Auto workers and their communities are feeling the brunt of the U.S. auto industry’s lack of leadership. The latest casualties are 1,300 workers in Lordstown, Ohio, who were laid off when GM closed its assembly plant for the fuel-efficient Chevy Cruze.
The plant closing is symptomatic of America’s industrial hollowing out. Although the decline of American car making is not a foregone conclusion, its renaissance will require bolder thinking that recognizes the urgency for cleaner technology.
But U.S. automakers are reluctant to shift gears. Indeed, the big two, GM and Ford, are teaming up with the White House to overturn the 2009 bailout agreement, which provided federal loans to the auto industry in exchange for building cleaner cars. Specifically, automakers want to roll back average 2025 vehicle fuel efficiency standards by 30 percent, from 54 to 37 mpg, while also revoking California’s authority under the Clean Air Act to regulate vehicle emissions.
Pursuit of the regulatory rollbacks is an admission of defeat in a global market that is innovating rapidly. Just as backyard car maintenance gave way to computer electronics, the gasoline and diesel-powered internal combustion engine is giving way to more efficient electric-drive technology.
Yet rather than build what the world needs and buyers increasingly want – cleaner transportation – GM and Ford are doubling down on a sales strategy featuring large SUVs and pickup trucks. This strategy seems business-savvy but GM and Ford are falling behind the competition. GM domestic sales have declined the past three years, while Ford is retiring many of its sedans, which will comprise only 10 percent of its 2020 models. Globally, both GM and Ford market shares are down. They now trail Volkswagen, Toyota and Hyundai with Nissan and Honda riding their rear bumpers.
In the emerging electric vehicle market, it doesn’t bode well that GM recently canceled production of the Chevy Volt, ceding the electric hybrid and plug-in markets to Toyota and others. This puts GM at greater disadvantage to electric carmakers like Tesla and Rivian as well as foreign companies like Toyota and Volvo, which is adding electric motors to all of its 2020 models on its way to an all-electric fleet.
Many SUV and truck sales are propped up by low gas prices, which delay the day when gas-guzzling models are showroom deal breakers. Oil companies enjoy generous tax breaks, low royalties on federal leases, and a free pass on carbon pollution – all of which enable lower prices at the pump with record profits.
But as the world grows sensitized to carbon pollution, GM and Ford’s attempt to roll back efficiency and emission standards is counterproductive. Moreover, the effort is all or nothing because vehicle mileage and emissions represent two sides of the same carbon coin. Enforcing either standard dictates how cars of the future will be built.
Under the Clean Air Act, California can set more stringent emission standards than the nation as a whole. Congress designed it this way in the 1970s because California had, and still has, the worst air pollution.
Multiple emission standards are costly and carmakers bemoan the fact that California is sitting in the driver’s seat with 40 million residents and enormous economic clout as the world’s fifth largest economy. Furthermore, California’s leverage is magnified by another CAA provision that allows other states to choose California emission standards over national standards, which Maine and 12 other states are doing.
CAFE and emissions rollback proposals expose GM and Ford’s narrow outlook. Instead of embracing innovation, GM and Ford are skidding off the road of industrial leadership while being bypassed by Japanese, Chinese and European carmakers who understand that the future is about building cleaner and more efficient vehicles.
GM and Ford would do well to recall their visionary past. As Henry Ford said, “… Remember that the airplane takes off against the wind, not with it.” More of Henry Ford’s boldness and spirit would certainly help now.
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