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Friday, November 7, 2008

Can Obama Save the U.S. Auto Industry by Greening It on Day One?

Can Detroit Retool with Plug-in Hybrids, Higher Gas Mileage Cars and Other Innovations?

President-elect Barack Obama went into the Motor City's lion's den last year, speaking before a sold-out audience convened by the Detroit Economic Club. He told the assembled business and political leaders not what they wanted to hear, but what they needed to hear.

"'For years," he said, "while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars....Here in Detroit, three giants of American industry are hemorrhaging jobs and profits as foreign competitors answer the rising global demand for fuel-efficient cars....The need to drastically change our energy policy is no longer a debatable proposition. It is not a question of whether, but how; not a question of if, but when. For the sake of our security, our economy, our jobs and our planet, the age of oil must end in our time."

barack obama in front of u.s. capitol in washington d.c.

Obama then described a plan to subsidize 10 percent of the Big Three's retiree health care costs (as much as $7 billion) if the companies would invest half of that savings in fuel-efficiency research. His alternative idea was $3 billion over 10 years to remake auto plants for a new generation of clean cars.

Obama wants a million plug-in hybrids on the road by 2015, a plan that could be derailed by insufficient lithium-ion battery capacity by then. He has a 10-year, $150 billion renewable energy plan.

Felix Kramer of, an early and consistent voice for plug-in hybrids, thinks the Obama plan is achievable. "Scaling up to produce a million plug-in vehicles in six years is far less challenging than what auto industry achieved after Pearl Harbor, switching in a year from cars and trucks to tanks and planes," he said. "And supplying batteries for those vehicles is attainable, especially since we have good enough technology to get started now."

Kramer also likes Obama's plan to have half of all new federal new car purchases by 2012 all-electric or plug-in. "That firm commitment to purchase 30,000 or more vehicles annually will be welcome to carmakers gearing up to produce plug-ins. It won't be hard to deliver," he said.

All well and good. But none of the proposals Obama has put on the table so far, by themselves, will turn around the increasingly dire situation for American automakers, which have indeed let foreign companies take the lead in fuel efficiency. The automakers need immediate and concentrated help, and they need clear direction. It's hard to see how a GM/Chrysler merger--bringing together two companies with SUV-heavy product lines--is a clear answer.

It's a cliche to say that Obama has a lot on his plate. But he can't defer action on the auto industry for long. He clearly understands the issues, and the imperatives of a quick turnaround. The Senator from Illinois is proving adept at getting his transition team in place. Let's hope that putting the ailing automakers on a green path is a day one priority.

Barack Obama: The auto industry needs to go green.

Photo Credit: U.S. Senate photo