By most accounts, the Obama administration’s “Cash for Clunkers” program is a resounding success. You’ve heard the sound bytes: “good for consumers, good for dealers/the auto industry/the economy, good for the environment.” There was some embarrassing attention focused on the program during its second week as consumer response overwhelmed everything from the dealer interface system to the rebate financing that the government initially allocated.

As the program’s future hung in the balance, some dealers were left holding clunkers without a guarantee that the rebates would ever be paid, and as administration officials promised a hollow-sounding “good faith effort” to pay off all the deals already made, those dealers began to call customers to claw back the new cars or request cash payments to offset the rebate.

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In the last weeks, GM has increased the intensity of its internal dialogue and negotiations with the Obama Administration to keep from being killed off. A summary of where GM is as of right now:

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San Francisco Mayor Gavin Newsom is in it to win it today. After earlier defending San Francisco from Oregon’s plan to overtake the Bay Area as the EV capital of the world, news hit the wire that Mayor Newsom struck hard at Detroit for killing their electric vehicle programs and lacking the vision to move beyond hybrids.

At conference on the future of the auto industry sponsored by Newsweek, Mayor Newsom remarked:

“With respect to Detroit, it is not good enough to advance by 2012 an ambitious strategy of having 14 different models at GM of hybrids — when hybrids are yesterday’s technology. Hybrids have been on the market since 1999. The car industry must be reinvented and automakers must move quicker to plug-in hybrids.”

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I was recently glancing through the Washington Post, when the headline, “Green Is In The Eye Of The Beholder,” caught my eye — mostly because I have been wondering a similar question question as of late: What, exactly, makes a vehicle “green?”

It seems there are as many answers as there are shades of green. But, ultimately, the question all automakers need to figure out the answer to — especially the Big Three in Detroit — is which variety of environmentally friendly vehicles do Americans really want?

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The White House and Congress are near a bailout for the “Big Three” auto manufacturers with a $15 billion loans. This is supposed to be a bridge loan to tide them over until the market improves. Will the market improve enough to pay back the loan or is this a bridge to nowhere?

Daimler-Benz wrote Chrysler off their books and sold 80% of Chrysler to Cerberus. Cerberus is one of the largest private equity investment firms in the US with total assists over $24 billion, yet they lack the faith to make a loan to their own company.

Bankruptcy is still the best tool for restructuring any failing industry!

Business cycles are a necessary part of any free market economy. Old industries and models must be replaced by new industries and ideas. This requires a shift in both human and material resources.
New industries require new skills. The government can best facilitate such a shift by easing reemployment of the workforce through realistic unemployment payments, education, investment in sustainable research and industry and a national health plan.

Healthcare, and pensions are a big part the Big Three’s problem. For every dollar paid as wages, more are spent on benefits for retired employees. Portability of health and welfare with affordable housing can increase mobility of the workforce.

Government should not try to pick winner in the market place. Old industry and models become entrenched into the government through lobbyist, influence pedaling, and just inertia. When Morse introduced the electric telegraph, he had to overcome a congress that was sold on optical telegraph – flashing lights, mirrors and telescopes.

Edison tried frantically to get alternating current banned as unsafe. Using A.C.. technology, Westinghouse drove Edison General Electric into bankruptcy, but GE emerged to become a pioneer and powerful competitor in a.c. technology.

Chrysler rose from the ashes of Maxwell Motors in 1915 by performance and safety innovations. It was reborn in the late ’70. After suffering loses from Dodge and Plymouth, Chrysler hired Lee Iaccoca, the former Ford CEO, who had been fired by Henry Ford II over his plain to market compacts.

While Iaccoca got government backing for loans, changes at Chrysler were well underway. He hired fellow renegades from Ford. The K-car, Omni, and Horizon are automotive history.

It’s been said that going to the moon was successful since it was a well-defined goal. Our primary goal should be greater than any particular market. It must represent a broad set of outcomes.

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According to the latest proposal, a “Car Czar” would be appointed to oversee the rescue. It’s unclear how this “Czar” could be more effective than a U.S. trustee appointed by a Chapter 11 Bankruptcy judge. A trustee might be more likely to be free of special interest and partisan bickering. There are strong special interests in the Congress over the automotive industry.

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via TreeHugger via The Beast via Boing Boing

Last year, when the US congress passed the Energy Independence and Security Act (EISA), a $25 billion fund called the “Advanced Technology Vehicle Manufacturing Incentive Program” (ATVM) was established to help new and existing auto makers re-tool their operations to bring next generation car technologies to market quickly. Just this month, the program started accepting applications for funds from interested parties.

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Whichever path they choose, Democrats could be headed for a confrontation with Mr. Bush and were setting the stage for a dramatic lame-duck session

The confrontation in question is a proposal from Senate Democrats, with backing from President-elect Obama himself, to bail out the Big Three, under the premise that they are too big to fail and that if they went under, the ripple effects would be devastating. Curiously absent from the discussion, however, is the fate of a host of cleantech startups making extremely efficient vehicles powered by electricity, electricity plus gasoline or biofuels, and so forth.

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When (and if) finally approved, much of the loan will be used to convert production to smaller, more fuel efficient vehicles, which are increasingly popular in Europe as a result of the escalating energy crisis. The money will also be added to existing U.S. Advanced Battery Consortium grants to help fund the development and manufacture of next-generation battery technology, such as those used in the forthcoming Chevrolet Volt.

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