There’s a good reason the Detroit Three automakers are trying to appease President-elect Donald Trump. And it goes beyond the fear of what an unpredictable president might do their business, particularly in the area of trade.
The automakers have reason to be apprehensive. They’ve been a favorite Twitter target of Trump’s, and no one is certain how tweets will translate to policy.
But the automakers also need very specific things from the new administration, notably an appreciation of the marketplace. Since the Great Recession, domestic automakers have been building cars and trucks for a market of politicians and regulators. In exchange for the bailout that assured their survival, they have accepted a range of regulations that place their long-term viability in doubt.
What they’ll need immediately from the new president is relief from last-minute rule-making by Obama’s Environmental Protection Agency.
The EPA is reneging on a promise to provide a mid-term review of stringent fuel economy standards scheduled to take effect in 2025. By then, automakers must bring their fleet-wide miles per gallon average to 54.5.
That is an impossible task in today’s environment of low gas prices and a weak consumer appetite for the small, electric and hybrid vehicles the industry will have to sell a whole lot of to meet the mandate.
The review was supposed to come late this year or early next. At that time, the EPA was to assess market conditions and the status of technology to determine whether the new rules were workable.
But last month the EPA moved to begin finalizing the regulations without the mid-term review. They could complete the effort in the next few days, and Trump will have to decide whether to sweep it away.
It is not as if the automakers have been slacking in developing vehicles to meet the standards.
Ford Motor Co. alone is in the midst of a five-year, $4.5 billion initiative to bring 13 plug-in models to market. Such vehicles will make up 40 percent of its lineup, from 13 percent today.
Making the alternative-fuel vehicles is one thing; selling them is another. Sales of hybrids and all-electric vehicles continue to slide, claiming barely 3 percent of automotive purchases.
Despite technological leaps that have extended the range of such cars and trucks, heavy government subsidies to encourage customers to buy them, consumers don’t want them.
As long as gasoline remains cheap and plentiful, consumers will continue to choose the muscular trucks, roomy sport utility vehicles and growling sports cars.
It is unfair to force manufacturers to make a product the public has little interest in purchasing. The fuel economy mandates allow politicians to crow about their commitment to the environment, without having to take more unpopular steps such as tacking on fuel taxes to raise the price of gasoline.
Courting Trump by moving a few jobs from Mexico to Michigan will prove well worth the expense if he comes through with relief from the unreachable fuel economy demands.