In a win-win move for both the environment and the US auto industry, President Barack Obama announced on Thursday that the US General Services Administration would order 17,600 fuel-efficient vehicles—including hybrids—from GM, Ford, and Chrysler by June 1. The purchase goal is fuel economy that’s 10 percent higher than the vehicle being replaced.
While auto sales have fallen 36 percent in the first quarter of 2009 compared to last year, the government’s purchase is still only symbolic, representing less than two-tenths of one percent of total US annual sales. But lawmakers from auto-industry states like Michigan and Ohio reacted with fervent support.
2500 Hybrids by Tax Day
The first step will be an order for 2,500 hybrid sedans by April 15. Qualifying cars include the 2010 Ford Fusion Hybrid, the 2009 Chevrolet Malibu Hybrid, and the 2009 Saturn Aura Hybrid. The Ford Fusion Hybrid received excellent reviews and generated intense public interest, but the incremental mileage improvements of the Malibu and Aura mild hybrids have neither sparked much enthusiasm nor sold particularly well.
Moving from a full-size sedan like the Chevrolet Impala to the Fusion Hybrid saves a lot of gasoline, though. Because gasoline mileage is not a linear scale, converting from the Impala’s 20 mpg to the Fusion Hybrid’s 40 mpg saves 2.5 gallons per 100 miles. Going from the Fusion Hybrid to a plug-in’s 100-mpg-equivalent displaces approximately 1.5 gallons—though it cuts costs, since driving a mile on grid power costs 3 or 4 cents versus 10 to 15 cents on gasoline.
The total cost of $285 million would come from the $787 billion economic stimulus bill passed by Congress last month. A statement from the White House said the entire purchase will “reduce gasoline consumption by 1.3 million gallons per year and prevent 26 million pounds of carbon dioxide from entering the atmosphere.”
The President also highlighted the program’s benefits for the US auto industry. “I am 100 percent committed to a strong American auto industry,” his statement said. Obama called this program “only a first step.”
Within the total $285 million cost is $15 million that the GSA, the government’s purchasing arm, will allocate to orders for advanced technology vehicles, including “commercially available” buses that run on either compressed natural gas or hybrid-electric power. This category also includes all-electric vehicles, which might include neighborhood electric vehicles for certain government uses. That order is to be placed by September 30.
Weighted Toward Small Cars
With at least some vehicles in the order to be expensive buses and commercial trucks, the average per-vehicle cost of $16,200 is likely to indicate large numbers of the smallest US-built cars.
Even at the heavily discounted rates offered for government fleets, the order will likely include US-built high-mileage vehicles with conventional gasoline engines. These could include such vehicles as the 2009 Chevrolet Cobalt, 2009 Ford Focus, and 2009 Dodge Caliber—all of which have seen their sales fall as the price of gasoline plummeted.
Sadly for the civil servants who will drive them, some of these cars receive poor consumer ratings in their categories. Only the Focus is remotely modern, and its sales have held up better than the other two. The Cobalt will be replaced for 2011 by the new global Chevrolet Cruze, and the aging Caliber received tepid reviews several years ago on launch.
Ambitious Administration Goals
The Obama Administration’s auto task force is currently pressing GM and Chrysler to improve their restructuring plans if they expect additional funds beyond the $17.4 billion received to date. Obama’s goal of creating a viable auto industry will emphasize building more efficient cars.
Other policy measures include working with Congress to pass a “cash for clunkers” bill, which would subsidize trade-ins of older, less efficient vehicles for new, high-mileage replacements. Those vehicles, however, would likely not be restricted to US-built models, to improve the array of choices for car buyers and avoid running afoul of international trade restrictions.
During his campaign, Obama pledged to put 1 million plug-in vehicles on US roads by 2015. He also said he wanted to convert the White House fleet to electric vehicles, and would urge the government to make half of its new-car purchases plug-in hybrids or electric vehicles by 2012. But experts question whether this goal is achievable, given the huge capital investment required for battery manufacturers to build domestic lithium-cell plants and for automakers to tool up for that volume of new vehicle designs.