The debate over 2025 CAFE standards will continue to rage all summer long, but if there’s one thing I learned from the industry lobbyists that I spoke to in Washington D.C. a few weeks ago, it’s that the media debate severely lags the conversation that’s going on behind closed doors. It’s a frustrating situation for commentators who hope to influence the process, but then D.C. debates are rarely about the ideas anyway. But environmental groups who hope to come between an industry that’s already relatively well-positioned for short-to-medium-term standards and a government that’s more interested in helping the industry than ever are still hoping to bring some public pressure to bear on an issue that, according to my sources anyway, was already largely settled weeks ago. Bloomberg [via AN [sub]] reports that

The auto industry is pressing the Obama administration for a promise to reevaluate rules that may more than double U.S. fuel economy standards by 2025 before they become final…

Still under negotiation are details of the midpoint review, including the timing, whether there will be a judicial review and whether the Environmental Protection Agency, the Transportation Department and California’s Air Resources Board will coordinate efforts, Gleberman said.

Environmental groups oppose the midterm review, saying it’s a gambit by automakers seeking to kill the program at the halfway point, when a president more friendly to the industry may be in office, said Dan Becker, director of the Washington-based Safe Climate Campaign.

According to my sources, a mid-way review of 2017-2025 standards was agreed to in principle by all the major stakeholder stakeholders some time ago. And for obvious reasons: with disruptive new technologies under development and the trajectory of fuel prices remaining an unknown quantity, nobody knows precisely what technologies will be available and what the market will demand come 2017. Like California’s ZEV mandate, a push to kill the mid-term review makes CAFE even less responsive to the market than it already is. If anything, environmental groups should embrace a review of current standards because there’s a good chance fuel prices will be higher and the nation will be more determined than ever to sacrifice for higher emissions standards. Besides, if CAFE loses touch with the market and has no opportunity to sync back up, the industry could be in for another disastrous downturn. And no matter how pro-regulation you are, it’s tough to argue that CAFE should be totally unresponsive to market forces. Unless you know exactly what the market will look like in 2025 (in which case, let’s start a hedge fund), trying to set 2025 emissions standards in stone now makes no sense at all.

Last week I wondered aloud about where the UAW stands on fuel economy, inspired by the union’s apparent flip-flopping between supporting the companies that employ its workers and backing its environmental allies on the left with talk of its commitment to green jobs. And after expressing concern about proposed CAFE increases, it seems the UAW is flopping back towards the environmentalist side of the equation, joining the so-called “Blue-Green Coalition” of labor leaders and environmental groups in expressing its vague support for “strong” emissions standards in a letter to President Obama [PDF]. But with CAFE negotiations coming down to within 5 MPG or so of a final “number” for the 2052 standard, the letter’s lack of commitment means it’s still not clear where the UAW comes down in the policy debate. So instead of highlighting the union’s commitment to the environment, the letter ends up serving as a window into the UAW’s cynical, yet self-deluding side.

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Doesn’t it bug you that you have to shell out loads of money in order to save gas? Here comes a fuel sipper that won’t suck your wallet dry. No fancy electronics, no heavy batteries, and it even so gets 30km per liter of gasoline (according to the JC08 standard,) which translates to a non-EPA, but nonetheless jaw-dropping 70 mpg. According to The Nikkei [sub], Toyota’s Kei car subsidiary Daihatsu “has developed technology that will enable it to offer the only [gasoline powered] car in the world” that gets these numbers without hybrid technology. (Read More…)

If you asked an auto industry lobbyist, say, a month ago, what the big fights were over in CAFE negotiations, he probably wouldn’t have said “the number.” In the parlance of the Potomac valley, that means everyone at the table knows that at some point they’re all going to join hands and sing kumbaya over one highly symbolic number. Not surprisingly, the numbers that everyone in DC has been looking at fall right in the middle of these four scenarios… not coincidentally the tipping point where hybrids swing from a quarter to nearly half the market. But are these WSJ [sub] charts even accurate? John Krafcik, CEO of Hyundai Motor America and the industry’s CAFE contrarian implies that it’s not for everyone, telling Automotive News [sub] that

Honestly, our focus isn’t on hybrid. Our focus is on optimizing internal combustion and getting as many fuel-efficient vehicles out there, across the lineup. That’s the way you do it. If you look at the math, if you look at how CAFE math works, volume trumps everything.

But then Krafcik oversees a brand that doesn’t just sell lots of high-efficiency cars, it sells very few pickups… resulting in a sales-weighted fleet fuel economy 35.7 MPG in the first half of this year (as calculated by Hyundai). Did we mention that the 2016 passenger car standard is 37.8 MPG, at which time it figures its non-hybrid Elantra will get 50 MPG combined on the CAFE test? And nobody can look at Hyundai’s six-month sales performance (up 26%) and argue that Americans don’t want to buy fuel-efficient cars. In short, Hyundai is proving that automakers who can make money selling appealing, fuel-efficient cars need not binge on hybrids Even, according to the EPA’s final rule on standards through 2016, for manufacturers trying to sell as many pickups as possible.

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As a relatively pragmatic person who generally chooses the imperfect-yet-achievable path rather than agonizing over the perfect-but-unattainable goal, this chart [from a fascinating Boston Consulting report, in PDF here]  frustrates me. I understand why Americans choose hybrid-electric cars as their most favored “green car” technology, but from their it gets fairly crazy. EVs are fantastic on paper, but in the real world they’re still far too expensive, their batteries degrade, they have limited range, oh and did I mention that they’re freaking expensive? Biofuels, America’s third-favorite “green” transportation technology can be fantastic in certain limited applications, but the ongoing ethanol boondoggle proves that it will never be a true “gasoline alternative.” Finally, at the bottom of the list, Americans grudgingly accept only relatively slight interest in the two most promising short-term technologies: diesel and CNG. Neither of these choices is radically more expensive than, say, a hybrid drivetrain and both are considerably less expensive and compromised than EVs at this point. So why are we so dismissive of them?

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Cartoon by Pat Bagley at Cagle Cartoons.

The United Auto Workers have proven that they’ll come out in support of greenhouse gas regulation when they think it’s in their interests, but what happens now that the union-built green-car future isn’t turning out to be the jobs-loaded utopia they predicted? With CAFE standards of 56.2 MPG by 2025 being proposed, the union has a choice to make: back the government that saved it or the automakers it’s currently negotiating with for jobs? Unless, of course, there’s some kind of principle here…

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As automakers face slowly diminishing returns in their attempts to make internal combustion engines more efficient (while facing huge challenges in electric, hydrogen and other alt-fuel drivetrains), they are looking ever more closely at alternative materials to improve efficiency (and, to a lesser extent, driving pleasure) through weight-savings. Perhaps the biggest emerging trend in this area, especially at the higher end of the market, is in the use of carbon fiber, which is being actively pursued by automakers like BMW, Toyota, Lamborghini and Daimler. But, as WardsAuto points out, there’s another material that’s trying to earn a place in the lightweight cars of tomorrow: polycarbonate plastics.

Polycarbonate windows weigh half as much as glass, and because they are made with injection molding they can come in shapes that can’t be imagined with glass.

However, the material is more expensive. To get auto makers to convert, Sabic and its main material competitor, Bayer MaterialScience, have to sell the idea of integrating other parts into the plastic mold that makes the window.

For example, says Umamaheswara, “on a liftgate, a lot of features can be integrated, and if the manufacturer is short of room in the factory, it can be delivered as a module.”

A modular liftgate could include the window, cladding for the D-pillar, a roof spoiler, the high-mounted rear brake light, a rear wiper foot, handles and logos. When all those processing costs are included, he says, polycarbonate is competitive with glass and metal.

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When the White House opened negotiations over the next round of CAFE regulations for 2017-2025, I reckoned the automakers and regulators were “working in nearly unprecedented harmony.” Well, not so much any more. The WSJ [sub] reports that, although work on “the big number” is proceeding well, in the words of IHS Automotive’s Michael Robinet

This becomes a lot more politically divisive as they become much more specific in terms of the footprint of the vehicle.

In short, the original sin of CAFE, the two-tier system that drove SUV “light truck” sales and saw the creation of “trucks” like the PT Cruiser and HHR, has returned to haunt the latest round of negotiations. And, according to the WSJ, Japanese and Korean manufacturers are complaining that the new rules will motivate consumers to buy less-efficient offerings, and in turn give the Detroit manufacturers an unfair advantage. The kumbayas are over, and the gloves are off… but just how unfair are the newly-proposed rules?

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GM still won’t comment on the matter, but a recent rumor that the Cruze’s two-liter diesel engine will be federalized for the 2013 model-year has been confirmed to the AP [via the DetN] by “two people briefed on GM product plans.” That motor, designed by VM Motori and built since 2006 by GM-Daewoo, was recently updated to Euro 6 standards, and according to the Holden website, the Australian-spec version makes 160 HP (at 3,800 RPM) and 236 lb-ft (at 1,750 RPM), while returning 42 MPG (combined with manual transmission) or 35 MPG (combined, automatic). Of course those aren’t EPA numbers, and they could easily change by the time the engine is certified for US emissions standards.

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[Editor’s note: The video above depicts a Penske-era Smart ad. The new Mercedes-led marketing effort begins this fall]

Having taken over sales and distribution of the Smart brand from Penske and canceled a planned Nissan Micra rebadge, Mercedes is trying to inject some life into its flagging city car brand (Sales are down 24% YTD, at 2,556 units) with a new marketing campaign (coming this fall) and finance offers. Smart’s new General Manager Tracey Matura explains the problem to Automotive News [sub], saying

People are not avoiding the brand or the product, but there is a great majority of people who are not aware of the brand

Really? People don’t know or notice a brand that’s in its fourth year of US sales, offering a car that’s unlike any other on the market? It seems to me that the problem isn’t awareness, as the term “Smart Car” is almost universally synonymous with “hilariously tiny car,” even among non-expert consumers. The problem seems more precisely to be that Smart is neither as cheap nor as efficient as larger rivals, and American consumers are constitutionally resistant to the idea of paying more for less (a point that VW seems to be proving in spades). More promising: $179/month lease and finance deals backed by Mercedes-Benz Financial Services, not to mention the decision to ditch the snottier-than-thou Penske campaign embedded above. But even new ads and good deals aren’t likely to make Smart a truly viable brand in the US until new product arrives in 2014, hopefully in a more efficient, enjoyable-to-drive form. Or unless gas prices spike again, causing a 2008-style rush for conspicuously downsized vehicles.

The transition from exclusively gasoline-powered vehicles to the new panoply of permutations of gas and electric power has not been easy on the old emm-pee-gee. The imperfect-yet-universal (in the US market) measure of efficiency finds itself at a loss to compare an electric car’s efficiency with that of a gas-powered car, and completely falls apart as a relative measure of efficiency between plug-in-hybrids which use gas and electricity in different ways (see the ongoing battles over the Chevy Volt’s efficiency). Into the breach have stepped several challengers to the emm-pee-gee’s supremacy, including the weak MPGe (which was responsible for the Volt’s disastrous “230 MPG” introduction), and the “Kilowatt-hours per 100 miles” measure championed by Motor Trend in a rare display of admirable pointy-headedness. But the Gordian contradiction of efficiency measures is that they must be both accurate and easy-to-understand… and if the MPG’s history tells us anything, it should probably err on the side of the latter prerogative.

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After Greenpeace attacked Volkswagen for opposing proposed increases in the EU’s emissions regulation, Ford is joining the opposition to tough EU proposals. Ford Europe CEO Stephen Odell railed against the EU’s recent White Paper On The Future Of Transport [PDF here], which calls for (among other things):

-“A higher share of travel by collective transport, combined with minimum service obligations”
-“The use of smaller, lighter and more specialised road passenger vehicles”
-“Road pricing and the removal of distortions in taxation [to] also assist in encouraging the use of public transport and the gradual introduction of alternative propulsion”
-All in the pursuit of the goal: “Halve the use of ‘conventionally-fuelled’ cars in urban transport by 2030; phase them out in cities by 2050; achieve essentially CO2-free city logistics in major urban centres by 203”

Now what about that plan might worry an auto executive?
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Fortune [via CNN]’s Alex Taylor III is clearly as disappointed as I was with Joe Nocera’s toothless, vaguely pro-Volt piece in last Sunday’s NY Times, and he’s riled up enough about it to lay down a savage call-out the Volt hype machine. In fact, it’s a less scientific, less comprehensive (and, by virtue of the passage of time, less speculative) version of a piece my father wrote in 2008, comparing the then-undelivered Volt with the also unlaunched 3rd gen Prius and Plug-In Prius. Taylor’s foil for the Volt is the plug-in Prius, which now arrives in less than a year, and in the eyes of the longtime industry writer, the contrast is stark:

Volt enthusiasts like to recite the fact that the Volt can go 35 miles on battery-power and then shift seamlessly into gasoline-engine mode, saving on gas and reducing emissions of greenhouse gases. It is an impressive technological improvement but one that is already obsolete.

Here’s why:

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TTAC has long seen stop-start systems (which turn off the engine at idle) as one of the many common-sense technologies that will continue to improve internal combustion engine efficiency at a relatively low cost. Outside of these digital pages, though, the systems have taken longer to gain awareness in the United States, resulting in the lagging adoption rate pictured in the chart above. Up to this point, we’ve assumed that this can largely be blamed on the EPA test’s unwillingness to acknowledge the urban-driving advantages of stop-start systems, pointing to Mazda’s protests on the matter as evidence that government intransigence was keeping the technology out of the market. But recently Mazda has announced that all of its vehicles will get stop-start as standard by 2015, and Ford has said that it will begin offering the technology on “some” four-cylinder models for the North American 2012 model-year… and the rest of Detroit isn’t far behind. So what’s the deal? The EPA hasn’t changed its test… why are stop-start systems finally starting to trickle over?

Thanks to new research obtained by TTAC from the cleantech investment fund Pacific Crest, we now have a better understanding of stop-start technology, and why we’re actually glad it’s taking so long for the systems to get here.

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Every advertiser faces a basic choice at the outset of a campaign: come up with unique, relatable imagery for ads, or riff on an established cultural meme. Volkswagen went the latter route with its “Darth Vader” Super Bowl ad, achieving huge success: it was the most popular auto-related ad of the Super Bowl, and the Youtube version has received over 40 million views. The only problem with appropriating such popular imagery: you don’t enjoy unique rights to it, meaning you can be easily hoisted by your own petard. Which is exactly what’s happened here to Volkswagen. Greenpeace is angry that VW opposed a bid to bump the EU’s 2020 emissions goal from the agreed-upon 20% to 30% of 1990 levels (even though C02 emissions improved 3.7% last year and 5.1% in 2009, and average emissions are on track to hit the 130g/km 2015 goal ahead of schedule). As a result, they’ve turned VW’s hugely popular “Darth Vader” ad on its head, identifying the giant automaker with the evil Lord Vader, and encouraging fans to “join the rebellion.”
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