Despite the excellent reasons to reject the GM bailout, consider this: a strings-attached investment that tweaked GM’s production model could reap huge climate benefits — perhaps bigger than anything else we do to autos in the near term. That’s because the biggest opportunities in fuel economy are at the low end of the fleet, not in FutureCars.
Remember: you save more fuel switching from a 15 to 18 mpg car than switching from a 50 to 100 mpg car. (The explanation is here and here.) For a company like GM that’s based on building fuel-wasting behemoths this has huge implications. Seemingly minor tweaks can yield colossal returns. Let’s take a look at some specific changes to the GM fleet:
- The Hummer H3 averages 15 mpg. Making an H3 that gets just 18 mpg would be the fuel-saving equivalent of turning the Prius into a 100 mpg hypercar.
- The GMC Yukon Denali is even worse: it averages 14 mpg. Turning one of those tanks into a 20 mpg truck would save more fuel than turning two Toyota Tacomas (22 mpg) into two Honda Civics (29 mpg).
- The Chevy Trailblazer is worse yet: it averages 13 mpg. For every Trailblazer we made that got 22 mpg, we’d save as much fuel as we would by taking a Toyota Corolla (31 mpg) off the road entirely.
- Making a single Cadillac Escalade (14 mpg) get just 18 mpg would save more fuel than turning a 50 mpg car into a 500 mpg car.
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It’s easy to get distracted by cool fads like hypermiling and the technological promise of Magic-Future Cars. I’m all for these things, but they are much, much, much less important than the drudgery of making improvements to the bottom end of the fleet. That’s where the real gains are to be had.
Of course, there’s another possible strategy: just let GM fail outright. Then instead of upgrading Hummers to make them go from shockingly-horrible to just horrible, we might have a chance to go from shockingly-horrible to decent in terms of fuel efficiency. And personally, I’d like to retool a lot of those factories that are currently used to make planet-crushing tank-trucks. In their next iteration, maybe those Heartland factories could flourish as the manufacturing backbone of new infrastructure for renewable energy and truly efficient autos. That’d be groovy too.
* Please note: in all the comparisons above, I assume that the cars are driven an equal amount. Also, for any make and model there are many different packages and features that affect fuel efficiency; in the examples in this post, I picked specific real cars, but I didn’t try to average across all the available configurations of every make and model.
Can’t we do both, as KC and you suggest? Require GM to build next generation cars for urban commuters (PHEV and EV) as well as improved gas mileage traditional models (SUVs, pickups, vans) for the weekend warriors. One size car (big) does not fit all purposes. A crash-safety-engineered micro EV commuter car, with two-seats-in-tandem like the Tango (www.commutercars.com), uses available technology and only needs NHTSA crash testing (at a mere cost of $12 million). With some guaranteed government fleet purchases, these micro EV commuter cars could go into full production, if GM/Ford/Chrysler were to license its patented design. Otherwise, some Chinese or Korean company is going to make them overseas. Why do we continue to clog our urban freeways with big single-occupant cars that are four-fifths empty? The muscle-car styled Volt is not the answer. Our population continues to increase, and there is no room on the urban freeways to accommodate only more big cars. Most families have two cars these days—have one for the family/long trips and one for commuting/short trips.
Many of those huge SUVs are extra huge so that they can qualify for that nefarious small business tax credit, which lets you write off a good chunk of the purchase price on vehicles over 6,000 lbs. By bringing the weight of the Durango up to 6,050 lbs, Dodge intentionally put their truck into this category. I wonder how much lighter those cars would get simply by eliminating that one tax credit.
You don’t get huge improvements by pushing the Hummer mileage from 15 to 18 mpg. You get it by NOT MANUFACTURING IT AT ALL.
“Making a single Cadillac Escalade (14 mpg) get just 18 mpg would save more fuel than turning a 50 mpg car into a 500 mpg car.”Following that logic, putting lipstick on a pig turns the pig into a gorgeous, giggling bimbo.
Didn’t they already halt most of the manufacturing of those large beasts due to the leap in gas prices? All manufacturers are currently having trouble selling the beasts on the lot. What makes anyone think GM will spend their resources on upgrading the fuel economy on SUVs they aren’t currently selling?
There’s much to weigh when considering bailouts for the auto industry. Never mind that a quarter million people might lose their jobs and that no bail out may end up costing government considerably more (see Bloomberg.com, “G.M. Collapse at 200 Million May Exceed Bailout Plan;”http://www.bloomberg.com/apps/news?pid=20601087=ad09qxbiElB8=home).Eric’s post points out an important possible benefit: the leverage to impose higher mileage requirements on an industry that has traditionally fought fuel economy standards. The problem here is one of political will. Will free-market ideologues in Congress demand such standards as part of a deal? The financial bailout has shown the government willing to hand out money but not so willing to oversee its use (see Naomi Klein, author of The Shock Doctrine, in The Nation:http://www.thenation.com/doc/20081201/klein). The question is whether or not Congress will demand such fuel efficiency goals in exchange for bailout money. Recent history suggests it will not. It’s up to us to hold their feet to the fire.
How about not bailing them out and letting the auto industry’s transition to cleaner vehicles continue naturally, as it has been?If the government wants to impose restrictions on the types of vehicle emissions that are acceptable, they should do so by legislating them, *not* by bribing GM. The latter is unfair, and will fail while the former is fair (in the sense that it applies to all players) and promotes innovation.
Eric, long time no see. Hope your doing well! I like how you acknowlege that a very large amount of Americans want to drive cars and that the greatest good for the mpg of the fleet is to be found by looking at the margin. Its econ 101! Yeah and the thing you said about making changes at the bottom of the fleet ie pickups and suv’s, is definitly true. the new 2009 chevy silverado hybrid has much more potential to save gas then almost any other vehicle coming out on the market. Enough of that, I hope you have a great thanksgiving!
Arie van der Hoeven
Both failure and a bailout offer opportunities for change. Tying any bail out to new regulations that tax vehicles appropriately for their true cost to both the environment and infrastructure would be possible and should have the effect you are looking for. This would be a shock to the industry, but so would bankruptcy. We also need a business structure that can survive and the incredibly large pension liabilities of the big 3 guarantee they will not be competitive. Any bail out should address this as well as we can’t allow hundreds of thousands of pensions to simply disappear without some compensation. My next car will be an electric car. Perhaps the Chevy Volt.