• May 28th 2010 at 11:53AM
  • 23
The Auto Alliance does not like feebates as a way to get cleaner vehicles on the road. Dave McCurdy, Alliance president & CEO, says a "feebate tax" [his words] is not the way to enact change. Why does the Alliance feel the need to speak out against feeble? Because the California Air Resources Board is considering adopting them and has tasked researchers at the University of California – Davis to report on the feasibility of such a program. The UC Davis team released an interim statement of research findings called "Potential Design, Implementation, and Benefits of a Feebate Program for New Passenger Vehicles in California" last month. Here's how the researchers define the term:
Feebates are market-based policies for encouraging emissions reductions from new passenger vehicles by levying fees on relatively high-emitting vehicles and providing rebates to lower-emitting vehicles.
So, basically, if you want to buy a dirty vehicle, you pay more. If you choose a clean ride, you get to pocket some of the money those gas guzzler drivers paid. Over all, the researchers found, "feebate programs reduce emissions at a net negative social cost" while admitting that, "new vehicle sales in California would decline under all feebate programs, resulting in industry revenues falling on the order of 1 percent or several hundreds of million dollars to one billion dollars per year." The Alliance has its own issues with the report, and points to four main problems:
  • Feebates are just another word for taxes, and have not worked as expected in other countries, specifically France and Canada.
  • A nationwide program for reducing greenhouse gases already exists.
  • There will be unintended consequences.
  • Lastly, "a feebate always ends up penalizing somebody unfairly." The Alliance says that farmers, tradesmen, small business and large families will be hurt by the program.
Remember, a feebate plan was floated in California in 2008, but went nowhere. A table showing UC Davis' expected effects from a feebate program is included above, and the full statement from the Auto Alliance is after the jump. You can read the entire interim statement here. A final report from UC Davis is due later this year.

[Source: UC Davis, Auto Alliance]

PRESS RELEASE

Proposed Car "Feebate" Tax Raises Pocketbook Concerns
National Program Already Reduces Auto CO2 Dramatically


Washington, DC – Automakers responded to California's proposed car "feebate" tax today by saying this is not the time for another government program that will put consumers further in debt or drive up the government deficit. The program of feebate taxes being considered by California has proved to be costly to consumers in both Canada and France.

"Since automakers are investing heavily in more fuel-efficient autos, we want to put more of them on the road....to improve the environment, to reduce our dependence on foreign oil and to strengthen our bottom line. But a feebate tax is not the way to do it," said Dave McCurdy, president & CEO, Alliance. "Experience in France and Canada shows that feebate taxes raise costs to consumer one way or another, either through an extra fee paid when buying a new car or through higher income taxes to fund the program."

The proposed California feebate tax raises several concerns for consumers:

· Consumers understand that feebates are taxes. Feebate proposals have been discussed since 1989 and there is a reason they are rarely adopted: in other countries, feebates have become just another source of revenue for the government or a reason to raise taxes. Canada started a feebate program in 2007, and within two years, Canada ended the consumer rebates, or subsidies, but kept the consumer fees, or taxes. In France, taxpayers are subsidizing the feebate program. Rebates are exceeding fees paid, so the French program cost taxpayers 600,000 Euros in 2009 (or about $800 million).

· There already is a nationwide program. In April, EPA and NHTSA finalized a new multi-year national standard to reduce carbon dioxide (CO2) and fuel use through 2016. Just last week, on May 21, automakers joined federal policymakers at the White House to launch the next phase of coordinated NHTSA and EPA regulations to address fuel economy and greenhouse gas emissions through 2025. Since there is a new national mileage/CO2 standard for autos, the proposed state feebate represents another layer of government regulations on top of existing government regulations.

· The feebate will have unintended consequences. Many consumers feel there are already too many additional costs and government fees when buying a new vehicle. If the government
imposes these fees on new cars, consumers will either hold on to their older (less efficient) cars longer, or choose to buy a used vehicle to avoid the extra tax.

· A feebate always ends up penalizing somebody unfairly. If the government determines who gets rebates and who pays fees by vehicle size, there is an extra tax burden on farmers, tradesmen, small business and large families who depend on these vehicles. If the government decides who wins and who loses by picking the best and worst performers in each vehicle class, then there will be a situation where a small car will carry a fee while a pickup truck generates a rebate
.


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    • 1 Second Ago
  • 23 Comments
      • 5 Years Ago
      An alternate solution would be to mandate more zero emission vehicles be sold, and then let the car makers figure out for themselves how to incentivize buyers to buy them.

      The problem is that Auto Alliance doesn't want any regulation at all. They want to skip out completely on any of their own personal responsibility for the products they sell.
        • 5 Years Ago
        This is America!

        Avoiding paying for the costs of pollution is called Freedom!
      • 5 Years Ago
      Tesla and Nissan-Renault make production electric vehicles. Tesla and Nissan-Renault are not members of the Alliance of Automobile Manufacturers. If GM was truly serious about electric vehicles they would quit this B.S. alliance.
      • 5 Years Ago
      Sometimes the government wants people to do something and people won't do it by themselves, so the government has to provide incentives to encourage people to do it. This is standard practice with all aspects of politics but the Auto Alliance is trying to make it sound scary by making up new words to describe it.

      "There will be unintended consequences."

      Yes, let's all fear the unknown!
        • 5 Years Ago
        "There will be unintended consequences."
        Yes, that is exactly what out of control industries such as, Banks, oil, coal, food, meat and drug industries say if anyone tries to regulate them.

        Banks say you can regulate us but a unintended consequence will be that small business loans will dry up.

        Oil corps say you can regulate us but unintended consequences are, now all those drilling jobs go else where and the price of gas goes up. Of course they must go where they locate oil so they do not have a choice to go elsewhere. If they do, sooner or later they will be back. Most likely after they lobbied the heck out of congress.

        Coal and the rest etc... Please do not regulate industry at all because I fear unintended consequences more than anything.
      • 5 Years Ago
      "A nationwide program for reducing greenhouse gases already exists."

      THAT'S IT, WE HAVE ONE, CAN'T HAVE ANY OTHERS THAT ADDRESS THE PROBLEM FROM A DIFFERENT ANGLE!

      "There will be unintended consequences."

      Like? More vague bullshit bulletpoints to prop up a weak argument?
        • 5 Years Ago
        Umm... what is the nationwide program for reducing greenhouse gases that already exists?

        I have not heard of that program-that-must-not-be-named before.
        • 5 Years Ago
        probably means the new nationwide fuel economy standards, which completely solves the greenhouse gas problem by itself /sarcasm
        • 5 Years Ago
        That is so they can blame anything they want on this Freebate policy.

        Children got run over by truck... we told you there will be unintended consequences.

        Your stock crashed... we told you there will be unintended consequences.

        Hurricane wiped out New Orleans... god hates the gays... oh, and ... we told you there will be unintended consequences.
      • 5 Years Ago
      ""There will be unintended consequences.""

      That is NOT a valid bullet point.
      • 5 Years Ago
      Just another industry lobby crying boo-hoo when someone wants to make them stop behaving irresponsibly. In 1993 Clinton had the partnership for a new generation of vehicles and companies did all that research to get high gas mileage vehicles that looked pretty darn good too. What did the US auto companies do with that research? Put it right on the shelf and went on making crap vehicles that people did not want to buy. They have shown they are not capable of making the necessary changes on their own. Like a misbehaving child they must be told exactly what to do at all times or they go off on their own and get into mischief. The PNGV resulted in several vehicle designs that got high gas mileage

      http://www.pngv.org/main/
      • 5 Years Ago
      big auto not liking being forced to make less stupid cars by Carb. sounds so familiar.

      but carb you might try another approach. start a small car factory and build the right type of car. ultra light ultra aerodynamic battery electric vehicle with tiny range extender generator.
      it is difficult to promote greener cars when they don't exist. gov should have the courage to lead, not just whip the stubborn mules.
        • 5 Years Ago
        I don't know why you were voted down for your comment Dan, I voted you up!
        • 5 Years Ago
        Any Democratic administration has to deal with the corporate and foreign government funded right wing propaganda machine. And although your proposal makes sense, because the US Gov. could hire the smartest engineers and designers, and build the most advanced assembly line, that would be "Socialism".

        And America, Can Not Be Allowed to Be FREE From Saudi Oil. -- Fox News.
        And America, Can Not Be "Socialist" -- Beck - Fox [ Foreign ] News.

        Until we get control of our news media back from the Terrorists, we will not Win.
        • 5 Years Ago
        good evsuperhero
        I don't know what drives half the people in this world. it's like they are fountains of stupidity. not just passively stupid but really proactively stupid.
        just saying 2+2=4 can unleash a shouting army and neptronix will be their general
      • 5 Years Ago
      As an FYI, I couldn't find this Press Release anywhere on either the web or the Alliance Website - not even in the "Media Room"... is this an AutoBlog Green exclusive?

      Also, €600,000 equals about US$732,000, rather than the US$800,000,000 that McCurdy - if it's not a typo - claims.

      Sebastian, can you post an online reference to the Press Release, please? That would be helpful!

      Thanks,

      Kelly
      • 5 Years Ago
      Actually it worked great in Canada. It boosted the popularity and lowered the price of small cars for consumers.

      Honda whined about the program publicly because the Fit didn't make the same economy targets as they Yaris and didn't get the same rebate. After all the whining was done, Honda improved the fuel economy of one of the Fit models.

      But then the program was dropped for no apparent reason and the next Honda Fit lost fuel economy.

      If there was a program like this for all North America, the next Fit likely would have had a 6speed and close to 40MPG highway, instead of the 33MPG the MT Fit gets.
      • 5 Years Ago
      "The Alliance says that farmers, tradesmen, small business and large families will be hurt by the program"

      Just exclude registered companies and farmers. If you file taxes as a company, you're excluded from fuel-consumption taxes and the truck/van gets counted towards the automaker's truck CAFE total. Otherwise, you pay fuel-consumption taxes and the truck/van gets counted towards the automaker's car CAFE total.
        • 5 Years Ago
        Yes, I've been wondering why they didn't do this for such a long time, it makes so much sense. This "farmers, tradesmen, small business" excuse have been put out for so long, in terms of large vehicles (including in the 6000lb vehicle tax breaks by Bush). Even household size can be determined from tax records.
      • 5 Years Ago
      The republicans are gonna love this.
      • 5 Years Ago
      If auto makers want to jump in with both feet into electric vehicles but avoid much of the initial costs there is always Project Better Place. Or there is a company called Traxxa which provides the everything but the interior and shell of the vehicle.

      "Built with carbon steel tubing, aluminum and fiber-reinforced thermoplastics, the modular Trexa platform can contain enough lithium iron phosphate battery modules to carry you 105 miles with dual motors capable of reaching 60 miles per hour in eight seconds."
      (source: http://green.autoblog.com/2010/01/20/trexa-platform-lets-you-develop-your-own-damn-electric-vehicle/ )

      Here is Shai Agassi talking about Better Place:
      http://www.cnn.com/2010/OPINION/05/11/Agassi.TED.electric.cars/
        • 5 Years Ago
        Trexa, not Traxxa. What happened there?
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