Obama: U.S. Automakers Should Follow Lead of Foreign Companies

DETROIT — Senator Obama yesterday faulted American automakers for failing to do what foreign manufacturers have accomplished in producing fuel-efficient vehicles.

Uttering words not often spoken in Detroit, Mr. Obama said U.S. energy policy must change in order to help domestic automakers answer the rising global demand for efficient autos.

"For years, while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars," the Illinois senator told business and political leaders.

Mr. Obama said his plan encourages domestic automakers to make fuel-efficient hybrid vehicles by giving them health care assistance for retirees. Federal financial assistance would cover 10% — up to $7 billion — of automakers' annual legacy health care costs through 2017, under Mr. Obama's plan, which would require automakers to invest at least half of their health care savings into technology to produce fuel-efficient cars.

As a second choice, Mr. Obama's plan would provide $3 billion to automakers over 10 years to help retool plants to make fuel-efficient cars and trucks. It's all part of the U.S. auto industry taking necessary steps to help its own turnaround, Mr. Obama said.

"Here in Detroit, three giants of American industry are hemorrhaging jobs and profits as foreign competitors answer the rising global demand for fuel-efficient cars," he said.

"The need to drastically change our energy policy is no longer a debatable proposition. It is not a question of whether, but how; not a question of if, but when. For the sake of our security, our economy, our jobs, and our planet, the age of oil must end in our time."

A Senate committee today is expected to consider a proposal to raise fuel efficiency requirements for automakers. The measure, which would require a fleetwide average of 35 miles a gallon for cars and trucks by 2020, comes amid calls to push the industry to produce more fuel-efficient vehicles to respond to global warming and America's growing reliance on foreign oil.

Mr. Obama said focusing on the cars Americans drive and fuels used would save 2.5 million barrels of oil a day.

"It starts with our cars, because if we truly hope to end the tyranny of oil, the nation must once again turn to Detroit for another great transformation," Mr. Obama said at the sold-out Detroit Economic Club meeting.

To start, his plan calls for raising American fuel economy standards by 4% each year, adding about one mile a gallon. Passenger cars currently must meet a fleetwide average of 27.5 miles a gallon, while the standard for SUVs, pickups and vans is 22.2 mpg.

The Bush administration has set a similar goal of increasing the standards by 4% each year.

"Our goal is not to destroy the industry, but to help bring it into the 21st century," Mr. Obama said. "So, if the auto industry is prepared to step up to its responsibilities, we should be prepared to help."

Separately, a portion of Mr. Obama's energy plan that would establish to establish a national version of California's low carbon fuel standard drew praise from Governor Schwarzenegger, a Republican.