Friday, May 22, 2009

The Car of Obama's Dreams

There are a few things you may not know about those Euro-type cars that President Obama has decided are best for Americans (and, believe it, this guy means to have his way in almost every area of your lives).

For instance, Steve Siler and Mike Dushane, writing in Car and Driver, say that the President's "mandate of 35.5 mpg by 2016 is like fighting obesity by outlawing large clothing."

And they've got more to say too.

That thud you just heard was the “other shoe” dropping in Washington, D.C.: the Obama administration has used the turmoil in the auto industry as an opportunity to nudge—okay, force—the industry into a new, more environmentally sensitive direction, thus making good on its promise to impose stricter Corporate Average Fuel Economy (CAFE) and tailpipe emissions standards across the automobile industry...

There's another force at play here, however, as both Chrysler and GM, recipients of massive government bailout loans, are in no position to voice dissent. Whether they think these policies are sound or not is moot; they will toe the Obama party line because he's their de facto boss. Ford knows it will have to ask for Obama's help if the economy doesn't improve soon, so it is also going along with the hype. Honda and Toyota have been tooting their green horns for years, so they can't very well be the voices of dissent on this issue. Put bluntly, the government is ramming this down the throats of the car companies.

Senator after senator cites as evidence for the attainability of these standards the vehicles sold in Europe. But car for car, European vehicles aren't meaningfully more efficient. Take the Ford Focus sedan, a car that's comparably sized here and in Europe (although not the same vehicle). In the U.S., the base Focus sedan costs $15,000, has 140 hp, and is rated at 28 mpg combined by the EPA. The base Focus sedan available in Germany costs $20,000 (plus 19-percent tax!), has only 79 hp, and would be rated by the EPA at approximately 30 mpg combined if they were to test it. (Our estimate is based on standard differentials between U.S. and E.U. test numbers.) Paying an extra $5000, Europeans sacrifice 44 percent of their horsepower and gain less than 10 percent in fuel economy.

So why is Europe's fleet so much more efficient overall? The cars people buy there are much smaller. The Focus is one of the tinier mass-market cars sold in the U.S. today, but it's considered a reasonably sized family vehicle in Europe. The average European consumer buys a car a few sizes smaller than a Focus. (This is mainly due to space constraints in cities and smaller roads. If Europeans drove the long distances we do, they likely would drive Hummers, too.) And about half of Europeans buy diesels, which consume around 30-percent less fuel.

Car companies have an extensive menu of options to meet the aggressive targets, but each has a high price tag. Diesel engines fired the efficiency revolution in Europe, but tough new particulate emissions laws mean thousands of dollars in extra costs for diesels, which are naturally dirty and require NASA-level catalytic technology to meet current U.S. standards. Hybrid technology works, but economy increases are closer to 30 percent (not the 35 percent needed) and the systems cost $4000 to $10,000, depending on the size of the vehicle. GM won't even talk about the cost of the extended-range electric powertrain in its Volt, but industry sources quote a $10,000 premium per vehicle—and that's for a small car (costs generally increase proportionally with size). Lightweight materials can help a few percent, but they are already in widespread use and further implementation would yield diminishing returns and massive cost...

All of this means that the anticipated $1300 price increase per vehicle quoted by the Obama administration is absurd. Only if consumers trade down a few vehicle sizes and pay $1300 can the targets be met...

Cost cutting at Car and Driver means we no longer have unlimited access to the Psychic Friends Network, so we can't predict the future. There are a few ways this can play out. If gas prices go up significantly (naturally or with massive taxes)—or if the Obama administration introduces massive tax credits for new vehicle purchases—consumers might actually want to buy the vehicles that have been mandated. But if that doesn't happen, we'll be able to tell you about some great places to buy bigger, more comfortable, more powerful, and safer used cars and trucks.

And on that safety matter?

Robert Grady (a former trustee of the Environmental Defense Fund, a senior White House aide in drafting the Clean Air Act Amendments of 1990, and a key player in developing Gov. Arnold Schwarzenegger's Environmental Action Plan during his 2003 campaign) points out over at the Wall Street Journal that Obama's plan will result in substantially less safe vehicles and, ironically, in greater health hazards from air pollution!

Check it out.