Why is GM using taxpayer funds to fight clean car progress?
Just back from a weekend conference where climate litigator Matthew Pawa gave a keynote address. He’s one of the lawyers who successfully defended California’s right to demand that automakers make cars that limit their greenhouse gas emissions, calling and cross-examining witnesses in a dramatic 2007 trial that put climate change science on the stand. In some ways it was the modern-day equivalent of the Scopes trial, but with science winning this time. (Read the court’s opinion here.)
Pawa made the good point that as GM continues to plead for additional bailout money, it and the auto industry are turning around and using that money to appeal this court loss, funding highly-paid private lawyers to press the losing case that they should continue to build the carbon-spewing dinosaurs that got them into this mess. Even assuming EPA head Lisa Jackson soon grants California’s request for a waiver allowing the state to go forward with its clean-car regulations, as looks likely, the Big Three will still be fighting in the courts for the right to build less efficient cars. Doesn’t this seem wrong? Should American and California taxpayers be subsidizing the auto industry’s expensive, backwards, and, ultimately, futile efforts to thwart progress on developing a more efficient and less polluting U.S. car fleet?
Pawa made a simple suggestion to fix this inequity, one that circulated last December as well, at the time of the first auto bailout. Let’s condition any further taxpayer assistance to the automobile industry on an explicit authorization for California and other states to implement California’s landmark greenhouse gas emission standards. Whether we do it through a simple Congressional enactment or through executive branch dealmaking, last week’s Gallup poll numbers show a new round of auto bailout funds to be deeply unpopular and suggest there’s leverage to get this done.
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4 Replies to “Why is GM using taxpayer funds to fight clean car progress?”
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About Cara
Cara Horowitz is the executive director of the Emmett Institute on Climate Change and the Environment at UCLA School of Law. The Emmett Institute was founded as the firs…
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What is the evidence that the U.S. automakers production of “carbon spewing dinsosaurs” has anything to do with their financial troubles? GM, in particular, as been quite poorly managed, but the last data I saw showed that profit margins on larger vehicles, and SUVs in particular, were far higher than for more eco-friendly vehicles. This was not only true for GM, but for more successful automakers as well. Indeed, when Toyota was still making money, they were making far more on their SUVs and other light trucks than on hybrids or smaller, low-fuel-consumption vehicles. It would be convenient were the manufacture of more fuel efficient and lower emitting vehicles were also more profitable for automakers, but I have not seen any evidence that this is in fact the case.
JHA
Profit margins may be higher for gas guzzlers, but high margins on plummeting sales volume yields little. GM’s own shifting business strategy (as opposed to its litigation strategy) suggests it agrees that a more fuel efficient fleet will lead to higher profits — see “GM Shifts Focus to Small Cars in Sign of Sport Utility Demise,” http://www.nytimes.com/2008/06/04/business/04motors.html?ref=business. Okay, so “dinosaurs” may have been a little over the top–I was reaching for a Scopes trial Darwinian reference. But wouldn’t GM have better weathered the last several years of high gas prices if it had made this shift more quickly?
I’m still not sure I see it. Last June, after a quick (two-year) reversal in SUV sales (versus car sales), GM opted to reduce its production of full size SUVs. Up until that point, SUV sales had been strong. So I don’t see how SUV production (as opposed to other problems) are what got GM into this mess, nor (given the June announcement) do I see GM’s position as seeking to continue to produce SUVs. Moreover, as the story you cite notes, if one looks at the vehicles that sell the best now, they are full-size cars (like the Corolla) and crossovers, not smaller, more fuel-efficient vehicles. So I still don’t see how the failure to make more fuel efficient vehicles has much of anything to do with the automakers economic problems.
JHA
I don’t have much to add to this debate overall, but Jonathan, I wonder how you can characterize the Toyota Corolla as a “full-size car.” As a Corolla owner who has also ridden in full-size cars on occasion, I can say unequivocally that the Corolla is not full-size under any common or reasonable definition.
Here is Edmunds’ discussion of the Corolla:
http://www.edmunds.com/toyota/corolla/review.html
If there is any rental car company or other company that classifies the Corolla, they almost certainly classify it as “economy” or “compact” (admittedly, not “subcompact,” but not even “mid-sized,” much less “full-“).
and the base version of the new model year gets 26 mpg city, 35 mpg highway – it is certainly on the “smaller, fuel-efficient” side of average, so I’m pretty sure its popularity (http://usnews.rankingsandreviews.com/cars-trucks/daily-news/080702-Toyota-Corolla-Now-America-s-Best-Selling-Vehicle-/) doesn’t support your thesis here, as this linked article indicates.
Sean