With lead times of three years or more, auto makers cannot turn on a dime. Somehow, manufacturers need to be urged to keep building more efficient vehicles and buyers need to be encouraged to purchase them.
Movie makers often hedge their bets by filming different endings, so here are several outcomes for the Obama Admin.’s proposed new 54.5 mpg (4.3 L/100 km) corporate average fuel economy mandate for 2025, which likely will become law next summer:
The happy ending: Written by the Obama Admin. and environmental activists, auto makers spend billions creating new cars and trucks that steadily increase in cost and fuel economy. The cost of the fuel-efficient technologies is more than offset by fuel savings over the life of the car.
Consumers are so thrilled with the new products, they line up at dealerships to trade in their old gas-guzzlers for a growing menu of attractive small cars, hybrid-electric and battery-electric vehicles.
Car buyers save an average of more than $8,000 per vehicle in fuel costs. America’s oil consumption is reduced by 2.2 million barrels per day and about 484,000 new U.S. jobs are created, 43,000 directly in the auto industry. Old junkers that produce 100 times the pollution of new vehicles are scrapped.
The tear-jerker:Written by skeptics and Republican opponents of the President, auto makers spend billions developing super-efficient cars and trucks, but no one wants them. Slow economic growth throughout the world keeps oil prices low and kills the fuel-economy value proposition.
U.S. vehicle owners start to behave like Cubans, keeping their gas-guzzlers for 50 years. Old cars spewing pollutants become so common on U.S. roads that air quality in 2025 is worse than now.
Cash-strapped local and federal governments eliminate subsidies for HEVs and BEVs. Sales of all new vehicles plummet, and thousands of auto industry jobs disappear from pickup-truck plants to lithium-ion battery plants such as A123 Systems in Michigan.
The realistic ending:This falls between the happy ending and the tear-jerker, and is the outcome proponents and opponents of the new standard do not want to consider. That’s because the future, when it comes to oil prices, is impossible to predict.
A sudden flare-up in the Middle East or another giant oil spill could send crude prices skyrocketing overnight and have millions of consumers suddenly demanding 70-mpg (3.4L/100- km) sedans and hundreds of thousands of BEVs.
But a prolonged period of moderate fuel prices also is possible, and we know from history that stable gasoline prices create a surge of big-car and truck purchases in the U.S., continuing our addiction to oil.
With product-development lead times of three years or more, auto makers cannot turn on a dime. Somehow, manufacturers need to be urged to keep building more efficient vehicles and buyers need to be encouraged to purchase them.
Most major industrialized economies create demand with high taxes on fuel and other types of government incentives and disincentives.
Because new taxes and related incentives for steering vehicle production and consumer choices are politically impossible in the U.S., we are stuck with CAFE rules. A particularly concerning element is the fact there are three sets of values for calculating fuel-economy ratings, according to the National Highway Traffic Safety Administration.
In a WardsAutoarticle last summer, I mentioned the500 has Environmental Protection
Agency combined fuel economy of 33 mpg (7.1L/100 km), and the 2.0L Audi A6 has a combined number of 28 mpg (8.4 L/100 km). However, these are “adjusted” numbers designed to reflect what consumers will get in the real world.
The “unadjusted” numbers, used for calculating CAFE, are quite different. The’s unadjusted combined number is 44.5 mpg (5.2 L/100 km), and the Audi’s is 35.4 mpg (6.6 L/100 km). Don’t ask me what the third set of values is because I don’t know.
If there is one thing everyone involved in the CAFE debate can agree upon, hopefully it will be that this movie will end with the disclaimer: “Your mileage may vary.”
The new 2025 CAFE goals are an annoying and overly complex roadmap for the future. But a lousy map is better than none at all.