Episode 147 – New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough

May 19th, 2009 at 12:00pm

Runtime 6:58

The Obama Administration is increasing national fuel economy standards for vehicles sold in the U.S. market. Democrats in the U.S. House of Representatives propose to double the federal loans for automakers to retool plants. A possible battery breakthrough with lead-acid batteries. All that and more, plus we sit down and chat with Ed Peper, General Manager of Chevrolet.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. California’s CO2 regulations become the national standard. Congress may double the retooling money for new technology. And a possible battery breakthrough with lead-acid batteries.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Tuesday, May 19, 2009. And now, the news.

The Obama Administration is increasing national fuel economy standards for vehicles sold in the U.S. market, essentially by adopting California’s CO2 legislation. Automakers will now have to average 35.5 miles per gallon by 2016. That’s 6.7 l/100 km. That’s what their lineups have to average. Cars will have to achieve about 43 mpgs or 5.4 liters per 100 kilometers. Trucks will have to hit 26 mpgs, or about 9 liters. The only good news for the industry is that it will not face two separate standards.

In a sign of how much has changed in the auto industry, General Motors and Chrysler issued separate statements praising the new standards. GM CEO Fritz Henderson “commended” the president, Chrysler “welcomed” the new regulations. This, of course, is 180 degrees the opposite of which each company said before they had to go running to the Obama Administration for more bail out money. Indeed, GM had led the legal fight against it.

Democrats in the U.S. House of Representatives propose to double the federal loans for automakers to retool plants and develop fuel efficient vehicles to $50 billion. According to the Detroit Free Press, the Department of Energy is expected to handout loans soon, but only Ford qualifies among the domestic automakers because GM and Chrysler are not yet financially viable. As we reported last week, part of the bill also includes a clause that gives automakers a percentage of the government’s revenue from carbon emissions permits starting in 2012 that initially could be worth up to $15 billion a year.

Chrysler will use taxpayer loans to increase buyout deals for UAW workers. According to the Detroit Free Press, workers under 50 years of age and that have at least 10 years seniority will be offered up to $115,000 plus a $25,000 vehicle voucher to leave Chrysler voluntarily. Meanwhile white collar workers, creditors, and dealers are wondering why the UAW keeps getting so much taxpayer help while they do not.

Who says you can’t teach an old dog new tricks? Ward’s reports that an Illinois-based company called Firefly Energy is developing an advanced, lead-acid battery (subscription required). The technology uses a 3D, lead-impregnated foam instead of conventional flat plates. This offers a greater surface area which eliminates corrosion. The company says future generations of the technology could rival nickel-metal hydride and lithium-ion batteries. Firefly Energy is shooting for a commercial release this quarter.

As the saying goes, all good things must come to an end. Autoblog reports that Volkswagen will stop producing the Quantum, called the Santana, in China by 2012. It first went on sale in the MIDDLE KINGDOM in 1983. When the company finally pulls the plug it will have been in continuous production for 29 years. The car has received numerous improvements over its long run but it’s still basically the same as it was when it first came out in the early ‘80s.

Coming up next, we sit down and chat with Ed Peper, General Manager of Chevrolet.

Chevrolet is GM’s biggest division, which is a huge advantage in today’s market. It practically guarantees that it won’t get dropped like Saturn or Saab.

Of course the company is also shedding Pontiac, and a lot of people have been wondering if Chevy will pick-up some of its products. Rumor has it the Vibe will get rebranded, but the future of other models is unknown. The rear-wheel-drive G8 would look great with a bow tie, but there may not be room for it in Chevy’s current lineup.

Thanks to award-winning vehicles like the Malibu and the hot new Camaro, Chevy doesn’t need to rebadge anything. What it does need to do is to get these cars, along with the other new product it has coming, ready for the fight. With a nine or ten million unit market, the battle for sales will get even more intense than before.

Today’s market is practically a warzone. Automakers are literally battling for sales, and whoever has the freshest lineup gets a leg-up on the opposition.

On the product front, Chevy has a redesigned Equinox on the way, the 2011 Cruze small car is brand-new and of course the Volt is coming. Offerings like these should only strengthen its position in the marketplace.

And that’s it for today’s top news in the global automotive industry. But don’t forget, to tune in to Autoline After Hours, Thursday night live at 7PM eastern time. Thanks for watching, we’ll see you tomorrow.

36 Comments to “Episode 147 – New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough”

  1. Wayne Says:

    Hey John,

    In your latest plug for GM you forget to mention the new GMC Terrain. This is another new very fresh, stylish and high quality offering from GM.

  2. Tom Martin Says:

    Even if Chevy picked up a rebadged G8 sporty coupe or sedan, it would be short lived due to the looming 2016 CO2 and mpg requirements. Probably the right decision to stay clear.

  3. George Says:


    The government is saying the new fuel/emissions standards will add $1300, but if I remember correctly that you and some other automotive analysts were saying $4000 to $8000. People’s wages would not keep pace so consumers would end buying smaller cars with fewer options (less vehicle than before).

    So who is right? I think you guys are. To get that kind of fuel mileage would require hybrid power train and a substantial weight reduction. All the current hybrids cost $3000+ more than non hybrid versions and to get the substantial weight reduction will require expensive materials.

    I do not disagree with the need for higher mileage and better emissions, I just wish the government would tell us the truth (what it really means to the consumer) instead of sugar coating these announcements.

  4. Pedro Fernandez Says:

    Mr Peper, GM has made a habit of rebadging cars for decades, now you sit there all smug saying that strategy doesn’t work? Also Toyota is not your worse enemy, your company’s bad decision making and screw ups are your own worst enemy, and selling crappy cars to your customers for years is what got your company where it is now, having to kiss the Obama administration’s behind.

  5. Tony Gray Says:

    Agree with you John, a two door G8, rebadged as a Chevelle SS would be a wonderful addition, and I don’t think would kill Camaro sales, but I suppose that is what Chevy is worried about.

    I’d dump the aging Impala and bring over the G8, but then, I’m not a GM exec!

  6. Alex Kovnat Says:

    43 Miles per gallon for cars? This is not a victory for our country. It is not a victory in any sense except for the purely emotional, purely ego needs of automobile-hating intellectuals.

    Even if it weren’t for the additional burden automakers are facing from increased roof crush standards, we are in desperate, and I mean desperate, need to bring out into the open the possible consequences of this bashing of the auto industry.

    Will the cars available in the future be such overburdened, weak and weedy things (owing to the double-whammy of increasingly stringent safety combined with draconian fuel economy requirements) that we will be limited to travel at no more than 45 miles per hour?

    The doomsayers will no doubt tell us that in the absence of all these regulations, traffic accidents will kill us all and the world will come to an end from global warming. In my opinion, that still doesn’t justify the lack of open discussion regarding the price we may pay in terms of reduced performance.

    Recently I found in the Detroit Public Library a great book I recommend everybody to find and read: Horner, Christopher C., Red Hot Lies: How Global Warming Alarmists use Threats, Fraud, and Deception to Keep You Misinformed. It is indeed frightening that we are sacrificing the best interests of society on the altar of the emotional and ego needs of those who, as I see it, ought to work out their personal neuroses on a psychiatrist’s couch – not in the national realm.

  7. Scott Says:

    After driving GM cars since 1978 I have probably bought my last one – a Pontiac G8 GT. I just drove it 5000 miles over the last two weeks – what a nice, comfortable & fun-to-drive car. Certainly the nicest one I have owned. What kind of idiots are running GM? They deserve all of the Pelosi/Obama/Reed medling they are getting. GM isn’t being killed – it’s committed suicide.

  8. DukeT Says:

    In response to Alex Kovnat’s recommendation to read Horner’s book, keep in mind that Christopher C. Horner is a senior fellow (and a Wash DC attorney – not a scientist – let alone a climatologist) at the Competitive Enterprise Institute (CEI), a right wing think tank that’s received more than $2 million in funding from ExxonMobil, among other corporate funders.

    Maybe you are obsessed with finding sources that quantify the position that you (and most conservatives, esp think tanks) have already taken – but please do not try to assert that there is ANY science behind that position. Science does not take a position first and then search for sources to justify that position.

    You can choose to brainwash yourself, but that sir, is the frightening reality of the discussion as to whether or not we are going to suffer from accelerating climate change.

    To accept money from the world’s largest oil producer – sorta takes integrity out of the equation in anything that they have to say.

  9. Jude Says:

    The G8 shouldn’t be a Chevy, and it shouldn’t replace the Impala. It’s too close in size to the Malibu (halfway between it and the Impala in size, and the Impala’s sales are being cannibalized a bit by the Malibu). It doesn’t have the sales potential to replace the Impala’s 200k annual units, either.

    The G8 would work better as a Buick (especially in wagon form), but not as much as the LWB Holden Caprice version would as a Lucerne replacement. And GMC could probably use the Ute, too.

  10. G.A.Branigan Says:

    Well,it looks like my wish for small diesels will be coming true.Why do I say that?The mpg numbers that the govt is mandateing could be easily achieved using clean burning diesels.They exsist,pay 50 state emmisions too.Also factory made propane and cng powered vehicles.Electrics are fine for city driving but to those of use who live well off the beaten path,they won’t due.Also the need for small diesels in work trucks are needed more then anything else,and needed now.

  11. Alex Kajdi Says:

    Dear Mr. Ed Peper:

    I am writing to say that GM/Chevy do not have a Minivan. The soon to be enacted 2016 CO2 emissions standards means that vehicles like the Traverse need to pump out more mpg. I would like to recommend that you start planning to add a minivan to the GM / Chevy portfolio. The Traverse is a great looking vehicle. If you take the nose of the Traverse until just behind the driver and passenger front doors and marry it to a Minivan Body with dual sliding doors and a tailgate you would have a wonderful minivan. I would call it the “Transport” after then GM / Pontiac’s minivan. This would make the Traverse and Transport very desirable twins. They would share major components and sheet metal making them very cost effective to build in the same assembly plant.

    I see Chevy / Buick / GMC as the “New General Motors” once the government bailout is over. Cadillac would remain the premium brand for GM. The concept of closing dealerships is very distasteful to me. An American Institution like General Motors should never announce that it is going to import cars from China, No – No – No! This will push Americans further away from ever considering to buy a General Motors product again. The “Transplants”, like Toyota, Honda & Nissan have always been very low key about where there parts come from. Their vehicles are mostly assembled in the USA and that is all that matters. GM / Chevy needs to promote quality, reliability and durability at an affordable price. That is a winning combination.

    The GM Dealership structure needs to change. There needs to be showrooms, which act as distribution and marketing centers with other dealerships being transformed into 24 Hr Service Centers running with 24/7 365 availability to customers. The American Worker needs a Service Center available on his or her schedule and not just during normal business hours. Even extended hours does not cut it. A New GM Service Center would do late night oil changes and warranty work on all GM vehicles, regardless of brand, during the night so that a customer could drop a vehicle after work, be driven home and then be able to pickup their vehicle, once the service has been completed, in the morning before going to work. This is a winning model for the remaining GM dealerships. You would have two to three shifts of mechanics employed at a single Service Center. Mr. Goodwench Service Centers (24/7)& 365 says it all.

    In Closing, Please consider promoting Electric Vehicle Racing Competitions. The Volt is a huge step in the right direction and I can not wait to get behind the wheel of one, but auto racing is the place where innovation truly happens. Mr. Peper please forward my comments to Mr. Henderson for his consideration.

    Best Wishes,

    Alex Kajdi

  12. JIm Thykeson Says:

    You know its just insane to try and ‘milk’ more out of that old, tired, fuel; gasoline. They could forgo all the pain and hardship if the dumb-asses would just convert to what all municipalities and NASA use; natural-gas! Power plants, big city bus fleets, use natural-gas because its plentiful and clean. If they can’t CLEAN the skies, they won’t have to worry about MPG. Not using this fuel during the interim of time before the fuel-cells and electrics can be proven is just nuts!

  13. Thor Says:

    “May 19th, 2009 at 12:57 pm
    43 Miles per gallon for cars? “?

    NO, As usual, that whiny-voiced PARROT McELroy babbled the news we knew for several hours, if not a whole day, already,

    and did not bother to accurately define or explain ANY of it.

    It is NOT 43 MPG,

    because EPA has changed its own rules to far stricter ones back in the 2008 model year, so 43 is equivalent to maybe 39.

    And John does not tell us if this is HIGHWAY or COMBINED. I bet it is just highway, which is already achievable even with no hybrids or even diesels.

    AND for trucks, the limit is a LAUGHABLY EASY to achieve 26 highway under the OLD EPA MPG calc, or maybe 23-24 highway under the CURRENT EPA MPG rules.

    Is McElroy Senile? He sure is, if he does not have a CLUE about all of the above, and he is grossly negligent if he knows but does not bother to tell us.

    And didn’t you love McElroy’s complete 180 with the GM guy?

    First McElroy correctly wanted to save the excellent Pontiac G8 by rebadging it as a CHEVY (It is not a Pontiac EITHER, fools, it is an AUSTRALIAN HOLDEN!!!)

    Then that idiot from GM, who was rebadging all his life, objects to John’s correct suggestion by preaching to the choir about how bad rebadging is (even tho the g8 is ALREADY a rebadged Holden!!!)

    AND THEN, amazingly, john does an 180 and babbles that OK, Chevy does not need the G8.

    Why? because of the stupid, geriatric Impala? That may be OK for Cheap RENTALS, but it has NO RELATION to the G8. Especially the CORVETTE-ish G8 with Corvette’s own engine, the glorious 6.2 V8 with its 400+ HP!

    Impala? Gimme a break!

  14. G.A.Branigan Says:

    The problem right now is lack of infrastructure for any other fuel type besides gas and diesel.Sad,but true.Yes it could be corrected,but will it? Also,the rural areas would need to be covered too,very spendy I would imagine.Propane is available in most rural settings though,and factory conversions would be a nice option,maybe with a tax credit or something to go along with it? Food for thought maybe….

  15. Alex Kovnat Says:

    @Duke T:

    EVERYBODY who likes to drive a car that doesn’t accelerate no faster than a sick and dying turtle when you step on the gas, and EVERYBODY who likes to travel at 60 miles per hour (if not 70!), has a vested interest in theories that the world is NOT coming to an end from global warming.

    At least I know which side my bread is buttered on.

  16. Pedro Fernandez Says:

    To those of you out there who feel that having a 500 hp motor to get you to 70 in 5 secs is your god-given right, you help create the conditions that force the price of oil to go up, resulting in an equally higher price at the pump for all, even us wimps who don’t want to keep sending more of our hard earned $ to OPEC and to the oil conglomerates. Now if they could figure out a way of giving fuel efficient drivers a lower gas price and you speed racers whatever the market bears, then that’s fine by me.

  17. Alex Kovnat Says:

    @Pete and all of us here:

    For what its worth: My car is a 2005 Toyota Corolla. I don’t mind having to slow down from 70+ miles per hour to a nice even mile per minute, but not down to only 45 miles per hour. That’s what I’m worried about, if we keep hammering the auto industry harder and harder.

  18. MR GMC Says:

    Again, another absurd decision. Mr Peper, your argument implies the current Impala is a better fit in the GM lineup than a Bowtie version of the current G8? By my estimation, the Malibu would easily make up nearly all potential lost current impala sales and a G8 based Chevrolet Impala would absolutely dominate the law enforcement market in addition to being a phenomenal full sized platform currently absent from the lineup.
    Nearly every consumer I’ve spoken to and some very influential consumer magazine folks all unanimously agree the G8 is simply the best car GM has build in decades!
    The decision to not re badge a car because it hasn’t worked particularly well in the past is the same kind of short sided logic that causes consumers to not buy a GM product because the one they drove 30 years ago was lousy.
    Mr Peper shares more than hair styles with Curly Howard, they’re both victims of their own circumstance.

  19. Pedro Fernandez Says:

    Alex; I have owned 4 cyl. cars since 1975 when my Beetle carried me though the oil embargo and all we could get was $5.00 at a time.Well that $5.00 filled my tank while those folks with their big cars had to get back in line and make another $5 purchase over and over again. I also have a Corolla, and when gas was at its peak it would set me back over $43. to fill up, and then car sales bottomed. I guess some people just don’t have good memory.

  20. » Episode 147 - New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough Says:

    [...] Read more:  Episode 147 – New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough [...]

  21. jesse m. Says:

    Well,we have politicians who think they know the car business.We have had Execs in the car business making the stupid decisions for the last 20 + years.Now,the both of them together think they can fix GM/CHRYSLER and the industry as a whole??It’s a good thing my chair is well built because I would have fell over laughing if it wasn’t!GM thinks people will spend 40 grand on a VOLT when we the people can get similar benefits at a far lower price from a proven entity,TOYOTA + HONDA.The not so big 2 and the Government are in for a big surprise when the people reject the boring cars that are about to get built.Could they be anymore out of touch with the car buying public? Unless of course one lives in the REPUBLIC OF CALIFORNIA where I’m sure no one sees a problem with all this Government meddling!GM,you made your bed,now file BANKRUPTCY,GROW SOME STONES,and start building reliable cars that somebody out here may actually want to buy without you giving away the farm in rebates!

  22. julius lambert Says:

    I have an engine design that would solve most of our problems.The PROBLEM I have I’m retired and don’t have the FUNDS to PATENT it.It’s radical but SWEET.Congress needs to modify the rules where the IDEAS can garner a patent and the industry develop it to fruitation.This would open up a lot of innovation in todays STAGFLATION.

  23. paulstewart Says:

    Thor give McElroy break. Why do you constantly berate him ? Stop tuning it in. Their are other auto programs on you tube .You are no God, ditch the name “Thor” and type in your own real name if you can. I do why can’t you ?

  24. Pedro Fernandez Says:

    I second that motion

  25. G.A.Branigan Says:

    Yeah,I agree.John has given us an excellent show while allowing us to participate.I don’t always agree with him,but I do respect him.He can’t be all things to all people.Enjoy what we have.

  26. C-Tech Says:

    Hey Alex, about your 24/7 365 GM service centers, As a ASE Certified Auto Tech, you’ll HAVE to pay me a LOT more than what comes down the road as “Flat Rate” to give you the conveinience of dropping off your car to be serviced overnight. Are you ready to pay $75 for an oil change at midnight? For what its worth, take the G8 (A stupid name if there ever was one) and make it the Impala SS. You’ll sell 30,000 of them. Move the Vibe to Buick. Give a new front end and upgrade the interior and it is the entry level Buick and attracts buyers under 35 to Buick. Thor GET YOUR OWN SHOW OR SHUT THE @#%K Up about John!

  27. Steve Says:

    GM’s number one enemy is Toyota? What a joke! They have been in bed with them for years. They are build cars together which Toyota always seems to out sell GM ever time, and have better quality rates.

    Nice looking Camaro from the “outside”. The interior is a whole different story. Who ever thought that a 40 year old looking interior looks good in todays market is crazy. Must be the same guys that worked on the Aztec. I wouldn’t be surprise if there is an 8 track option available. I think the car would be a much better seller if they just put the Malibu interior in it then that hunk of crap.

    It would nice to see Buick get the G8 in it’s line up. The Chinese can whip up a fresh new interior and grill and add a little excitement to a boring brand which could benefit from such a product.

  28. Stuart Somers Says:

    We are seeing our freedom slip away. Now we will be forced to drive tiny government designed cars. Really sad. It’s the end of our Capitalist system that made the United States the largest, most prosperous place in the worlds’ history.

  29. Mike Says:

    I don’t know what bug is up your rear end but it has moved to your brain and is nibbling it away. If you hate JMc so much, why do you visit this site.
    Also, I own a new Focus and an older model F150 (140K miles so far). Both are fantastic vehicles and compete head to head with the best in their class for fuel economy and performance but neither will touch the mileage numbers of 43 / 26 – forget about guessing what that equates to on your fictional scale!!!!!
    Finally, a note to all, I saw one of those ridiculous smartfortwo’s getting on the expressway today. Thought it was some fool in a go-cart. If this is where we’re heading … we’re screwed!

  30. Thor, Like it or NOT! Says:

    paulstewart Says:(but WHO CARES?)

    1. I am NOT censoring the drivel YOU post, and I expect that YOU do NOT Censor what I post. And this goes also to whoever SECONDED Paul’s motion.

    2. THor, DUMBASS, is NOT just a name from Norse Mythology, but a REAL, VERY POPULAR, name among people of Scandinavian Origins. BESIDES, I was BORN ON A THORS-DAY, so I have even MORE reasons to use it!

  31. paulstewart Says:

    Well “thor” some people do care as you can see ! I didn’t censor you. You seem to watch the site for info. Sad to see you ashamed of your real name !!! Sorry I’d didn’t mean to make you angry. I will stop hurting your feelings OR I will feel the smight of your mighty hammer ! Keep enjoying John’s voice.

  32. Thor Says:

    My feelings were never hurt. This is still a FREE country, but some here do not like that freedom of Expression, it seems. These comments are MODERATED anyway, and I just saw that my last one was allowed.

    If John and his staff are OK with my criticisms, I REALLY would care less if the various Focus-driving (give me a break, couldn’t you find a WORSE vehicle?) secretaries here object to my criticisms.

    BTW, John sounds much better on the Sunday show, when he responds naturally and does not parrot what his teleprompter says. Others, like that Motorweek guy Davis, nave this tendency to speak very differently when they read a prepared text than when they think and talk at the same time.. LOL.

    I will keep listening to these daily updates, although every day I have read all the news a few hours before John repeats them.

  33. paulstewart Says:

    I don’t recall ever saying it wasn’t a free country, however I’m only human. Not god-like.I’m so glad I didn’t hurt your feelings…Good luck with that man crush you have like that commentor said last week about you.Good luck in Asgard.

  34. Alex Kajdi Says:

    Hi C-Tech:

    Would you rather be an employed ASE Certified Auto Tech earning a standard hourly rate plus a ten percent differental for the second or third shift at a GM Service Center or be an unemployed one. I have a better idea, with your expeience maybe you would be the Service Manager or Trainer at one of these 24/7 Mr. Goodwench Service Centers second and third shifts, and train our returning men and women from Iraq for a lifetime career in the automotive industry!

    Your comment leads me and others to believe that not all Americans are thinking about their follow citizens. This is the same thinking as those Top GM Executives and Wall Street Bankers who got us into this mess! The “What’s in it for Me” attitude has to stop. To answer your question, “Yes” I would pay extra for a oil change at that fits my schedule!

    I believe that if there were well paying jobs available at these service centers you would have hundreds of applicants applying! The unemployment rate is this rising and at ten percent this changes from a “Resession” to a “Depression”! What ideas do you have to improve the current economic condition for GM Workers and the nation?

  35. Episode 147 - New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough Says:

    [...] Original post by John’s Journal [...]

  36. Episode 147 - New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough | Real Rumors Says:

    [...] Episode 147 – New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough 19.05.2009 | Posted in Industry Runtime 6:58 The Obama Administration is increasing national fuel economy standards for vehicles sold in the U.S. market. Democrats in the U.S. House of Representatives propose to double the federal loans for automakers to retool plants. A possible battery breakthrough with lead-acid batteries. All that and more, plus we sit down and chat with Ed Peper, General Manager of Chevrolet. Transcript and Story Links after the jump . . . Here are today’s top headlines. California’s CO2 regulat More: Episode 147 – New Fuel Economy Rules, Proposal Doubles Retooling Loans, Battery Breakthrough [...]