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The always-amiable Amory Lovins of the Rocky Mountain Institute offered his plan for an ultra-light-weight SUV-sized vehicle called the Hypercar—in tones that suggested that anyone who didn’t understand its obvious advantages and ability to transform the global industry completely was…well, perhaps slightly slow.
And Honda’s John German took a contrarian tack, suggesting that most consumers are risk-averse in adopting new technologies, due to uncertainties over future fuel prices and the lifetime costs of those technologies. And he noted that the new CAFE regulations no longer regulate fuel economy, but instead the “maximum feasible” efficiency for each class of vehicle—so that each company’s fleet mix will have its own, sales-based mileage requirement. A shift to smaller cars, he pointed out, will actually raise each company’s required mileage. “The new CAFE regulations will be much more dramatic than the ‘35 mpg in 2020’ that we think of,” he warned.
Without listening closely, an environmentalist in the audience might have come away from the session thinking that some automakers view better fuel economy as just an expensive irritation.
But the reality is far more complex. The US industry is now under stress it has never before experienced. Whipsawed by shifts in consumer demand, waiting desperately for new products to emerge from three- to five-year development cycles, the former “Big Three” know they must change to survive.
They feel the costs to do so, however, are being exacerbated by elected officials who have little understanding of the capital costs or lead times required to make those changes. So they will change—but the structure of the resulting industry remains unclear. So does the size of the resulting carmakers, and whether their suppliers (virtually all of whom are being restructured, bought, merged, closed, or changed, whether in or out of bankruptcy) will survive at all.