Volvo, Tesla, France spell doom for combustion engines, but Trump pumps up gas

Volvo to make all its cars electric by 2019
Volvo to make all its cars electric by 2019

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Volvo to make all its cars electric by 2019 01:05

Story highlights

  • President Trump tweeted earlier this week his approval of affordable fuel prices
  • Trump administration policies have encouraged gas consumption over hybrid or electric

(CNN)Combustion engines choked this week.

Tesla announced plans to start rolling out its Model 3, which is supposed to be the electric car for the masses. Volvo announced a moral decision to move away from combustion-only engines by 2019. And the French government announced its effort to ban the sale of combustion-only cars by 2040.
Electric and hybrid, it seems, are the future.
    Except the US government is going in the opposite direction. And for President Donald Trump, gas is still king.
    For example, the President tweeted earlier this week his approval of affordable fuel prices.
    "Gas prices are the lowest in the US in over ten years! I would like to see them go even lower."
    Trump's right. The price of gasoline in the US is quite low, as CNN Money's Chris Isidore explained just before the holiday, but with the important caveat that the low prices are not expected to last forever.
    "Drivers are enjoying the cheapest Fourth of July gasoline in more than a decade. Enjoy it while it lasts: Experts say prices will start inching higher soon.
    The average price nationwide for a gallon of regular is $2.23, down 15 cents from a month ago, according to AAA.
    And really cheap gas is even more common than suggested by that average: About 25% of gas stations nationwide are selling gas for $2 a gallon or less."
    Trump's policies have encouraged gas consumption over hybrid or electric and they've caused people like Tesla's Elon Musk to sever ties with the White House. Musk quit his role as a White House adviser in June after Trump pulled the US out of the Paris climate agreement. (Note: Tesla relies on a generous $7,500 federal tax credit in selling it's cars, but that credit is only eligible on the first 200,000 cars the manufacturer sells, so it will likely run out within the next year or so).
    On the policy front, Trump re-implemented in March a review of fuel economy standards that had been rushed into place by the Obama administration. The current standards require car companies to get more than 54 miles per gallon across their fleets by 2025.
    To be sure, US car companies have also invested in mass market hybrid and electric technology. GM has the plug-in hybrid Chevy Volt and fully electric Bolt as well as hybrids. Ford has the C-Max line, Focus and Fusion hybrid. Chrysler has the first hybrid minivan.
    But they have groused at the Corporate Average Fuel Economy requirement, which they say isn't feasible and which Ford's CEO told Trump would cost a million jobs, he said back in January. Interestingly, Trump was thrilled when Ford announced it would invest $700 million to create 700 jobs in Michigan. But that investment is to develop and build electric and self-driving cars.
    Appearing in Detroit to announce the move, Trump said it would help car companies build cars domestically, rather than abroad, a main gripe of his during the 2016 campaign.
    "I'm sure you've all heard the big news that we're going to work on the CAFE standards, so you can make cars in America again," he said March 15. "We're going to help the companies, and they're going to help you.
    Even if the national standard is revoked, which is still a big if, California could impose its own tougher standards under a special waiver built into the Clean Air Act. If it sought to revoke that waiver, the Trump administration could find itself fighting the most populous US state over emissions. Twelve other states follow California's lead on emission regulations, and those 13 states together, including California, have 35% of the nation's population. So if EPA and California go in two different directions, the automakers will be left with two separate standards, which is one thing they hate more than anything else.
    Trump's long-promised infrastructure plan -- details have not been announced -- is expected to lean heavily on repairing US highways and roads, which is another emphasis on cars as transportation.
    In addition, his budget proposal suggested cuts for Amtrak and local mass transit systems. Conversely, his administration has not said how he would pay for the infrastructure plan, although an increase in the gas tax has not been ruled out.
    Fuel economy is not the only area in which the Trump administration is moving at cross-currents to much of the rest of the developed world. He pulled the US out of the Paris climate accord -- making it one of three countries worldwide on the sidelines. In part, he said the near-worldwide agreement was unfair to the US coal industry; he has promised to be a champion for coal jobs and pointed out a new coal plant is coming online.
    President Trump's record on coal mining jobs
    President Trump's record on coal mining jobs

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      President Trump's record on coal mining jobs

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    President Trump's record on coal mining jobs 00:42
    His energy secretary, Rick Perry, was in West Virginia this week to tour a more efficient coal plant. Perry projected the government could stoke new appetite for coal when he said, "Here's a little economics lesson: supply and demand. You put the supply out there and the demand will follow."
    Perry's visit to West Virginia came around the same time China announced it would not approve permits for new coal plants. The New York Times, however, points out that there are a large number of new coal plants already in the works in China.
    Neither Trump's stance on fuel economy standards nor his advocacy for coal and against an international agreement should come as a surprise; they were things he talked about on the campaign trail. But it does show that the President will follow that rhetoric into the future, even as countries and companies change course.