“We’ll agree to anything that’s 15 years out,” a highly placed auto industry insider told me today about the fairy tale 54.5 mpg-by-2025 mandate for America’s auto fleet that Barack Obama and Big Auto execs will finally — officially — announce Friday in Washington.
The rule has no grounding in reality. An engineering rule of thumb is that gas engine efficiency improves by 1.5 percent a year (a gain that, in the cheap gas U.S. market, has traditionally gone to power upgrades rather than mpg improvements). The EPA’s rule will mandate that light trucks gain 3.5 percent a year and cars, 5 percent. Really.
It might as well mandate that the sun rise in the west three days a week.
No matter, say Detroit automakers who resisted the edict (well, as much as government-owned entities could resist government mandates, at any rate) until this week; they can live with it. Why? Because it screws Detroit’s competition (hey, government ownership has its advantages).
The whys of that turnabout provides insight into how much the industry has learned to play the D.C. game since the imposition of the Corporate Average Fuel Economy Standards (CAFE) 35 years ago.
Obama is on a mission to increase efficiency standards for ALL products to fight global warming — not just autos. The crucial difference between Big Bulb’s acceptance of light-bulb standards (the 20 lumens limit effectively eliminates the incandescent bulb) and Big Auto’s resistance to the 55-mpg standard (effectively eliminating the gas engine) has been one of cost. Big Bulb can make more money on the incandescent’s CFL alternative. Big Auto can’t make money on the gas engine’s electric alternative.
So they poured millions into lobbying to “fix” the standards to their liking — and disadvantage the competition. And that’s changed everything.
The original, 1975 CAFE standard — demanding a 40 percent increase in fuel efficiency — discriminated against Detroit which relied on bigger vehicles for its profits. As a result, CAFE tilted the field to foreign competitors and the Big Three struggled — until discovering the SUV loophole in the Nineties.
This time, a wiser Detroit lobbying team has reacted to Washington’s 100 percent increase in fuel economy by carving out special rules for its truck-heavy lineup, devising easily manipulated “footprints” by which each vehicle is judged, and negotiating massive federal subsidies to help automakers build the electrics that will gain the industry credits against the pie-in-the-sky standard (and that Obama has guaranteed the federal government will buy up for its own fleet).
As a result, it’s foreign automakers who are screaming this time. Toyota, Mercedes, and VW have all balked at the blatant foreign discrimination.
“It’s clearly inequitable and favors manufacturers of full size trucks,” one European executive told TheTruthAboutCars.com. “It could have an adverse effect on real world [gasoline] consumption by driving consumers to trucks.”
But they’ll come around. The loopholes in this bill are enormous. And automakers have 15 years to write more. “And if Romney gets elected, he’ll gut the rules anyway,” says my source.
“Remember the ZEV standard,” the source continues, referring to the inane California rule cooked up in 1990 that mandated that 10 percent of automakers’ cars sold in the state had to be “zero-emission- vehicles” by 2003 — or they could not sell any vehicles at all. This goal — like the 54.5 mpg number — was unworkable and “greens quickly realized that people would only hold on to their older cars when automakers were banned from selling new cars for not meeting the ZEV rule,” says the insider.
The new rule is just as daft. “This is a pipe dream,” the source continues. “There’s no science involved here. “
Of course, EPA’s green pawns in the media and the environmental movement get a thrill up their leg at the prospect of 54.5 mpg cars. “(The deal) likely will change how drivers shop for, interact with, and think about cars,” bleats the Detroit Free Press’s Aaron Kessler. “It’s really about looking at where we’re headed as a country,” cheered a spokesperson for the lefty Union of Concerned Scientists.
Nonsense. “Gas prices are the only thing that change consumer behavior,” my source says, pointing to hybrid sales’ high water mark of 3 percent of the market in 2008 when prices hit $4-a-gallon.
In the final amalysis, CAFE standards have become a play toy for utopians — and a weapon for automakers to hamstring their competition.
“In order to win the backing of the domestic automakers, the White House agreed to a review midway through the period, to ensure the new requirements are achievable, as well as granting credits that will make it easier for the companies to meet the revised standards. If the credit loopholes are too big and if overall fuel economy is not improved to the promised levels, an outcome that is definitely possible with the credit loophole, California could defect again, leaving the entire process back where it started,” reports TheTruthAboutCars.
Got that? No one else does either.