Obama Gives Detroit Its Best Day In Decades

This is a story of supply and demand. On the demand side of the equation, President Obama has put in place landmark new vehicle mileage standard for cars and light trucks. By 2016, cars must achieve 39 miles per gallon in city + highway driving. Light trucks must average 30 mpg. How aggressive is this standard? Less than a handful of cars and no trucks can meet it today. Yet everyone from Detroit to retired military brass and Republican leadership support it.

Why? Read on to see why President Obama has given Detroit’s its best chance in decades.

Detroit, Europe and Asian car companies can and will meet these standards. For the past decades, America’s low fuel taxes (and therefore low fuel prices) meant Americans did not buy the same kinds of cars the rest of the world bought. Detroit got out of sync. with the world market and could not afford to invest in the efficient technologies that the rest of the world demanded.

This new regulation (and its greenhouse gas caps) means that Americans will now buy cars with worldwide sales potential - returning the U.S. to leading the world’s automotive trends. This opportunity gives Detroit the chance to become the Silicon Valley of automobiles by selling to the world’s most demanding and sophisticated market. American companies are at their best when striving for excellence.

The competition is tough to be sure. Yesterday,
Toyota introduced its $22,000 third generation Prius which gets 50 mpg. A month ago, Honda introduced its $20,000 40mpg Insight. Lexus will launch its hs250 luxury hybrid expected to get over 40mpg and Audi will serve up new 45mpg diesels this fall.

But the U.S. is looking to leapfrog Japan’s technology and this R&D investment will be redoubled by Detroit’s assurance that Americans will now buy these cars. Today, Daimler (Mercedes Benz) invested in a partnership with Tesla, the Silicon Valley electric car leader with its demon-fast 150mpg Roadster & forthcoming model S. (We just put a deposit on a Model S.) Chevy’s electric hybrid Volt is still on track for 2010. And Fiat will bring its mileage leading diesel and the new MultiAir super-efficient gasoline engines to Chrysler. In a few years, there will be no excuse not to Buy American.

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