Forget incrementally improvements in fuel economy. It's time to radically re-invent the American automobile, recapture the competitive edge in automotive technology and ensure that the average car gets 100 mpg by 2020.
With a new bailout for Detroit on the table, there's a lot of talk about getting some "grand bargain" with automakers out of the deal: automakers will agree to some terms, like producing more efficient vehicles, in exchange for the loans.
In fact, the direct loans approved by the 2007 Energy Bill require auto companies to use the funds to retool factories that produce vehicles that get 25% better fuel economy than the average vehicle in it's class. That's a start.
But the real grand bargain, in my opinion, is to bust out of this incremental improvements mentality for fuel economy. We don't need incremental improvements, we need exponential improvements in fuel economy. Here's how it could work...
It takes something like 3-7 years to design a new car, build the plants and get it rolling off the assembly line. So, rather than say we want a 4% annual improvement in fuel economy (as the current CAFE standards roughly call for) - incremental improvements that get us to no-where near plug-in hybrid-type fuel economy - let's propose a deal that goes something like this
We'll give automakers tens of billions in loans, put tens of billions more on the table for consumer credits to purchase advanced vehicles, and provide billions more for advanced vehicle R&D incentives (for batteries and lightweight vehicle materials research). In exchange, Detroit would have to support and lobby for fuel economy standards that look like this:
- 2009 to 2014: improve at 4%/year to something like 30 mpg.
- 2015: jump to 55 mpg
- 2018: jump to 75 mpg
- 2020: jump to 100 mpg
A deal like that would mean America is committed to radically - not incrementally - re-inventing the American automobile, re-committing to innovation, and recapturing the competitive edge in automotive technology.
Do you have a vision for a re-invented and renewed American auto industry? Do you have a strong opinion on the bailout plan currently on the table? Join the discussion and participate in the Breakthrough Institute's new essay competition:
We are currently soliciting guest essays that answers the question: What will it take to reinvent the American auto industry? We will publish the best responses on our home page, www.thebreakthrough.org. Please submit your op-eds to oped@thebreakthrough.org.
The premise behind all this is that GM, Ford and Chrysler are "too big to fail." Based on this, they can agree to everything you ask, screw it all up, waste all the money you give them and then, when you ask them what happened, they will just say "We're still too big to fail, give us more money" and you will (this is known as the "AIG Strategy"). Neither the management of these companies nor the UAW have any interest in being competitive with Toyota, they just want to keep taking home paychecks they can't earn at taxpayers expense.
By the way, what does "American Auto Industry" mean when all of the big Japanese automakers, plus Mercedes, build cars here?
I disagree with the whole CAFE approach, but here's an idea: offer new car purchase rebates based on the cars' mileage BUT only if the car is assembled in the US and at least, say, 50% of the components are sourced here. Phase massive rebates in over a 8 year horizon to accommodate a design and plant building cycle (design for the US companies, plant building for the rest). Then let Toyota, Nissan, and who knows: Hyundai? Tata? Tesla? run GM and Ford into the ground with better designed, more efficiently produced cars that preserve American jobs.
Posted by: Robert www.neolibertarian.com at November 13, 2008 5:35 AMIf GM and Ford and the UAW surprise us by making cars that are competitive, so much the better but it will depend on the performance of their cars, not on the performance of their lobbyists.