Trump's Tweaks to Fuel Economy

The auto industry is trapped between regulations and consumer desires.

For eight miserable years, the automobile industry was subject to do-gooder regulations transformed into draconian measures based upon environmental strictures from the last century as Mr. Obama saw fit to clamp down on petroleum use. Much of environmental law became punitive of success rather than conservative of resources.

As Mr. Trump works to "Make American Great Again," the Feds are contemplating a somewhat more logical approach to fuel economy standards. As in nearly everything from the previous administration, the previous standards are long on hope and short on reality.

A savvy investor does not bet his money in the stock market  that way; in fact, most savvy investors would do the reverse. Long on reality makes a lot more sense.

From the August 1, 2018 Wall Street Journal:

This latest proposal, which is subject to a 60-day public comment period, would still increase targets through 2020 but then hold them at that level, significantly lowering the longer-term requirements through 2026. The new target would be 37 miles a gallon by 2026.

This would mean that the ridiculous requirements previously imposed (54.5 MPG) will become a much more reasonable, though still stiff 37 MPG.

We have already seen the market running away from cars and toward SUVs and pickups. The government is using its enormous power to force purchasers of automobiles into politically correct, undesirable, uncomfortable econoboxes whose crushability during collisions is reminiscent of coke cans. So, consumers are heading in droves to the showrooms where SUVs and Pickup Trucks are the featured product for the simple reason that, as trucks, they are allowed a looser fuel economy standard, and so can be bigger, safer, and more comfortable.

In the best tradition of free enterprise, consumers are voting with their feet: those two types of vehicles make up almost 2/3 of the entire market for consumer vehicles.  And companies are following them, as they can: Ford has announced its intention to leave the "car" business almost entirely and concentrate on trucks, because that's what people are the most willing to pay for.

This doesn't mean that cars are dead.  Extremely radical cars hit the market in the last two model years. Electric cars and plug-in hybrids are now so numerous that, as a visit to reveals over 200 makes and models are on the market now. When I first looked at that site before the first of the year, less than half that number were there.

All the major manufacturers have models listed, plus it seems that every budding automotive designer has chipped in his two cents worth.

The President's transportation team is endeavoring to alleviate the pressure created by the CAFE standards and the 1975 Energy Policy and Conservation Act which dates back to the Ford administration. Mr. Obama's decision to have his EPA set the standard at 54.5 mpg by 2025 was typical of his outlook and the euro-style economy that he wished to leave us with. This ludicrously high figure can only have been proposed, much less signed into law, by a community organizer who either has no idea of economics or engineering or is deliberately trying to damage our economy.

The new administration is on our side in this fight, pushing for more sane requirements. Taking into account the evolution of hydraulic fracturing (fracking) techniques which have made the US into the world's largest oil producer (WSJ August 3, 2018), the hopes of the "acutely blind" Mr. Obama do not conform to the realities of the marketplace.

Science Marches On

We seem to have gotten used to the absolute insanity of the nature freaks allying with the loony left to have their will imposed upon us in all things environmental. Through the era from the reign of the hippies (1964~73) to the current tender ministrations of the West Coast Climate Mafia, the unproven supposition has reigned supreme. There was only minor opposition to even the most oppressive regulations during the reign of the last administration.

As a result, we have had to live with the results of our own fecklessness in allowing sloppy science and ideas that sounded like they might be right, to reign.

Along comes the Trump team with different conclusions drawn from the same information. They have a more clear-headed approach to problem-solving and policy-making as it relates to living with "climate change," "global warming," or some other euphemistic phrase of preference. They are willing to contend with the slings and arrows of trendy authoritarians in the interest of making sane environmental decisions. It's time to drain the deepest swamp of all – the sacred environment.

Anything that has an odor – gasoline, diesel fuel, anything that burns – is a suspected pollutant. In fact, to an environmentalist's mind, an odor of any kind, good or bad, is all that is needed. No proof of environmental damage is required.

And the fact that a stream of electric current is in existence because fuel is burned miles away is just fine; the batteries get charged, and it is the batteries that provide the go. No one mentally connects the electric grid and car batteries.

Yet despite the growing backlash to oppressive environmentalism, new technologies are well established and growing by leaps and bounds.  The Toyota Prius (a hybrid) went on sale in Japan in 1997, and was one of the precursors of the movement toward the electric cars and hybrids that we see now.

In that 20 year period, things have changed drastically in the motoring world. We have been through a major gasoline disruption almost like the Arab oil embargoes of the 1970s, and gasoline has fluctuated in availability from those days of high-priced scarcity to the glut of a couple years ago.

Prices are fluctuating once more, and the reasons are a little esoteric, but the industry experts expect oil prices to settle in at somewhere in the $69 – $73 range per barrel, a very definitely reasonable range. This will hold gasoline prices in the range that we are becoming used to: ~two dollars. The current surge in gas prices will have subsided.

Even at this low and stable rate, the new technologies are able to compete.  We don't know what the market will tell us in a couple of years, but right now prices seem to be down to affordable levels for even all-electrics.

Ford is making a hybrid pickup available estimated in 2019, and a choice of plug-in hybrid or electric later that year or 2020. And this is the Ford F250, the model that is one level up from the basic consumer pickup truck F150. Ford revolutionized the SUV market in the early 1990s with the introduction of the Explorer, followed by the Expedition and the Excursion, plus their whole range of pickups.

It appears that Ford is doing that same thing with the electric and hybrid models, hoping to get an early start and corner that market in the one sector: serious consumer vehicles and light commercial trucks. But there are other sectors within the electric vehicle (EV) market which are open for the many producers of future-style cars. Ford is taking on a heavy vehicle segment of the class, but there are other vehicles which will be available for the lighter-duty sort.

It does take two to Tango – I wonder how many car reviewers have made that joke/observation – which is probably the origin of the name of this awful vehicle. Made on the West Coast as a small-quantity electric vehicle with some incredibly daunting pricing, the Tango T 600 can be yours at the giveaway price of $108,000 (economy model), and $150,000 for the deluxe model which uses lithium batteries.

The number 'two' does figure in this equation: that is the number of passengers, one fore, and one aft.

Funny looking, but with blazingly fast 3.2 second acceleration to 60 miles an hour, and one quarter-mile time of 12.2 seconds, this car is a study in contrasts. The proportions of this thing are extremely peculiar with 102 inches overall length (short), the height of a normal car, but a width of only 39 inches. It looks like a badly designed normal car squashed in a vise.

The website is rife with quotes from Albert Einstein which convey the pretentiousness of this homely automobile. It seems like the statistics are strategically included to help dispel the visual impact of this thing, which screams "I'm going to fall over at the slightest provocation!"

The very low center of gravity is a feature that most cars do not need to emphasize, but this vehicle looks like a puff of breeze would put it on its side.  The manufacturer swears at great length that this is not so.

Just picking at random for another model, we find the Honda Accord Hybrid. I have owned two Honda Accords, which were actually wives' cars. In both cases they were excellent vehicles for their time, in the early and mid 80s.

This new hybrid offers 47/47 MPG and an impressive list of standard features which was the way my two Accords were sold. The hybrid model price is right in among the line of models that Honda offers, and appears to be very similar in size and appointment to the gasoline powered cars. In fact, if the price is correct, there is no question that I would buy the hybrid if I were in the market.

As with my Accords, the option was exterior color which then dictated the interior color. I saw no available options for anything I might want. That was one of the great things about buying a Honda.

The "MSRP as Built" for this car is $25,995, a very reasonable price if the manufacturer has maintained the build quality of the Hondas that I have owned. Other makes' comparable vehicles range a few thousand dollars up or down from that price, which I think that the market is dictating. Scuttlebutt is that some EV selling prices are many thousands of dollars below manufacturing costs.

But often they are not actually available at those prices. When the Prius was introduced and for several model years thereafter, there was a hefty 'availability charge' that the dealer heaped on the list price, and to drive away in one of those uber-fashionable vehicles that charge of several thousand dollars had to be paid above the finance value of the car. But, pay it the customers did. The same sort of thing will probably be the order of the day now.

The Ford dealer that I spoke to would not comment on that fact and I did not talk with the Honda people about that. I was unable to speak to the Tango dealer – the manufacturer – at all: he didn't return my call.

The list price may be reasonable, while the availability charge - if any - is not, for the two normal vehicles, and the ludicrous price of the Tango daunts my interest.  Eventually, though, production and design of these new-tech vehicles will begin to catch up with demand, and gasoline vehicles will become a drag on the market.

At that point we will see price adjustments on "normal" vehicles to keep them selling - for a while.  Long-term is another story: someday, as the environmentalists wish, we will all be driving electrics or hybrids.  But it will be at a time chosen by the market and the customers, not by regulators imposing their pipe dreams from on high.

Thomas Anderson is a multi-state registered architect and an ex-Air Force electronic technician, who is a keen observer of the human condition.  Read other articles by Thomas Anderson or other articles on Business.
Reader Comments

I'm not sure I feel more educated after reading this. Sedans crush like Coke cans, presumably because they are smaller than trucks? I think that is wrong.

The Tango is simply weird in today's world, much like a throwback to micro-cars made for war-torn Europe in the 1950's. It's interesting that it's shockingly fast to accelerate, though.

Talk about the Toyota Prius is okay, and likewise the Accord hybrid, but there are a number of other hybrids in today's market which deserve more attention than those two.

Thanks for writing this, but I would have to rate the whole article in the bottom quarter of what I read from Scragged.

August 19, 2018 10:29 AM

This article does crystalize the difference between the Obama and Trump administrations. Obama was about creating more government dependent employees. Regulators, trial lawyers, bureaucrats , educrats, checkers, food stamp dispensers, watchers, enforcers, tax name them he wanted more of them. So putting a ton of silly regulations on US vehicle makers was OK since it meant more govt regulators ( who reliably vote Democrat) .The fact that US jobs were lost to low wage countries to make the econoboxes was simply collateral damage.
Trump sees a difference between jobs that consumes taxes and ones that generates taxes. Hence the focus on creating and keeping private sector jobs in the US. US car manufacturers could not profitably build 50+ MPG vehicles in the US, so they opened up factories in low wage Mexico. The new guidelines will help assure that a greater % of American cars are actually build by Americans.

August 19, 2018 11:48 AM

Despite all of the incredibly absurd spiteful groundless
un-American unprecedented uhjust opposition roadblocks illicit illegitimate setbacks etc etc Put America First President Trump will go down in history as the most patriotic America\Americans positive & productive president in our history-
& his pro Automobile\pro auto workers\manufacturers\plants campaign promises [which as no other president
he has solidly demonstrated his intent & sincereity to fully keep] which have been getting America & it's auto workers & the countless industries & American jobs that are related dependent upon arise from etc. so very much back in the game, so many of us wish President Trumnp could be re-elected indefinitely or at least how ever long it takes him to fully "DRAIN THAT SWAMP"!

September 19, 2018 10:23 AM
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