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Senate Mileage Measure Would Boost Detroit Profits
by Stacy Feldman - Nov 2nd, 2007
Here’s a good nugget on the economics of auto efficiency: The tougher fuel economy standard in the US Senate’s energy bill would actually boost G.M.’s bottom line by as much as $0.25 per share in earnings.
It’s a key finding in a new analysis by Citi and and the Ceres Investor Network on Climate Risk, called CAFE and the U.S. Auto Industry: A Growing Auto Investor Issue, 2012-2020.
They looked at the Senate’s 35 mpg standard for cars and trucks and found that it’s not only realizable but could be profitable for shareholders. Blows a hole in the argument of the Big Three plus Toyota (and Rep. John Dingell from Michigan) who argue that the Senate standard is impossible to achieve at reasonable costs.
You would think G.M. would welcome the news. Thomas Friedman explains:
“G.M. today has 73,000 working U.A.W. members, compared with 225,000 a decade ago. Last year, Toyota overtook G.M. as the world’s biggest automaker.”
Still, don’t expect G.M. to jump for joy. But perhaps we can expect, or at least hope, that this analysis will add its considerable influence in the debate on tougher CAFE standards. Maybe even help to derail automakers' stubborn efforts to water them down.
Tailpipes are greenhouse gas spouts. They’re responsible for about one-third of US emissions. And yet, when it comes to the most obvious and easiest fix -- improving CAFE standards -- the U.S. is dead last among industrialized nations, behind China, Canada, South Korea, Australia, Japan and the European Union.
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