Nov 12, 2008 (From the CalCars-News archive)
Tuesday morning's news stories indicate the likelihood of legislative action to provide loans to carmakers as their position continues to worsen. It's not surprising that the day begins with an extraordinarily uninformed and misdirected attack on the Chevy Volt in the nation's most influential financial publication, The Wall Street Journal. We'll talk about that below, and we offer our response to a NY Times column by Thomas Friedman, and a pointer to a column by Joseph Romm on the car companies. Before those, we start with a short discussion about the impact of falling oil prices and news about GM's planned Saturn Vue PHEV.
IMPACT OF $60/BARREL OIL: While high fuel prices motivate consumer buying patterns and interest in high-MPG cars, the transition to electrified transportation is more broadly driven by the three characteristics of electricity: compared to oil, it's "cleaner/cheaper/domestic." Of course, 2-4 cents/electric miles compare favorably to 8-40 cent gasoline miles. But the global and social benefits of plug-in cars derive from their contribution to lower CO2 and improved energy security, and from their ability to enable automakers to evolve to produce more efficient, reliable and modern vehicles -- irrespective of oil price fluctuations. We have every reason to believe, as does even the very cautious International Energy Agency, that our future is $200/barrel oil http://ap.google.com/article/ALeqM5h4ZGTUrYhzzLOhFASpNhny3b_mmgD94DCFO80 . (Let's hope we don't remain stuck in a global recession that causes oil prices to sink.) We don't need to rely on predictions about the price of oil or the timetable for "peak oil." And we see validation in a new British study that confirms at least a 40% reduction in CO2 from plug-in cars even with today's power grid, and projects an "extreme update" scenario that would have 60% of all vehicles plug in by 2030. http://www.greencarcongress.com/2008/11/uk-report-on-po.html
GM'S SATURN VUE PHEV POSTPONED: This vehicle is a "line extension." The plug-in version of the Saturn Vue crossover SUV, expanding on the "dual-mode hybrid" version that will be introduced shortly, had been expected "as soon as 2010." But along with most other new GM products except the Chevy Volt, it's now been pushed back to 2011. http://money.cnn.com/galleries/2008/autos/0811/gallery.gm__product_plans/7.html
WALL STREET JOURNAL'S FULL-OUT ATTACK ON CHEVY VOLT: Now we come to the main reason for this posting. It's the latest from Holman Jenkins, Jr., who writes the WSJ's weekly "Business World" column. Back in 2005, Jenkins unleashed "Prius Follies," a broad attack on hybrids, to which the Union of Concerned Scientists http://hybridblog.typepad.com/my_weblog/2005/12/government_econ.html and others ably responded. Today Jenkins basically re-publishes his story from July, "What Is GM Thinking," which we posted at http://www.calcars.org/calcars-news/969.html along with an able response, "WSJ Attack on Chevy Volt--Shocking" by Business Week's David Kiley. Because we expect that GM's spokespeople may have more urgent priorities right now, we'll step in with our comments. Below is the first half of his column, about the Volt, with [our comments].
Obama's Car Puzzle by Holman Jenkins, Jr. http://online.wsj.com/article/SB122645159441719325.html
You have in GM's Volt a perfect car of the Age of Obama -- or at least the Honeymoon of Obama, before the reality principle kicks in.
Even as GM teeters toward bankruptcy and wheedles for billions in public aid, its forthcoming plug-in hybrid continues to absorb a big chunk of the company's product development budget. This is a car that, by GM's own admission, won't make money. It's a car that can't possibly provide a buyer with value commensurate with the resources and labor needed to build it. It's a car that will be unsalable without multiple handouts from government. [COMMENT: even before federal tax credits were announced, 40,000 buyers signed up at http://www.gm-volt.com, in addition to the 400,000 who signaled their interest when the car was announced.]
The first subsidy has already been written into law, with a $7,500 tax handout for every buyer. Another subsidy is in the works, in the form of a mileage rating of 100 mpg -- allowing GM to make and sell that many more low-mileage SUVs under the cockamamie "fleet average" mileage rules. [COMMENT: cars and trucks still have separate MPG standards.]
Even so, the Volt will still lose money for GM, which expects to price the car at up to $40,000. [COMMENT: most new cars lose money when they're first produced. GM's modular Volt design is a platform for multiple cars (starting with the Opel Flextreme diesel version of the Volt).]
We're talking about a headache of a car that will have to be recharged for six hours to give 40 miles of gasoline-free driving. What if you park on the street or in a public garage? Tough luck. [COMMENT: The first buyers will be among the many tens of millions of households with garages.] The Volt also will have a small gas engine onboard to recharge the battery for trips of more than 40 miles. Don't believe press blather that it will get 50 mpg in this mode. [COMMENT: That's what well-designed hybrid cars get.] Submarines and locomotives have operated on the same principle for a century. If it were so efficient in cars, they'd clog the roads by now. [COMMENT: That's why the Prius and the Honda Civic sell well.] (That GM allows the 50 mpg myth to persist in the press, and even abets it, only testifies to the company's desperation.)
Hardly mentioned is the fact that gasoline goes bad after a few months. If the Volt is used as intended, for daily trips of 40 miles or less, the car's tank will have to be drained periodically and the gas disposed of. [COMMENT: In a well-designed system, "stale gas" doesn't become an issue for a long time--not having been to a gas station for that six months to a year be a problem I'd love to have!]
"HOW TO FIX A FLAT:" Also today, Thomas Friedman devotes his NY Times column http://www.nytimes.com/2008/11/12/opinion/12friedman.html to a broad critique of the auto industry's failure to innovate for decades. He focuses especially on GM for throwing "too much energy into lobbying and maneuvering to protect its gas guzzlers;" for ignoring national health insurance proposals that would have reduced its benefits burdens. He notes that Vice Chairman Bob Lutz questioned the value of hybrids for years and still doubts the reality of climate change. He approvingly cites a proposal by former Wall Street Journal Detroit Bureau Chief Paul Ingrassia for a government rescue that would replace management, devalue the company's shares, and renegotiate union and supplier contracts. http://online.wsj.com/article/SB122628230122212449.html . Finally, he says "Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol."
OUR RESPONSE TO FRIEDMAN'S LAST PROPOSAL: First, Toyota has already said that it intends to offer hybrid versions of all of its cars. Friedman taking that one big step further is well-justified, since hybrid technologies have proven their value for every type of vehicle -- who wouldn't want to eliminate idling, recapture braking energy and use a more efficient electric motor rather than an engine poorly sized for low-speed travel? And Toyota and Honda have already said they've halved the incremental cost of hybrids and see cost parity in the future (even without incentives).
Second, we're disappointed that Friedman didn't extend his ambitious and worthy idea to include plug-in cars. We can forgive the omission, given his long-time support for them. Back in June 2005, we posted, "NYTimes: Thomas Friedman endorses plug-in hybrids." You'll find two dozen Friedman clips at http://www.calcars.org/news-archive.html . His passionate columns helped spur the Bush Administration's recognition of PHEVS. You can see where he stands if you watch a two-minute video at http://www.calcars.org/audio-video/doerr-friedman-22may06.html from the May 2006 Charlie Rose show. His response when asked by venture capitalist John Doerr to imagine a future world: "that would be my dream for America. That will not only be a cleaner world, I guarantee you, John: it will be a safer world -- if everyone is driving a plug-in hybrid car that runs on flex-fuels." And finally, he just gave a full-out endorsement in his new bestseller, "Hot, Flat and Crowded," saying, "to get the most efficiency gains and to make the Energy Internet-smart grid complete requires that one more big piece of the puzzle be put into place -- electrifying transportation, and moving as many cars, trucks, buses and trains away from exclusively combustion engines and into plug-in electric hybrids or plug-in all-electric cars." http://www.calcars.org/calcars-news/996.html
JOSEPH ROMM SUGGESTS AUTOMAKERS DROP 4-YEAR LAWSUITS ON EMISSIONS RULES: Finally, at his Climate Progress Blog, Joseph Romm asks "Why bail out the car companies when they bailed out on us?" http://climateprogress.org/2008/11/12/why-bail-out-the-car-companies-when-they-bailed-out-on-us/ and suggests readers sign the petition at "Bailout should end Detroit's assault on state emission laws" http://action.40mpg.org/campaign/bailout . In his piece today at Salon, "Is Detroit worth saving? The U.S. is gung-ho on rescuing the automakers. But the bailout better have major strings attached" http://www.salon.com/env/feature/2008/11/12/barack_obama_detroit/ Romm endorses a transition "the car of the near-future:" the PHEV.