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Auto Profitability Colliding with Low Emissions

June 1, 2023 By Debbie Young

By Supamotionstock.com @ Shutterstock.com

From President Obama’s Task Force:

At some point . . . the drive for profitability is likely to collide with [the government’s] fuel-efficiency and low-emission goals.

Holman W. Jenkins, Jr. asks in the WSJ, “What did the drafters of the House Oversight Committee expect?” That the administration’s “54.5 miles per gallon mandate for 2025 was based on science and engineering, rather than a quest for an impressive sounding ‘headline number’?”

Was the former president’s May 2009 mileage announcement just a political circus for immediate political effect? Answers Mr. Jenkins, “Of course it was.”

And the only flaw in (Darrell) Issa’s admirable – and partisan – report is failing to say why it couldn’t be otherwise.

Price of Gas vs Fuel Efficiency

The mandate, explains Mr. Jenkins, is rife with “flexibility factor” fudge to encourage car makers to subsidize money-losing electric cars to fulfill a throwaway line in an Obama speech. (NPR, calling a spade and spade, said the mileage rules were an “electric vehicle mandate.”)

A perfectly good mechanism already exists to help Americans decide which cars to buy and how highly to value fuel efficiency. It’s called the price of gasoline.

Not well-remembered nowadays, the U.S. began regulating fuel efficiency only when it denied itself this useful mechanism during a disastrous experiment with gasoline price controls in the 1970s. The corporate average fuel economy rules (aka CAFE), though now fully institutionalized, stopped making sense as soon we stopped trying to fix the price of gasoline below market levels.

Buyer Beware

Healthy skepticism among taxpayers already runs high for government-subsidized electric vehicles. The gap is wide between gas-powered vehicles and the performance of EVs, reports James Freeman, also in the WSJ.

Car and Driver Caleb Miller reports:

… EVs tend to fall considerably short of the range number on the window sticker. The paper, written by Car and Driver’s testing director, Dave VanderWerp, and Gregory Pannone, was presented this week at SAE International’s annual WCX conference.

It points to a need for revised testing and labeling standards for EVs moving forward.

Killing the Chevy Bolt

Mike Collias reports in the WSJ:

The Detroit auto maker… said Tuesday it would drop the Chevrolet Bolt from its lineup, killing off its first mainstream electric vehicle as it moves to newer battery technology…

GM’s decision to unplug the Bolt—while expected by analysts—ends a troubled run for the model, which had become a black eye for the company after battery fires and costly recalls dented its early push into electric vehicles.

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Debbie Young
Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over five decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, driving her Porsche Boxter S through Vermont and Maine, and practicing yoga.
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