Detroit plots green future as its bailout plan
A new partnership is evolving between Washington and the car companies.
Emergency federal loans to the US auto industry are just the beginning of an emerging partnership between Detroit carmakers and the US government – a partnership that could shape the industry’s future.Skip to next paragraph
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Close ties between Detroit and Washington aren’t new. The car industry has long been influenced heavily by rules of the road set in Washington, such as fuel economy standards. But what’s taking shape now, in the midst of an industry crisis, appears to be a new teamwork that is driven by necessity.
The companies are committing more than ever to shift toward new fuel sources. But to do so at a time when vehicles sales have plunged, they say, will depend on policies such as incentives for consumers to buy cleaner, but costlier, cars.
Consider that sales of hybrid vehicles have plunged in recent months, even as the carmakers are being nudged toward a carbon-conserving future.
The message: Consumers may be interested in helping the environment, but with rising unemployment and gasoline at $2 a gallon, they won’t pay too much for it.
“It’s kind of hard to push [environmental technologies] on people beyond a certain point,” Rick Wagoner, chief executive of General Motors Corp., told reporters at a Monitor-sponsored breakfast Tuesday. Ramping up clean-car sales has “got to be a cooperation between governments and consumers and the industry.”
In reports to the Obama administration in February, GM and Chrysler have already outlined plans to shift their car lineups increasingly toward fuel-efficient models and new technologies such as advanced electric batteries or fuel cells.
Those plans – in addition to cost cutting – are central to the carmakers’ vision of business viability. Billions of dollars in new federal aid hangs on them.
Obama task force in overdrive
In recent weeks, meanwhile, the Obama administration has ramped up its partnership with the industry, by creating a task force to handle the emergency aid.
Task force members were in Detroit recently to test-drive cars such as GM’s electric powered Chevrolet Volt. They learned about fuel cell cars and visited what Mr. Wagoner says is the largest battery lab in the United States.
The task force represents a big change from a few months ago, when Washington’s focus on the industry was more immediate in scope. The Bush administration had to decide quickly how to help the industry, or face the prospect that GM and Chrysler could end up in a disorderly, and job-killing, bankruptcy.
The Bush loans tided the companies over some tough months, and bought time. Now, the Obama task force, whose members include the Treasury secretary and bankruptcy experts, has begun the work of bridging short- and long-term survival plans together.