Little Sympathy for Porsche on New Fuel Economy Rules

Includes: DDAIF, POAHF
by: Michael Steinberg

The Wall Street Journal’s “Porsche Presses for Easier Fuel Rules” quotes Daimler’s (DAI) Chief Executive Dieter Zetsche: “We have to stretch but we will get there, and so we don’t complain. And I would prefer if others complain, they not do it in the name of their neighbors.” Speaking in reference to the new US fuel economy fleet wide average of 35.5 MPG and carbon-dioxide average of 250 grams per mile, all luxury and specialty car companies don’t have a uniform voice.

Just like the controversial healthcare legislation, implementation is 90% of the law. In this case the government must develop the regulations which define mileage based on each vehicle’s footprint (wheelbase and track). The idea was to still retain a variety of car sizes while still improving gas mileage and reducing greenhouse gasses.

Porsche’s (OTCPK:POAHF) major complaint is that while it believes its cars provide reasonable mileage compared to cars in general, it is unfair to judge high-performance sports cars with other cars of the same size. The Journal points out that this will be less of an issue after Porsche’s merger with Volkswagen is completed. Jaguar and potentially others large specialty companies are also having discussions with regulators.

The new rules are to be finalized this week. While exemptions for low volume companies were common in the past, there is little incentive for exemptions to continue. With the Tesla electric roadster and the carbon bodied Corvette Z06, the country has refocused on what is enviable. Light and powerful is in, even when cost is of no object.

Even if we have the attitude that the wealthy will leave the country when they can’t get the car of their dreams, we need to be cognizant that conspicuous consumption of fuel will no longer be in fashion. That is not to say that luxury will be out of fashion, but it will have to be more high-tech in an environmentally friendly way.

I would like to reiterate a few points that I made in previous articles. Power to weight will become the new performance metric, rather than sheer power alone. Pushing the limits of material science and computerization will provide a luxury experience with reduced environment and fuel consumption impact. And these advances will trickle down to lower priced cars.

Daimler created a hybrid version Mercedes’ large car specifically to meet the social responsibility obligations of German executives. While this is only a baby step, it shows where things are going. Now let’s push the real science.

Disclosure: None