Carpe Diem

2013 International Auto Show: Fewer politician-pleasing green concepts and more consumer-pleasing must-haves.

Detroit News political cartoonist and editorial writer Henry Payne reporting in Saturday’s WSJ from the 2013 North American International Auto Show in Detroit, which ended today (Sunday):

From sport utes to sports cars to soccer-mom vans, every industry segment is thriving—with the notable exception of the alternative-fuel vehicles into which Washington has sunk billions of taxpayer dollars.

Under the administrations of George W. Bush and Barack Obama, the federal government has tried to reinvent the automobile with ethanol and battery power. But the market is proving that industry—not Washington and its central planners—knows its customers best.

Predicting a breakthrough in switchgrass-based ethanol technology in 2007, the Bush administration mandated that cellulosic, or plant-cell based, ethanol production for American autos increase to 500 million gallons by 2012 and a staggering 16 billion by 2022. Washington then subsidized its fledgling industry with $1.5 billion in federal grants and tax credits. Prodded by Washington, General Motors used the 2008 auto show to announce investments in cellulosic ethanol companies and flex-fuel vehicles, and a national campaign to add E85 (a blend of 85% ethanol and 15% gasoline) pumps at gas stations.

Five years later and the ethanol market is a bust. Fewer than eight million gallons of cellulosic ethanol were produced in 2012, E85 pumps are rare (most blends are 10% or 15%), and ethanol is rarely mentioned at the auto show.

The electric revolution is muted too. Spending an estimated $10 billion of the 2009 federal stimulus bill on battery power, Team Obama predicted a million electric cars on the road by 2015. Today there are barely 30,000, and federally subsidized auto-battery suppliers like Ener1, A123 Systems, and LGChem are either struggling or bankrupt.

The 2013 show puts greenbacks first and green second. This year there are fewer politician-pleasing green concepts and more consumer-pleasing must-haves. For continued industry success, Washington would do well to keep its distance.

Update: Related article from Car and Driver:

Electric vehicles aren’t selling as most manufacturers thought they would. What short-circuited sales?

It’s been a combination of problems that the industry saw coming—cost, range, and infrastructure—and the failure of expected fixes to materialize. The long-promised breakthrough that would give us greater range and quicker charging at a fraction of the price of today’s batteries has yet to appear. Not even the industry-wide embrace of EVs has driven down the component costs. Some estimates put manufacturing-cost parity between ­electric and internal-combustion vehicles still 10 to 15 years out. Tax credits ease the sting to buyers, but while they might convince ­customers who are on the fence, they’re insufficient to entice people who aren’t already considering electric vehicles.

42 thoughts on “2013 International Auto Show: Fewer politician-pleasing green concepts and more consumer-pleasing must-haves.

  1. Peak Oil is no excuse for poor energy policies.

    And, let’s not forget the remarkable progress on climate change, i.e. spending trillions of additional dollars with more overregulation for the depression.

  2. Americans will drive more expensive smaller autos:

    Rules to double U.S. fuel economy to 54.5 mpg by 2024
    August 28, 2012

    “The National Automobile Dealers Association estimates an average $3,000 increase in the price of each vehicle to comply with the rules. It says that will put a new car out of reach to an estimated 7 million potential buyers…safety will suffer as a result of new lighter vehicles…reduced vehicle choices for drivers who want large cars or trucks

    They (regulators) say the rules will help reduce the nation’s oil imports from OPEC by about half…Drivers will spend less on gasoline…(and, reduce greenhouse gas emmissions).”

  3. It’s a wonderful thing that the government cares so much about my safety that they are willing to spend unlimited amounts of my money to achieve their goals.

  4. Just a fun little fact:

    Of the 14.5 million vehicles sold in the United States in 2012, only 3% of them (approximately 478,000) were hybrids (source: WSJ).

  5. Tax credits ease the sting to buyers…

    Even with those tax credits and gov’t subsidies, you’re still talking about a $30,000 car. Many Americans don’t have that kind of cash to drop on a vehicle.

    • well, and more to the point, for $30k there are lots of options that are actually cars, not crappy little cracker boxes with no power, handling, or storage space.

      the volt and leaf resemble cars you could buy for $15k, not 30k.

      $30k will put you into an audi a4 or an accord with $10k to spare.

      it will buy you an SUV.

      for $30k you can have 2 ford fiestas and fuel them for years and years.

      they are of at least as high a quality as a volt in every functional aspect.

      so why pay more than double just to buy yourself hassles with charging etc?

      • for $30k you can have 2 ford fiestas and fuel them for years and years.

        So, Ford Fiestas are still being sold in pairs?

        I don’t know much about the current 6th generation models, but if memory serves, the 1st generation models sold in the 1970s were always sold in pairs so you had a better chance of at least one of them being drivable at any given time.

        The Fiesta, along with the Chevy Vega, shared the distinction of being the first American cars that began to rust before they left the dealer’s showroom.

        Here’s an early Ford Fiesta road test.

        • ron-

          fwiw, i recently drove one for half a day while down in san diego and was pleasantly surprised. it’s not a bad little car. i mean, i’m not looking to buy one or anyhting, but compared to the rental econoboxes of even 5 years ago, it’s a big improvement. you can drive it and not want to push it off a cliff after 10 minutes and they did a good job with ergonomics etc.

          • morganovich

            That’s good to hear. My comment was somewhat facetious, but they really were awful in those days. They could only get better. :)

          • ron-

            agreed. in fairness, we could say that about most US cars in the 70′s, no?

            detroit was building some real crap.

            chevette, pinto, gremlin, we had some real winners.

          • Yikes! Ugly memories, yes. The 70′s seems to have been the low point in US auto manufacturing.

            When people wistfully lament that “They don’t make cars like they used to.” I can only say “Thank God!”

          • And, in fairness, Detroit was not alone in building crap. Rabbit diesels and B-210s come to mind.

            Virtually all cars made today are superior in fit, finish, paint quality, and power compared to cars in their categories made fifteen or more years ago.

  6. Why would anyone spend the extra money needed to buy a high-MPG hybrid car or electric–Prius, Leaf, etc.?

    The Feds will tax you more at the pump and then they will then tax you again on the basis of your miles driven. What they may lose at the pump (due to high mileage) will have to be made-up/offset with a tax on miles driven. That’s the plan, its coming. The taxpayer can’t win as long as he drives a car–any car.

    Looks like plug-in industry is doomed. Why should any driver settle on driving an unsafe and overpriced washing machine?

    • Looks like plug-in industry is doomed.

      Well, before we go completely down this road (forgive the pun), let’s keep in mind that we don’t know what the future holds. None of us do. It’s easy to look at things now and say hybrids are doomed, but there could be one major invention just around the corner that changes everything.

      • jon-

        of course, that is correct.

        but i think the point was more that barring a major advance in battery technology, the electric vehicle market will be stillborn.

        we need a battery with much more power density, the ability to be recharged over for at least a decade without degradation, and the ability to take a charge quickly.

        right now we are 0-3 there. not even one or 2 of those things will really matter.

        you really need all 3.

        and then you need a system of power stations for them as even if we had a quick charge battery, you’d need a very high power charger to provide the juice. 110 or even 220 is just not going to cut it. to power several at once at a gas station will require grid upgrades to get the juice to the station in the first place.

        can it happen? sure. it’s possible. but there is a lot of innovation needed, and predicting when and if it will happen is extremely difficult if not impossible.

        • You are, of course, correct Morganovich. I wasn’t making an argument in favor of hybrids and the like, I was just making an argument against burying them prematurely. I agree that there certainly is a long way to go in the technology. But a breakthrough can come from unexpected places. It’s merely the nature of science :-)

          • “Of course. Why do you think I’m so staunchly opposed to government subsidies?”

            because you are an evil, mean spirited free marketer that hates progress?

            ;-P

      • Since we have been waiting over 100-years for thatnext big power-plant “invention,” (like the “battery solution”), I’ll bet that the next 25-50 years look more like the last 50 than it will.

        The engine of the future is already under you hood–just like it was some 40 years ago.

    • They buy them because it’s a statement. The bumper sticker just is not effective enough. Spending all that money on a golf cart says “I care about the environment about $30k more than you do”.

      Get it?

  7. Here is another subsidy story. The Canadian government heavily subsidized the oil sands industry in the 1990′s. This made it possible for the private companies in the sector to be profitable and sell the oil extracted at huge costs (due to old technology) at much lower than todays prices. However, today the industry drives much of Canadas economy, no longer needs any subsidies and is the number one reason why Canada has been one of the few nations in the world to do very well throughout the financial crisis.

    Therefore not all government subsidies are evil. Some do serve their purpose in allowing fledgling industries to grow and develop a competitive advantage.

    Problem? Well, lets just say those subsidies are still in place even though the industry clearly does not need them. Ironically it’s the current conservative government that is defending them.

    • “The Canadian government heavily subsidized the oil sands industry … Problem? Well, lets just say those subsidies are still in place even though the industry clearly does not need them.” — Derek Tomczyk

      Removing tax distortions and other disincentives to investment isn’t necessarily a “subsidy”. Exactly what tax “subsidy” do Canadian oil sands producers receive that isn’t/wasn’t already available to other industries?

      “If a country decides to tax an industry more than others, they will shift capital away from that industry toward others industries and the rest of the world. If taxes are low — the “subsidy” — more capital will be invested in that industry. In this case, it might be justified to level out taxes so all industries bear a similar burden in order to make better economic use of scarce resources. This is a matter of neutrality and efficiency … If “subsidies” are measured by the extent to which new investment in oil and gas is taxed less than other industries, it is clear that the no subsidy generally exists … In the case of conventional oil and gas, investments are highly discouraged since the royalties, applied to production revenues, weigh heavily on marginal projects. Alberta recently reduced royalties charged on conventional oil and gas because its 2009 changes went too far in discouraging investment. In the case of Alberta oil sands, the net profit royalty does not nearly have the same impact on new investment. However, it does aggravate the corporate tax distortion and therefore results in oil sand investments being more heavily taxed than other industries.” — Oil Isn’t Subsidized -The National Post

    • The Canadian government taxpayers heavily subsidized the oil sands industry in the 1990′s.

      Therefore not all government subsidies are evil. Some do serve their purpose in allowing fledgling industries to grow and develop a competitive advantage.

      ALL subsidies serve their purpose. However, that purpose may not be what you think it is, and isn’t necessarily in the best interest of consumers.

      It appears you believe that politicians spending other people’s money can make investment choices better than private investors risking their own money.

      Problem? Well, lets just say those subsidies are still in place even though the industry clearly does not need them. Ironically it’s the current conservative government that is defending them.

      Nothing ironic about it. This shouldn’t surprise you if you favor mercantilism over free markets.

      • Lets go back in history. to 1864 and Lincoln wants a transcontinental railroad. However with the original terms offered and the profits to be made off the war no one would invest. So they sweetened the deal to get investors in. Even in 1865 after the war its not clear that without the bond subsidies and the land grants any rational investor would build a railroad thru 1000 miles of empty country. Or take the Erie Canal, which was held to be a big waste of money, “Clinton’s Big Ditch” (Not Bill but Dewitt here) Now of course the Erie canal made NYC the dominant city of the country, and ended up killing off small farms in NE in favor of farms in upstate Ny where the land was better? Was this another example of government subsidy gone bad?
        If you look at it there are causes and issues where no private money can be attracted to a project (recall that G. Washington could not get the money to build the C&O canal).
        Or should Teddy have not dug the Panama Canal?

        I take these examples from the past and ask if you use the current view of logic would they have happened?

        • There were four transcontinental railroads, 3 were built using money bribed from politicians. They also stole the equivalent of 7 billion of taxpayers dollars. Read up on the Credit Mobilier. All 3 also went bankrupt.
          The fourth, the Great Northern was built using entirely private funds and no Federal aid. It was the only successful transcontinental railroad.

        • Lyle

          Lets go back in history. to 1864 and Lincoln wants a transcontinental railroad.

          Lincoln? You mean that big government, high tariff, high taxes, mercantilist, infrastructure building Whig? The former lobbyist for the railroads? Of course he wanted a transcontinental railroad to funnel taxpayer loot to his cronies and former employers.

          If you look at it there are causes and issues where no private money can be attracted to a project (recall that G. Washington could not get the money to build the C&O canal).

          If private venture capitalists are not willing to invest their own money on a project they consider too risky, why do you think politicians who have nothing to lose should take money from unwilling taxpayers for such a project?

          If there is demand for something, as in railroads, they will be build by private investors as Rick pointed out.

          “<i.Or should Teddy have not dug the Panama Canal?”

          Do you mean that uber-progressive Teddy who ignored the Constitution at every turn to steal a portion of the isthmus from Colombia by supporting rebels who seceded to form a new country, Panama, which gave Teddy his canal for helping them fight the Colombian government?

          No, Lyle, Teddy should not have built the Panama Canal.

      • Wow. what a car“…

        Yeah ron h that is one sweet piece of machinery…

        Prettyyyyyyyyyyyyyyyyyyyyyy!!!!!

        Jay didn’t mention what kind of gas mileage it gets. (meh meh meh)“…

        Well you know that AMG V-12 has twin turbo chargers so all things considered the milage might not be that bad…

        There is that little detail about the tires though, those Pirelli only come in a set of four and that’ll set you back a cool $6800…

        The following is a video documenting the design and construction of that bad boy and personally I found it quite interesting…

        Horacio Pagani is balls to the wall anal about the form and function equation…

        But damn! Its a prettyyyyy car and a performer…

        45 min Hi-Def National Geographic version on YouTube: Pagani Huayra Supercars HD

          • actually, that second picture looks like a caddy cts-v crashed into a lotus elise and the nose got smushed.

            i realize there is a lot of personal taste in such preferences, but man, i think that is one ugly car.

            the lines are totally incohesive and weird and the balance makes it look like an el camino.

            it’s even uglier than the veyron.

          • Hmm. You could be right. I guess I’ve just never thought of “Corvair” and “testosterone” at the same time.

            Nevertheless – I would drive it with a big smile on my face if I had one.

          • morganovich says: “am i the only one that thinks that thing looks like a corvair humped a 458?“…

            ?!?!?!

            for the money, give me the 918 any day“…

            Are you talking about the Spyder 918?

  8. BOTTOM LINE:

    No Taxpayer Subsidy = No Greenie

    Sorry greenies and other enviro geeks, but that wind mill and/or solar panel isn’t going down into your gas tank. Ain’t gonna happen.

  9. It was never about energy independence or carbon emissions.

    It was merely about find a way to transfer big payouts to cronies, packaged in way that gullible, phony lefties could feel that they were staying true to their religion.

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