Shifting the Auto Industry into Reverse
America’s auto industry was doing great. In 2016, its sales rose for the seventh year running to record highs. In 2017, sales slipped 1.2 percent but remained among the top five in history, dominated by more-profitable pickups and SUVs. But now a salvo of assaults from the White House “so we can make cars in America again”—ignoring alarmed automaker CEOs’ pleas to desist and let them get back to work—imperils their jobs and profits and all Americans’ security and prosperity.
The nightmare that my March 17, 2017, article warned about is now Detroit’s unhappy reality. New tariffs on autos’ main raw materials—steel and aluminum—will boost sticker prices. Threatened tariffs on imported autos risk countertariffs on exported autos and parts. Automakers’ exquisitely tuned supply chain intertwines Canada and Mexico, which assembles over a tenth of US vehicle sales and $50 billion a year in components for US assembly plants; yet the president despises the NAFTA treaty that made those integrations possible. And his August 2, 2018, demolition of stable, well-running regulatory structures and standards for auto efficiency has plunged the industry’s unimaginably complex product planning into years—last time around it was six years—of conflict, litigation, and uncertainty.
President G.W. Bush’s law requires “maximum feasible” auto efficiency after 2020 if technologically and economically practical. The Obama Administration found that the 2022–2025 standards agreed by all parties in 2009–2012, rising to 36 mpg on the road in 2025 (or 54 on paper), could be met, at lower cost than expected, and even higher standards were justifiable. Over 100 cars and light trucks on the US market already meet 2020+ standards. Nearly all big overseas auto markets have similar or stiffer standards, plus higher fuel prices, plus often carbon pricing on top, so US autos without the previously planned efficiency gains could become unsellable abroad, split the home market, and cede market share to foreign competitors both at home and abroad.
Last year, the established science-based standard was suspended; now, after a brief comment period, it’s proposed to be scrapped. So is the right of a dozen-plus states—a third of the market—to set stronger standards, cleaving the US market and triggering fierce litigation. Current standards’ exhaustive evidentiary record, backed by National Academies scholarship, is to be replaced by flimsy myths.
Perhaps the strangest claim is that contrary to the government’s previous analyses, wasting fuel will save thousands of lives, in three ways. First, less-efficient and hence cheaper cars would speed replacement with newer, safer models (an argument overlooked when threatening vehicle and parts tariffs that automakers’ trade association said could raise sticker prices by thousands of dollars). In fact, higher gasoline bills would cut owners’ purchasing power so they’d keep clunkers longer—also prolonging air pollution, which kills about as many Americans as car crashes.
Second, people who buy more-efficient vehicles, thus cutting total per-mile costs (contradicting the previous argument), are said to drive more, risking more accidents. But the new analysis exaggerates this small “rebound” effect via outdated and misinterpreted literature.
Third, the new analysis revives the zombie myth that higher efficiency requires lighter and therefore supposedly less crashworthy vehicles. The National Highway Traffic Safety Administration had long erroneously conflated vehicle size with weight and found that lightweighting kills, but in 2003, separately reanalyzing size and weight showed that heavy vehicles kill more people but bigger vehicles kill fewer, because what protects you is not weight but size. US size-based efficiency standards therefore now decouple weight from size, encouraging light but strong materials. Thus autos can be big (hence safer and more comfortable) without also being heavy (hence hostile and inefficient)—simultaneously saving oil, lives, climate, and money.
As I argued five quarters ago, reversing efficiency progress would penalize technology leaders, reward laggards, and disarm America’s leadership in electric vehicles and in shared and connected mobility. It would squander market credibility and customer appeal. Its signal of low ambition would drive more talent from Detroit to Silicon Valley. It would threaten national security by raising oil dependence and exposure to price shocks, accelerating climate change’s threat multipliers (of deep concern to the Pentagon), and making oil wars—a risk enhanced by saber-rattling at Iran—more likely and more devastating.
I drive a lightweight, sporty, brilliantly engineered, 124-mpg-equivalent electric car with 5-star safety ratings. Its passenger cell is woven from ultralight, ultrastrong carbon fiber made in Washington State and paid for by needing fewer batteries (which then recharge faster). I wish my car were American, but it’s profitably assembled in Germany with one-third the usual investment and water and half the normal space, time, and energy.
The president apparently doesn’t want such advanced vehicles developed or made in America. If he gets his way, all of us—autoworkers and auto buyers, shareholders, and citizens—will be poorer, sicker, less safe, and less secure. That’s a high price to pay for anti-regulatory zeal, political posturing, and hostility to reason. Our nation’s great but now-threatened automotive industry, the courts, and the people will have their say.
This article was originally published on August 16, 2018, on Forbes.com.
