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Automakers & PHEVs: Between “Barack” And A Hard Place
By: Investment U   Friday, March 20, 2009 12:03 PM

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Automakers & PHEVs: Between “Barack” and a Hard Place

by David Fessler, Advisory Panelist

During the last few years of the Bush administration, the EPA was directed to ignore California’s pleas to grant it a waiver of the Clean Air Act.

Why? The grant would effectively have permitted California to enforce stricter emission rules its legislature had enacted a number of years before.

The EPA dragged its feet because as many as 16 other states were considering legislation modeled after California’s - with one notable difference: emission rules even more stringent than California’s.

The automakers lobbied Bush administration officials to oppose California’s request. And it’s not hard to understand why: They’re struggling just to stay in business.

But now, automakers are between Barack and a hard place, as the President told the EPA to “reconsider” its Bush-era denial. If it does, car manufacturers could find themselves having to make cars that get 43 mpg by 2016. It’s why PHEVs have generated so much interest lately.

Not that that’s a bad thing - but it’s far more aggressive than the current goal of 35 mpg by 2020. The problem is that the new requirement would nearly double today’s fleet-wide average of 25 mpg.

Automakers Scramble To Get Into Plug-In Electric Vehicles

All this has had the automaker’s scrambling to get into the Plug-In Electric Vehicle (PHEV) business. Most already have an active PHEV development program underway, with GM being the closest to production with its Chevy Volt.

Unfortunately, GM is also teetering on the edge of bankruptcy.

Necessity is the mother of invention, and we’re seeing that in spades with PHEV development. One of the more intriguing schemes is the “Vehicle-to-Grid” (V2G) concept, and it’s been strongly endorsed by the head of the Federal Energy Regulatory Commission (FERC).


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The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.
  
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