We’ve already touched on the terrible state of the car industry across the world is in and that this is not simply a problem unique to the United States.  Japanese and Korean car makers are seriously feeling the credit crunch and though they have better cash reserves, they are suffering badly and R&D has already been axed in many firms as a response to the economic and financial crisis.

In Europe, the situation is not so clear; the car makers there are not in such dire straits as their American counterparts (if you ignore Land Rover and Jaguar) but there’s a government which is more prone to fund the private sector with subsidies and loans than ours.

On the table right now is a EU 40 billion R&D development package (about $40 billion) simply to fund the development of green cars and this is being earmarked from an existing EU 140 billion economic stimulus package already approved.  Though much is made of the stringent emission tests carried out in the US, there are much tighter environmental issues and regulations that govern the European Union throughout the entire manufacturing, distribution and driving process when it comes to motor vehicles and this is before the much tougher EU emissions regulations come into force in 2010.

Given that much of the existing car fleet in the European Union will not meet these new high standards and the necessity for economic stimulation it is highly likely that this EU 40 billion is going to get passed despite anti-competition issues.

…and where does that leave America in developing a commercially viable green alternative or will we be driving around in VW’s, Fiats. Renaults and Peugeots instead of a Kansas City Cadillac in 10 years time?