One of the first cars I drove was my dad’s Buick Regal. I was only 14, but my older brothers let me sit behind the wheel. After college, I moved to DC and was happy to have an old VW Rabbit to wedge into tight parking spaces. I have fond memories of both those cars—they brought me a taste of freedom—but they can’t hold a candle to today’s models. Neither the Regal nor the Rabbit had the antilock brakes, power steering, or fuel injection that has since become standard.
The auto industry has pioneered remarkable innovations in the past three decades. Nearly every new car on the road is wired with a computer more powerful than the ones that sent astronauts to the moon—a development my dad couldn’t have imagined when he bought that Buick Regal.
And yet, now that the Obama administration is considering raising clean car standards to 60 miles per gallon, automakers claim they don’t have the ingenuity to do it.
Building cars that get 60 miles per gallon would cut drivers’ costs at the pump in half, slash our dependence on foreign oil, and reduce carbon pollution. It would also make American automakers more competitive.
Yet many car companies say the standards will be too costly. Others insist they don’t have the technological ability to reach the goal. Former GM Vice Chair Bob Lutz even dismissed a more modest standard of 42 miles per gallon as “totally ridiculous.” He claimed, “Nobody knows how to do a full-line fleet with the equivalent of 42 miles per gallon. That’s aintgonnahappen.com.”
We shouldn’t be surprised. Even though this industry innovated its way from carburetors to fuel injectors, it has made the same declaration of ineptitude every time the government creates a new public safety standard.
Faced with rules for seatbelt, airbag, or catalytic converter, car executives warned that the measures would put them out of business or pass on exorbitant costs to consumers. And every time their claims have been proven wrong.
NRDC analyzed automakers’ cost projections for each major new government standard, and we found that their estimates have been 2 to 10 times higher than actual costs. We also found that government projections of compliance costs tend to be 1 to 2 times as well. Why? Because they underestimate the technological innovation that will drive costs down.
History shows that once carmakers accept new safeguards, they design the technology, and they do it at a reasonable price.
GM and Ford Claimed Catalytic Converters Would Kill Business
Back in the 1970s, government experts concluded that car makers would have to install catalytic converters in order to reduce the amount of dangerous pollution Americans were breathing. The auto industry immediately claimed it wasn’t technically possible.
GM Vice President Ernest Starkman said: “If GM is forced to introduce catalytic converter systems across-the-board on 1975 models, the prospect of an unreasonable risk of business catastrophe and massive difficulties with these vehicles must be faced.”
Ford President Lee Iacocca cried that “If the U.S. Environmental Protection Agency does not suspend the catalytic converter rule, it will cause Ford to shut down.”
Automakers said that installing catalytic converters would force them to raise the price per car by about $2,130 to $2,700 in 2004 dollars. In fact, it cost between $2875 and $1,350 in 2004 dollars. And incidentally, neither Ford nor GM went out of business. And all those converters they begrudgingly installed helped reduce smog in our skies and cut down on asthma attacks and cardiovascular and respiratory diseases.
Automakers Fought Airbags for 20 Years
As far back at 1969, government officials recognized that air bags could provide a critical line of defense against deadly car crashes. Yet in 1971, Ford President Lee Iacocca went to President Nixon and asked him to block a pending airbag mandate.
These and other entreaties paid off: the federal airbag rule didn’t go into effect until 1990. Constant foot dragging and political pressure bought automakers 20 years of delay. Similar stonewalling also postponed the adoption of seatbelts, padded dashboards, shatterproof windshields, fixed head restraints, and other safety measures that have since become routine.
Car Makers Wildly Overestimated Cost of 1990 Tailpipe Rules
The federal Clean Air Act Amendments of 1990 adopted by Congress and signed by President Bush required automakers to further reduce dangerous pollution from tailpipes by 1996.
Car manufacturers claimed that the costs of meeting these Tier 1 standards would tack on a cost equivalent of $432 per car. EPA staff estimated the cost to be $150. Using actual data submitted by the automakers to the US Bureau of Labor Statistics, EPA staff has since estimated the actual costs to be $88.42 (all values in 2001 dollars).
Why New Standards Cost Less than Car Makers Claim: Innovation
Before 1969, engineers thought the only way to reduce car pollution was by using end-of-pipe technology such as catalytic converters. Yet, as emission standards starting coming into effect, Honda, pursued alternative methods. The company’s founder, Soichiro Honda, instructed his engineers to “try to clean up the exhaust gases inside the engine itself.”
Honda realized that by pre-burning the gasoline/air mixture, more impurities were removed before they reached the tailpipe. This discovery resulted in the “compound vortex controlled combustion” (CVCC) engine, which allowed Honda to meet the 1970s Clean Air Act standards without catalytic converters. It also proved profitable: Detroit manufacturers, who initially scoffed at Honda’s accomplishments, all licensed the technology from Honda in 1973.
The implementation of CVCC technology on the Honda Civic in the 1970s disproved Detroit’s claim that meeting emissions and fuel economy standards simultaneously was impossible, as the EPA ranked the Civic first in fuel economy among all models.
American automakers can continue to be the naysayers and let other companies beat them in the innovation game. Or they can channel their considerable ingenuity toward achieving the new clean car standards that will save drivers money and make America more competitive.