As TTAC readers well know: There is a huge E85 flex-fuel loophole in the new federal fuel economy CAFE standards. Ford will drive right through that barn door-sized hole.

By the end of this year, Ford wants to deliver 370,000 flex fuel vehicles, a number which they can trade against fuel oinkers. Let’s review:  A flex-fuel vehicle is one that is capable of running on E-85. But it doesn’t have to. It can also run on straight gas. Or on any mixture of the two fuels. As long as it’s E85 capable, it counts at least for a Peppermint White Chocolate Mocha at the DC CAFE. (Read More…)

CAFE got you down? Worried that it’s only a matter of time before the feds come for your V8? You can relax a little, as General Motors is announcing that it will spend nearly a billion dollars rolling out its next generation of small-block V8 engines. According to Automotive News [sub], GM is dropping $893m to upgrade or renovate engine plants in Tonawanda, NY; Bay City, MI; Bedford, IN; Defiance, OH; and St. Catharines, Ontario. These new plants will build GM’s next generation of all-aluminum V8 engines, which will use direct-injection and a new combustion system for improved efficiency.GM won’t say what vehicles these new V8s will be offered in, but expect this to signal the end of the road for the Northstar family of engines as well as replacing the outgoing small-blocks. And what of GM’s commitment to reducing emissions? According to The General’s presser, all of its future small-block V8s will be E85-capable, meaning they qualify for the CAFE ramp-up’s Flex Fuel Vehicle credit loophole. As such,

their fuel economy is determined using a special calculation procedure that results in those vehicles being assigned a higher fuel economy level than would otherwise occur.

Which helps explain why Sen Chuck Schumer (D-NY) doesn’t mind publicly lobbying for V8 production at Tonawanda despite his strong belief in Global Warming: the regulatory fix was already in.

With Senator Chuck Grassley (R-IA) already taking the White House and Treasury to task for possibly helping GM avoid paying the “TARP Tax,” Republican representatives Darrell Issa (R-CA) and Lamar Smith (R-TX) are attacking the auto bailout from another angle, writing a letter to nine automaker CEOs requesting clarification of the negotiating process that led to recently-passed final rules on a ramp-up of greenhouse gas (GHG) emissions standards. In their press release on the issue, Issa and Smith note:

It is unclear whether the Administration used leverage created by the possibility of a taxpayer bailout of GM and Chrysler to secure their cooperation and support for new fuel economy standards.  Moreover, there is reason to believe Administration officials used inappropriate tactics to ensure broad based support across the industry. Given the clear conflict-of-interest issues at play, which naturally arise when the government is in a position to pick winners and losers and impact the future viability of private entities, it was imperative that the Administration act with the utmost transparency. Instead, the White House imposed an unprecedented level of secrecy.

Are Issa and Smith on to something, or is this simply a partisan dogpile on an unpopular policy? Hey, this is politics… does it even matter?

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If Automotive News’ [sub] dealer sources have heard right, then Daimler might sacrifice their S-Class on the altar of the almighty EPA and its newly announced CAFE standards. (Read More…)

On April 1, new federal fuel economy CAFE standards went into effect. By 2016, new cars should get 35 mpg or thereabouts. The true number remains an exercise in abstract algebra. Says Consumer Reports: “The new standards require different fuel economy averages for each manufacturer and for each type of vehicle (such as small, midsized, and large sedans or SUVs).” There are plenty of loopholes and offsets. Extra credit for cars that take E85 Ethanol, for instance. And here is another huge loophole: (Read More…)

In its fight against American CAFE rules, Porsche is ratcheting up the decibels. For background on Porsche’s beef, see here, and here. For a possible way out, see here.

Unconvinced by electrification plans, Porsche’s new boss Michael Macht publicly joined the fray. He doesn’t mince words. “What’s happening here borders on a trade war,” said Macht yesterday evening, while Das Autohaus took notes. “We’ll keep at it. The German auto industry will not give up territory over there unnecessarily.”  Financial Times cited Macht as saying that “the Americans are spoiling for a fight.” (Read More…)

Take One: The Ruf 911 Greenster EV. From AB Green’s report:

Last fall, Porsche high performance tuning specialist Ruf announced that it had built a prototype electric sports car called the eRuf which was essentially a lithium ion battery-powered 911. That was just the beginning of the story as the company has brought the Greenster here to Geneva. The Greenster is a targa top 911 in the old style with a chopped speedster type windshield. In the back sits a 270 kW Siemens electric motor with 695 lb-ft of torque. The battery pack system has been improved and is now 30 percent smaller in volume, restoring the front trunk space that was lost on the original. The battery pack now has greater power capacity allowing it to release and absorb power faster, enabling more regenerative braking capacity. The battery can apparently be charged in only one hour from a 400V outlet. The next iteration will switch to a twin motor setup and the company is planning a small series production run in 2010.

Porsche 911 have been a favorite target for EV conversions fir decades. Ruf’s version is almost series ready. It will probably have an EPA mpge rating similar to the Tesla’s 256 mpge. How many would Porsche have to sell to increase its fleet average to the amount necessary? (Read More…)

When we reported a few days ago that Porsche would have serious trouble complying with the upcoming CAFE rules, and that the existence of Porsches on American roads may be in danger after 2016, the majority of the commentariat exploded: “Unbelievable!” (Read More…)

In a few years, by 2016 to be exact, P.J. O’Rourke’s “ass-engined Nazi slot car” may be history in the U.S.A. Gone. By that time, Porsche needs to have a Corporate Average Fuel Economy (CAFE) of 41.4 mpg – if President Obama gets his wish. Mission impossible, says Porsche. Jack Baruth, stock up. Porsches will be extinct. (Read More…)

To qualify for Japan’s cash-for-clunker program, new vehicles must meet the 2010 fuel economy standard of 35.5 mpg, making 87 percent of Japanese-made vehicles on sale in their home market eligible for the credit of up to $2,800. In fact, the Japanese program doesn’t even require a clunker (MY 1996 or older) to trade in, although without giving up an inefficient vehicle, the best credit available is a mere $1,132. But the American Automotive Policy Council calls these rules “unfair,” telling the Freep:

We urge the U.S. government to make clear that it cannot tolerate this outright discrimination, particularly at a time when it has provided substantial direct financial support for Japanese automakers in this market

Huh? Is the AAPC talking about America’s cash-for-clunker program, which (like Japan’s) sent Honda and Toyota sales soaring? Or the $1.6b DOE “ATVML” loans that Nissan got, which were dwarfed by the same program’s generosity towards Ford? Or perhaps the $82b+ TARP bailout that… oh wait, that all went to Detroit. Ok, let’s forget about America’s “substantial direct financial support for Japanese automakers” for a second and figure out just how unfair this Japanese program is.

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CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.

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Point three of Barack Obama’s ethics pledge to the American people is that “no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.” Obviously that’s a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to “restructure” the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.

According to the Detroit News, the leading candidate for Obama’s “Car Czar” position is a certain Mr Steven Girsky, who the DetN describes as a “longtime auto industry analyst.” Having advised Centerbridge Industrial Partners and JP Morgan on auto issues, Girsky is more than simply an analyst. Automotive News [sub] reported in October of 2008 that Girsky was hired by the United Auto Workers to advise on the proposed Chrysler-GM merger and as AN dryly put it “he may also advise the UAW on a possible federal bailout of the U.S. automakers.” Girsky was also a consultant to GM’s CEO and CFO for just under a year, leaving the firm in 2006. As of October 2008, he also served on the board of Dana Corp, a massive auto supplier firm.

Does Girsky’s experience make him incapable of living up to Obama’s high moral standards? Technically, no. Like Tom Daschle before him, Girsky is clearly a lobbyist, though he’s not registered as one (the de facto bright line rule for Obama). But having been paid by the UAW within months to advise them on bailout strategy, he’s also clearly not going to live up to the “no work on regulations or contracts directly and substantially related to their prior employer for two years” standard. And if he is appointed as Car Czar, it’s safe to say that he will be guiding regulations and money disbursements that are “substantially related” to the work he has been doing for the UAW.

But as with so many political decisions, the choice of a Car Czar will likely be decided on the lesser of two evils. After all, Girsky may be steeped in the cozy relationships between GM management, the UAW and the government, but at least he has industry experience. Steven Rattner of Quadrangle Group has also been named as a possible czar, but as Newsweek reports, his main qualifications appears to be as a Democratic fundraiser (he is married to the National Finance Chairwoman of the DNC) and media-elite insider. Sure he covered energy and economy beats at the NY Times back in the day, but there’s little to indicate that he would make an especially good Car Czar.

Meanwhile, for all of Girsky’s industry connections, some of his ideas are decidedly TTAC-ish. Like when he got AN Executive Editor Edward Lapham‘s collar up by suggesting [sub] that the Detroit Three might need to cut as many as 70 percent of its dealerships. He even seems to cause some consternation among his UAW employers, based on this post at Salon. And that might just indicate the kind of experience and perspective that Obama’s team clearly needs. After all, his Climate and Energy Czar Carol Browner told Automotive News [sub] at the DC Auto Show that there are “lots of clean cars out there and options for the consumer.” You know, because the OEMs say so.

Meanwhile, it seems that nothing will stop or slow the rolling tide of money that is about to slosh into the automotive industry. $2b worth of battery research money is said to be going into the forthcoming stimulus package, and the Senate just approved an amendment to the stimulus bill which would make auto loan interest and state sales taxes deductable from federal taxes. Whether Girsky or Rattner is appointed as Car Czar won’t likely make much of a difference in terms of the amount of money that will be funneled into the industry over the following years. The crucial distinction is whether experience is worth the possibility of a conflict of interest.

Obama’s strict ethical standards are admirable, but if his options for Car Czar are between an industry insider who defines the term “revolving door” and a candidate who is being considered solely due to his political connections, something has clearly gone wrong. I’m not sure this kind of compromise is what people had in mind when they voted for “change we can believe in.” But in this familiarly frustrating choice, at least Girsky has a record of taking stands on crucial issues facing the industry. If he can publicly explain his recent UAW dealings in a way that passes Obama’s muster, Girsky may actually be the least of the available evils.