Wednesday, November 12, 2008

A Real Grand Bargain: Radically Re-invent the American Automobile

Cross-posted from the Breakthrough Institute

With a new bailout for Detroit on the table, there's a lot of talk about getting some "grand bargain" with automakers out of the deal: automakers will agree to some terms, like producing more efficient vehicles, in exchange for the loans.

In fact, the direct loans approved by the 2007 Energy Bill require auto companies to use the funds to retool factories that produce vehicles that get 25% better fuel economy than the average vehicle in it's class. That's a start.

But the real grand bargain, in my opinion, is to bust out of this incremental improvements mentality for fuel economy. We don't need incremental improvements, we need exponential improvements in fuel economy. Here's how it could work...

It takes something like 3-7 years to design a new car, build the plants and get it rolling off the assembly line. So, rather than say we want a 4% annual improvement in fuel economy (as the current CAFE standards roughly call for) - incremental improvements that get us to no-where near plug-in hybrid-type fuel economy - let's propose a deal that goes something like this

We'll give automakers tens of billions in loans, put tens of billions more on the table for consumer credits to purchase advanced vehicles, and provide billions more for advanced vehicle R&D incentives (for batteries and lightweight vehicle materials research). In exchange, Detroit would have to support and lobby for fuel economy standards that look like this:

  • 2009 to 2014: improve at 4%/year to something like 30 mpg.

  • 2015: jump to 55 mpg

  • 2018: jump to 75 mpg

  • 2020: jump to 100 mpg

A deal like that would mean America is committed to radically - not incrementally - re-inventing the American automobile, re-committing to innovation, and recapturing the competitive edge in automotive technology.

Do you have a vision for a re-invented and renewed American auto industry? Do you have a strong opinion on the bailout plan currently on the table? Join the discussion and participate in the Breakthrough Institute's new essay competition:

We are currently soliciting guest essays that answers the question: What will it take to reinvent the American auto industry? We will publish the best responses on our home page, Please submit your op-eds to

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