5. The cost to turn a car into a Flex-Fuel or E-85 (85% Ethanol and 15% Gasoline) car is only about $200 for a manufacturer. E-85 is a bit more corrosive to some of the standard rubber and metal parts, but still the cheapest way to go “green”. The problem is ethanol contains slightly less energy than gasoline(whereas diesel has slightly more than gas) and so you need about 20%-30% more fuel running through your injectors for the vehicle to run on E-85 . If you try and run E-85 in a vehicle not designed to run E-85 you’ll see your Check Engine light come on in all its glory. Your car’s computer is telling you that the vehicle is running lean (meaning not enough fuel). I thought being “green” was all about being efficient? Ethanol is obviously not the most efficient way to go. Although I think biodiesel is up to the task.

4. The Energy Policy Act of 2005 says that 7.5 billion gallons of biofuel be blended into gasoline by 2012. The government is helping make that happen through subsidies to refiners. The refiners get a tax credit of 51 cents a gallon to produce E-85. The government is also helping farmers by imposing a tariff of 54 cents a gallon on imported ethanol. I don’t really have a problem with the tariff because farmers have a hard job, and will probably never get rich farming while other poor countries undercut their prices. But what’s that mean to a manufacturer? Ethanol was an inevitability and research had to be done to the affects of ethanol on an engine anyway.

3. Manufacturers get a fuel-economy credit for every flex-fuel vehicle. That’s right, an E-85 vehicle gets 25-30% worse mileage than an equivalent gas car and yet the manufacturer gets a fuel-economy credit. The logic in that hurts my head to think about for very long. The government actually rates a flex-fuel vehicle about 65% higher than a gas car. So what does a manufacturer do if they have a problem meeting CAFE mileage requirements? They say “SCREW IT!” and put some higher quality fuel lines to turn it into flex-fuel car and take the fuel-economy credits to make up for fines.

2. It’s too hard to get diesel to meet Tier II Bin 5 emissions requirements. Lutz’s excuse for not making diesels was that it would add a $3000 to $4000 premium on a vehicle to make a diesel that would pass emissions, and consumers wouldn’t pay that. However, a 2006 VW Jetta Base model was $17,900, and a base TDI was $21,605. The difference in price is $3705, and dealers couldn’t keep these diesels on the lot. I think he means no one would pay a $4000 premium on a Chevy diesel car. It’s unfortunate the stigma that American cars are junk because it’s just no longer the case. My Camaro lasted 165K problem free miles (I count starter and alternator replacement as still problem free) before I sold it. All car manufacturers have a few lemons. However, with basic maintenance most cars built in the last, at least, 10 years are going to go over 100K miles easily before they start to have problems. Unfortunately, I think it’s true that most would not spend an extra $4K on a Chevy, but throw a diesel in that new Malibu and you’ll have a damn nice car.

1. They just weren’t ready. As my last post shows (Lutz Says Customer Not Currently Part of the Car Planning Equation - No Small Cars) American manufacturers just weren’t ready for such dramatic price increases for gas over the last couple years. These price increases ushered in a swift change in consumer attitude towards smaller more fuel efficient cars. The Toyota Prius became the car du jour. You could hardly open a magazine or newspaper without reading about the 60 mpg wonder, and even after the backlash when customers found out it was closer to 40-45mpg it still did little to quell their interest. Meanwhile, quietly behind the scenes, the only diesel cars available to Americans, the Volkswagen Jetta, Golf, and Passat were selling for above sticker new and near new prices for used…