Obama Raises CAFE Standards; GM Suspends Volt Production

The Obama EPA is getting ready to formally raise the CAFÉ standards that auto companies have to meet from the current 34.5 mpg by 2016 to 54.5 mpg by 2025, reports the Washington Post. Even the 34.5 mpg requirement – that the Bush administration imposed in its waning days to foster "energy independence" and deflect attention from

its Iraq debacle—required the auto industry to expend $85 billion for retooling. So what a 50 percent increase over that will cost car companies is anyone's guess – although be prepared, dear taxpayers, to open up your wallets to provide retooling loans.

But how is the pioneer in the genre of cars with an engine capable of meeting these new standards – to wit, the electric-hybrid Chevy Volt – doing? Not too well. In March, the Wall Street Journal reported :

General Motors Co. will idle production of its Chevrolet Volt battery-powered car for five weeks beginning this month because of slow sales amid an effort to boost the vehicle's consumer appeal, the company said Friday.

Launched last year with great fanfare, the Volt has had a rocky start as sales stalled, and the car became a lightning rod for critics of the Obama administration's auto-industry bailout and support for alternative energy.

GM said around 1,300 workers at the Hamtramck, Mich., factory where the Volt is built will be out of work between March 19 and April 23, a spokesman said. The plant had just resumed production on Feb. 6 after a prolonged holiday shutdown.

Mark Reuss, GM's North American chief, said in an interview the auto maker remains committed to the Volt and is taking a number of steps to improve lagging sales. GM will launch a new national ad campaign this month that features Volt owners praising the car. It also recently dropped the monthly cost of leasing the vehicles to $350 from $399 for a 36-month lease.

But a few short months later, GM is idling the plant yet again. That's hardly a surprise. GM, under pressure from the Obama administration, had a target of selling 45,000 Volts this year. Actual sales? Around10,600 sales through July. This was – triple the 2,870 sold in 2011, but only because California gave the car an artificial boost by allowing lone Volt drivers on the car pool lanes.

But what is GM planning to do when the plant is idled? Retooling it to manufacture cars that people actually want and can afford – even without the $7,500 subsidy that the $40,000 Volt gets. Reports Reuters:

GM…will continue to "match supply with demand" for both the Volt and the Chevrolet Malibu sedan that is also made at the plant. The automaker declined to specify how long the plant will be closed.

During the shutdown, GM will do some retooling and other work to prepare for production early next year of the 2014 Chevrolet Impala sedan. The plant will begin building preproduction prototypes of the redesigned Impala this fall.

Welcome to Obama's green economy where products that sell can't be made – and the ones that are made, don't sell.