The Latest Auto Bailout Plans II - So What Did We Find?

A few days ago, on the eve of the auto companies' submittal of their latest restructuring plans, I wrote about what to look for in terms of commitments to meet higher standards for global warming emissions and fuel economy.  Now that GM and Chrysler have filed their plans with the Treasury, let's see what they said.


General Motors' plan, which asks for $22.5 to 30 billion dollars in federal loans, had this to say about emissions and fuel economy standards (pp.21-22): 

[T]he Company has complied with Federal fuel economy rules since their inception in 1978, and is fully committed to meeting the requirements in the 2007 Energy Independence and Security Act (which specifies the 2020 fuel economy requirement). Going forward, the Company will work closely with the Administration on future requirements, and work to meet them in the most cost effective way. Compliance with other regulatory schemes, including the California CO2 program, will be addressed as any such programs are finalized. General Motors will work with the Administration, and others, to develop any changes needed to the Company's product and financial plans to meet such additional requirements.

The last two sentences are intriguing.  In place of GM's former just-say-no stance on California's global warming emission standards, now the company pledges that compliance with those standards "will be addressed as any such programs are finalized."  And the company pledged to "work with the Administration, and others" (Who could that be?  California?  Environmental organizations?) "to develop any changes needed to the Company's product and financial plans to meet such additional requirements." 

The Wall Street Journal characterized the company's new tone this way:  "General Motors: Maybe We Can Live With California Emission Rules."  The Journal said that GM "appears to have softened resistance to government fuel-economy standards" and "hinted it might be open to California regulating auto emissions after all."   

We'll have to see about that.  In a subsequent conversation with NRDC, GM's chief Rick Waggoner reiterated his desire for a single national standard, but said the $64,000 question is what that would be.  As I reported, an analysis of automakers' previous restructuring plans, prepared by my colleague Roland Hwang, found that the companies are now positioned to comply with California's standards if they were extended to apply nationwide.  GM's officials quibble with that conclusion, but say they want to talk.  We'll keep pressing. 


Chrysler's plan, which seeks another $5 billion in loans, also seems to have softened the company's stance against to the California standards - at least in tone.  Chrysler's report says this (p.116): 

  • California and thirteen other states have adopted greenhouse gas vehicle emissions standards ("AB 1493 standards") that require increases in fuel economy. These states comprise about 50% of the domestic car market.
  • If the US Environmental Protection Agency allows these states to enforce the AB 1493 standards, Chrysler will try its best to comply using available technology, however as a last resort it may be necessary to restrict sales of certain vehicle models in those states. The ultimate effect of the California standards on Chrysler's product plans depends on a number of developments, as indicated in the Appendix.

Chrysler now says that if EPA approves the California waiver, it will "try its best to comply using available technology."  The company does say that "as a last resort it may be necessary to restrict sales of certain vehicle models in those states," but this is a step back from Chrysler's shrill claims of doom and gloom two years ago, in the auto industry's unsuccessful lawsuits to block the California standards.  

There's more to explore with Chrysler too.  The last sentence mentions an appendix that explores "a number of developments" that will shape the effect on Chrysler's product plans, but that appendix was not made public.  We'd like to know what it says.

So, do the plans show some movement?  Maybe.  As I told the Wall Street Journal:  "If you have your hand out for federal dollars, it is harder to thumb your nose at these requirements as they used to."  But we still need to see if the movement is real. 

The solution is in still their hands.  All they have to do is agree to meet standards that deliver emissions and fuel economy at least equal to applying California's standards nationwide.