Auto Execs Say Security Demands U.S. Financing of Advanced Auto Technologies

Auto Execs Say Security Demands U.S. Financing of Advanced Auto Technologies

Falling Fuel Prices Are 'Disincentive' For Consumers, Analyst Group Says

U.S. automotive executives are using the bully platform offered by the Detroit auto show to step up calls for an increase in the funding that Congress is considering - has already  allotted in some cases - to finance development and production of advanced vehicles, biofuels and battery technologies that can help reduce the nation's dependence on oil.

What's missing is a call for a sensible fuel tax policy that encourages people to buy the fuel efficident cars the government says automakers must build.

Congress already has approved $25 million in loans to automakers and suppliers to use in retrofitting facilities - or building new ones - for the manufacture of advanced cars and trucks. General Motors, Ford and Chrysler has requested a combined $22 billion of the pot and would like to see the money increased.

President-elect Barack Obama, who is to be sworn in as the 44th president on Jan.20, has indicated a willingness to do just that, perhaps even doubling the $25 million loan pool. 

Want More

But the automakers would like to see additional funding made available in the $800 billion economic stimulus plan Congress is now developing at the behest of the incoming Obama Administration.

"It's an issue of economic security, of national security, of energy security," GM research and development chief Larry Burns told reporters during  the North American International Auto Show's media preview days this week.

It would be devastating, he said, for the U.S. to merely go from being dependent on foreign oil to being dependent on foreign nations for the advanced batteries and other components needed to make electric vehicles - battery-electric, fuel-cell electric and hybrid-electric .

Granted, GM needs federal funds to survive right now and Burns has a lot at stake - his job, for instance - in promoting federal funding that helps the industry.

But we still agree with him.

We'd rather see a few hundred billion tossed to the companies working on lithium-ion and more advanced batteries, clean biofuels, fuel cell and electric charging and hydrogen fueling station infrastructure development than to be handed to the corn ethanol  industry or to big banks so they can continue bolstering their reserves.

Need Tax Plan

Analysts in the London offices of Global Insight economic and business forecasting and consulting, looking at the U.S. situation from an outsider perspective, suggest that things could work well if federal tax policy encouraged purchases of and investments in more fuel-efficient vehicles.

We agree.

Instead of merely demanding that automakers develop cars that are ever-more fuel efficient without any thought to the impact fuel prices have on consumer preferences, Congress needs to suck it up and address the issue of setting at least a bottom price for gasoline that's steep enough to encourage Americans to think of fuel-efficiency first when they are considering new car and truck purchases. 

Recalling that the hybrid technology that has stood Toyota and Honda in such good stead was developed in Japan and not the U.S., Global Insight's London analysts point out that " it was Japan's strict legislative environment towards emissions that gave rise to gasoline (petrol)-electric hybrid technology, not a government edict."

The only reliable way to determine a positive outcome for these technologies "is a tax and legislative environment that would replicate these conditions and drive consumer behavior" in the U.S., the report insists.

We couldn't have said it any better.

John O'Dell,Senior Editor

..........Cartoon courtesy of www.punny.org

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.