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October 4, 2008 / Mridul

Needed: A Bailout Plan For Automakers To Boost Green Cars’ Production

As the European Parliament argues the details of the controversial plan regarding penalties on automakers which fail to comply with the emissions reduction proposal, the automakers lead by the government of Germany, with support from EU President Nicolas Sarkozy, are preparing to block the same. Some members want that the penalties be diluted so that the auto industry, already reeling under the economic burden, is given some kind of relief. Also proposed is a €40 billion loan for the automakers which would help them compete with the low-cost energy efficient models being imported from Asia. 

Projecting the growing concerns of the automakers, Fiat Chief Executive Sergio Marchionne expressed his concerns about the impact of the proposed measures could have on a sector which is already plagued by high raw material costs, lack of cheap labor dwindling sales and unavailability of credit. 

Fiat’s chief executives concerns are valid and so are the proposals and goals of the European Union in regard to the rising carbon emissions. The European leadership needs to break a common ground and lay out a middle path so that the concerns of the automakers are addressed and it also meets the set emissions goals. 

Being the world leader in the fight against climate change, Europe cannot afford to just do away with or give up on its set goals. Yes, the times are turbulent; yes, the economic growth is sliding and yes, high inflation has made availability of cheap raw materials impossible but we can’t be lenient in our fight against climate change as it poses challenges of similar or even graver proportions. 

Firstly, the automakers and the countries who are opposed to these measures must find a common ground in that reduction in carbon emissions is an essential and inevitable measure that must not be ignored at any costs. Secondly, the European Parliament must also show some sensitivity towards the auto industry. It should provide ample funds and if required, subsidies as well, to the automakers so that they have the resources to manufacture the new age automobiles which would not only meet the set standards but would also work as the base of the zero-emission cars that are the future of the industry. 

And while EU provides the much needed resources to the industry, it must also obligate the automakers to use these resources for production of only those cars which emit less emissions and would help Europe meet its emission goals. It is essential that at this time of financial crisis governments help the industry if it wants achieve the set goals. Without any help even the automakers who are willing to manufacture clean cars won’t be able to do so.

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2 Comments

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  1. preplan / Oct 29 2008 8:17 pm

    The EU has financial constraints just as does the U.S., but as you say, the cost of ignoring climate change is far worse than the current financial mess. Incentives are needed, but also, private investment in the greenest automakers is required as well. Investing in anything today is risky, but unless such industries receive a vote of confidence from the investing public, they will perish and we will all suffer as a result. I’d like to see some means of consumers pre-investing in future vehicles sort of like my energy plan. I haven’t worked it out, but perhaps people could invest 100 euros in a future vehicle and receive a 200 euro discount off the vehicle when it is available.

  2. Mridul Chadha / Oct 30 2008 12:08 pm

    I agree with that. In addition to giving incentives to companies the government must also make the new clean cars look more attractive. An integrated effort from the government, industry and the public is required. The burden of production of the new, and presently expensive cars, must be bored by all the three parties.

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