Can You Make Detroit Profitable With Green Cars?

Doug MacEachern asks a pretty important question in an opinion piece today. He wants the Obama administration to declare its intentions with regard to its car company ownership.

They will have to declare a goal.

Do they want to rebuild an industry that is now a smoking wreck? Which is another way of asking: Do they intend to build and sell lots of cars and make a bunch of money in the process? Like, you know, in the olden days? Or do they have something else in mind?

It’s a great question and honestly one I hadn’t thought much about. I sort of assumed that the White House auto task force had some great Excel spread sheets that laid out the entire strategy. Free market sort of guy that I am, I figured that they planned to get these companies back to profitability.

What else would they have in mind? Well, MacEachern provides a clue to what it might be.

Like the entire American auto industry, the future for Chrysler is now in the hands of Lisa P. Jackson, a chemical engineer and the director of the Environmental Protection Agency under President Barack Obama.

Last month, Jackson declared that her agency would regulate a number of greenhouse gases, including carbon dioxide. Since cars and trucks are among the largest sources of that newly declared pollutant, Jackson’s views regarding the industry suddenly have great relevance.

Here is what the nation’s new Queen of Cars told National Public Radio last week, just before Chrysler teetered into bankruptcy:

“The president has said, and I couldn’t agree more, that what this country needs is one single national road map that tells automakers that are trying to become solvent again what kind of car it is that they need to be designing and building for the American people.”

Even her NPR interviewer felt compelled to ask if designing road maps for critical industries really should be a role of the federal government. “That doesn’t sound like free enterprise,” said NPR’s Michele Norris.

Jackson responded, in part, that it was “free enterprise” that got the country into the economic mess it’s in now.

Well, OK that puts a pretty fine point on at least one view from the Obama camp. She certainly doesn’t appear to think that a private approach to the companies is the way to go. Actually, it sounds as if she has little use for the private sector at all.

Now it’s a pretty well established fact that Americans haven’t flocked to small green cars. There was a flurry of interest in hybrids when gas went to $4 a gallon but that quickly faded as prices came back down.  So it sounds as if Ms. Jackson plans to tell Detroit what kind of cars to build and then hope (?) that their customers will buy them. That doesn’t sound like a real solid plan to once again become solvent. Certainly it’s not the type of product that has produced profits in the past.

It seems obvious then that there’s another part to her plan. Tell Detroit what kind of cars to build and then tell buyers what kind of cars they are expected to buy — is that how it’s going to work?  Or maybe you don’t give them a choice. There’s ways to do that through incentives for buying green and penalties for buying what you want. Or, I suppose, you could just make it a losing proposition for the manufacturers to build and sell any car that doesn’t fit the template.

Implicit in all of this seems to be an attitude that the public won’t push back. I don’t know that I would be quite so comfortable with this proposition as the administration seems to be. They might be able to pull it off over time — I’m talking a decade here — but forcing it down the public’s throat is a dangerous game. Americans get a little psychotic when you mess with their guns or cars.

In the meantime there is that pesky problem about profits. Escalades and mini-vans get the cash rolling in, gas sippers don’t. So do they try and roll to the green side gradually or do they force the consumer to buy what the government wants them to build?

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