What Obama's New Green Car Rules Do for Electric Cars
On Tuesday, the Obama administration announced that it had finalized the Corporate Average Fuel Economy (CAFE) rules that will see automakers’ fleets averaging 54.5 mpg in 2025. In a press briefing, EPA head Lisa Jackson was asked whether it was true that this fuel-efficiency play was indeed the Obama administration’s biggest-ever action against climate change. “I believe it is, at least domestically,” she said.
Since the process to address global warming on the international front is dead as a doornail, it’s safe to say that history will record the planet-saving provisions of CAFE, which represents a rare moment of consensus between the feds, carmakers and the environmental community. “Historic,” Obama said.
"The Electric Car Mandate"
Not everyone was celebrating. Like Solyndra, CAFE is a Republican campaign applause line as “the electric car mandate.” The automakers have actually consistently supported the program, but some sectors of the auto press, and many red-meat bloggers, are hostile. Car and Driver proclaimed, “Obama’s CAFE Fuel Economy Standards to Create Fleet of Tiny, Expensive Vehicles.”
In fact, CAFE does give automakers incentives to build electric cars—they really help get the fleet averages up. The rules also include extra credits for electric, plug-in hybrid and fuel-cell cars. There’s a multiplier effect, so from 2017 to 2020 each electric or fuel-cell car counts as two zero-emission vehicles when determining compliance. In 2021, the multiplier goes to 1.5. Plug-in hybrids start at 1.6X in 2017, then go to 1.3 in 2021. Complicated? You bet.
But CAFE also gives automakers lots of ways to meet the mandate by building more fuel-efficient gas cars, and that’s exactly what they’ve been doing so far. Far more numerous than battery electrics on the ground today are 30-40-mpg-on-the-highway compacts and subcompacts. The availability of those fuel-efficient cars, from the Ford Fiesta to the Chevrolet Sonic, is undoubtedly one factor in slow electric sales, because they’re half the price.
California actually requires automakers to build and sell zero-emission electric cars, more than 227,000 of them by 2025. Its mandates parallel CAFE, but has some important differences. The feds give you credit for EVs, but aren’t demanding they be sold. The California market is so important to automakers that it has given rise to so-called “mandate” cars, including, some say, the Chevrolet Spark and Honda Fit electrics. Given all this, the anti-regulatory crowd should logically be angrier with California than they are with the Obama administration, right? But it doesn’t work that way, not in an election year.
The poster child for the vehicles nobody supposedly wants is the Chevrolet Volt, which Romney has derided as “an idea whose time has not come.” Andrea Saul, a spokesperson for Romney, echoed that comment after the finalized standards were announced. “The president tells voters that his regulations will save them thousands of dollars at the pump,” she said, “but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want.”
That's highly debatable. Transportation Secretary Ray LaHood said during the press briefing that the fuel savings from green cars could total $8,000 over the average life of a 2025 vehicle, far offsetting what he said was an approximately $1,800 price increase.
The Volt Suspension
Conservative websites were quick to pounce when General Motors announced a five-week suspension of Volt production this week. “The idling, second time this year, is hardly a surprise,” said Reason’s blog. “Welcome to Obama’s green economy, where the products that sell can’t be made—and the ones that are made can't be sold.”
GM said it was retooling for the popular Impala, not losing confidence in the Volt. “We are not idling the plant due to poor Volt sales,” said spokesman Dave Darovitz. Some media outlets had reported exactly that, and then had to correct the record. But the damage was done; the GM-abandoning-the-Volt story had already gotten traction in the press.
Nobody would argue that the Volt has so far been a runaway success: GM sold 10,666 through July this year, and isn’t likely to get anywhere close to its 35,000 to 40,000 goal (including the Opel Ampera). But it’s also far too early to call the program a failure. Besides, the Volt's sales are surging, and it's now on track to sell 2,500 in August, it's biggest month yet. People appear to be warming to what the Volt has to offer.
The Volt Predates Obama
There are all kinds of problems with the cozy Obama-builds-electric-cars-nobody-wants scenario. For instance, for consumers the car’s biggest boost comes not from Obama’s CAFE rules but from the $7,500 federal income tax credit, enacted when George W. Bush was president. Many of the clean energy programs that support electrics, including the huge federal subsidies for the Tesla Model S, the Fisker Karma and the Nissan LEAF were also Bush-era appropriations.
As Matthew Wald reported in the New York Times, “Some funds for green energy were appropriated during the administration of President George W. Bush, but not spent until Mr. Obama took office. And some of the stimulus money—for green energy—went to programs signed into law by Mr. Bush, but were not actually financed until Mr. Obama became president.”
The bottom line here is that it’s not really fair to assign ownership of the Volt to Barack Obama, and assume it wouldn’t exist without him.
The arc of the Volt is well known: then-GM vice chairman Bob Lutz got electric car envy in 2006, after he saw the Tesla Roadster. He thought if a tiny start-up could build a sexy plug-in sports car, so could GM. His advocacy kept the project alive, even as it evolved (through the intervention of GM Chief Technology Officer Jon Lauckner) from a battery car into a plug-in hybrid. All this happened before Obama was elected—the production Volt rolled out in September 2008. At the time, CAFE mileage requirements had been stagnant for more than 20 years.
Does Obama like the Volt? He seems to. He’s been photographed sitting in it. He’s adopted policies that definitely encourage it. But it’s no more his car than is the Nissan LEAF. Give Carlos Ghosn some credit for that one. He wanted to build an electric car, and he did.
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