Obama’s American Hybrids

These words were a standard item in Candidate Obama’s stump speech:

“I’ll help our auto companies retool, so that the fuel-efficient cars of the future are built right here in America. And I’ll make it easier for the American people to afford these new cars.”

Now, the big question is if President Obama (after taking oath) can deliver on these promises. And if the key points in his plan will go far enough to achieve the ambitious triple goal of revitalizing domestic auto manufacturing, freeing the US of dependence on foreign oil, and reducing greenhouse gas emissions from our cars and trucks.

The following proposals are part of President-elect Obama’s 10-year, $150 billion energy package:

  • $4 billion in tax credits to American automakers to retool plants to meet higher fuel efficiency standards.
    Caveat: President Bush already signed a $25 billion loan package for Detroit to retool.

  • A $7,000 tax credit for consumers who buy early model plug-in vehicles.
    Caveat: A $7,500 tax credit for plug-in vehicles is already included in the $700 billion bailout package for the financial sector.

  • A goal of putting 1 million plug-in hybrids on American roads by 2015.
    Caveat: The first plug-in hybrids will not be launched until late 2010, so ramping up to meet these goals will be extremely challenging.

  • A requirement that all new vehicles made in the US would be flex-fuel capable by the end of their first term in office.
    Caveat: Unfortunately, very few of today’s flex-fuel cars actually run on ethanol, because the economics and environmental consequences of corn ethanol are prohibitive, and the technology for producing cellulosic ethanol is still in development.

Despite the caveats, these goals represent an unprecedented level of aspiration for greener transportation. In fact, Obama has been considering how to combine efforts to save Detroit and reduce fuel consumption for at least two years. His 2006 bill, “The Healthcare for Hybrids Act,” had the federal government covering 10 percent of the retiree health care costs for a qualifying auto manufacturer—that is, if the carmaker invests at least 50 percent of the those savings into hybrid and alternative fuel vehicles, including the retooling of assembly lines and the retraining of workers.

Things have grown even more dire for the auto industry since that time—so Obama may need to go beyond specific technology goals—a certain number of plug-in hybrids by a certain time—to more fundamental shifts in strategy. He could start with one or both of these steps:

  • Break the California versus EPA Log Jam

    The Obama administration should accept California’s application for a waiver allowing the state to regulate greenhouse gas emissions from vehicles. Bush’s Energy Bill, now the law of the land, mandates an average fuel efficiency of 35 miles per gallon by 2020, with a phased-in approach beginning in 2011. The California standards would force automakers to cut greenhouse gas emissions by 30 percent—roughly equivalent to 43 miles per gallon—by 2016, with cutbacks to begin in 2009. The decision affects 16 states other than California—thus impacting about half the new car market in the United States.

    With the single act of accepting the California waiver, global automakers would accelerate efforts to build more efficient vehicles using all kinds of fuel-saving strategies, from downsizing, increased aerodynamics, hybridization, and plug-in technology.

  • Create a Gas Price Floor

    All of Obama’s efforts to have Detroit produce hybrid and plug-in vehicles will be undermined—if not entirely swept away—by low gas prices. The Obama Administration should ensure a price floor—say $2.50 or $3.00—for a gallon of gas. And raise that floor steadily over time. High gas prices earlier in 2008 produced a real shift in sentiment—among automakers and consumers—toward higher mpg vehicles. Ensuring a minimum level of prices at the pumps would make sure that this momentum is not lost.

    Many commentators, including Ford CEO Alan Mulally and GM CEO Rick Wagoner, have said CAFE is the wrong way to go, and that higher gas taxes or a gas-price floor would spread the burden and let markets work more efficiently. But they also acknowledge the political difficulty of that strategy.

Obama’s presidential campaign was built on hope and possibility. And Obama has inspired the vision for a Detroit renaissance built on a new generation of American hybrids of all kinds. It’s easy to like that idea. But it’s another matter to ask Americans to make sacrifices—like paying more at the pump—or to force car companies to accept the will of states that want more aggressive emission standards. For Obama to achieve his critical goals regarding energy and the environment, he’ll need to rise beyond hope to a new level of pragmatic leadership. He’s our best chance in a long time.


  • thompson

    I fully agree with the points in this article, particularly with the gas price floor.

  • Jeff

    Obama gives a sh!$ so he will at least be giving it a real try. It will be as much up to the auto industry and consumers to do their part too. If people keep siting fears of small car safety etc. for not buying a small efficient car then we might as well not wast our time. We need to all commit to this to make it work. “So GM, Ford and Dodge, quite making the Unimog 5000s and focus on real vehicles, plug in or not.”

  • Samie

    Brighter days ahead!

    CAFE, CAFE, CAFE not gas price floor!
    Large political fallout that nobody ever bothers to see with that idea.
    Every environmentalist loves to say that CAFE actually encourages people to drive more with less importance on conservation, which is true. But economic activity is just as important as CO reduction which if we adjusted the CAFE standards again in a away that forced the auto boys to use more efficient technologies in ALL their fleets over a 20-30 yr period we could actually meet both of these things and spur greater innovation and efficiencies. It could be that no longer would we see a $60,000 SUV without some form of hybrid technology. Tightening the MPG’s in a long-term CAFE could create an idea of the word hybrid or EV as just some technology that helps drive my car instead of the great green marketing those words are associated with today’s vehicles and consumer ideals.

  • cho cha

    It’s president elect obama not president obama.

  • Sanjay

    I believe a floor on gas price is a wonderful idea, and CAFE can easily be combined with it. While there will be political fallout, it can be overcome by the call for sacrifice and a promise for a substantially low $/mile. This will achieve several objectives: (i) The overall fuel consumption will trend downwards, (ii) It will be easier for automakers to meet CAFE, and (iii) The tax $s will provide for building the infrastructure for charging stations, retooling automakers and highways.

  • Samie

    By not offering a tax rebate that is proportional to what one pays in you create a policy that is unevenly distributed. I say even if one gets what they pay in by maybe federal income tax rebates that is disproportional to, since folks with different incomes don’t have the luxury of budgeting for everyday expenses with a check that comes once a year. Disposable incomes are different and I would argue any policy of a gas tax or something like it would have uneven consequences on say people or families of lower incomes.

  • Bryce

    Congrats to Mr. O. : )

    Somehow though, I think he has got it covered hybridcars.com

  • Cal

    It all sounds good, but Obama’s proposals have either already been put in place, or are simply unattainable. I’d like to see the good, but lets be realistic. He is not our savior, he’s made a ton of empty promises. Let’s hope he can actually do some good.

  • ex-EV1 driver

    Forget CAFE.
    All CAFE did was to get people out of their sedans and into trucks. This will continue to happen unless we outlaw trucks – which, of course, will kill our economy since we must have trucks in order to deliver materials.
    We need to take positive action, not just pass a bunch more feel-good laws that backfire on us.
    We’re a capitalist democracy, not slaves of a totalitarian socialist government and it has made our country strong. In order to continue our strength, WE must take the action and save ourselves instead of whining for big brother to come save us.

  • Will S

    I like most of the points, though a gas price floor is hard to implement without the oil companies/refiners simply raising their price to whatever the floor is. A steadily increasing gas tax will accomplish more, along with a gas tax rebate, which rewards those who use less. I think I saw this proposal here; raise the gas tax by 10 cents every three months for 5 years. Give back gas tax rebates equal to the average per capita expenditure. Those using less gas will be subsidized by those with higher consumption lifestyles.

    CAFE will also have its place, especially when all vehicles under 10,000 lbs are included in it. Changes need to be made to incorporate electric and plug-in hybrid vehicles.

  • Samie

    Proof of per capita expenditure is hard to accurately record and it allows all the scammers to enter into this. New bureaucracy and red tape I’m sure would follow. A history lesson I guess but back in the Clinton Administration with the help of Al Gore they tried to increase federal gasoline tax but this policy meet heavy oppostition at the time from congress. This issue became a catylis along with others that helped the Republicans take back the House and the Senate. So lets be careful of gasoline taxes and other types of programs that put the pressures on consumers to reduce consumption. Not to say those are not good ideas but in reality they don’t get us that far

  • Lori

    I think the idea of a gasoline price floor would be better combined with a requirement that oil companies invest a substantial part of their already obscene profits (maybe half?) in alternative energy. That would reduce the temptation to “simply raise prices to meet the floor” and would benefit alternative energy research. And it would ultimately benefit the oil companies – short sighted as they are.

  • mdensch

    We just witnessed the profound impact that $4 per gallon gas had on demand and it proved to be just what we needed to snap the public to attention.

    CAFE and high prices, whether market driven or engineered through a sensible energy policy, will work in tandem to move us in the right direction. You force car makers to produce fuel efficient vehicles AND create a market for those vehicles with high fuel prices. Consumption goes down, we stop funding terrorism through the billions that we send to the middle east, the air gets cleaner and we further incentivize research into non-carbon fuels.

    That’s a win-win-win.

  • hybridman2

    Incentives to drive alternative energy are necessary, but until the efficiencies are high enough to actually make a difference, we’ll bu cutting off our foot if President elect Obama put’s his policies in place to penalize fossil fuels like reported this article from CNN .

    Ethanol is not the panacea it’s made out to be- throwing good money after bad will not help our economy or environment. SOlar is making headway, but not ready for primetime.

    In the meantime, we must send a message to OPEC and other countries like Venezuela, that we will not allow them to cripple our economy by manipulating prices. The only way we can do that now is to build more refineries to process the oil, and tap into our existing shale oil and off-shore reserves. We must approach this from a practical as well as philosophical viewpoint and not get caught up in a “feel good” approach only.

    Will oil last forever? Of course not. But 30-40 years can make a huge difference in breakthrough technologies, especially if the coming administration helps fund research and development beyond the corporate buddies that helped them get there.

    Time will tell. But I hope America doesn’t get complacent with the low gas prices. I’ve seen this pattern before and it effectively quells cutting edge advancements and development before beginning it’s ravenous rise again.

    Bob

  • Will S

    Samie said:

    >Proof of per capita expenditure is hard to accurately record

    ? All you need is TotalGasolineSales divided by NumberOfTaxpayers

    > and it allows all the scammers to enter into this.

    How so? Any rebate would be fixed at the same level for all taxpayers.

  • Dom

    I like some of it, except please don’t give California a waiver!! I’d much prefer the EPA set one single standard for the automakers to follow. And please keep ALL the alternatives on the table, don’t just single out one technology.

  • Samie

    Question to Will S. if you take TotalGasolineSales (I assume the additional fed tax on gasoline?) divided by NumberOfTaxpayers and distribute it evenly to all taxpayers sounds like a interesting idea. But you could say that it would penalize those who have to travel far distances to work (ie those who may not be as well of as one may think) and those who carry freight or say supplies to a work site which may mean higher prices to consumers. If we use the added tax formula it seems we would be even more sensitive to higher prices of gasoline. People have a really hard time budgeting for once a year refunds especially those who live day to day in terms of monthly incomes. So for Will please explain more I’m interested in why we could not make higher CAFE standards or restructure the gas guzzler standards. I see CAFE is good in that some of the top fuel rated vehicles often are the base models or the ones that most people can afford. What I do not like about CAFE is the 60k SUV’s that gets 10-12mpgs which I do not see why those who can afford those types of vehicles can not pay an additional say 3-5K more for technology that increases MPG’s this is somewhat changing due to some weak upgrades to CAFE

    As for Hybridman2 Why care about prices of gasoline? Requiring use of efficient technologies in vehicles leads to more innovations as they are exposed to market forces. If we take a conservative approach how does that do any good if consumers are limited on choices of new plugin, EV or other technologies. This also leads to less competition or innovations from other companies. We have to get these things on the market to become viable and profitable and I’m sure these things can reach a mass market well before the 30-40 years you talked about.

  • B. Nicholson

    OPEC’s formation was an act of war according to international law. We, as a nation, are entitled to retaliate. We must increase importation taxes on OPEC oil. And they must be HIGH taxes, too. Taxes must be revolutionary to obtain revolutionary results. We might even KILL OPEC if we only tax cartel oil. Discouraging international cartels should be American policy across the board.

    It is true that the Northeastern United States would suffer the most from a high tariff on OPEC oil, but the NE states are the wealthiest states and can afford it best. New England is the seat of American patriotism! Natural gas from American fields is available for the Northeast. It is among the wealthiest Americans that use of compressed natural gas automobiles should first occur and where the stiffest penalties should be imposed for using imported OPEC oil.

  • Will S

    Samie wrote:

    > it would penalize those who have to travel far distances to work (ie those who may not be as well of as one may think) and those who carry freight or say supplies to a work site which may mean higher prices to consumers.

    Samie, some things are unavoidable if we are to right this sinking ship. People can vanpool (I have), carpool, etc. Yes, freight will become more expensive when gas prices go back up again. I would recommend to anyone who is a trucker to acquire a skill in another area.

  • DJB

    A rising gas price floor makes real sense. We should encourage Obama to adopt it, although it is doubtful that he will.

    It is ironic that our thinking on transportation is confined to cars/trucks/SUVs. These have always been history’s dirtiest, most dangerous, and most expensive forms of transportation. Imagine if we invested the same sums in making walking, biking, or public transportation easier.

    Widespread adoption of truly clean vehicles is decades off even with an aggressive subsidy program. We need to think about ways to plan our cities, suburbs, and even rural areas to make them less dependent on vehicular transportation of all types, especially in this, the most auto-dependent country in the world.

  • steven

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    vice versa. The solar carports can also power up the car’s battery’s and in combination these energy power sources can send excess solar energy back into the elctrical grid or send excess electrical energy to any power source or load in need of renewable energy..why arent people more aware of these types of solar carports or this technique???. NO MORE GAS BURNERS…hybrids are ok for now, but yes Full electric vehicles are just few years away people!!!!!!!!!!!!!!!

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  • bill cosworth

    People are so negative

    Hybrid cards were invented by the American car companies dummies.

    Its this a hybrid site.

    Jezzz.

    Oh we cant do it.

    Come on we did. Ford sold the technology to Toyota.

    Didn’t we do that with the VCR Too.

    Sell all the american inventions to japan so the japanese can get rich?

  • Gloria

    I understand the idea of being green , but California is completely disregarding the health and welfare of truckers with their CARB laws . sadly the next target on their list will be foods that are transported by refrigerated trucks . No , I am not nuts , if you do not believe me then please search for the CARB laws online and read them .

  • Richard Lee

    Government did not create the auto industry and the auto industry does not depend on government to innovate or change. If it did, our cars would look like those created in the former soviet union. Cars are getting more fuel efficient all the time and hybrid and electric will continue to develop independent of government controls or intrusion. If government does NOTHING, the automobile will continue to evolve and improve. The best companies will survive, and the worst may disappear, which in the long run is best for everyone.

  • Bryce

    Will……

    If the cost to truckers go up, they aren’t simply going to go out of business, they will raise their prices and the prices of everything from food to T.V.s will go up. Anything that moved between production and your house will cost more. that is not something that you or I want. You can’t just count them out. Trucking is something that will be necesary until the day robots can do it.