Emissions ChevroletBoltReveal07.jpg

Published on January 8th, 2016 | by Steve Hanley

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Regulators Vs. Free Market: Who Will Win The Vehicle Emissions Game?

January 8th, 2016 by  
 

A story in the Detroit News on January 7 suggests the market for electric cars simply doesn’t exist. It says that within the auto industry, electric cars are still seen only as “compliance cars” and money losers. Even the all new Chevy Bolt falls into that category. If it wasn’t for EPA and CARB regulations, nobody would build them, but they have to in order to avoid hefty fines looming in the future. “The regulators are what are driving electric car production,” said Karl Brauer, an industry analyst with Kelley Blue Book. “It’s not because consumers are demanding them.”

Chevrolet Bolt has no vehicle emissions

10% of all new cars sold in California are supposed to have no tailpipe emissions by 2020. Car makers will be fined $5,000 per car if they fail to comply. This year, Fiat Chrysler bought $600,000 in federal emissions credits. It had to because its products, particularly the Dodge Ram 1500 and the entire Jeep lineup, fall woefully short of meeting the targets regulators have set. For Fiat Chrysler and small automakers like Mazda and Subaru, “The only options they have are to buy credits or invest billions in batteries,” says Brauer. “It’s pay up or else.”

Last year, sales of alternate fuel vehicles fell 20% at the same time the market overall set a record for total sales. Of the almost 17.5 million cars and light trucks sold last year, more than half were light trucks and SUVs. Plug-in hybrids and electric cars accounted for just over 2% of that total, down from 2.4 % the year before.

What we have is a two tier system, says the Detroit News. On one hand, there is a market full of SUVs and trucks people actually buy. On the other hand, there are the “money losing compliance vehicles” composed of EVs and hybrids that people aren’t buying. Next week, Chrysler is expected to preview a hybrid version of its popular Town & Country minivan. You would expect there would be a line out the door of people wanting to order one, right? Not according to KBB’s Brauer. There is “zero market demand for a hybrid minivan,” he says.

While Chevrolet is extolling its virtue for bringing the Bolt to market, it has also announced it is capping production at 30,000 vehicles. Why is that? If the Bolt is the savior everyone says it is, shouldn’t they be selling as many as they can weld, screw, and bond together? Doesn’t that prove the Bolt is a compliance car? Chevrolet has calculated how much money it will save in fines and emissions credits, divided that by the amount it loses on each car, and decided 30,000 cars is all it needs to make in order to come out ahead financially.

How long can manufacturers play the emissions compliance game? At some point, somebody has got to start making money on alternative fuel cars. The auto industry is hugely important to the US economy. For every job in the industry, 4 to 5 other people are indirectly involved in making parts, transporting cars, selling them, or financing automobiles. If automakers suffer, the entire economy suffers.

Americans have shown time and again that they prefer the biggest, thirstiest vehicles available. If gasoline prices stay below $2.00 a gallon, expect to see General Motors resuscitate its Hummer division and Ford re-introduce the behemoth-sized Excursions that used to roam the highways.

The problem, of course, is that the emissions from burning fossil fuels are poisoning the planet. We all understand that, but opt for big, heavy, emissions spewing vehicles anyway. As human beings, we are inclined to minimize the bad news we hear if it means we have to alter our lifestyle one iota. We are like the staff on the Titanic who raced to re-arrange the deck chairs as the great ship prepared to sink beneath the waves.

Maybe fuel economy standards and market solutions aren’t the way to save us from ourselves. Maybe the only way to do what needs to be done is to simply ban the use of gasoline or diesel fuel in passenger vehicles. How’s that for a disruptive idea?


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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.



  • Jim Smith

    Americans like what they like. It is no one else’s business what they like or dislike. If the American market favors SUVs, and no one is building an EV SUV…pretty simple stuff.

    If a EV SUV will have significant limitations compared to a ICE SUV it is no wonder no company is building them. If an EV SUV will cost more than an ICE SUV, Americans are not going to buy many of them.

    • Steve Hanley

      So, we can safely put you in the category of people who could care a flying fig leaf about emissions, rising sea levels, climate change and all the other left wing commie-pinko socialist claptrap, Jim?

      • Jim Smith

        you won the internet for straw mans! wow.

        • super390

          “Progressives don’t understand anything but the heavy hand of government spending other peoples money.”
          Guess you won for the biggest straw man – the belief that all environmentalists are are secretly communists.

          • Jim Smith

            supposedly progressives are not communists..at least that is what the low information ones say all the time.

    • James Rowland

      The answer to your objections is called the Tesla Model Y. Same platform as the $35k Model 3, but a crossover and probably with falcon wing doors. Expect it to look great, have at least 200 miles range, Supercharger compatibility and the acceleration and handling of an ultra-hot ICE sedan (even in base trim.)

      Of course, since it’s a Tesla product it’ll be delayed; my guess would be early 2019.

      • Jim Smith

        the market will react….when it is viable. Progressives don’t understand anything but the heavy hand of government spending other peoples money

        • super390

          How will the market react to a mass extinction event?

          • Jim Smith

            everyone will be dead. there will be no market.

        • James Rowland

          There are a few things market worshipers don’t understand either, like the fact that functioning markets only exist as a result of successful regulation – not despite them – and that free markets are an ideal never completely achieved in reality. Also that real markets are subject to many types of failure and cannot not solve all problems.

          • Jim Smith

            “…like the fact that functioning markets only exist as a result of successful regulation”

            Totally incorrect, and thanks for proving my point. Progressives love big government and hate freedom.

            “free markets are an ideal never completely achieved in reality.”

            Again, thanks for proving my point.

            “Also that real markets are subject to many types of failure and cannot solve all problems.”

            government fails over and over and over and over, yet this you mention not. Interesting….

          • James Rowland

            Totally correct, actually. How many markets function in the absence of, say, a court system to make contracts enforcable? Answer: None. That’d be government regulation in action. It’s the same for many essential institutions and infrastructure.

            The point I am making is that while price signalling is a powerful and indispensible tool, it is not the only tool – nor is it infallible, universal or able to stand on its own.

            Tell me, what point are you making, and specifically how does anything I wrote prove it? (Please note that an assertion is not an argument.)

          • Jim Smith

            but that was not what you were saying and not what i was saying. “Free” Markets do not equal no government. But that is the Progressive meme. Same slander is used against Libertarians. Laws and “free” markets are _not_ mutually exclusive.

            BTW – Regulations and laws are not the same.

          • James Rowland

            It’s precisely what I was saying. Maybe you could read this time, instead of trying to shoehorn me into your cliché-ridden narrative.

            Also, contract law is a type of regulation, done by governments.

          • Jim Smith

            “Also, contract law is a type of regulation, done by governments.”

            strawman.

            It was not what you said.

          • Steve Hanley

            If you spent more time couching your arguments in persuasive terms instead of repeating drivel you have borrowed from ideologically driven websites or Faux News, you would be more persuasive.

          • Jim Smith

            You should take your own advice.

          • SkyHunter

            When has laissez faire capitalism ever succeeded?
            And you need to demonstrate how James makes your point, not simply claim it is so.

          • Jim Smith

            it has never existed. The power of government and the ruling elite will not give up their power to abuse.

          • SkyHunter

            That is because it is impossible.

      • Steve Hanley

        I too expect it to be a great car, James. But affordable? As my granddaughter would say: “I’m skepical.”

        • Marcus Mendez

          The answer is mobility sharing via autonomous electric cars. And it has to be profitable extremely so, and the ice ownership model blows up.

        • James Rowland

          Form suggests the price target will be just barely met, but in a configuration too compromised for anyone to want (which will be quietly retired before main production begins.)

          If we’re talking about Y instead of 3, the target’s going to be a bit more than $35k anyway.

    • SkyHunter

      How is pollution no one else’s business?

      If I defecate in the stream you drink from, is it none of your business?

      • Jim Smith

        ICE cars pass all legal emissions standards. Everything causes pollution, even EVs.

        • SkyHunter

          Poison the well fallacy.

          • Jim Smith

            it is called reality.

          • SkyHunter

            You are making a false equivalency and poisoning the well. Both are logical fallacies.
            Reading some of your comments, proves that you are strong on opinion and weak on logic.

          • Jim Smith

            so you admit to having no logical response so you back out with nonsensical claims. EV’s in fact pollute. Hate to break it to you.

          • SkyHunter

            EV’s have no emissions. They do not pollute.

          • Jim Smith

            they are powered by magic? all the components in an EV are created from magic? All the roads EV’s drive on were created from magic? When you are done with the EV it disappears magically?

          • SkyHunter

            And the same is true of ICE, except they also have tailpipe emissions.

            You are employing a fallacy of false equivalence. It exposes you as less than objective.

          • Jim Smith

            Again, you can not just throw out big words without understanding what they mean or how to use them. You said: “They do not pollute.” in reference to EVs in a comment above.

            I said they do pollute. You are wrong. I am correct. Very simple.

          • SkyHunter

            They don’t pollute. Their manufacturing does, some of the electricity used to charge them does, building and maintaining roads does. But they have no emissions and therefore do not pollute in and of themselves.

          • Jim Smith

            Here is where i properly use the term: Goalpost Fallacy.

          • SkyHunter

            My argument has not changed, therefore I could not have moved the goalpost. The EV has zero emissions, it does not pollute.

          • Jim Smith

            i grow tired of pointing out your fallacies…i will humor you one more time.

            “They do not pollute.” That is what you said. That, of course is not true. I win. You lose. Game. Over.

          • SkyHunter

            You are a funny little man.

          • SkyHunter

            They do not pollute. That is a fact. You are not correct, you are rationalizing in order to convince yourself you are right, avoiding cognitive dissonance and loss of self-esteem.

          • Jim Smith

            Again, EV’s do pollute. Sorry you wrong, yet again. Game. Over. I. Win.

          • SkyHunter

            Pointing out the logical fallacy of your comments IS a logical response.

          • Jim Smith

            But is is not a logical fallacy. that is my point. You can’t just throw around big words without understanding how to use them properly.

          • SkyHunter

            They are logical fallacies, I even named them for you.

            False equivalence is a logical fallacy which describes a situation where there is a logical and apparent equivalence, but when in fact there is none. This fallacy is categorized as a fallacy of inconsistency.

            ICE and EV are not equivalent when it comes to pollution.

            Poisoning the well (or attempting to poison the well) is a rhetorical device where adverse information about a target is preemptively presented to an audience, with the intention of discrediting or ridiculing everything that the target person is about to say. Poisoning the well can be a special case of argumentum ad hominem, and the term was first used with this sense by John Henry Newman in his work Apologia Pro Vita Sua (1864).[1] The origin of the term lies in well poisoning, an ancient wartime practice of pouring poison into sources of fresh water before an invading army, to diminish the attacking army’s strength.

            Just because everything has a pollution footprint, does not mean that there is no difference.

          • Jim Smith

            The problem here is, I _NEVER_ said ICE and EV are equivalent when it comes to pollution. They, in fact, pollute differently.

          • SkyHunter

            You implied it when you poisoned the well and made a false equivalency.

          • Jim Smith

            No i did not. Take a break from posting, as you are getting confused in several areas.

  • AaronD12

    There is “zero market demand for a hybrid minivan”… Statistically speaking, that is incorrect. I am interested in a PHEV minivan to replace our gas-only SUV.

    Look at how well the Mitsubishi Outlander PHEV is doing in Europe and Asia. Amazingly well. I think there is some pent-up interest there that KBB doesn’t know about. Yes, gas prices are incredibly (too?) low, but there are those people who are environmentally-minded and don’t base their purchasing decision on the incredibly volatile gasoline price.

    • Steve Hanley

      I’m with you, Aaron. I think there would be a strong market for such cars. A hybrid minivan would be especially well suited for the type of stop and go, short trip urban/suburban driving most minivan owners do on a daily basis.

      I know my daughter complains all the time about the dismal gas mileage her Scooby Do Tribeca gets. In the immortal words of George W. Bush, I say to Chrysler: “Bring it on!”

    • Jim Smith

      as long as it can be priced accordingly to its limitations over the ICE version, it will sell. I would also love an EV or PHEV minivan in a few years.

  • SkyHunter

    The demand is not there, because the product is not ready. Tesla delivered over 50 Model S sedans last year. They have no problem with demand, producing enough vehicles is their biggest shortcoming.

  • Eco Logical

    The big trucks and SUVs need to pay for their emissions, and not just carbon but NOx (asthma), SOx (asthma), particulate-matter/diesel-soot (asbestosis) and other toxins. Alberta is introducing a Carbon Tax on all emissions including gasoline at 7 cents/liter (27 cents/US gallon). Its a start. If the polluters had to pay for the health, environmental and climate change costs they are perpetrating on all of us, the cost of fuel would double or possibly even triple. Then add in the $5 Trillion/year subsidies the (already rich) oil companies are getting from you and me taxpayer. We are essentially paying the oil companies to produce a product that kills us. It kind of reminds me of drug pushers. How long can the fossil fuel emissions carnage go on?

    • Steve Hanley

      You’re singing my song, sir! But call it a “carbon fee”, please. The word “tax” makes people forget all about logic.

      • Eco Logical

        Thanks Steve, “fee” instead of “tax” is a great, even better might be calling it an “emissions fee” to include all those other toxins as well as carbon. I’m going to submit the suggestion to the gov’t 🙂

        • Steve Hanley

          Let us know how that works out for ya! ; – )

          • Eco Logical

            I contacted Alberta’s Environment Minister suggesting ‘Carbon Fee’ instead of ‘Carbon Tax’ and they’ve settled on ‘Carbon Price’. Unfortunately the term ‘Carbon Tax’ is still pervasive in the media…

          • Steve Hanley

            I congratulate you on being proactive on this issue, sir!

            Labels are hugely important. Just look at how the Republicans in the US repackage the estate tax as a “death tax.”

            I just read yesterday an article (can’t remember where I saw it) that said the health care costs from burning fossil fuels were over a trillion dollars a year. That’s a tax, too. But no one is talking about that.

            If the prices of a gallon of gasoline represented its true cost to society, it would be 5 times what it actually is. The critical thing is to educate people about the enormous amount of money fossil fuels cost society as a whole. What we pay at the pump bears no relationship to reality.

            Keep up the good fight! : – )

  • roseland67

    Graft and corruption will win

  • James

    One of the big problems is the sheeple that buy SUVs and other fossil fueled land barges because of the very effective marketing campaigns (aka Jedi mind tricks) of the car manufacturers. “You want unnecessary speed, power, and cubic feet”

    Then the manufacturers claim that that is what the public wants. Let’s not forget how successful the tobacco industry was at getting the sheeple to buy their products.

    Break free of their spell and decide for yourself. Gas guzzling, overpriced land barge with a big profit margin or biosphere, species saving EV.

  • airchompers

    Mandating electric cars to stay in business is a market solution to the extent that ‘you must do this to be permitted to exist’ is a solution.

    There are absolutely market solutions.

    1) Emissions taxes – especially carbon dioxide so it becomes a proxy fuel consumption tax

    2) vehicle weight / loading taxes. An SUV wears out the road way more than a Mitsubishi Mirage, the registration fees should reflect this.

    3) enforcing emissions laws, bumper height laws, headlight laws, and tire laws against brodozers not just ricers.

    4) giving larger vehicles stiffer penalties for breaking the law. An SUV parked illegally takes up more space than an illegally parked Yaris, The SUV should be fined accordingly.

    Re-write speeding laws to consider the amount of illegal momentum – an SUV going 10 mph over the speed limit has the same amount of illegal momentum as a sportcar that weighs have as much going 14 mph over.

    And re-write traffic laws so motorcycles can speed and lane split, encourage people to use them and reduce traffic and fuel consumption.

    And when there are collisions, there should be the presumption that the larger vehicle caused it. Obviously if there’s compelling evidence otherwise that should be considered, but the larger the vehicle you drive, the more responsible you should be.

    5) Make SUVs and trucks meet crash standards that let them play nice against smaller vehicles. Give them huge crumple zones and don’t let trucks put frame rails at the eye level of people in cars

    6) And when there are collisions with injuries and the SUV/Truck is at-fault, let people collect punitive damages on the amount of damage attributed to the SUV’s/Truck’s extra mass. If they would have walked away from a collision with a Subcompact car, but they broke their neck because they collided with an F-350 rather than a subcompact car, then they should collect damages that make them whole (as they already do). But they should collect punitive / triple damages on the injury as well – to discourage irresponsible SUV/Truck use.

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