Congress has passed legislation qualifying three-wheeled vehicles for federal subsidies by classifying them as advanced technology vehicles. According to Automotive News [sub], the legislation has passed the House and Senate and should be signed by President Obama by week’s end. The classification is crucial for firms like Aptera to secure the federal Advanced Technology Vehicles Manufacturing Incentive Program funds that have been critical for firms like Tesla, GM and Ford. Aptera has asked for $75m, but efforts to include the three-wheelers like Aptera’s 2e have been criticized by GM, which is waiting on $10b in Department of ATVM funding. So, on the one-hand you have self-interested, tax money-bloated firms like GM who want the money for themselves, and cottage industry EV freaks who call their three-wheeled designs “innovative.” But not only are three wheeled designs far from unique (they tend to show up in every major recession), they also aren’t cars. If the Feds are going to give money to to the makers of three-wheelers, which have to be licensed as motorcycles, they should have to allow electric motorcycle firms like Brammo and Zero to apply as well. After all, a $10k motorcycle isn’t any less ridiculous than a $45k Volt or a $40k Aptera.
I think what I saw at Chrysler is what people felt when Iacocca was there. It’s a new level of energy and enthusiasm because there’s new leadership of people that know what they’re doing, of people that have been successful in the automobile manufacturing business.
Transportation Secretary Ray LaHood waxes eloquent about the New New Chrysler and its Iacoccian leader, Fiat’s Sergio Marchionne. Speaking at the Detroit Economic Club [via Automotive News [sub]] LaHood said Marchionne represents “the next generation of leaders for the American automobile industry.” But who’d have thought Detroit would have had to look outside of, well, Detroit for that? Luckily LaHood was able to ward off such awkward questions by simply stating that “Detroit is back.” Yeah, now that the Italians have taken over. Elsewhere in his Detroit visit, LaHood also pronounced “Taurus is back. Ford is back” after a test drive, confirmed that “high speed rail is not competition for cars,” and predicted Detroit would become a “Midwest cruise-ship capital.” TTAC is still trying to confirm rumors that Secretary LaHood has money on the Lions making the playoffs this year.
Growing up my family owned a Jeep Wagoneer that consistently broke down towing our boat. My frugal parents couldn’t afford to have it repaired by a mechanic so my Pop dutifully bought the repair manual and spent his days off cursing under the hood in our driveway. He eventually grew so frustrated that he dropped a 500cu Cadillac engine in that old Jeep. Technology has made do-it-yourself repairs little more than nostalgic memories. Now it takes expensive diagnostic computers to identify why the light on the dash came on. And not only are the diagnostic computers expensive but in many cases the codes are proprietary. With recent dealership closures, congress has proposed legislation to protect consumers access to this critical repair information. HR 2057, the Rural Communities Stranded Without The Right To Repair Act would require auto manufacturers to make repair information and computer diagnostic codes available to the general public.
“What do you think the percentage likelihood is that, if we give this deal a chance, it will succeed?” Rattner didn’t make the decision any easier. “Fifty-one per cent,” he said. “But, Mr. President, in my experience, deals get worse, not better, over time.”
Ryan Lizza recounts the decision to bail out Chrysler in his epic New Yorker piece on Larry Summers and the president’s economic team [via Kausfiles]. This exchange came after the economic council split 4-4 on the automaker bailout, and Rattner was identified as the tie-breaking vote. Is it safe to say now that nobody expects Chrysler to survive?
A UK government group has just released a proposal that would impose a per-mile tax on motorists to rescue the planet from an imagined catastrophe. The Committee on Climate Change (CCC), a body established by the UK Parliament to advise the government on environmental issues, has set a target of a two-percent annual reduction in carbon dioxide (CO2) emissions. CO2 is a naturally occurring gas that is essential to human life. The committee believes it can reach its goal by imposing massive new taxes on drivers that will reduce demand for driving which, in turn, would reduce carbon dioxide output.
Secretary of Transportation Ray LaHood kicked off the DoT’s first-ever “Distracted Driving Summit” in Washington today with a speech calling texting while driving a “menace to society.” LaHood cited just-released NHTSA data (PDF) showing that 6,000 road deaths, or about 15 percent of the 2008 total, were caused by distracted drivers as evidence of what he termed a “deadly epidemic.” According to the Detroit News, LaHood singled out drivers under the age of 20 as the worst offenders and called for “a combination of strong laws, tough enforcement and ongoing public education.” And though there seems to be little outcry over the singling out of young whippersnappers, the cell phone industry wants to make sure its products don’t become the scapegoat for LaHood’s ominous metaphors. Makeup, GPS systems, food and other distractions are being discussed as potential targets for action. The summit’s media facts page even points out that “distraction from cell phone use while driving (hand held or hands free) delays a driver’s reactions as much as having a blood alcohol concentration at the legal limit of .08 percent.” Sorry Ford! A Maine law banning all forms of driver distraction is being looked at as an example, but even LaHood concedes that “We cannot rely on legal action alone, because in reality, you can’t legislative behavior. There aren’t enough police on patrol to catch everyone who’s breaking the law.” Which is a fantastic point, but one that’s apparently not stopping LaHood from considering invasive enforcement techniques.
A major criteria for spending funds from the recent stimulus bill was that qualifying projects had to be “shovel ready.” Though that stricture was put in place to speed up the stimulus’s impact on the economy, it’s preventing the replacement of many of the worst roads in the nation. USA Today reports that only 20 percent of the $10 billion in stimulus money being spent on road repairs will go to the 74 counties that host half of the country’s worst roads. According to USA Today‘s analysis, those 74 (mostly-urban) counties will split $1.9 billion in stimulus road repair funds. Counties with no roads in need of major repairs mysteriously ended up with $1.5 billion. “Objective reviews show that Recovery Act dollars are going to the communities that need it the most to repair roads and bridges in need of help,” say Federal Highway Administration spokesfolks. However, USA Today‘s study is based on FHA data from 2007. USA Today has an interactive map comparing miles of “unacceptable” roads and amounts of stimulus dollars allocated. Check it out here.
Neil Barofsky, Special Inspector General for TARP (SIGTARP), will audit the closure of 2,139 GM and Chrysler dealerships, reports Automotive News [sub]. Barofsky told members of the Senate Banking Committee [download PDF of Barofsky’s testimony here] that his office “will examine the process used by General Motors and Chrysler to identify which automotive dealerships should be maintained or terminated” [start your own audit of GM’s cull here]. Barofsky also indicated that he would conduct a separate audit of “governance issues when the U.S. government has obtained a large ownership interest in a particular institution.” Though he didn’t explicitly confirm that the “particular institution” is GM, that seems to be a safe conclusion, given the Treasury’s 60 percent stake in The General. “The extent of government involvement in management” is said to be the focus of Barofsky’s GM audit, along with “risk management, monitoring, internal controls, performance measures and transparency.” In other words, we’re going to be learning a lot more about post-bailout GM… at some point. Maybe. Barofsky didn’t indicate when his audits would be complete of whether the information would be made public.
Retool this! Fisker will use the majority of its Advanced Technologies Vehicle Manufacturing Loan Program (ATVML) loan towards developing its next generation of plug-in, range-extended hybrids, according to the company’s press release [via Yahoo]. Preliminarily dubbed Project NINA, Fisker’s next vehicle range will be “affordable and fuel-efficient” vehicles with a similar drivetrain to its Karma sibling. Unfortunately, Fisker’s idea of affordable is $39,999 “after tax credit.” Sound familiar? Some portion of the AVTML money will go towards wrapping up Karma development, but it’s clear that Project NINA is the new priority. “Inspired by the ship belonging to explorer Christopher Columbus,” Fisker’s release intones, Project NINA “is symbolic of the automobile industry’s transition from old world to new.” Which is oddly appropriate. If it weren’t for state funding, that voyage would never have taken place either. [Thanks for the tips!]
Here’s an excerpt from the CARS.GOV website, spotted by one our eagle-eyed readers:
Do I get any money for my trade in vehicle in addition to the CARS credit?
YES. The law requires your trade-in vehicle be destroyed. The dealer must disclose to you the scrap value of your vehicle. The dealer is entitled to keep up to $50 of the scrap value for administrative fees. You are entitled to negotiate about who keeps the remaining scrap value. For example, you may use that money toward the price of your new car separate from the CARS credit.
How many customers received this federally-mandate disclosure from their dealer? Not many, I’d wager. TTAC writer and used car guru Steve Lang reckons the average clunker was worth between $300 and $350 in scrap. So let’s call it $250 per car. Multiply that by the estimated 700,000 crushed clunkers and you’re looking at some $175,000,000 that may have been left on the table. Oops! Our tipster reckons that money should have gone back to taxpayers, anyway. I reckon he’s right.
The WSJ reports that EV manufacturer Aptera is asking the government for $75M from its energy-efficient retooling funds. Unfortunately for the makers of the Jetsons-inspired 2e, there’s some debate about whether its three-wheel design makes it a car or a motorcycle. Which means the gravy train could be delayed at the station. The Department of Energy has already rejected Aptera’s request for this reason, but Congress is wading into the issue at the EV maker’s request.
Just don’t ask what the newly-released rules will do to the upfront cost of your new car. Though the EPA claims that 35.5 mpg by 2016 is “within reach” of the industry, OEMs will certainly pass some of the $2 billion in costs to meet the standard onto consumers. Let’s also not forget the billions of taxpayer money spent on retooling loans intended as a payoff to the industry for agreeing to the standard, or the EPA’s estimate that new regulations will save consumers $3,000 in fuel cost is over the vehicle’s lifetime. Good thing the new rules will save the environment and improve energy independence. Otherwise we’d have a really hard time being positive about all this.
The Treasury has placed new rules on TARP recipients like Chrysler and GM requiring the bailed-out firms to disclose policies on “luxury expenditures” after several banks were found to be spending exorbitant amounts of money on aircraft and offices. The Detroit News reports that firms have until Monday to disclose their spending policies, except for GM which has been granted an undisclosed extension to the policy due to the relative lateness of its emergence from bankruptcy protection. And the decision to take private jets to a bailout request keeps biting GM and Chrysler from beyond the news cycle.
The National Auto Dealer’s Association is warning its members that a government audit of the $3b CARS program is imminent. “We expect that a high percentage of dealers will be audited,” NADA explains in a letter reported in Automotive News [sub]. “Please make sure that all transaction paperwork and trade-in vehicles are in order.” Widespread fraud has been reported in the German clunker rebate program, particularly in regards to vehicle disposal. Or, rather, the lack thereof. Apparently pretending to destroy a vehicle and then driving it to Poland (Mexico in our case) for sale on the black market is is not an approved disposal method. Anyway, investigating fraud seems like the prudent thing to do after spending $3b in a few short weeks, but try telling the dealers that.
The GM Opel saga continues—at least until it doesn’t. Meanwhile, Spiegel is reporting that GM pressured the German government to separate the Russians (OAO Sberbank and automaker GAZ) from the Canadians (Magna) to make an Opel sale more palatable to its owners (the American government). Spiegel’s sources say Germany nixed the request; it had made promises to Russian President Dmitry Medvedev about the sanctity (if you want to call it that) of the deal. For those of you who want a little background on this international game of chess, the World Socialist Website has the 411.
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