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Thursday, July 10, 2008

Electrify America: Re-tooling and Re-charging the American Auto Industry

By Jesse Jenkins, Breakthrough Generation Co-Director

This post is part of our week-long Special Issue exploring ways to sever the link between transportation and oil by electrifying transportation. Stay tuned for more...

Toyota Motor Company announced today it's intention to retool two U.S. manufacturing plants currently building giant, full-size trucks and SUVs to instead build hybrid-electric vehicles. Meanwhile, Ford is expected to reveal more details this month on their plans to retool several plants to build the more fuel efficient models they currently sell in Europe.

As automakers scramble to react to rapidly shifting customer preference driven by spiking fuel prices, isn't it time for the United States government to make investments that help re-tool and re-charge the American auto industry?

Toyota's re-tooling plants, announced today, involve opening the first U.S. plant to build their popular hybrid Pruis at a new factory in Blue Springs, Miss. originally intended to assemble sport utility vehicles. The Japanese automaker also plans to immediately halt production of its two largest vehicles, the Tundra pickup and Sequoia sport-utility vehicle, for three months. Next spring, Toyota will consolidate production of the Tundra at one of two U.S. plants that currently manufacture the full-size truck and retool the second plant to produce the hybrid Highlander SUV.

In one of the most dramatic manufacturing transformations in Detroit's history, Ford Motor Company announced plans in June to retool several North American plants to produce smaller and more fuel-efficient vehicles the company currently builds in Europe, where Ford is a leader in the small-car segment. This is a necessary but costly process though for the cash-strapped company, and it's unclear how well the American auto giant can weather the transition. Converting a single factory to advanced, flexible manufacturing lines can require up to six months of off-line time and cost $250 million or more!

According to the Detroit News, Ford also plans to thoroughly review its entire product pipeline in North America, hoping to accelerate the introduction of new, more fuel-efficient cars and to build more vehicles on fewer platforms.

These are smart reactions from both companies. Americans are clearly clambering for more fuel efficient vehicles and the waiting list for the Prius and other hybrids is months long. Most importantly, it's clear that the time is now for automakers and policymakers to plan proactively for the future of transportation. And as we've been exploring all week here at WattHead, that future lies in electrifying our cars, trucks and trains.

With the American auto industry reeling and already retooling their plants and strategies, we now have an unprecedented and urgent opportunity to help Re-charge Detroit!

Strategic and timely investments can help cash-strapped automakers get through the expensive but necessary transition to new manufacturing plants ready to churn out advanced hybrid, plug-in hybrid and electric vehicles. By doing so, the federal government has the opportunity to help secure our Energy Freedom at the same time that we help re-vitalize the ailing American auto industry, the economic cornerstone of so many American communities.

A timely investment package could include:

  1. Tax credits or low-interest loans for automakers that retool manufacturing plants to build hybrid-electric, plug-in hybrid or full-electric vehicles or the batteries and other major components of these advanced cars and trucks.

  2. The "Health Care for Hybrids" plan that relieves American automakers of their mounting "legacy" commitments (health care and pensions for retired auto workers) that are as high as $1,500 per vehicle for General Motors. In exchange, participating automakers would make investments in modernizing and retooling plants to build fuel efficient and hybrid vehicles.

  3. Expand and publicize tax credits for consumers who purchase hybrid, plug-in hybrid and electric cars and trucks that have fuel economies at least a certain percentage (40%?) higher than a conventional vehicle in the same class.

  4. Public-private partnerships to develop and refine advanced batteries for hybrid and plug-in hybrid vehicles and other key advanced vehicle components. The 2007 Energy Bill included some incentives and R&D funds for advanced batteries and advanced light-weight vehicle components, but clearly, fast-tracking advanced vehicle development is a national imperative in today's climate of economic downturn and mounting energy costs.
This is just a quick brain-dump of possible investments that could give Detroit and the auto industry the shot in the arm it needs, re-vitalize our troubled economy, and help secure America's much-needed Energy Freedom. What else can we do to Re-Charge Detroit?


Anonymous said...

Hey Jesse,

You are a Co-Director and you offer a quick brain dump and that brain dump includes having us taxpayers contribute to the pension/healthcare benefits of retired autoworkers?

No offense, my friend, but we need more from you in your current position. We need to bring the left and the right together to get to the electrification of the auto industry and this attempt is not what is needed.

Serious issues deserve serious consideration and a "quick brain dump" doesn't do it? So live up to your potential and start a serious dialogue. By that I mean that you have the left on your side, so start doing your homework and understand how to bring the right on onboard.

Having taxpayers bail out the big three on their union-induced costs does not do it. Having a brain dump does not do it.

What are the options? What are the pro's and con's? How do you bring the "right" on board?

There aren't simple answers and I can get half-ass suggestions anywhere on the internet. Step up, be the man, and let's start discussing real solutions that appeal to all segments, especially the "right" that is the biggest obstacle right now.

Do that and you have earned your stripes and your position. Up to the challenge?

Jesse Jenkins said...

Wow, thanks for the inspiring challenge. I'll really take that to heart, especially from an anonymous commenter...

Care to at least name yourself and then offer your own bright ideas? Pretty sure that if you had time to write about how I should start a serious conversation about solutions that you could have actually started one here with your own serious thoughts.

I'm sorry the co-director of a few month old youth organization didn't figure out how to solve all the woes of the American auto industry in a 20 minute blog post... I'll keep at it.

Anonymous said...

Anonymous - The "legacy" costs will probably get eaten by the government anyway when the Big Three go bankrupt, and as we transition to universal health care (a transition that will probably be piecemeal rather than revolutionary). And the "right" is currently supporting yet another massive bailout for the financial industry, so no need to slam unions bargaining honestly for far less than Wall Street has serially stolen in spades.

Seriously though, your comment exhibits perfect "right" analysis - you completely ignore all context! The post was one of a series, one that elsewhere included numerous acknowledgments of the effects of markets, and had a decidedly positive outlook.

Good luck in the job hunt, but until Starbucks starts expanding again, enjoy all the union/socialist/liberal-procured safety-net benefits in the meantime.

Anonymous said...