Mitt Romney Weighs in on GM, CAFE, and EVs

If elected president, presumptive GOP nominee Mitt Romney said he would quickly sell off the government’s 26-percent share in General Motors, take a long hard look at pending fuel efficiency mandates, and presumably electric vehicle subsidies as well.

The U.S. Treasury has held onto its stake in GM for 35 months now, and if it were to sell its stock today at $21-something per share, well below its $33 IPO price, the country would lose around $16 billion, but Romney said there was no good reason to hold on.

Instead, he said President Barack Obama wants to avoid an embarrassing financial loss that stands to be a political check against him, thus Obama is not in favor of selling GM stock. But this Romney said he would do in short order, if he won the White House.

“There is no reason for the government to continue to hold (its GM stake),” said the Michigan governor in a lengthy interview with the Detroit News published Tuesday. “The president is delaying the sale of the shares to try and avoid the story that the taxpayer took another loss. I would get the company independent from government and run for the interests of the consumer and the enterprise and its workers – not for the political considerations of government officials.”

Furthermore, Romney said, he would review pending Corporate Average Fuel Economy (CAFE) mandates slated to put the industry on course toward a “54.5 mpg” fleet-wide average (actually about 40 mpg or so on window stickers) by 2025.

A comment offered by Obama spokesman Matt McGrath generally countered the views aired by Romney, who in 2008 famously wrote a New York Time Op-Ed urging the country not to bailout Detroit automakers, and let them go bankrupt.

“The last time Gov. Romney weighed in on the future of the auto industry, it was to suggest that we let Detroit go bankrupt, a betrayal no Michigander is likely soon to forget,” McGrath said. “As someone who was dead wrong about the industry’s present, Mitt Romney is the last person who should be offering advice about its future.”

Romney told the Detroit News his intentions and statements have been mischaracterized and Democrats are “distorting” his record.

“If they needed help coming out of bankruptcy and government support, that was fine, but I was not in favor of the government writing billions of dollars in checks prior to them going into bankruptcy,” he said.

But as of this week, Romney is still weighing in on an industry in the sphere of which he grew up as the privileged scion of former American Motors Executive George Romney, who’d climbed to the top of that now-shuttered company’s ranks decades ago.

Romney also said CAFE is not likely such a good idea, represents intrusion into the free market by the Obama-led government and he’d try to find “a better way of encouraging fuel economy” rather than solely relying on efficiency mandates.

“The best approach is to try and build vehicles that people want, rather than having the government telling the companies what they must make,” he said to the Detroit News.

“I would work with the manufacturers to find ways to encourage fuel economy on the part of the consumer. But trying to have the manufacturer push the product on the consumer — that the consumer doesn’t want — is not the right approach.”

The Obama administration has also been a major champion for plug-in electric vehicles and hybrids. It has pushed for even higher plug-in vehicle subsidies and incentives on the supply side and consumer demand side of the equation to get the fledgling industry flying on its own. Those plus CAFE requirements – not to mention European legislation beyond the purview of the American president – are expected to be key motivation in developing more electrified automotive solutions in coming years, but Romney said he sees failure written on the EV wall already.

The Obama-led government is, Romney said, trying to “to force a market to adopt a technology that people aren’t interested in.”

What do you think?

The post-bankruptcy New GM is now posting record profits, and the auto industry is on course to developing advanced-technology vehicles ranging from fuel-efficient conventional cars, natural gas, diesel, electrified, and even hydrogen fuel cell vehicles to meet CAFE – not to mention European – efficiency requirements.

The Detroit News offered other commentary saying Romney was off base, but what would be best regarding government attempts to influence the direction of the auto industry? If CAFE standards were relaxed, and EV incentives removed as one might surmise could happen, would the industry be better for it?

An oft-repeated appeal is to “let consumers decide” or variations thereof. However, in times past, the U.S. auto industry has not shown itself willing to as aggressively pursue advanced technology that could actually wean the world off of oil. If given the longer leash of a closer-to laissez-faire approach, do you think the industry might be more inclined to be like a junk food manufacturer and go for more expedient solutions that average consumers would still buy?

It’s well documented mainstream consumers have been slow to even grasp advanced-tech automobiles such as hybrids, and EVs. It has often been shown they overwhelmingly vote their pocketbook, and fuel prices have had a stimulus-response effect for hybrid sales.

As fuel prices crest generally upwards, if prices dip and appear momentarily more affordable, hybrid sales go down. If alarming price spikes happen, hybrid sales go up. This demonstrates a phenomenon that many consumers are reactive, and not carefully analyzing long-term trends in a world of finite oil, and ill effects resulting from hydrocarbon emissions.

What’s more, reasonably efficient conventional cars are in any case a far easier sell, and it will take a big push to develop affordable cleaner alternatives that have mass appeal while being sustainable in the long haul.

On the surface, it sounds enlightened and even democratic to say give the people what they want, but is relaxing regulations going to create for future generations what they will find themselves wanting, and is that the direction we wish to take as a society? Without strong mandates, would automakers attempt to as carefully research, develop and market the most efficient, low emissions vehicles possible? And will as many consumers gravitate to the best long-term solutions all by themselves as long as the most efficient choices are few, and on average cost more?

Further, at present all three Detroit manufacturers are on board with CAFE requirements. The rules are estimated to ultimately add $2,000 per vehicle on average and cost $157.3 billion to develop compliant vehicles, but would more than pay for themselves and net $1.7 trillion in fuel savings …

This is a highly complex topic, and now having raised only a few questions, we’ll back off, and qualify that we would not pretend to say we have all the answers that really, no one can offer with complete certainty.

Can you add to the discussion in a constructive way? We’re interested to know what you think the auto industry needs to see happen in coming years. What is best for the economy and environment? Is CAFE a good thing as proposed? Are EVs a worthwhile endeavor to continue to support? If so why? If not, why not?

Detroit News

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  • CharlesF

    I can only think of three ways to raise MPG.

    1) CAFE standards. If you keep the bad credits down, they do work, and allow people the freedom to choose any car. The companies have to decide how to balance high and low MPG cars.
    2) Raise fuel taxes. Hurts the lower income people the most. Allows all cars to be sold.
    3) Mandate MPGs. This would limit trucks to the work place. I do not think the citizens of the USA would go for this one.
    4) Do nothing.

    Personally I like a combination of 1 and 2, with 2 being slowly phased in. I think 4 leads to the destruction of our habitat, but is the way the GOP wants to go.

  • kmack

    By far the best way to change demand is to increase fuel prices slowly over time. Not just a tax but an actual set price (may not be possible). For example, the average price per gallon would be $4.00 in 2012, $4.20 in 2013, $4.40 in 2013, etc. This would still disproportionally affect the poor who can’t simply go out and buy a more efficient car but the price per gallon is the only true way to change demand. Simply mandating MPG is better than nothing but the market only works if people want the cars. Raise prices on gasoline and people will want more efficient cars and the manufacturers will have no problem producing them. The worst thing that can happen is for a new administration to come in and cut MPG standards. Industry has spent a lot retooling for efficient automobiles. Relaxed standards will only cause confusion on the path forward.

  • Roy_H

    Romney is an idiot. I find it hard to believe that the Republican party has fallen to such a low that this is the best they can come up with. Anybody who has followed Romney’s speeches knows he has changed so many times with the wind that he clearly has no direction other than to say what he thinks the people in front of him want to hear at that moment. You cannot run a government by changing your stance with each delegation you meet. His only focus is to destroy all the good things Obama has done and is trying to do.

    If the American people vote him in it will be a disaster of epic proportions and they will get what they deserve.

  • LynnM

    Here’s my take. There is no end to the areas of potential government laws controlling our lives. If you are for the government deciding how to build cars then here are some others freedoms you could also give up to the government
    1 size of your soft drink
    2 size of your burger
    3 total calories of your restaurant meal
    4 size of your house
    5 size of your car
    6 miles you drive/year
    7 miles you fly/year
    8 gallons of water you use /year
    9 max commute to work miles
    10 max temperature you can heat your house to
    11 min temp you can set A/C
    12 outside temps that you can’t turn on your heat or A/C
    13 trips to the grocery store/week
    14 trips to the mall/week
    15 number of pairs of shoes/shirts/slacks you can own
    16 number of children you can have
    17 number of cars you can own
    18 size of you house
    19 size of your garage
    20 amount you can smoke
    21 amount you can drink
    22 Kw hours of electricity/year you can use
    23 max hours/week to watch TV
    24 min hours/week exercise
    25 max number of pets
    26 max hours/month of sun exposure

  • Capt. Concernicus

    @ Roy

    You’re absolutely right. That’s all I’m going to say because getting into Romney’s policies only irritates me. I’m an independent and I will not be voting for him in the fall.

    The govt needs to have some hand in weaning us off oil. It’s a finite source and price although do go down here and there have been trending upwards for years now. Unfortunately the American public has no long term thought process. We’re very reactive and not proactive and it shows in our energy policies or should I say lack of?

  • David Long

    Romney can think of no reason for the government to hold onto the shares? How about “until the share price increases since GM is doing much better right now?”

    Oh, I forgot, this is the guy from Bain Capital. They bought Kay-Bee Toys for $300M using only $18M of their own money. They charged fees and sucked over $80M OUT of Kay-Bee and then had Kay-Bee file for bankruptcy. They almost quadrupled their money while purposefully running that company into the ground.

    THAT is what Mitt knows how to do.

  • Van

    Great topic.

    What should the auto-industry do in coming years? Develop and sell affordable plug in hybrids with at least 20 miles of EV range. The road block appears to be battery technology. Rather than mandating the end product, i.e vehicle choice, government should help development next generation batteries and production facilities. This expense should be viewed as natural defense expenditures, with far greater payout then say high speed rail or another tank.

    We should protect the environment from air pollution, not green house gases which is a boon-doggle like the Hydrogen economy. Wasted dollars. Plug in hybrids emit no exhaust for short trips, and the electric is produced outside urban areas. Trying not to go too far afield, we need to build more natural gas and nuclear electrical generating stations, so our domestic energy does not needless pollute the air.

    The whole concept of CAFE standard are a joke, you do not bring about technological advancements by mandating outcomes. The early success of CAFE was due to fuel injection, and now we can make a leap forward with hybrid technology. No need to give the credit to central command and control government action. The Soviet Union used that model and produced misery for 70 years.

    Yes, taxpayer dollars should be used to foster development of EV with at least 120 mile range and a cost of less than $35,000. As stated above, we need next generation batteries with more power and less cost. The Government should be working on that big time.

  • MrEnergyCzar

    Most of the Right and Oil Dictators have to hate these cars.. Just follow the oil money and it’s influence… Why would Romney go against what Bush did when he spent a few billion keeping GM from failing in 2008? Aren’t they the same party? Bush Senior bought a 2012 Volt for his son Neil this year. I don’t get it.


  • John Doe

    The more I read about Mitt Romney, the more I think he’s the wrong person to run our country. First of all, he’s one hell of a liar and cannot be trusted.


    Dear LynnM,
    Your fear of government regulation taking over everything we do is hypocritical (besides the fact that some are regulated at the state and local level)! The limiting factor for almost everyone of your points is MONEY. Our govenment is corrupted by money and has no concern for the greater good. Do you think the rich should do whatever they want just because they can afford it? If we get government out of everything we the people will end up being completely owned by the Chinese.

    You also left out a few points. I assume you want the government to continue to regulate these.

    1. What we smoke (pot, crack, heroin, etc)
    2. Who we marry (same sex, brother, sister, mother, etc)
    3. Reproductive Rights (abortion, birth control, etc)
    4. Foriegner Money (campaign contributions, company ownership, government contracts, military influence)
    5. Amount of harmful chemicals in our water and food supply
    6. Safety Regulations (building standards, sub-standard products)
    7. Immigraton Laws
    8. Workers Rights (working conditions, minimum age, max hours worked, discrimination)

  • bruce f

    This woman is an idiot, just like Romney