Resources for a sustainable future

18/3/2010 BBC Carmakers are gathering at their annual jamboree in Geneva this week, collectively gasping for air.A year ago the industry was in crisis.
Car sales had slumped, hit by the global recession and credit crunch that
resulted in banks refusing to lend money, whether to people who were keen to buy
cars, or to suppliers and manufacturers fighting for their survival.
But at least the carmakers were still energetic, vigorously calling for
governments to step in and help revive car sales.
Their calls for action were heard, and many, if not most, governments introduced
some form of scrappage scheme that subsidised cars sold to those who crushed
their old ones.
By now, most of the scrappage schemes have come to an end, or they will do soon.

So the industry has been left not only exhausted after perhaps the toughest
couple of years in its history, but also desperate for another fix of public
money.
And they know exactly where to look for it.
Electric motoring
At this year’s motor show there will hardly be a single exhibit that does not
display petrol-electric hybrids or all-electric cars.
The models on display were conceived and developed during less lean times, when
carmakers were forced by regulators to invest heavily in technology that would
help them cut vehicle emissions.
There are hybrid versions of the Ferrari 599 Fiorano, Porsche’s new Cayenne
sports utility vehicle (SUV) and the Audi A8, as well as of more ordinary cars
such as the Peugeot 508 saloon, the Suzuki Swift and the tiny Lexus LF-Ch
concepts.
All-electric models on display include Nissan’s Leaf, the Kia Venga, and the BMW
Active-E – as well as the Aston Martin Cygne, a beauty-treated Toyota iQ with
hand-stitched leather seats.
Even China’s Build Your Dream, or BYD for short, is here with its hybrid and
electric models, both aimed for European markets.
Government incentives
Developing these cars have been costly affairs for the carmakers, and in these
lean times, when every cent and penny counts, they are eager to recoup their
investments.
But with no signs of a strong economic recovery, indeed amidst widespread fears
that we will have a so-called double-dip recession, they know full well that
their customers are not about to pay a premium to go green.
So they are turning to their governments, hoping for another shower of
subsidies, whether in the form of incentives for people who buy these greener
cars, or as assistance or tax incentives that support their research and
development programmes.
Governments have been quick to respond.
Last week, for instance, the UK government said it would cough up up to £5,000
($7,600) to help consumers buy electric cars – a level of assistance that may
well cover about a quarter of the cost of, say, a Nissan Leaf.
In South Korea, the government is getting ready to lift a ban on all-electric
vehicles – which until now it has justified on safety grounds – and replace it
with both research and development assistance, as well as tax incentives and
other measures to stimulate demand for such cars.
The move seems set to coincide with the country’s manufacturers getting ready to
start making electric vehicles.
Electric car pioneers Tesla and Fisker are at the Geneva show too, and consider
this – in January Tesla secured a $465m (£305m) low interest loan from the US
Department of Energy to build its new factory in California, with Fisker getting
$528m to help with the construction of its production plant.
Scale this up and look to Detroit in the US, where the traditional automotive
industry has been decimated, and you will see the figures multiply.
In Motor City, hopes are high that the billions of dollars President Barack
Obama’s administration has set aside to pay for the development of
petrol-electric hybrids or electric cars and batteries will help the
recession-hit economy bounce back.
Jobs and emission cuts
So as the scrappage schemes are phased out, it seems clear that green subsidy
schemes are morphing into the motor industry’s next set of crutches.
The various scrappage schemes were widely criticised for ignoring the
environment part of the equation; in most cases the scrappage cash was dished
out without any regards to the new cars’ emissions.
Last week, Dieter Zetsche, the walrus-moustached president of the European
Automobile Manufacturers Association, said the motor industry should be seen as
a “partner in problem solving” eager to combine forces with other stakeholders
“to manage together what none of us can manage alone”.
The challenges ahead, he said, were two-fold. “Number one: Building a more
stable foundation for economic recovery. And two: Leading the transition to
low-carbon, sustainable mobility.”
In other words, in return for injections of taxpayers’ cash the industry will
deliver two things, namely jobs – the industry accounts for more than one in
three manufacturing jobs in Europe – and emissions reductions.
Which is exactly what governments say they want.
Hence, this time around the cash injections might actually deliver better value
for money.

Go to: http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8537611.stm