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Developments on Bridge Loan to Automakers; 4 Groups Write Congress
Nov 19, 2008 (From the CalCars-News archive)
CalCars-News
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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Notice how we titled this posting: language is important. After listening and watching testimony today and yesterday in Congress, we believe calling any proposal under consideration a "bailout" promotes a simplistic presumption of a questionable giveaway. Calling it a "bridge loan" says it's a way to get through a difficult global liquidity crisis. At a time when we're all challenged to believe that the best chance to meet enormous challenges is to cooperate and use all available resources at hand, we suggest it's worth giving the US auto industry every chance to succeed. It may be telling that Wall Street analysts link the continued decline of the U.S. stock market at least in part to many investors' recognition of the consequences of bankruptcies among automakers.

We're including below:

  • Chrysler CEO Nardelli explains that Chrysler has chosen electricity over other fuels
  • Economist Jeffrey Sachs links plug-ins to long-term rescue of auto industry
  • By the way: bankruptcies could mean no domestic battery technology
  • By the way: US carmaker plug-in technology is national security issue
  • Joint letter from four environmental groups to House leaders
  • Senate leaders Reid and Byrd propose battery guarantee program


CHRYSLER CHOOSES PLUG-INS: We've been struck by how far we've come in promoting an awareness of the imminence and benefits of plug-in cars. Repeatedly we've heard legislators refer to the Volt and to other vehicles, not simply to the general "high-efficiency, environmentally friendly, advanced" vehicles that avoid specificity. We happened to hear one signal moment at the House Financial Services Committee hearing: when NY Rep. Nydia Velazquez asked Chrysler CEO Robert Nardelli whether his company was trying to pursue every energy solution, instead of the reassuring bromide, "we don't pick winners," he replied (we think this is close to a quote): "We chose a technology -- one in which we had the most experience, and which is most accessible to the consumer, and that's electricity."


JEFFREY SACHS TAKES THE LEAD: Noted economist Jeffrey Sachs, director of the Columbia University Earth Institute and leader of the global poverty Millenium Project, began promoting PHEVs in his last book, Common Wealth. He emerged as a strong advocate for PHEVs in House after the Detroit Three CEOs completed their testimony; we don't have quotes. He wrote a Monday Op-Ed in the Washington Post: "A Bridge for the Carmakers: The Future Is in Sight. They Just Need Help Getting There" http://www.washingtonpost.com/­wp-dyn/­content/­article/­2008/­11/­16/­AR2008111601743.html . He said the market could not accommodate auto bankruptcies, and he noted: *This is an opportunity to embark on a major industry restructuring to position the United States to lead the world in producing cars that get 100 miles or more per gallon. This achievement is closer than many suppose, with the pathbreaking plug-in hybrid Chevy Volt set to arrive in 2010 and several new hybrid models on the way....Some want to see the industry punished for its neglect of energy and environmental realities, but we should acknowledge that the SUV era reflected poor judgment across society. Yes, the industry ignored warnings about energy insecurity and climate, but so did the public and politicians. Rather than kill the auto industry, and destroy the U.S. economy in the process, we should fix the industry with a sense of national responsibility and purpose.


LITTLE-NOTICED POINT #1: IF CARMAKERS CLOSE, US WILL NOT HAVE BATTERY TECHNOLOGY:
A story that otherwise minimized the impact of automaker bankruptcies, "If Detroit Falls, Foreign Makers Could Be Buffer," by Louis Uchitelle with Bill Vlasic in The New York Times, November 17, 2008 http://www.nytimes.com/­2008/­11/­17/­business/­economy/­17impact.html concludes:

Still, there would be one irreplaceable loss, Mr. McAlinden argued. "Right now, we do $18.5 billion of automotive research and development in a year," he said, referring to innovative projects like the development of new types of batteries. G.M. in particular is involved in the development of lithium ion batteries to power the next generation of cars. If G.M. disappeared, "the foreign companies would develop the batteries, but not here," Mr. McAlinden predicted. "We would lose all the additional development connected to that technology. It would be a technology opportunity lost."


LITTLE-NOTICED POINT #2: US MILITARY NEEDS DOMESTIC CAR INDUSTRY WITH PLUG-INS:
Gen. Wesley K. Clark, former supreme allied commander of NATO, said in an Op-Ed, "What's Good for G.M. Is Good for the Army," The New York Times, November 16, 2008 http://www.nytimes.com/­2008/­11/­16/­opinion/­16clark.html

More challenges lie ahead for our military, and to meet them we need a strong industrial base. For years the military has sought better sources of electric power in its vehicles -- necessary to allow troops to monitor their radios with diesel engines off, to support increasingly high-powered communications technology, and eventually to support electric propulsion and innovative armaments like directed-energy weapons. In sum, this greater use of electricity will increase combat power while reducing our footprint. Much research and development spending has gone into these programs over the years, but nothing on the manufacturing scale we really need.

Now, though, as Detroit moves to plug-in hybrids and electric-drive technology, the scale problem can be remedied. Automakers are developing innovative electric motors, many with permanent magnet technology, that will have immediate military use. And only the auto industry, with its vast purchasing power, is able to establish a domestic advanced battery industry.... And we should insist that Detroit's goals include putting America in first place in hybrid and electric automotive technology, reducing the emissions of the country's transportation fleet, and strengthening our competitiveness abroad....Americans must bear in mind that any federal assistance plan would not be just an economic measure. This is, fundamentally, about national security.

• FRIENDS OF THE EARTH • PLUG-IN AMERICA • CALCARS • RAINFOREST ACTION NETWORK LETTER TO CONGRESS: This joint letter makes many of the points we posted on Monday in http://www.calcars.org/­calcars-news/­1026.html (see the section called "Tipping Point for Plug-in Cars: How Members of Congress Can Respond to the Detroit Three"). It was hand-delivered today to staffers of House Speaker Nancy Pelosi and House Republican Leader John Boehner staff by Friends of the Earth's Washington, DC Legislative Director.

Dear Speaker Pelosi and Representative Boehner,

Our organizations write to urge both Democratic and Republican Leaders in the House to ensure that any further consideration of federal aid or bailout funds to Detroit automakers be tied to fair and productive commitments that will result in helping the automakers retain solvency in the short-term, as well as meet the nation's demands for fuel efficient vehicles in the medium term. As a pre-condition to accepting federal funds or loan guarantees, each automaker must be required to:

  • Commit to align the companies' production plans with the Nation's critical need to reduce its dependence on foreign oil and its carbon footprint: Any aid package must put commitments in place that will improve the fuel economy and reduce greenhouse gas emissions of manufacturer's fleets. Automakers must also commit to performance levels at least equivalent to California's greenhouse gas emission standards.
  • Commit to produce and make available for sale 60,000 plug-in electric vehicles by 2012: GM has already promised to produce between 30,000 to 60,000 plug-in electric hybrids by 2012 and both Chrysler and Ford have prototype plug-in models in test phases, based on existing vehicle lines, which need to move to full production. Ensuring these promises come to fruition will help ramp up related industries such as the battery industry, which will ramp up plans if demand is certain.
  • Accept parity in terms of rescue or bailout funds: Conditions on aid must align, at the very least, with measures that were incorporated into other rescue packages this year including a federal ownership stake, priority of loan repayment, limitation on dividends, limitations on lobbying, and appropriate changes in management to usher in new company vision and direction.

Automakers' current financial crisis, like the larger economic crisis facing the nation and the world, demonstrates that we must move in a new direction. The terms above will ensure that any taxpayer dollars that flow to Detroit automakers will be used to spur the kind of new innovation and production that will increase the future prospects of the industry, green-collar jobs, and help tackle both the energy and the climate crisis.

President-elect Obama has pledged to: (1) put one million plug-ins on the road by 2015, (2) ensure that fifty percent of all federal fleet purchases be plug-ins by 2012, and (3) grow five million green-collar jobs.

Plug-in vehicles have been highlighted by President-elect Obama as one of the most important national energy solutions for a number of reasons:

  • Plug-in vehicles are clean and will get cleaner over time. Compared to conventional cars, plug-ins reduce global warming pollution by 40-62 percent depending on the grid from which they charge. As the nation's electric grid incorporates more renewable energy sources such as wind and solar, plug-ins will become even cleaner. President-elect Obama has pledged to require that 10 percent of the nation's electricity come from renewable sources by 2012 and 25 percent by 2025.
  • Plug-ins can be flex-fuel vehicles and need no new infrastructure. Plug-ins are primarily powered by electricity, but the range extension engine can run off other sustainable liquid fuels. Unlike other alternative fuel technologies, plug-ins do not require construction of a costly fueling infrastructure. They require only access to a 120 volt outlet for charging, which is available to a majority of consumers today.
  • High demand for plug-ins will help grow the green economy. With 250,000 consumers eligible for substantial plug-in tax credits under the Emergency Economic Stabilization Act, and EPAct requirements which mandate that 75 percent of federal fleet purchases must be alternative fuel vehicles plus President-elect Obama's pledge to press federal fleets to switch to plug-ins, there will be no shortage of buyers for these vehicles.

We urge you and your legislative colleagues to consider our request and ensure that any bailout of the auto industry be instrumental in helping the nation transition towards a clean, sustainable energy future.

Sincerely, Brent Blackwelder, President, Friends of the Earth; Linda Nicholes, Board President, Plug-in America; Felix Kramer, Founder, California Cars Initiative (CalCars.org); Jennifer Krill, Program Director, Rainforest Action Network


SENATORS PROPOSE BATTERY GUARANTEES: among the new proposals that have surfaced, we find that Senate Majority Leader Harry Reid and Senate Appropriations Committee Chairman Robert Byrd's $100.3B Economic Recovery Act of 2008 includes "1 billion for the advanced battery manufacturing loan guarantee program" -- this is a proposal that has been advanced by many advocates and deserves more attention.

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