The Obama administration’s reported proposal of a 56 mpg fuel-economy mandate by 2025 sets up an inherent conflict of interest for a government that has given away hundreds of millions of federal dollars to companies manufacturing batteries for electric cars.
“Carmakers say the proposal would effectively require most new vehicles sold in the U.S. to be battery-powered by 2025 and raise prices by thousands of dollars,” reported the Wall Street Journal Monday. “Makers of electric vehicle technology say declining costs for lithium batteries will allow the auto industry to make big gains in fuel efficiency.”
Those manufacturers are dependent on huge federal infusions of cash — as well as the federal purchase of electric vehicles in order to stay in business. The Obama administration, in other words, is mandating an artificial mpg standard to guarantee a market for its investment.
“Regarding the feds and the auto industry, conflicts of interest that used to be the exception are now the rule,” says Sam Kazman of the Competitive Enterprise Institute, a longtime critic of federal fuel mandates.
Since the 2009 stimulus bill passed, Washington has “invested” over $100 billion in giant corporations to realize Obama’s dream of transforming America into a green economy. Billions have been targeted at lithium-ion auto battery suppliers including $250 million to A123 Systems, $160 million to Dow, and $150 million to LGChem — in addition to $600 million for GM, Chrysler, and Ford combined.
Currently, no single vehicle achieves the 56 mpg standard. Indeed, the average auto is nowhere near the mandated fleet average mpg standard of 35.5 mpg mandated by Obama in four short years. But industry insiders acknowledge that number is fictional and will be heavily subsidized by credits to companies that build electric vehicles — whether the public buys them or not.
The industry is protesting the rule, saying it would inflate vehicle prices by $6,000 or more. But automakers are also resigned to the new green authoritarianism and have vigorously sought taxpayer subsidies to build the cars the government wants — as well as insuring that government will buy the vehicles when they roll off the assembly line. To date, hybrid-electrics are a small niche of the market occupied mostly by wealthy, image-conscious buyers.
Already this year, Obama helped the automakers towards meeting federal standards by promising that the feds will only fill their 600,000 vehicle fleet with hybrid-electrics.