2016/11/16

Even If Trump Kills Obama's Fuel Economy Standards, Detroit Still Has To Make Green Cars

The Cadillac CT6 Plug-In Hybrid goes on sale in North America in spring of 2017. The CT6 Plug-In offers over 400 miles of combine driving range, a full EV range of an estimated 30 miles and a zero to 60 mph time of 5.2 seconds.
The Cadillac CT6 Plug-In Hybrid goes on sale in North America in spring of 2017. The CT6 Plug-In offers over 400 miles of combine driving range, a full EV range of an estimated 30 miles and a zero to 60 mph time of 5.2 seconds.

During the campaign, President-Elect Donald Trump called climate change “a hoax” and reaffirmed his view last week by choosing a well-known skeptic of global warming to lead his transition team at the Environmental Protection Agency. Given Trump’s plan for a comprehensive review of all federal regulations, it’s not hard to predict which way he’s leaning when it comes to the issue of whether the strict fuel economy rules mandated by the Obama administration should be kept in place.

A steep climb is required starting in 2017, so that light vehicles will average 54.5 miles per gallon by 2025. Regulators recently found auto makers are on track to achieve roughly 50.8 mpg, or about 36 mpg in real-world driving. Industry lobbyists have asked for relief.
But it’s important to remember the big picture: the rest of the world is mandating cleaner cars so global carmakers need to invest in these technologies anyway.

The global view is already guiding decision-making: General Motors, for instance, said it’s building a plug-in hybrid version of its flagship Cadillac CT6 sedan to comply with future regulations in China. The vehicle, which will drive 30 miles on full-electric power and has a total range of more than 400 miles, will be exported to the U.S. starting next spring.
China, now the world’s largest auto market, has a lot of catching up to do when it comes to protecting the environment, but its intentions are clear. After selling cars with outdated technology for years, it wants to leapfrog the global industry and be the leader in electric vehicles.

China requires automakers to lower the average fuel consumption of their vehicles to 5 liters per 100 kilometers (about 42 mpg) by 2020 from the current 6.9 liters (34 mpg). The government has targeted a 10-fold increase in electric vehicle sales by 2025. The city of Beijing has already announced that by 2020, it will have the most aggressive emissions standards in the world.
But it’s not just China that is pushing for cleaner cars. Regulations are getting tougher in Europe, too, where currently half the cars run on diesel fuel.

Even in the United States, the head of California’s Air Resources Board, Mary Nichols, tweeted: “We will continue to use our authority under the Clean Air Act to enforce strong emissions standards for vehicles, to promote advanced technology vehicles and to support the transition to clean, renewable energy. Our policies were developed under both Republican and Democratic Administrations, and we expect to work with the new Administration to advocate and to defend those policies where necessary.”

There are also competitive forces at work. Electric carmaker Tesla, which undoubtedly got a leg up from government policies (including a federal loan it has since paid off and zero-emissions credits it used to raise revenue), is no longer dependent on such policies and has become a legitimate threat to established carmakers.

All of which makes the hand-wringing in the U.S. over Trump’s intentions beside the point. The momentum toward cleaner cars is irreversible: the investments have been made, the innovations are under way.

For companies like Borg-Warner, a leader in gasoline turbo-chargers that is shifting toward electric propulsion, the die has been cast. “I don’t see us going back,” CEO James Verrier told me in an interview. “The question is whether we march on the same trajectory to 54.5 mpg. We’ll just have to see.”

The only concern is whether the strict fuel guidelines are hurting consumers or American workers. Right now, gas is cheap in the U.S., and consumers aren’t willing to spend extra on advanced powertrains.

But the costs of electric car batteries and technologies are coming down rapidly, in part because of the pressure from global mandates for cleaner cars.
So Trump would be wise to jump on the climate train, which has already left the station.
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