Cash for clunkers

http://www.cars.gov/
http://www.kbb.com/kbb/cash-for-clunkers/list.aspx
http://www.npr.org/templates/story/story.php?storyId=111456626&ft=1&f=1006

I question the necessity and execution of this program. Yes it appears to be a success when the $1B CARS fund has nearly depleted after a week of enrollment, and the House quickly passed another $2B replenishment. Assuming that the average rebate is $4,000, that means 250,000 new car sales were subsidized by CARS (assuming no overhead and clunker junking costs). But what is the purpose of the program? A) to get surplus new vehicles off dealer lots, B) to make America's auto fleet less polluting, and/or C) to help consumers fight the recession with increased spending and enjoy the quality-of-life benefits of a new car? And shouldn't this program accomplish those goals fairly and efficiently?

Well let's look at goal A. If Uncle Sam wanted to incentivize Americans to buy more cars (and more fuel-efficient cars... tie-in to goal B), why not just give a tax rebate for buying high-MPG vehicles? Hybrids already have a tax credit, and under the Bush admin. they even gave polluting mega-trucks and SUVs up to a $12k tax break if the vehicle was used for a small business (an easily abused condition). Efficient vehicles are already cheaper than gas-guzzlers, and it's easier to get a great deal for a new car these days, but maybe another $1-2k off the sticker price would help consumers do the right thing. Because if the Feds are essentially rewarding consumers for making poor decisions in the past, that is no different than the bank and mortgage bailouts to irresponsible lenders/borrowers.

So for goal B - will this program make America's auto fleet a bit less polluting? Hard to say but doubtful. There are over 140M autos in the US (1 car for ever 2.5 people, so even if CARS facilitates 500k trade-ins, that will raise our overall fleet MPG under 0.1%). To qualify for the program, clunkers must achieve 10 MPG (or 4 MPG for "work trucks") according to Kelly Blue Book. And to get a full rebate, you must buy a new car that is 10 MPG more efficient. So if I trade in a guzzler 9 MPG Suburban, that means I can buy another medium-sized SUV that gets 19 MPG, and Uncle Sam takes $4,500 off my bill. Why? We know that SUVs not only consume more fuel, but their emissions are dirtier and some studies suggest they are more accident-prone (maybe more a function of the SUV-driver demographic than the actual vehicle class, but still). SUVs may hurt Americans more than cigarettes, yet we tax the hell out of the latter and subsidize the former? So this program hardly discourages the purchase of low-MPG vehicles, which is why the Senate may re-think the weak MPG rules attached to the addition $2B in funding that the House passed. One may still buy a new car that is only 3-5 MPG better than the trade-in clunker and receive $3,500 credit, which is 78% of the maximum rebate. So I can trade in my old Suburban for a slightly smaller Suburban, and somehow that makes me worthy of $3,500 from the taxpayers?

It doesn't make sense. If anything, you should receive a smaller rebate proportional to how low your trade-in vehicle MPG is. If one trades in an efficient but old Civic for a new Civic, that is the "model consumer" the government should reward, not the person trading in an old truck for a new one. And in order to achieve the maximum effect, the trade-in vehicle should be the person's primary or secondary car. If many of these clunkers are a family's "forgotten" fifth car that sits in the driveway and maybe gets 1,000 miles a year, then by removing it from circulation we haven't really helped fight the CO2 problem, because even badly polluting vehicles don't pollute much if they're not driven. So again, the government is subsidizing a family's poor consumer decision and giving them a free pass to the junkyard. And speaking of junking these clunkers - it's not cheap to safely dispose of a junked car. Parts must be salvaged, toxic components must be safely disposed of, and the bulk metal must be compressed or shredded. Or they'll just end up in a Third World nation with laxed environmental laws, like much of the West's consumer trash.

And lastly for goal C - how will this program stimulate the economy? If anything, it looks like another cash infusion to auto companies. Why not just cut a check to the Big 3 and call it even? Because the administrative costs of running this program are not trivial either. "Cash for appliances" seems just as appropriate to meet goals A-C, if not moreso since appliances are cheaper so we can reach more people. As far as I know, there are no income eligibility requirements for CARS. So Warren Buffet and I are equal in the program's eyes. I know it's too early, but I would like to see some demographic data for those who used the CARS program. I highly doubt many of them are "needy" in this recession. Was there even an effort to spread awareness of this program to lower-income or non-English speaking communities? I know CARS is not a charity (it seems DC is mainly interested in helping the rich and irresponsible during this recession), but still. Why not cap eligibility at $150k household income? Otherwise we are giving people who were going to buy a new car anyway a pointless subsidy. Or you have the "cheapskate rich" who are financially able to buy a new car any time they want, but are just waititng for an opportunity like this for Uncle Sam to save them money. Other Americans who unfortunately must rely on their clunker to get to work and pick up the kids from school every day may not be able to afford a newer, better, more efficient vehicle, even with an extra $4,500.

So is this program fair, effective, green, and edifying for America? Possibly but I have my doubts.

Better Place: an expanded model of electric transport

http://www.sciam.com/blog/60-second-science/post.cfm?id=electrifying-cars-down-under-2008-10-23

http://www.betterplace.com/

The business model for automobiles and cellular phones don't seem very similar at first, but that will change if entrepreneur and former SAP software engineer Shai Agassi has his way. His CA start-up called "Better Place" is pitching a new electric automobile network, and companies/nations have been so impressed already that he's garnered a billion dollars in venture capital, even in this tight economic climate. He already has contracts with Denmark and Israel, and Australia (the most carbon-spewing nation per capita, even more than the US/China) recently signed on as well.

His innovative approach centers on paying for the miles you drive instead of the actual car, like cell phone plans with minutes included and the phone comes free (or heavily discounted). If all works well and his system reaches a sufficient scale for efficiency, he even makes the audacious claim that customers will get their cars for free. Deutsche Bank analysts have studied this possibility and concluded that it's feasible. Renault-Nissan have developed the prototype vehicle for Better Place's network, and unveiled at an Israeli auto show in January. It uses an advanced litium-ion battery (like personal electronics) and has a range of about 100 miles with peak horsepower of 91. Sure it's not a Corvette, but it's not an Insight either. It's performance is comparable to a 1.6 L vehicle and looks like a typical compact 4-door sedan (see below). 500,000 units are supposed to hit showrooms, starting in 2011 for the first customers Denmark and Israel.

With a projected 2.5 charging stations per EV on the road, customers shouldn't have to worry about running out of power, especially when most urban residents drive less than 40 miles per trip. Using current technologies, 1 mile of normal driving power will take 1 min to charge, so it won't be an all-day ordeal. On-board GPS will locate the most convenient charging locations. Israel estimates that 1/6 of its parking spots could be converted into charging stations to make this work. There will also be automated battery replacement stations that operate similar to car washes (see simulation video below). This way, you can just get a fresh power supply without much delay if you're taking a cross-country trip. Small nations like Denmark and Israel may not need it, but for Aussies driving across the Outback (or potentially Californians commuting from SF to LA), it will help a lot. So in order to be accepted by the consumers, EV charging mustn't be more inconvenient than our current system of refueling at gas stations and taking your car in for regular oil changes/tune-ups (which EVs won't need).

http://www.youtube.com/watch?v=f9bc4vNccL0

So Better Place will make it's money on mileage/power plans for its customer network. I am not sure how much it will cost to drive a mile, but again, it has to be affordable vs. gasoline to gain acceptance. The up-front infrastructure costs will be huge, but hopefully governments will contribute in return for the benefits of less pollution and oil dependence. Especially for nations like Israel and Denmark with abundant renewable power (wind in Europe, sun in the Middle East), nature will literally power human transport. Though this model may not work for rural peoples, who could get gasoline credits or hybrid subsidies instead. Of course this plan is quite radical, and may encounter stiff resistance from more conservative oil and auto interests, who still refuse to stop marketing SUVs. Aircraft, buses, and freight trucks will still need to rely on fossil fuels, but alleviating the passenger vehicle sector will do wonders for our oil consumption. Though another concern is where the electricity will come from. It doesn't do much good to power electric cards from coal or petroleum-fired plants, so the power sector has to evolve in parallel for their plan to be successful. Hence Better Place's partnerships with power companies like Australia's AGL Energy, in order to build wind farms of sufficient scale to power their auto grid.

But the sad reality of all of this is, "If the 700 million cars on the road today were powered by re-chargeable batteries, our carbon footprint would be reduced by 10%," according to BetterPlace.com. A lot of effort for just 10% savings, but maybe weaning us off gasoline automobiles from an energy security standpoint is the larger benefit. Though on a separate page in Better Place's website, they estimate carbon savings of 40%. So not sure which figure is more accurate, but every bit helps.

Fuel efficiency estimates

I thought this was a great article, not sure if anyone's heard about this guy. My company did a TV show about him last year. It takes almost fanatical dedication, but maybe this is the best way to combat gas costs (a gallon of regular gas costs $4.67 here in Emeryville...yikes). I've started driving with my FCD on, it's interesting to see where I am wasting fuel the most.


"But it was driving his wife's Acura MDX that moved Wayne up to the next rung of hypermiler driving. That's because the SUV came with a fuel consumption display (FCD), which shows mpg in real time. As he drove, he began to see how little things—slight movements of his foot, accelerations up hills, even a cold day—influenced his fuel efficiency. He learned to wring as many as 638 miles from a single 19-gallon tank in the MDX; he rarely gets less than 30 mpg when he drives it."



http://www.motherjones.com/news/feature/2007/01/king_of_the_hypermilers.html

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That is amazing driving! I guess the people behind him at a red light must be mad when he accelerates at a snail's pace! But good for him.

It's funny how the EPA fuel economy estimates are calculated. Apparently they are done by the car MANUFACTURERS themselves in their LAB (are their equipment and methods even validated?), and the EPA just reports the results (gotta love half-assed government oversight). They verify only 10-15% of those estimates in their own lab in Ann Arbor. So the automobiles for testing are in tip-top shape, with near-ideal tire pressure, tune up, ambient temperature, etc. Professionals (or maybe even computer controlled?) do the driving routines, so they rarely over-rev. Haha, the second link shows that the max acceleration during city/hwy testing is 3 MPH/sec, so 0-60 would take about 20 sec! I wonder if they even factor in air/road resistance, braking, turning, and such. No wonder why we can hardly ever reach their estimates during "normal, real" driving.

http://www.fueleconomy.gov/feg/how_tested.shtml
http://www.fueleconomy.gov/feg/fe_test_schedules.shtml

The Senate will hear arguments from various viewpoints today on whether speculation is in fact driving up energy futures. As we discussed in previous emails, the CFTC claim that they have seen no evidence that speculation is affecting prices. But an interesting factoid - since Bush took office, budget cuts have forced the CFTC to trim 20% of its workforce (GOP's attitude is the market will work itself out!), while commodities trading has increase 6X over that same time span. So we have fewer already-overworked and underpaid regulators overseeing a much larger trading volume with higher stakes. Also the NY and London energy markets are trying to work out an agreement for better oversight and transparency.

http://biz.yahoo.com/ap/080617/oil_trading_speculation.html?.v=1

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As a (former) proud owner of a 2001 Honda Insight (61/68 EPA MPG) I can tell you that "hyper-miling" does work: I was able to get as much as 75MPG driving to/from San Jose using regular unleaded gas and nothing more than a very light foot. I should mention the fact that there is a large community of Insight owners on the internet (e.g. http://www.insightcentral.net/) who are able to garner as little as 50MPG and as much as 100MPG from the same model automobile; however, most drivers would not find the techniques used while "hyper-miling" to be practical on a day-to-day basis and would be better served by simply using cruise control (not available as a standard feature on the Honda Insight) and keepinig a well-maintained, fuel-efficient vehicle.