Five Signs That Detroit Is Committed to Fuel Efficiency for Longterm
Automotive executives are planning based on high oil and gas prices.
The New York Times reports today that Dan Akerson, G.M.’s chief executive, has told his product executives to use $120 a barrel oil and $4 a gallon gas as the basis for its vehicle development strategy.
Cars are being built ready to accept gas, hybrid, plug-in hybrid and electric drivetrains.
We’ve already seen models like the Mercedes ML 450 hybrid that is available in gas, diesel or hybrid. By 2012, the Ford Focus will come with the choice of efficient gas, hybrid, plug-in hybrid, and pure electric—all on the same production line. Honda globally will build gas, hybrid and EV versions of the Fit. Yes, there will always be a few drivetrain-specific models, but the big move is drivetrain flexibility: build the fuel-efficient technology that’s selling.
SUV plants have been rebuilt for small cars.
Since 2004, Detroit Three have closed 17 assembly plants that build pickups, SUVs and vans—removing millions of low-mileage vehicles from product roadmaps. Meanwhile, automakers have invested hundreds of millions into converting those plants—and building new ones—to build smaller cars (from crossover SUVs to compacts), as well as hybrid and electrics, and the batteries that make them run.
Small cars are becoming profitable.
As stated above, automakers have retooled for efficient high-volume production of smaller cars. At the same time, Detroit has a much better handle on overall production capacity and health care costs, which had baked in too much baseline cost in each vehicle. The marketing has shifted from powerful V8 engines, to smaller models with efficient turbocharged and direct injection engines smaller displacement (and lots of entertainment and connectivity features) that can command premiums from mainstream consumers.
Automakers fully understand the long-term reality of higher fuel-efficiency standards.
Detroit’s big investment in hybrids, plug-in hybrids and electric cars is not a kind-hearted gesture to save the world. It’s a requirement from the government, which is mandating a 30 percent improvement in fuel efficiency between now and 2016, and an even bigger jump as we head toward 2025. “Are we going to stick with improving fuel efficiency? You don’t have a choice,” G.M.’s Akerson told the New York Times. “The government has told us what we have to do, and we will meet those goals.”