Lower CAFE standards won't 'make America great' for long

In the long run, US automakers could get left behind

People buy Teslas - a considerable number of them vis-à-vis the competition. According to insideevs.com, there were 29,421 Model S vehicles delivered in 2016, making it the No. 1 plugin. Second place goes to the Chevy Volt, at 24,739.

However, the starting price for a Model S is more than double the $33,220 starting price for a Volt. Tesla, of course, is profitability-challenged (it had to raise $1.2 billion last week), but its stock price didn't waver. Tesla, it seems, is not only electric, but it is able to defy gravity.

At $68,000 (before tax credits), the Model S is in a space ordinarily inhabited by the German brands. Say, a BMW 5 Series starting at $51,200. In 2016, according to Autodata, BMW delivered 31,651 of those. Though the Model S gets lumped in with EV and plug-in sales, it's more comparable to a mainstream luxury sedan and its sales came within spitting distance of the less-expensive 5 Series.

But this is not about Tesla. Rather, it is about what will likely happen to US vehicle manufacturers in light of the probable gutting of the Environmental Protection Agency and rollback of the 2025 CAFE standard. Taking these steps is supposedly intended to "make America great again." It won't.

To be sure, many people buy products based solely on price. But there are others who buy based on the "cool factor." Arguably, more people buy Teslas to be cool (for now) than because they are strident environmentalists or because they want to hammer the accelerator and do 0 to 60 in 2.5 seconds.

There are hundreds of thousands of Model 3 pre-orders not because there is intrinsic benefit compared to say, a Chevy Bolt, but because it is a Tesla. It is like the difference between an iPhone and something from Samsung. People line up to buy the Apple. It isn't the equipment. It's what the equipment represents.

So sure, when US automakers get relief from tough fuel economy standards, they won't have to spend millions on engineering advanced technology vehicles that seemingly no one wants to buy right now. They won't be forced to dabble with cars like the Pacifica PHEV or the CT6 plug-in. They'll get to eschew cool and make short-term millions the easy way, by producing pickups and large SUVs.

Meanwhile, the Germans are working to electrify their fleet. Volkswagen Group is talking about having "over 30" battery-powered vehicles by 2025, which means everything from entry-level to über-level. And the Japanese companies are likewise relentless in their pursuit of alternatives. (Consider this: Although sales of the Prius sedan were down 12.9 percent in 2016 compared to the previous year, the company delivered 98,866 of them. While not a direct comparison, know that the total number of Buick cars sold was 84,845. You can sum all of GM's alternative powertrains and not hit the Prius sedan number. And if you add in the Prius variants, the total is 136,632.)

With time comes experience. With increased production come economies of scale. On the other hand, with the ability to forego competition comes products that aren't cool, aren't hot, but are, in effect, the temperature and consistency of a bowl of a gelatinous something not particularly appealing. In other words, the commodity-grade SUVs we see flooding the market. Those products will sell. For a while. Those products will make money. For a while.

But then there's a Mission E and Elon gets a run for his money and the domestic luxury brands who don't have anything like it are left even further behind not only their German competitors, but their Japanese competitors as well. Lexus just rolled out the LS 500h hybrid ... and where's something like that from Cadillac or Lincoln? Yes, there is the CT6 Plug-in ... but as of right now, it is available in but seven states – Arkansas? And there is the MKZ Hybrid, but then we could counter that with the Lexus ES Hybrid – as well as the CT, RX, NX, and GS. Let's face it, hybrids just aren't something that the domestics have placed many bets on.

Those brands gain the knowledge. They achieve the scale. And those who are seeking "relief" find that the respite has left them behind. How great will that be? Not very.

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