Archive

Archive for September, 2011

Opinion

September 26th, 2011 Comments off

There’s been a lot in the news lately about how much our federal government spends, and questions about whether  it spends it wisely.  Specifically, those who proclaim fiscal conservatism have recently called into question the benefit of using tax-payer money for environmental efforts, such as funding the EPA, providing grants and loan guarantees for clean energy projects, and supporting automakers that build more efficient vehicles.  (The recent media hype around the bankruptcy of solar panel-maker Solyndra certainly appears to lend weight to their argument, although that’s certainly more a case of corporate mismanagement rather than government/corporate cronyism as some claim.)

The logic goes that the government shouldn’t be in the business of picking winners and losers.  And that argument might make sense if the government only funded a single corporate entity for a single technology in any given sector.  But it doesn’t.  For example, in the automobile industry, the feds provide financial support to all of the domestic OEMs (and numerous players up and down the supply chaim) for projects related to electric-drive vehicles, efficient gasoline-burning vehicles, and lightweight technologies.  These projects aren’t picking winners, but are creating jobs as well as solutions that will promote energy security and environmental benefits for the long term.

So what happens when the Feds don’t step in?  Others do. And given the risk-averse mindset of investors in the current economy, the “others” are often from other places.  Like China. Where investors recently put up $125-million for lithium-ion battery maker Boston Power.  Who, as a result, decided to move its manufacturing facilities to China.

“American jobs” seems to be the economic topic most prevalent in the political discourse today.  And some of the battery makers who have received government funding have publicly stated that they would have built facilities overseas instead of the U.S. had they not received federal support.  Others – like Boston Power – obviously go where the money is.  And I don’t blame them.  But to say federal investment in new technologies doesn’t create jobs – a notion espoused by many of our lawmakers and pundits on the conservative side of the fence – is just nonsense.

Categories: Policy Tags:

Settled

September 10th, 2011 Comments off

Not long after my last post on CAFE regulations (where I mentioned that the White House was leaning towards a 2025 target of 56.2 mpg), the matter was “settled,” at a proposed 54.5 mpg.  (The difference doesn’t amount to much – less than 6/100ths of a gallon of gasoline for every 100 miles that a vehicle travels.  But, the lowering of the goal was enough to get some of the major auto manufacturers to fall in line and support the proposed regulation – at least publicly.)

Behind the scenes, however, automakers and other opponents to tighter CAFE rules complain that the target is too tough, and that it will lead to slow, underpowered cars that people won’t want to buy at significantly increased costs.  Being a realist, I tend to think that – yes, it’s true that new, advanced technology does tend to cost more than the old, but the benefit far outweighs the cost.  On the other hand …

Reading my latest issue of Autoweek magazine, I came across an article about the new Range Rover Evoque, which states that its 4-cylinder engine “generates 240 hp and 251 lb-ft of torque, which is more than the 233 hp and 234 lb-ft from the 3.2-liter six currently in the Land Rover LR2.”  It’s also rated at 24 mpg, vs 17 mpg for the LR2.  Now in this case, the Evoque does come at a premium (approximately $44k as compared to the LR2’s $37k), but it’s a completely new model, in a higher-end segment than the LR2, and you’re paying for more than just a more powerful and more efficient engine.  So …

A few pages later is an article about the new Jeep Wrangler, which gets a new V6 for 2012.  As compared to the 2011 powerplant, Autoweek tells us its “output grows by 83 hp and torque gains 23 lb-ft, to 260 lb-ft.  That blows the old 3.8-liter engine and its 202-hp, 237-lb-ft raings off the trail.  Despite the power boost, fuel economy also increases to up to 21 mpg on the highway.  The base price remains the same…”  More power?  More efficiency?  Same price?  And then …

There’s the next article about the new Mercedes Benz M-class.  Since car mags are so good at telling us what’s changed between the new model and the old, let’s see what Autoweek has to say.  “Power is up, along with fuel economy, in both versions that will be offered at launch in the United States.  The gasoline direct-injection, 3.5-liter V6 ML350 4Matic, with 302 hp and 273 lb-ft of torque, has an estimated fuel economy of 17 mpg city and 22 mpg highway (versus 15/20 mpg in the outgoing model).  The ML350 Bluetec 3.0-liter V6 turbodiesel has an output of 240 hp and 455 lb-ft of torque and estimated fuel consumption of 20/25 mpg (versus 18/25 for 2011).  Pricing stays the same for 2012…”

It’s not like these are isolated, special cases.  Automakers are great at increasing efficiency and power without increasing cost.  They’ve been doing it for years.  It’s just that they’ve been using that ability to make our cars bigger, heavier, and faster, rather than making any significant gains in fuel economy.  As a result, they now have a long way to go to meet upcoming CAFE regulations.

The automakers (well, not all of them) publicly support the new CAFE targets.    My guess is they’ll find a way to comply.  From a fuel consumption standpoint (i.e., the y-axis on this graph), most of the work has already been done.