After the apocalyptic warning from the industry about a proposed 56.2 MPG 2025 CAFE standard, the auto industry seems to be backing the White House’s latest proposal, which reduces the 2025 target to 54.5 MPG, slows the rate of efficiency improvement for trucks and increases advanced technology credit loopholes. Another key consideration: the White House agreed to a mid-term review of the 2025 standards to ensure they reflect the market. Plus, the DetN points to a previously unheard-of compromise to keep big trucks cheap:

The plan is also carving out special rules for “work trucks” — heavier light duty vehicles used for construction.

As a result of these compromises, the WSJ [sub] reports:

As of Wednesday, Toyota Motor Corp., General Motors Co., Ford Motor Co., Chrysler Group LLC, Honda Motor Co., Hyundai Motor Co., Nissan Motor Co., BMW AG and Volvo had told the administration they would support the plan

With the industry now largely on board, the Obama Administration has a green light to announce its new standard at a ceremony planned for tomorrow. But not everyone is happy with the new proposal…

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After a lot of prototypes presented at Chinese car shows with hoods closed and long cables going to mock charging stations, EV development appears to get serious in China. Yesterday, Nissan announced that it is developing an EV for the Chinese market that will be sold under the Venucia brand by 2015. Daimler of all people could be further ahead. (Read More…)

Between Nissan’s Leaf racer and a new EV-only racing cup, electric auto racing has been coming along in recent months, although significant challenges remain. For one thing, batteries are still extremely heavy, and for another, they take a long time to recharge. Finally, thermal management issues conspire with both of these battery challenges to force EV races to be quite short. And in search of a solution, one team that’s entered into the EV Cup is looking to the original EV racers for inspiration: slot cars. Rather than getting hot and heavy with big batteries, figures Drayson Racing Technologies, why not charge the car as it’s racing at speeds upwards of 200 MPH? Luckily HaloIPT has come aboard the project, bringing its eponymous wireless Inductive Power Transfer technology to bear in order to create life-sized, wireless, slot-free slot cars.
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Research into environmentally sensitive ways of running a car, AKA “green patents” have been in the news lately and it’s been good news for GM’s image. The Detroit automakers in general are not seen as technology leaders, particularly in terms of alternative energy. Bob Lutz saw the Chevy Volt as a way of changing that perception, taking away some green luster from Toyota. Since there is usually considerable time between a patent’s filing and its granting, patents granted in the last 2 or 3 years are a good reflection of what a company has been doing for the past 4 or 5 years, and there’s evidence that Lutz’s strategy was not just a PR job but also a reflection of a very large amount of research and development at the automaker. Cleantech Group, of the Heslin Rothenberg Farley & Mesiti intellectual property law firm, publishes the Clean Energy Patent Growth Index. The CEPGI tracks the granting of U.S. patents for solar, wind, hybrid/electric vehicles, fuel cells, hydroelectric, tidal/wave, geothermal, biomass/biofuels and other clean renewable energy. The law firm publishes the CEPGI quarterly and then tabulates the annual results.

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Over a month ago now, I was told by several people who should know that the 2025 CAFE standard “number” would fall between 60 MPG and 50 MPG. When I pressed for details, the only answer I got was “at or slightly under 55 MPG.” So when the Obama Administration opened the haggling at 56.2 MPG, I wasn’t sure if he would stand fast by that number or come down a little. Certainly the auto industry and its allies have been portraying the 56.2 MPG proposal in apocalyptic terms, running attack ads against it like this one hosted at the Freep [MP3]. And apparently the opposition paid off, as the WSJ [sub] reports that the Obama Administration has caved, reducing its proposal from 56.2 MPG to 54.5 MPG… and that’s not all. According to the report

The plan calls for a 5% average annual increase in fuel economy for cars and a 3.5% increase for light trucks through 2021. After 2021, both cars and trucks face a 5% annual increase… Included in the plan are credits for hybrid vehicles—including large trucks —and measures that will give big pickup trucks and sport-utility vehicles more leeway in meeting the target.

We’ll have to wait to see the proposal in detail before we know for sure what happened here, but it seems that the industry has largely gotten what it asked for. Not only is the overall number decreased, but truck compliance has been slowed and “advanced technology credit” loopholes appear to have been expanded. This is fantastic news if you sell a lot of trucks and SUVs, and not so fantastic if you care a lot about dramatically reducing fuel consumption over the next 10 to 15 years. But again, we’ll just have to see what specific proposals are included in the new deal, and how automakers react before we jump to too many conclusions.

At a press conference in Beijing’s tallest building, Nissan’s CEO Carlos Ghosn announced today that the Nissan-Dongfeng joint venture will build an EV in China, and that it will be ready by 2015. No, it will not be the Nissan Leaf. It will be a plug-in that will sail under Nissan-Dongfeng’s “Chinese” brand, Venucia. Said Ghosn: (Read More…)

Dare to suggest that a strong CAFE standard won’t ruin any automaker, and you’ll be overwhelmed by deafening cries of “what about the market,” “think of consumer choice,” and “don’t you tell me what to drive.” Now, I’ve made it very clear that I’m not a huge CAFE fan, but the fact of the matter is that since nobody is leading a charge for a gas tax (least of all the industry that says it would be a good thing) it’s the only option on the table. Which leaves just one question: why regulate fuel economy at all? There are all kinds of arguments against regulating fuel economy, but most stem from a desire to “let the market do its thing.” That’s an argument I’m highly sympathetic towards, but it doesn’t necessarily require that the government but out and let the era of cheap, thirsty trucks roll on unabated. What maybe, just maybe, if the market actually wants more fuel economy? Well guess what campers… according to research by IHS Global Insight [via Automotive News [sub], the market does want more fuel economy.

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California has backed up its strict emissions standards for years now with a $5,000 tax credit for electric, hybrid and fuel cell vehicles, which when combined with a $7,000 federal tax credit can often make those vehicles nearly as affordable as “regular” cars. But, reports Automotive News [sub], that state credit has fallen victim to California’s budget woes and oversubscription, and has been cut in half from $5,000 to $2,500. According to the report:

high demand exhausted the program’s funding last month. The Los Angeles Times reported Thursday that about 500 consumers who bought electric cars such as the Nissan Leaf or Tesla Roadster are on a waiting list and will collect the $2,500 rebate.

To deal with growing demand, the pool of money to fund the rebates was increased to between $15 million and $21 million for CARB’s current fiscal year ending June 30, 2012, according to CARB’s announcement. A total of $11.1 million was allocated in the program’s first two years, according to CARB spokeswoman Mary Fricke.

The increased cash pool and lowered rebate amount are aimed at making the incentive available to more consumers, according to CARB’s Web site. The changes are projected to fund about 6,000 rebates for consumers who apply for the program on a first-come basis, Fricke said.

Now California “green car” intenders not only get a reduced tax credit, but they also don’t get free access to the HOV lane anymore. It’s almost as if California wants “green” vehicles to succeed or fail on their own terms…

The Michigan Congressional delegation’s letter, stating that the Detroit-based automakers are not technologically capable of serving the market while complying with a proposed 2025 CAFE standard seemed strange to me in light of the recent progress made by Ford and GM on fuel economy. Why, I wondered, would these firms boast of their fuel econmy efforts on the one hand while allowing their congressional representatives to portray them as unable to build a CAFE-compliant fleet on the other. Why, I wondered, don’t Ford and GM come out and angrily insist that they can build the most fuel efficient cars in the world? My guess: because they know that they can probably wheedle a loophole out of the feds if they keep pleading inability. Yes, everyone knows they can comply with CAFE… but even the UAW knows that when the government asks you to do something, you ask for something back. Which in turn made me wonder: what might the OEMs want? And, turning to the 2012-2016 CAFE Final Rule [go on, give it a read in PDF format here], I found a glaring loophole that all the manufacturers seemed to want, but which the feds turned down. I have no evidence that this is back on the table for 2017-2025, but I thought I’d put it out there to give a sense of what the OEMs may be pushing for by  pleading inability to comply with the proposed 2025 standard.

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An anonymous tipster has sent us a copy of a letter from the Michigan congressional delegation to President Obama [PDF here, or hit the jump for an embedded copy], which calls his proposal for a 56.2 MPG CAFE standard by 2025 “overly aggressive and not reasonably feasible.” The letter is remarkable in the sense that the major signatories are Democrats, and yet it attacks the President’s proposal with more vigor than many inside the industry. The letter also confirms that that the Detroit-based automakers already rely on CAFE’s “credit” loopholes in order to meet the 2012-2016 standard, a stunning admission of how far behind Detroit still lags in fleet fuel economy. And rather than taking responsibility for their situation, the MI representatives blame CAFE for Detroit’s low fleet efficiency, arguing that “manufacturers that produce primarily smaller vehicles will have an unfair advantage.” Moreover, the MI reps don’t just admit that Detroit is behind its competition, but even goes as far as to argue that “the overall targets currently proposed may exceed what is technologically achievable for the the US automakers that produce and sell the majority of the larger pickup trucks and sport utility vehicles that US families and businesses -and tens of thousands of autoworkers- depend on.”

In short, the letter strikes me as a shockingly old-school display of excuses and apologia that stands in sharp contrast to the “green car revival” narrative that Detroit and D.C. pushed so hard during the bailout. And frankly, I’d be embarrassed if I ran one of the largest automakers in the world and I was reduced to pleading my inability, on technological grounds no less, to achieve a 56.2 MPG fleet average (which in “window sticker” terms, translates to about 41 MPG EPA) within 15 years… even though CAFE is riddled with loopholes that make it easier to continue building thirsty trucks. If Detroit were actually leading the charge for a gas tax (or offering any kind of market-driven alternative), it might have some credibility on this issue, but as things stand this strikes me as nothing more than whining. So much for America’s “can-do” spirit…

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When I was a very young and very green copywriter, Dr. Carl Hahn, at the time CEO of Continental Tires and later CEO of Volkswagen, said in an agency brief: “We lose 10 Deutschmarks on every tire we sell.”

“Then we better stop advertising them,” said I.

Hahn gave me a pained look. The look was followed by real and massive pain in my left foot, because my Creative Director had kicked me viciously.

“Ouch!” I said.

“You’ve got that right,” said Hahn.

That little story crossed my mind when I read in The Nikkei [sub] that “Mitsubishi Motors Corp.’s electric vehicles and other eco-friendly offerings are expected to begin contributing to the firm’s bottom line in two years.” (Read More…)

Would you be a little bit surprised if the man behind this tiny, funky little electric van was the man who styled the VW Passat CC and first-generation Mercedes SLK? Well, Murat Günak has been heavily into the electric car game since leaving Volkswagen, having designed one of my favorite EVs, the fresh-and-freaky Mindset. But even though the Mia and the Mindset seem a little more in the same vein, Günak has actually moved well past the Mindset’s super-high-end positioning, as this Mia is set to sell for the lowest price of any EV in the EU, starting at €19,500 ($28k). For comparison, Mitsubishi’s iMiEV (the cheapest EV in the US market) sells for €34,390, or nearly $50k… although its European price is set to drop to closer to €15k when production ramps up.

But the Mia isn’t just (relatively) inexpensive… it’s downright cool. Built by the French firm Heuliez in either 9.4 or 10.5 foot lengths (the latter with 53 cubic feet of cargo space), it comes with a McLaren F1-style central driver’s seat and doors designed to operate in tight urban conditions. With a range of only 60 miles and a top speed of only slightly more than 60 MPH, it’s strictly an urban runabout, but as a small business delivery vehicle it seems to hit a lot of the right buttons… especially the three-hour charging time (an 80-mile-range battery is optional but takes five hours to charge). Production hits 10,000 units next year, when sales to private customers begin. [via Autobild]

Tesla will begin supplying Toyota with components for its electric RAV4 a year earlier than previously planned, reports Bloomberg, a move that will have Toyota paying $100m for the drivetrains rather than the previously-agreed-upon $60m. According to a Tesla SEC filing, the EV specialist firm will supply Toyota with

a validated electric powertrain system, including a battery, charging system, inverter, motor, gearbox and associated software which will be integrated into an electric vehicle version of the Toyota RAV4. Additionally, Tesla will provide TMC with certain services related to the supply of the Tesla Battery and Powertrain.

There’s still no word about how many of these RAV4s is Toyota planning on selling over those two years, or where will they be assembled, but it sounds like Toyota isn’t trying to launch quite the EV offensive that some green car blogs seem to be hoping for. As one analyst puts it to Bloomberg, $100 million “isn’t a huge amount for Toyota, so this allows them, with only modest downside risk, to participate in what Tesla is doing.” That sounds about right…

[UPDATE: GM responds to this piece here]

With environmentalist groups on the warpath over forthcoming 2017-2025 CAFE standards, trucks sitting on lots, and the Flint HD Pickup plant idled for much of the month, this is probably not exactly the moment GM might have chosen to put $328m into tooling for new full-sized pickups to be built at Flint. But time and the market wait for no company, and because the Silverado is GM’s single best-selling product, the investment isn’t tough to justify:

“Truck sales play an important role in the success of General Motors,” said Joe Ashton, UAW-GM Vice President. “We are confident that the next-generation of trucks will continue to be an important source of revenue for the company and jobs for our members

In case there’s any confusion though, GM is making perfectly sure nobody thinks they’re making any product choices because of union demands. At the investment announcement ceremony at Flint, Cathy Clegg, GM vice president of labor relations told Reuters [via Automotive News [sub]]

We certainly aren’t going to make a decision and make a commitment solely as a way of getting an agreement. If the market doesn’t drive it, we can’t do that

So, how is that truck market?

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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.