Where is Detroit's Can Do Spirit?

Last Sunday, the Detroit News published an editorial that claimed a 60 mpg standard by 2025 was “unrealistic”. However not only is achieving a 60 mpg standard clearly achievable, but it is also in the best interests of U.S. automakers and auto workers. The real question the Detroit Three and other automakers should be asking themselves is “can we afford to not meet a 60 mpg standard?”

There are three primary fallacies of the editorial I’d like to address.

Fallacy #1: The editorial claims that achieving a 60 mpg standard by 2025 is based “neither in scientific fact nor reality.”

Our 60 mpg target is based on work by researchers at Massachusetts Institute for Technology, University of Michigan, and the National Academy of Sciences (see our fact sheet for more details). Furthermore, the most up-to-date analysis from the National Highway Safety Transportation Administration, the U.S. Environmental Protection Agency, and the California Air Resources Board estimates that a 62 mpg level can be met at an additional vehicle cost of $2800 to $3500. This range is consistent with our estimate of $2700.

Fallacy #2: According to the editorial, a 60 mpg standard “…will impose untold billions in costs on the automakers, including the two already bailed out by taxpayers.”

If history is any indication, the exact opposite is true: without higher fuel economy standards, the US taxpayers will likely be asked once again to bail out one of the Detroit Three when the next oil orice shock hits.

The editorial conveniently ignores the fact that GM and Chrysler went bankrupt due to too little--no too much--attention to fuel economy. Over the last two decades, the Detroit Three squandered their chances to lead the world by pouring their resources and energy into fighting pollution and fuel economy standards, and building Hummers instead of hybrids.

As result, just like after the oil shocks of the 1970’s and 1980’s, Detroit lost market share to their more fuel efficient rivals from Japan and in this latest round, also the Koreans. U.S. based automakers sales share is at an all time low. The Detroit Three – Ford, GM and Chrysler – control just 45% of United States market share

Fallacy #3: The editorial says that “consumers haven’t reacted to the higher standards by buying smaller vehicles or hybrids. In fact, in September, light trucks, which includes crossover, SUVs, minivans and pickups, accounted for more than 50 percent of the market.” 

This statement is misleading and dangerously short-sighted.

Fuel efficiency is the future of the automobile industry. The average new vehicle model is more fuel efficient than the previous version, the market for truck-based full size SUVs has been cut in half  from its heyday, and crossovers are essentially tall station wagons that are more fuel efficient than the truck-based SUVs they replace. Toyota and other automakers have announced expansion of their hybrid vehicle model offerings.

The Path Forward to Restoring the U.S. Auto Industry to Global Leadership

There is little disagreement that the future of the automobile lies with innovation and advanced technologies. Electric drivetrains, high strength lightweight materials, and new business models are critical to any company that wants to compete in the global market of the 21st century.  

A 60 mpg standard is what’s necessary for the US auto industry to compete against its Japanese, German, and Chinese rivals. The European Union is considering setting its next round of passenger vehicle carbon dioxide pollution standards to achieve an equivalent fleetwide average of about 60 mpg by 2020. China is considering setting its own version of CAFE standards to achieve an equivalent fleetwide average of 50 mpg by 2020. 

The Detroit Three cannot afford to oppose the very policy that will keep them competitive in the worldwide market.  They must support innovation and an ambitious goal, if our greatest manufacturing industry – auto making - is to thrive, not just survive.