By Bart King
As I write this, the CEO’s of the three biggest American auto companies
are en route to Washington D.C. in hybrid vehicles.
‘For Sale’ signs have been hung in the windows of the corporate jets
that delivered them to the feet of Congress a few weeks ago, when they
first asked for a federal bailout.
But their penance is not limited to the revocation of VIP flight
privileges. Whether they know it or not, they are atoning for the
hubris of an entire nation that led its signature industry down a
dead-end road.
Despite rising gasoline prices around the world throughout the 1980’s
and 90’s, U.S. car buyers and makers opted for increased power, rather
than efficiency – an indulgence that was made affordable by suppressed
fuel prices due to the enormous size of the U.S. market. But since the
beginning of the new century, the United States has lost its market
dominance, as millions of drivers in China and India adopted the
American dream of auto ownership.
Other factors contributed as well, but in the last two years U.S.
drivers have been required to pay per-gallon prices on par with the
rest of the world – the true
cost, you might say. The fuel tanks of our over-sized and over-powered
vehicles became the hungriest, and most expensive mouths to feed in the
family.
Sales figures of trucks, SUVs and other gas-guzzlers plummeted, as new
car buyers began looking for smaller, smarter cars – the kinds Japanese
and some European companies have been perfecting for years. Now, the
economic meltdown, which began in the mortgage industry, threatens to
close the coffin on the U.S. auto industry.
In Congressional hearings on Thursday and Friday, the three CEOs will
ask for $34 billion in loans just to keep their doors open. They
submitted plans on Tuesday to cut thousands of jobs, close factories,
scale back benefits and even reduce their own salaries to $1 a year.
But what then?
Some argue that reorganization in bankruptcy – similar to what Delta
Airlines went through – is exactly what’s needed. The carmakers respond
that no one will buy a vehicle from a company that might not be around
in a year. But bankrupt or not, that is the position they are already
in, and it’s questionable whether they even make vehicles the average
consumer wants to buy.
The auto industry, and America’s preference for power, needs a complete
overhaul. A whiff of fresh air will put out a match just as well as a
bucket of water.
The auto industry won’t be the last to feel the effects of limited
natural resources in the years ahead, and at this early stage in the
development of alternative technologies, the smaller, more nimble
companies seem to be making the big R&D leaps.
There are no easy answers, but I would like to see U.S. automakers
embrace offers like the one made last week by Delaware-based AFS
Trinity, which has been converting compact SUVs into 150-mpg plug-in
hybrids with ultra-capacitor technology. The company wants to use $2
billion of the $25 billion in loans Congress put aside last summer for
the auto companies to retool their factories for more efficiency.
AFS Trinity has offered to work with whichever of the Big Three wants
the help, and it is just one of several U.S. companies with promising
electric drive-train technologies.
Congress asked the Big Three to submit proposals that demonstrated
their commitment to a new way of doing business, but what they got was
a laundry list of cost cutting measures that will allow the
continuation of business as-is. The federal government is prepared to
spend big money to save the economy, but no one wants them to dump
billions down the same old hole.
It seems unlikely that these storied institutions will ever lose the
bigger-is-better mindset. Even the Chevy Volt, GM’s highly anticipated
electric car (due out in 2010) is over-sized. I was shocked when I
first saw that the vehicle is about the same size as an Impala. It’s no
wonder they’re having trouble reaching the target battery-powered range
of 40 miles. And Chrysler is no different. Its first electric vehicle
will be either a jeep, a mini-van or a souped-up sports car.
Meanwhile, Norwegian electric carmaker Think last week began selling
its tiny ThinkCity, which the company says can go 112 miles on a single
battery charge. Small companies in Canada and South Carolina also have
announced plans to stick their electric drives in clown-size cars-made
in China. And the Japanese government is working with its companies to
begin replacing steel automotive bodies with lightweight carbon fiber.
That’s just common sense.
To Ford’s credit, it recognizes that batteries will be tomorrow’s oil.
It is calling for a partnership among automakers, parts suppliers and
the government to develop new battery technologies domestically, so the
U.S. doesn’t have to rely on foreign batteries to power its vehicles in
the years to come.
But I’m not sure some huge partnership is the way to go. The federal
government might do better to spend our $34 million on the most
promising small companies and let them lead the way. I don’t mean to
diminish the loss of jobs that would take place if one or more of the
Big Three went under, but I’m not convinced any of them can survive the
long term in their current forms.
Perhaps due to their dire circumstances, the automakers "green" plan is less
than impressive. GM continues to tout more fuel-efficient crossover
cars – modified SUVs – and flex-fuel vehicles. It costs practically
nothing to install a switch that allows cars to run on various fuels, but few gas stations offer an E85 option. GM and Chrysler say their
cars will be "fuel-efficient," but how efficient will they be?
And just so we’re clear, those CEOs aren’t making the Detroit to
Washington pilgrimage in the American equivalents of a 55-mpg Toyota
Prius, because there aren’t any. Rick Wagoner, CEO of GM, is most
likely getting 22 highway miles per gallon in a hybrid version of the
massive GMC Yukon, because that’s what power is all about.
++++
Bart King is News Editor of SustainableBusiness.com. This column is available for syndication.
Contact Bart.
Details on automaker commitments:
Ford: will introduce an EV van in 2010 for commercial fleets; an
EV sedan in 2011; a family of hybrids, plug-ins and EVs by 2012. Aims
for 36% improvement in fuel economy across its fleet by 2015,
investing $14 billion.
GM: launch plug-in Chevy Volt in 2010, and use its drivetrain in other
vehicles. Launch mostly fuel-efficient cars and crossovers through
2012, investing $2.9 billion. Will offer 15 hybrids convert over half
of fleet to flex-fuel vehicles by 2012.
Chrysler: plans to launch more small, "fuel-efficient"
vehicles. Will introduce the Dodge Ram Hybrid in 2010, along with its
first EV, and three more EVs by 2013.
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