I got the chance yesterday to go to the GM Tech Center to drive one of the Volt mules. You may have read something about these cars already. They’re actually Chevrolet Cruze’s with all Volt technology in them. Well, almost all of the Volt technology. These mules did not have the engines hooked up that recharge the batteries. More on that in a minute.

In case you’re not familiar with term, a “mule” refers to a car that’s been cobbled together for development purposes. Since the Volt and all the technology that’s going in it is still under development, GM took production versions of the Chevrolet Cruze and bolted in the Volt powertrain and batteries. They used the Cruze because it’s roughly the same size as the Volt. This allows them to test the powertrain more quickly rather than waiting for the final engineering on the Volt body to be done.

When we went outside to drive the mules the GM people told me that the car was already “on.” At this stage of development, it takes over 20 seconds to boot up everything in the car before it’s ready to drive. GM says it can reduce that delay but I still got the sense they’re still going to be some boot up time required even with the final production version.

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The debate about bailing out the Big Three has hit a fever pitch. It seems like everybody wants to weigh in with their opinions, and the louder they rant, the more coverage they get.

Strangely, the media is devoting far more attention to the $25 billion bridge loan for the automakers than it is to the $700 billion bailout to the financial industry. How does that makes us a better informed citizenry?

There are always two sides to every argument, but this discussion shows how much misinformation, misperception and wrong-headed “facts” are being bandied about. So here is my chance to debunk the five most popular myths that I keep hearing.

“The Big Three only build cars that nobody wants.” Oh really? Somehow last year they managed to find over 8 million customers to buy those cars nobody wants. And a good many of those people are not just satisfied with their purchase, they are passionately devoted to them. Corvette, Mustang and Viper have practically created cult followings. F-150, Silverado and Ram owners are the most loyal buyers in the business. Even with all their other vehicles, customer satisfaction has never been higher.

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I’m a big fan of diesels. Or, I should say I’m a big fan of common-rail, direct-injection, turbo diesels. They offer terrific fuel economy, performance and value. I love the way they drive.

That’s why I was sure diesels would take the American car market by storm, just like they have in Europe. But now a trio of circumstances are conspiring to choke off the diesel’s sales potential on both sides of the Atlantic. It all has to do with fuel prices, emissions regulations, and alternative technologies.

In the last year diesel fuel prices have soared both in Europe and the U.S. Historically, diesel was always significantly cheaper than gasoline, especially in European countries. Today, diesel costs about the same as petrol in Europe and it’s significantly more expensive than gasoline in the U.S. For the vast majority of car buyers, higher pump prices for diesel is a deal killer.

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There isn’t a whole lot of support in Washington D.C. to help the domestic auto industry these days. But there is one small concession the Feds could dole out to Detroit that would save it a lot of time and money in selling fuel efficient vehicles in the United States.

Thanks to heavy fuel taxes in Europe, automakers sell a line-up of vehicles there which get great fuel economy. That’s why GM and Ford want to start building a number of their European models in the United States. But it’s going to take them a number of years to do this, with most of that time eaten up by modifying those cars to meet U.S. emissions and safety regulations.

Why make them modify those cars? Why not let them build exactly what they sell in Europe over here?

This is the perfect time for Congress to give the Detroit Three a temporary freeze on safety and emissions regulations. As long as a car meets the Euro 5 emission regulations and European NCAP safety standards, let them build those vehicles in the U.S. with no other modifications.

I say we give the automakers a temporary reprieve, a 5-year window, to make those Euro-spec vehicles here. After that, they would have to meet whatever U.S. standards are on the books.

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Over the last decade the price of a new car has not gone up — at least in terms of purchasing power. It takes the average American family about 25 weeks of income to buy a new vehicle today, roughly the same that it did in the mid-1990′s. But that is about to change. The prices of new vehicles are about to skyrocket.

What prevented prices from climbing up to now is competition. Every market in the world has more car companies competing in it than it did a decade ago (with the glaring exceptions of Japan and South Korea). That competition forced automakers to wring costs and inefficiencies out of their operations, and then pass those savings on to their customers.

But with commodity prices soaring for all the raw materials needed to manufacture automobiles, the car companies just can’t cut costs fast enough. Let me give you an example.

To make cars you need steel. To make steel you need iron ore. But over the last decade three suppliers have pretty much cornered the global market for iron ore. The major steelmakers pretty much have to buy from BHP of Australia, Vale of Brazil and Rio Tinto, which is headquartered in London.

Last year those iron ore suppliers decided it would be a nice time to raise the price of iron ore by 30 percent. And then earlier this year they decided it would be even better to raise prices another 70 percent on top of that. As a result, steel prices are soaring. A ton of scrap now sells for more than a coil of finished steel did a year ago.

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If the auto industry thinks it’s going to have a hard time meeting U.S. fuel economy mandates or European CO2 limits, it ain’t seen nothing yet. Hold onto your hat with both hands folks, the regulatory push has barely begun.

I just had a fascinating discussion with three leading environmentalists in California, all with the goal of getting an idea of where the next round of CO2 regulations is headed. After all, as goes California, so goes the nation-and ultimately the world. And what the California environmental lobby wants is somewhere between 70 and 100 miles per gallon.

Automakers will wring their hands in anguish because the investment needed to hit those kinds of numbers is going to suck up much of their cash for decades to come. But they better figure out how to deal with it because I have no question the regulations are coming.

I spoke with Roland Hwang, Vehicles Policy Director for the Natural Resources Defense Council; Dr. Mark Bernstein, Managing Director of USC’s Energy Institute; and Dr. James Lents, President of the International Sustainable Systems Research Center. That interview will run soon on Autoline.

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Forty years ago the United States had the best traffic safety record of any country. Today, despite enacting the most stringent safety regulations in the world, we’ve dropped to 10th or 16th place depending how you measure. What’s going on?

Every year, like clockwork, there are 42,000 people killed in motor vehicle accidents in the U.S. Several million more are injured, many of them badly. Our reaction to this problem is to write even more regulations. It’s not working.

Today the U.S. has mandatory seat belts, and air bags. We crash test cars from the front and off-set front, from both sides, and the rear. We crash test them at higher speeds than the law requires because safety advocates made sure that’s the defacto law. Automakers must publish how many “stars” their cars get in these crashes to get the public focused on safety. And right now there’s a big push to improve roof-crush safety. None of this will have much effect.

Take the roof crush standard. Safety advocates successfully forced the National Highway Traffic Safety Administration to double the standard. Enormous technical efforts and scientific studies were thrown at this issue, which will end up making vehicles heavier and costlier. Safety advocates argue that roll-overs account for only 3 percent of accidents, but nearly 25 percent of fatalities—about 10,000 a year. Yet, when you dive into the details you find that the vast majority of those killed in roll-overs were ejected from the vehicle because they weren’t wearing a seat belt. NHTSA’s own analysis shows the new roof-crush standard might, maybe, possibly, hopefully save 476 lives a year.
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Automakers in the U.S. market heaved a sigh of relief when Congress finally enacted the new fuel economy law. They fought hard against it, but in the end Congress gave them a lot of wriggle room.

First off, Congress gave them until 2020 to hit the 35 miles per gallon standard. The industry wanted until 2022, but their opponents wanted 2018. To outsiders that may not sound important, but a couple of years can make a massive difference in being able to bring new products to the market profitably.

Congress also changed the law to require fuel economy improvements based on what they call “attributes,” that is, vehicles will have to make improvements based on their size. This was included to protect vehicles that are used for towing and hauling, which naturally burn more fuel.

Automakers will continue to get credits for producing “flex-fuel” vehicles that can run on something other than gasoline or diesel, namely ethanol. They’ll also get investment credits to retool their plants, and research credits to invest in new powertrain technologies.

And that’s why, while they don’t like the new standard, they believe they can meet it. You didn’t hear any champagne corks popping, but more than a few mopped their brows and exhaled.

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Being the best is no ticket to the top.

“Thou shalt have great quality.” It’s practically a commandment in the auto industry. Indeed, it’s become so entrenched as part of our conventional wisdom that it ought to be chiseled in stone tablets for all to worship.

One of the main reasons cited as to why the Detroit automakers are losing share in their home market is because their quality is not as good as the Japanese. However, the data tell us a different story.

Take a look at J.D. Power’s 2007 Vehicle Dependability Survey. This measures the quality and reliability of vehicles after three year’s of service, which provides a pretty good track record. Astonishingly, Buick is #1, tied with Lexus. And this is no flash in the pan. Buick consistently scores well in most quality surveys and has for years.

Cadillac is in third place. Mercury is in fourth. Lincoln is tied with BMW!

Jaguar is rated better than Acura, Mercedes-Benz and Infiniti. And all these brands score better than the industry average.

But you know what Buick, Cadillac, Mercury, Lincoln and Jaguar all have in common? They are losing sales and market share. In fact, there almost seems to be a perverse relationship between their gains in quality and their losses in market share.

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