U.S. Automakers Embrace Trucks, SUVs Despite Buzz Over Electric Vehicles
Despite the persistent buzz about the Big Three U.S. automakers embracing the electric vehicle revolution, the companies’ performance points to their enduring commitment to gas-guzzling trucks and SUVs, an analysis by InsideClimate News reveals.
“It’s an ominous development for climate change, since gasoline is the largest contributor to carbon emissions in transportation—the nation’s biggest source of planet-warming greenhouse gases,” InsideClimate reports. “It also helps explains why automakers sought Donald Trump’s help in easing the fuel economy and greenhouse gas emissions standards that they had agreed to as part of a 2009 economic bailout,” much as they lived to regret their lobbying when the former reality TV star and failed real estate magnate pushed much farther on the rollback than the companies wanted.
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While ICN opens its report with the disconnect between General Motors CEO Mary Barra’s rhetorical enthusiasm for EVs and the growth of SUVs and other light trucks from 60 to 75% of her company’s vehicle sales, “GM is not alone,” writes reporter Marianne Lavelle. GM, Ford, and Fiat Chrysler have all “shifted toward big, heavy vehicles that drink more fuel per mile,” and now place last for fuel economy among the 13 automakers with U.S. sales.
“Relatively low gas prices have helped drive the trend, as consumers are less concerned about the cost of gas guzzlers when fuel prices are low,” Lavelle explains. “But automakers, who make higher profits on pickup trucks and SUVs, have also stoked those sales with marketing muscle and retooled line-ups. The manufacturers’ all-important quarterly earnings have been bolstered as a result.”
The U.S. Center for Automotive Research estimates that automakers turn a profit of at least US$10,000 on a light truck, but just a few hundred dollars on some models of cars. “Detroit News’ auto critic recently quoted anonymous insiders saying that GM earned $35,000 profit on every Escalade SUV it sold,” Lavelle notes. “In contrast, when GM rolled out its all-electric Bolt in December 2016, a company source told Bloomberg that GM stood to lose as much as $9,000 on every one it sold at a retail price of $36,650.”
“The American manufacturers haven’t figured out how to make money on cars,” said Safe Climate Campaign Executive Director Daniel Becker. “They only make money on pickup trucks and SUVs. So they are seizing on temporarily low gas prices and…politicians like Trump to shift production to the most profitable vehicles they make.”
While “the number one problem with that is climate,” he added, “it also will result in the downfall of the American auto industry in a few years, when gas prices go back up and they will have gotten out of the business of making cars.”
The Energy Mix contributor Will Dubitsky previously reported that the U.S. rollback of fuel economy standards could lay the foundation for the next auto industry bailout. InsideClimate traces the shift in automakers’ product portfolios back to 2014, when gasoline prices fell by more than 40%.
“U.S. passenger vehicle production, which was 65% cars in 2013, dropped to 55% by 2016,” Lavelle writes, citing U.S. Environmental Protection Agency data. “GM’s sales tipped from 60% light trucks to 70% by 2016. That included an increasing number of so-called ‘crossover’ SUVs, like the Chevy Traverse (fuel economy 20 mpg) and Trax (28 mpg), most of which are categorized by EPA as light trucks, meaning they have a less stringent fuel economy standard to meet than vehicles categorized as cars.”