Obama to Automakers: Make Greener American Cars or Go Under
Photo via Motor Trend
Yesterday, big news broke that Obama denied Chrysler and GM further bailout funds. Both had submitted plans detailing how they'd use the funding to get their companies back on track. Both were deemed 'not viable'. How did they fail to make the grade? One reason was neither planned on going green enough--after rejecting both plans, the Obama administration laid out a "Path to Viability" for both companies. Common to both? Putting more effort and resources towards developing and selling fuel efficient vehicles. Yes, Obama's bailout refusal should lead to greener American cars.A Greener Auto Bailout?
This statement, from the Obama administration's "New Path to Viability for GM & Chrysler" outlines the issue:
Industry financial analysts and industry experts are nearly unanimous in their views that, to be competitive in the decades to come, auto companies will need to transform their processes and products to improve efficiency, reduce costs, and offer higher quality, more fuel efficient fleet.
In other words, both companies need to get a whole lot greener if they want to get bailed out. Obama's administration is forcing a point that's long been clear to many, many people (excluding the Big 3, that is)—fuel efficiency is a necessity now, and will be even more so in the future auto market. So what does Obama have in mind for the future of the two failing car giants?
A Greener Future for American Cars
From the Treasury Dept.'s report on GM:
-Technology Leadership: The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance, and are reliable, durable, and safe.
Bet that GM wishes it hadn't killed the electrical car now.
For Chrysler, the situation is a little different. The Obama administration has given the company 30 days to effectively partner with Fiat, for many of the same reasons. Here's the report on Chrysler:
Chrysler has also proposed a partnership with Fiat, which has the potential to address some of these problems and provide Chrysler with a path to viability. A Chrysler/Fiat alliance could lead to Chrysler manufacturing fuel-efficient vehicles using Fiat's technology while benefitting from the managerial expertise of the Fiat senior leadership that successfully lead a turnaround in Fiat over the last five years.
In both cases, improving fuel efficiency is a cornerstone of future strategy. This reasoning from the Obama administration is consistent with the raised fuel economy standard for 2011, and the proposed emissions regulations. So while his strategy with the banks is controversial for appearing too lax, it seems this tough love for the automakers is solid maneuvering and a wiser use of bailout funds.