Air Date: Week of September 15, 2000

Host Steve Curwood talks with Andrew Card, General Motors’ Vice President for Government Relations, about how automakers will meet California's mandate that by 2003, ten percent of cars for sale in the state must emit zero or very little air pollution.

Transcript

CURWOOD: California Air Resources Board is sticking by its guns, and has told automakers for the final time that by 2003, ten percent of all new vehicles they sell in the state must meet the toughest emissions standards in the world. The decision will drastically increase the number of electric cars on California's roads, as four percent of the cars sold must be ZEVs--zero-emission vehicles. Automakers can earn credits toward the rest of the goal by offering so-called low-emission vehicles, including hybrids. I asked Andrew Card, Vice President of Government Relations for General Motors, and former Secretary of Transportation in the Bush Administration, what the auto industry makes of the California mandate.

CARD: We don't think that it is the best solution for the environment, because it won't provide the clean air benefits at the most affordable cost. And we also would point out that it would burden consumers, where they would have to pay an awful lot more for vehicles that are not living up to their expectations. So, we don't think that the direction that they're headed in is the best direction.

CURWOOD: It does appear that it's going to be the law, though. How will you meet the challenges that it proposes?

CARD: Well, obviously we comply with the rules and regulations. But I would point out that it's going to be very, very difficult to have an expectation that General Motors, for example, would be able to sell 22,000 electric vehicles in California, knowing that they have a cost penalty of over $20,000 per vehicle. And that's not including the research and development costs.

CURWOOD: You're saying that what the Air Resources Board is saying that it's going to do is simply impossible financially from General Motors' perspective?

CARD: It's not just financially. It's that the technological advancements have not come in the battery as even the most optimistic environmentalists had hoped for 20 years ago. Even General Motors had bet an awful lot of money on the success of the electric vehicle. It was the first manufacturer to build an electric vehicle from the ground up. So far, despite Herculean efforts to market the best electric vehicle in the world, GM has only been able to sell less than 1,000. And that's over five years. So I think it's going to be very difficult for us to find market demand that would pull people toward an electric vehicle. Even the California Air Resource Board recognizes that the infrastructure is not there in California to support a large market of electric vehicles. And we also know that you don't have the range that a lot of people demand in their product today.

CURWOOD: Let's look at the hybrid part of the equation. Perhaps a majority of these vehicles actually would meet the requirement if they were hybrid vehicles. That is, gasoline and electric.

CARD: But they don't qualify as a ZEV under the rules that are proposed. That still leaves 40 percent (laughs) that have to be electric vehicles.

CURWOOD: What kind of competitive situation is your company in? The hybrids on the market right now are made in Japan. Honda has one for sale. It's called the Insight. Toyota's got one for sale. It's called the Prius. Are there concerns that General Motors and Ford may well lose market share to these companies that already have a foothold in this alternative vehicle marketplace?

CARD: Well, I wouldn't call it much of a foothold. GM, they've been leading the technology into the marketplace for so many years, they'll be able to compete very well when there is a significant market for hybrids.

CURWOOD: Some of the environmental advocates here say that the auto industry has a history of saying that costs are the problem. When it came to air bags, they will cost too much. When it came to seat belts, it will cost too much. When it came to --

CARD: Well, you know that's wrong. That argues that they aren't credible in making their statements about the costs of these new technologies, because today the air bag is relatively expensive, but it's in every vehicle. And the cost has been passed on to the consumers. But it is a costly item.

CURWOOD: When the California Air Resources Board rule becomes official in California, other states are going to have the option to follow suit rather than sticking with the less stringent federal clean air guidelines. How does this expanded market affect carmakers' efforts to meet this challenge?

CARD: Well, it kind of doubles the challenge, because if you're going to meet the mandate in California and you have to meet it in the collective states of New York, Massachusetts, and Vermont, you're talking about a significant market in the neighborhood of 175,000 vehicles. That's an awful lot of zero-emission vehicles to be able to sell when the consumers don't want them.

CURWOOD: Explain to me why it is that General Motors feels that consumers don't want cars that get better mileage, that are as comfortable and as quick and convenient as the cars we're used to driving.

CARD: They're available, those cars are available in the market right now. They sell less than one tenth of one percent of the cars in the market are those kinds of vehicles. So, it's not as if the demand is driving the market there. And the demand in the market today is for more utility in the vehicles. For more safety and for more comfort. GM sells the most fuel-efficient mass-produced car in the marketplace, the Chevy Metro. We market it, we try to sell it hard, but it still has a very, very small percentage of market share. And it's the most fuel-efficient vehicle in the U.S. market.

CURWOOD: How do we create incentives for consumers? In other words, how do we create demand for vehicles which will improve public health?

CARD: Well, it's very difficult for government to artificially create demand. I can remember when government artificially created the demand for seat belt ignition turn-off switches. And the consumers immediately rejected them, and Congress very quickly changed that law. So, sometimes governments don't have the best answers to these problems, and they should put the challenge out and allow industry to meet it with the consumer, and have the consumer kind of drive it. But I think clearly the government has a role through tax incentives or through outright grants.

CURWOOD: Andrew Card is Vice President for Government Relations for General Motors and former United States Secretary of Transportation. Thank you for taking this time with me today.

CARD: My pleasure. Thank you.