who's wasting more fuel in that case?
skierpage 2:11AM (11/21/2009)
@Jimbo,
You say: "The only small car that has been a sales success is the MINI."
Toyota USA says of 2008 annual sales: "The Yaris subcompact reported best-ever year-end sales totaling 102,328, up 20.3 percent over 2007. Prius recorded sales of 158,884 units for the year."
Mini USA 2008 annual sales: 54,077 (all models). Honda Fit sales 2008: 79,794. Etc. Small cars do sell in the USA, just nothing like the Camry (436,617) and Corolla (351,007).
Joeviocoe 12:29PM (11/21/2009)
@Jimbo
Your absolutely right, I do not live in a rural area... but I do know something (albeit, one thing) about it. It is the same little factoid that the Automaker also know... and quote often.
***Most people live in Urban and Suburban areas, not rural!
That is why they say an EV with a 50 mile range will satisfy 90% of the U.S. Population. Your metro living co-workers are also "abnormal" slightly with more than a 60 mile commute.
Rural areas are wide open BECAUSE it has so few people.
The rest of your post I am in agreement with. I do believe that country living is appealing and that it is important to be able to commute those long distances. And I certainly wish to preserve it.
EVs are NOT the solution for you, or your (small) percentage of the driving population... EV proponents like myself do not claim that 100% of the people can benefit from it. But Perfect is the enemy of Good. Do not poo poo EVs because they do not suit YOUR needs. Remember that you are the minority... and EVs are good for the majority.
Your second point reinforces mine. You drive twice the distance than your metro living co-workers, but probably use less fuel. That is because getting out of a city requires constant stop and go or idling. EVs shine at this because stop and go traffic allows more energy to be recouped via regen braking. And electric motors don't use energy to "idle". Also, EVs have the least advantage for long distances on the highway where losses to air resistance cannot be recovered or even avoided.
One more point
"I doubt they'd achieve that necessary 60 mile range in the winter". -Jimbo
Since modern EVs use quality thermal management to keep the battery pack at a "no capacity lost" temperature while charging. The only drain that winter provides is the heating coil power to maintain the warmer pack temperature until normal battery heating (from constant discharge/use) takes over . So maybe 10 - 15 miles is lost at the most.
Let's just know that although we may be lactose intolerant, cheesecake is still a good idea.
huhhhhh 9:55AM (11/19/2009)
So, electric cars are just a scam to achieve company-wide mpg standards?
niiiice
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Nick From Montreal 9:58AM (11/19/2009)
I totally agree with the US government's call here. They were the ones who asked Chrysler to find a way to make it work with Fiat. Now, it's up to Fiat to use its best judgment to get get Chryster out of the hole.
Fiat doesn't know EVs but they *do* know about small cars.
Give them a chance.
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paulwesterberg 10:07AM (11/19/2009)
If they don't produce fuel efficient vehicles and evs they will not be able to compete with foreign manufacturers. More people in China and India are buying cars, burning gas and increasing the demand for oil. Most major oil fields are in decline which means that increasing production is impossible without using more costly sources like tar sands which will further increase the price of gas and make low efficiency vehicles undesirable.
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Snoopy 11:32AM (11/19/2009)
No joke!
I have a serious feeling that this is going to come back to bite them in the ass. Just because you create a mandate for EV or high-mileage vehicles does not mean that every product they make has to be one or the other.
They could impose a rule that mandates the creation and actual sale production of at least one of each, as an example, so that the possibility for competition against foreign manufacturers is there.
If the American companies don't have products that compete with foreign manufacturers, they won't be able to keep up. It happened last time and it will happen with EVs.
Poopy 9:40AM (11/20/2009)
There are vast oil reserves in the waters north of Canada. There is lots of oil in Alaska. There is also quite a bit of oil in the Gulf of Mexico and off the coast of California.
However, instead of taking advantage of it, it sits there idle. I've got a great idea. Most people aren't complaining about $2.50 gas right now.
Produce enough oil domestically for the price to drop to levels close to $1.00 or so. The difference between that and $2.50 can be given to research grants in order to fund bio fuel, EV, and renewable energy research.
Considering that the US consumes around 10 billion gallons of gas a year, giving somewhere between ten to fifteen billion dollars a year to new energy conserving devices and energy sources may get us in the right direction. I haven't even included diesel.
I bet it would only take a few short years before massive strides are taken to produce domestic energy from biological sources. Imagine a solar powered plant that produces ethanol from genetically engineered bacteria or somthing. Imagine a ultra high load capacitor that could hold enough current to move a car 100 miles.
paulwesterberg 11:06AM (11/20/2009)
Poopy, you aren't naive enough to think that the oil companies, refineries and service stations would just hand over all the profits they make? Or do you think that the government should do the drilling/refining/selling themselves? That would be socialism! Like the free system of public health care in canada and cuba that helps sick people at the expense of corporate profits! Where are your principle man!? This country is built on making a quick buck off of someone who is dying!
Oil companies would not stand by idly while someone else milked their cash cow. Their crony capitalist stooges in congress would never stand for it either. This is america and we have the best government money can buy.
Jimbo 1:43PM (11/20/2009)
ppopy: You're right, there are vast reserves in Canada and Alaska. There are still lots of oil deposits around the world. But the problem is availability. That oil is much harder to access than the current sources and may not be cost-effective compared to investing in alternate technologies. Not to mention the tremendous environmental cost. The oil shale deposits in Canada are huge open-pit mines. Oil shale mining is just as bad or worse than coal mining.
Poopy 5:43PM (11/20/2009)
Paul, are you naive enough to think that increasing the supply won't lower prices? If congress approves drilling in those areas, even if they don't drill, the oil speculators will dump their futures and prices will plummet.
When did I say anything about government doing the drilling? I want the government to get out of the way and let American's drill on their own freaking land. That's all. Lower the actual cost of oil, and keep the price stagnent. Then use the extra tax funds to make us NOT have to use foriegn oil.
The drilling and extraction would creat jobs. The scientists and engineers doing more research would be more jobs, and local production of energy crops and the resulting bio fuels would creat jobs. Who looses besides the hippies?
It's actually very simple.
paulwesterberg 6:28PM (11/20/2009)
Drilling in very deep water and remote areas with extreme temperatures and permafrost is not cheap or easy and fully tapping our domestic reserves would only provide us enough oil for 1 year. We burn too much oil and our remaining reserves are too small and hard to access.
We cannot drill our way to energy independence.
The cost of tapping our resources would be much greater than the cost of importing oil from iraq which means that we would end up paying more for gas not less. Energy companies want the rights to our domestic reserves so they can sit on the oil, buy cheaper oil from other countries and manipulate the market. Why would you invest big money in a very deep water drilling operation when you can buy light sweet crude from iraq for $2 per barrel?
Throwback 10:11AM (11/19/2009)
"We obviously would be very happy if Chrysler and GM were making lots and lots of high mileage cars. It's not a prerequisite. It's not an obligation."
I find this hard to believe. Your biggest shareholder and debt holder wants something, but the management that the shareholder put in place is not obligated to follow suit? Since when doesn't welfare come with strings attached?
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