Hybrid Sales Fall Precipitously as Gas Prices Remain Low
Not surprisingly, as gas prices have fallen in recent months, so have sales of hybrid vehicles. In February, only 15,144 hybrids sold in America, down two-thirds from last April, when sales for that segment peaked (and gas was an average of $3.57 a gallon). While auto sales across the board have fallen dramatically as a result of the economic situation, the drop in hybrids has been even more precipitous.
Two main lessons can be learned from this situation, with the most obvious being that the higher gas costs, the more consumers will purchase efficient vehicles. But the second lesson, which is less apparent, is that as Congress forces automakers to build more alternative fuel cars as a condition of the bailouts, it is putting these companies in a new bind– since consumers don’t want to purchase these efficient vehicles while gas is reasonably cheap.
Apparently, the only entity that is more out-of-touch with the American consumer than the domestic automakers is Congress. By forcing automakers to build efficient cars while gas prices hover around $2, Congress could be setting the stage for another domestic auto industry crash in the coming years.
Of course, this could all be solved by just following the number one lesson above– and dramatically increasing the federal gasoline tax so that consumer (and industry) behavior changes permanently. But Congress, like the automakers, rarely makes the right strategic decision.
Detroit Should Support Obama’s Efficiency and Emissions Laws (But They Won’t)
Not surprisingly, automotive industry groups expressed opposition on Monday to President Obama’s plan to increase vehicle efficiency laws at both the state and federal levels. The opposition was generally expressed in the standard “this is too costly” language, with a dose of “in these harsh economic times” thrown in for good measure.
But we’ve heard this a thousand times before. Of course it is costly to meet new efficiency standards, and of course times are especially difficult right now. But given that automakers always warn that regulations will put them out of business and cost jobs, they have questionable credibility in this debate. READ MORE
Obama Administration Likely to Grant California Emissions Waiver for Cars
One of the most immediate environmental impacts the incoming Obama administration is expected to make is to grant California a waiver to impose their own greenhouse gas emission standards on vehicles.
The EPA under Bush has refused to grant this waiver, which has sparked a round of litigation between the state and federal government. Without the waiver, carmakers have only been required to meet the relatively lax federal CAFE standards. However, once the waiver is granted and California, along with more than a dozen other states expected to adopt the California standards, carmakers will be held to materially higher efficiency requirements. This could result in an average of 3 miles more per gallon by 2015, and 7 more by 2020.
The LA Times notes that Lisa Jackson, Obama’s nominee to head the EPA has stated, “If I am confirmed, I will immediately revisit the waiver.”
And GM Vice Chairman Bob Lutz, who is stuck between the need to keep ornery politicians happy and getting the most federal money possible, noted, “we can meet the law, but it’s going to take a lot of money.”
How to Save Detroit Automakers From Ourselves
There is concern that the Detroit bailout (which is, in part, requiring the automakers to devote resources towards developing more efficient cars) could backfire. In a couple of years if gas prices have remained relatively low and the economy recovers, high SUV demand from the public could very well return. However, since Detroit is being forced to redirect its focus away from SUVs, it could once again be producing cars that the public does not desire.
The most obvious way to avoid this situation is to set a higher price floor for gas prices so that demand for bigger cars is permanently softened.
DotEarth takes a look at this issue, noting that a new report co-authored by John D. Graham, a former Bush administration official, argues that a series of incentives could actually help accomplish this goal: READ MORE
This Electric Car is Amazing!
This is a video of the Tango electric car plowing snow from its own driveway. Apparently it was shot in December after a record snow storm hit Spokane, WA (where Tango is based).
This is not the first time this little EV that could has made YouTube stardom. We previously looked at this video of the Tango beating the socks off of a Tesla Roadster in a drag race.
Hat-tip: AutoBlogGreen
Michigan May See Growth in Local Battery Production
Given that battery technology will be the key to any Detroit renaissance, it is welcome news that domestic companies are beginning to apply for the government loan program for next generation battery development. One such company is A123Systems, which said on Wednesday that it had applied for such a loan under the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Incentive Program.
If the company receives this nearly $2 billion loan, they intend to build a series of factories in Michigan to produce lithium-ion batteries for hybrid and plug-in hybrid cars.
The Detroit News notes that “more than 70 companies have applied to the $25 billion retooling program, with Detroit’s Big Three requesting more than $21 billion. None have been approved yet.”
It is unclear whether A123Systems would also be applying for local tax rebates recently made available to battery companies by the state of Michigan.
Vermont Adopts CA Environmental Labels Requirement for New Cars
As often occurs, California’s recent regulation requiring environmental impact labels on new cars, has been adopted beyond that state’s borders. The first state in New England to adopt this rule is Vermont. Similar to California, the rule requires the label to indicate both a “global warming” and a “smog” score for each every new car.
Vermont Agency of Natural Resources Secretary Jonathan Wood explains, “These new labels will make it easy for Vermonters to choose cleaner vehicles while comparing fuel efficiency. Vermont is still the greenest state in the country but our largest output of greenhouse gas emissions comes from transportation.”
All New Cars in CA Have Environmental Impact Labels
As of January 1, every 2009 model year and newer car sold in California now carries a label that ranks that vehicle’s environmental impact. The label can be found under the hood on the emissions control information label. There are two rankings (global warming score and smog score) on a scale from 1 to 10, with five being the average score in the state. The more environmentally friendly a car is, the higher the ranking.
Check out this link to see the top 10 cleanest cars.
Michigan Law to Encourage Local Battery Production
While the federal government was busy with the travel habits of CEOs and propping up a failed business model, the state legislature in Michigan was planning for the future. Recognizing that the real technology for 21st century cars will be battery technology, the state legislature has agreed to offer up to $335 million in local tax rebates for the development of next generation car batteries. With this move, Michigan is aiming to carve out a piece of what is predicted to be a $50 billion market by 2020.
Ford Rains on Its Own Parade: ‘Fusion Hybrid May Face Battery Shortages’
It was so refreshing to write a positive post about a Detroit automaker earlier this week. The topic was Ford’s new Fusion hybrid which is rated by the EPA to get 39 mpg combined, which would make it the third most efficient mainstream car on the road in the U.S. (After the Prius and Civic hybrid).
However, ensuring that this excitement didn’t become contagious, or last too long, Ford is already warning that they cannot get enough hybrid batteries to meet potential demand. Ford Americas President Mark Fields said, “We are constrained by the amount of components, including batteries, that the supply base can provide us.” The Fusion uses nickel metal hydride batteries that are supplied by Japanese company Sanyo.
Two things. First, this comes as little surprise. Ford hasn’t had a really hot car since the Ford Explorers began imploding ten years ago and it probably doesn’t remember how to be successful anymore. And second, this reinforces the importance of encouraging a domestic battery industry. Of course, battery shortages could still occur with domestic production, but the sheer importance of batteries in the 21st century is so enormous that it would behoove us to have our own industry and expertise, as well.
New York Times Editorial Board in-Favor of a Gas Tax
The NY Times editorial board on Saturday followed the lead of co-worker Tom Friedman and endorsed the concept of a gas tax. Here are the highlights:
“…for all the conditions attached to it, the multibillion-dollar aid package for Detroit’s carmakers approved by the White House (with Mr. Obama’s support) fails to address one crucial question: Who will buy all the fuel-efficient cars that Detroit carmakers are supposed to make?
“The danger is that too few will, especially if gasoline prices remain low. Therefore, it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession. READ MORE
Ford’s Hybrid Fusion a Bright Light Coming Out of Detroit
Lately, the most progressive product to come out of Detroit is the marketing campaign for the planned electric Chevy Volt that may or may not eventually be built, and may or may not eventually work.
Fortunately, it appears that Ford may actually deliver a modern, efficient (and real) car next year. The new Ford Fusion hybrid, is slated to go on sale in the spring of 2009. The car has been certified by the EPA to get 41 mpg/city and 36 mpg/highway, with a combined rating of 39 mpg.
This will make the Fusion hybrid the third most efficient widely owned car on the road, after the Toyota Prius (46 mpg combined) and Honda Civic hybrid (42 mpg combined). READ MORE
Oil falls but gas prices increase in San Diego
San Diego, which traditionally has some of the higher gas prices in the country, is experiencing a new increase in gas prices. Strangely enough, this increase is occurring as the price of oil continues to fall.
With oil hovering around $35 per barrel this week, the average price for a gallon of gas in San Diego has risen to $1.81. This is up ten cents from a week and a half ago. This increase is being attributed to a decrease in supply from California refiners. The refiners, who have complained about losing money on sales of gasoline, have cutback their production by 6.4% in the last week. This has created a situation where refiners are apparently back in the black for their wholesale gasoline sales. READ MORE
Against the bailout: ‘An old man dies, a little girl lives; fair trade’
NYT columnist Roger Cohen had a great analysis of the Detroit bailout this week. Although President Bush did approve a $17 billion bailout on Friday, it is useful to look at Cohen’s points, since this is surely not the last time we will have to contemplate bailing out the Big Three.
Cohen’s op-ed, “Pan Am Dies, America Lives,” which reminds us of the classic line from Sin City, argues that the strength of the American system is derived from the natural rise and fall of companies. He uses the death of Pan Am, once a terrific airline, as an example:
“[F]acts are facts. Pan Am, which had been a leading U.S. international airline since the 1930s, collapsed in 1991. Like other great U.S. companies, it died in the marketplace because it blundered. Churn – of people and businesses – has always defined America. Nobody subsidized U.S. Steel or the automaker Packard in the belief that the world without them was unthinkable.” READ MORE
Newsflash: Europe is more committed to electric cars than U.S.
With battery technology being the biggest hurdle to the widespread adoption of electric cars, the state of that industry is of utmost importance to any American attempts to rebuild our auto industry and transition off of oil.
Unfortunately, Bob Kanode, CEO of U.S. battery manufacturer Valence Technology, warned that the U.S. is miles behind Europe on both the will to act, as well as the demand for electric car batteries:
“In Europe, the determination is absolute,” he said. “They have had high energy costs our whole lifetime. Second, they want to decrease their reliance on foreign oil…And third, they are absolutely committed to improving their carbon footprint, both the public and the governments.” READ MORE
