Jennifer GranholmFormer Michigan Gov. Jennifer Granholm.

Former Michigan Gov. Jennifer Granholm (D) has been one of the most outspoken advocates of the Obama administration’s auto-industry rescue. In a speech about the bailout at the Democratic convention earlier this month, she was so animated that Jon Stewart said she looked “like a drunk flight attendant” who shouldn’t be operating any kind of motorized vehicle. But the roaring crowd wanted more of whatever she was drinking.

We talked to Granholm — who now hosts Current TV’s political talk show The War Room and teaches at U.C.–Berkeley — about how new fuel-economy standards are also driving Detroit’s comeback.

Q. Obama’s decision to save Detroit is a hot-button issue in this election and a centerpiece of Obama’s reelection campaign. Why are cars so important to voters?

A. The auto industry is the backbone of the manufacturing industry. When the president stepped up and said it’s important for America to save this industry, it meant that we were gonna have a commitment to saving middle-class jobs in America. People want to see a government that is going to create and keep middle-class jobs, particularly at a time when we’ve seen so many manufacturing jobs exported to low-wage countries. President Bush had no manufacturing policy. So I think Obama’s decision to save Detroit really resonated with Americans.

Q. What role have stronger fuel-economy standards played in Detroit’s resurgence?

A. You only have to look at the last decade or 15 years to see what resistance to fuel economy has gotten the auto industry—and, in turn, what embracing it has gotten the auto industry. Resistance put them in a position of defending old technology, and therefore their products seemed old and they were losing market share. On top of it, people were paying more for gasoline.

So when Detroit embraced the technology and they retooled the industry to embrace it, there was a rebirth. Obviously the bankruptcy and the restructuring helped enable them to restructure in that way. But it all dovetailed with the push toward new, smarter, cleaner technology, with the fact that this was not your father’s auto industry but instead the industry of the future.

When you have clear standards, it enables the auto industry to invest long-term to meet those standards. And auto markets overseas have had a longstanding commitment to fuel economy, which means that when Detroit builds efficient cars, it can sell them not just in the U.S. but everywhere.

Q. So fuel-economy rules are already creating jobs?

A. Yes. For example, when the new fuel-economy standards came into being, Ford decided to invest a couple hundred million dollars to retool an old plant from the ‘60s to create a new hybrid transmission plant in Sterling Heights, [Mich.]. At that plant are some 1,300 jobs — jobs that are in the U.S. as a result of the fuel-economy efforts. Previous to that, Japan had been building the hybrid transmissions for Ford’s hybrid vehicles.

The BlueGreen Alliance has said that as a result of these CAFE standards we’ll create 570,000 jobs by 2030, and the Obama administration’s numbers are around 600,000 jobs by 2030.

Q. Detroit has a long way to go to phase out the combustion engine. What regulatory measures do we need in the next four years to accelerate the shift toward electric cars?

A. At this point, let’s claim victory on CAFE — to be able to get to 54 miles per gallon by 2025 is a great step forward.

The next step is to craft demand-side strategies like tax credits that will reduce the cost of hybrid and electric cars for consumers and enable the carmakers to take the technology to scale.

We also need a big federal push toward building the smart grid with quick-charge stations, and a push toward renewables so that the electricity powering cars is clean.

Q. So you see the electrification of the automobile as inevitable?

A. Oh yes. I have a very personal opinion about this because I drive a Volt. It is the best car I have ever driven. I cannot believe that everybody doesn’t want to have one of these. Granted, it’s a luxury car. It is expensive, so mine is a lease car. I don’t spend any money on gasoline. People think they’re like tin cans or something. This is such a beautifully made car. We cannot believe that it has not flown out of the dealer lots. In part, it’s probably because it’s been vilified by the right as a symbol of the auto rescue.

Q. What, more broadly, should the Obama administration be doing to rebuild the manufacturing base in America?

A. I just wrote a Politico column about that, with eight specific suggestions. [Editor’s note: Here are two suggestions from the column: Offer “zero percent, guaranteed federal loans if you build a factory” and “Offer a five-year federal tax moratorium for brand-new or reshored factories.”]

Q. Your passionate performance at the Democratic convention drew a big response. What happened — did you plan to be that passionate, or did you just get taken over by the excitement of the crowd?

A. Totally the latter. I’ve spoken at these conventions before and I’ve often been plunked in the middle of the afternoon and everybody on the floor is busy and they’re talking and ignoring you. A lot of people had been cut as speakers, so I was just hoping they weren’t gonna cut me altogether. The organizers tell you, Don’t worry about the delegates, don’t take it personally, just talk to the camera. So when the crowd started to get worked up, I was really surprised. The organizers said, Don’t wait for the audience to quiet down because we don’t have enough time. So I kept talking as they’re yelling louder and louder, and I had to yell because I couldn’t even hear myself.

It was very fun, that’s for sure.

Watch Granholm’s convention speech: