WASHINGTON – A federally mandated fuel-economy standard of 54.5 mpg (4.3 L/100 km) for 2025 will put recovering U.S. auto makers among the world’s leading innovators and make vehicles safer and more affordable, government regulators and backers of the new rules say.
“The standards are going to lead to large investments and a rebirth of the U.S. auto industry (as) global leaders in innovation,” says Roland Hwang, director, Transportation Program at the Natural Resources Defense Council, an environmental group.
Hwang estimates by 2030 the rules will generate $300 billion in extra revenue for the U.S. auto industry, put an estimated $200 billion of fuel savings into consumer pocketbooks and create 500,000 new jobs.
“This is a big deal (and) something that will keep the U.S. auto industry on the forefront of manufacturing innovation,” he tells industry and government officials during a panel discussion at the recent Washington Auto Show.
The 54.5-mpg standard, which Congress likely will sign into law later this year and starts taking effect with the ’17 model year, also slashes carbon-dioxide emissions and improves national security by reducing U.S. oil imports from unfriendly countries, proponents say.
Unlike a higher fuel tax favored by many in the industry, backers also say a strict corporate average fuel economy standard will end the wild swings in pump prices that crippled industry sales three years ago and helped driveand into bankruptcy.
“Clearly, if we are trying to compete globally and innovate, something like CAFE will be much more effective for us than a tax on gas prices, which really does not affect the volatility of your petroleum (prices),” says Kathleen Hogan, deputy assistant secretary-Office of Energy Efficiency and Renewable Energy at the U.S. Dept. of Energy.
Others are not so optimistic.
The Ann Arbor, MI-based Center for Automotive Research sees thousands of potential job losses if gasoline prices do not rise enough to convince Americans the extra they will have to pay for fuel-saving technology eventually will pay off.
The 54.5 mpg CAFE rule claims the average American driver would save $4,400 over the life of a car, which the government estimates at about 160,000 miles (257,000 km).
Count David Sargent, vice president-global automotive at J.D. Power, among those pessimistic about the proposed rules.
“CAFE has always struck me as a somewhat odd way of going about the solution,” he says. “If there was the political will, by far the most efficient way of achieving the ultimate objective is just to make (gas) more expensive.”
Sargent says the assumption Americans will pay more for fuel-saving technology is at odds with their historically short-term vehicle ownership.
“The average consumer only keeps their car for three or four years,” he says. “Most consumers, when they do the math, do not get the payback.”
But the NRDC’s Hwang says that’s because CAFE critics focus on expensive fuel-saving technologies such as hybrid-electric vehicles and plug-in HEVs when the march to 54.5 mpg will be led by tweaks to the old-fashion internal-combustion engine. The rule estimates 82% of the U.S. fleet will be powered by the ICE in 2025.
“It will be gasoline direct injection, turbocharging, variable valve timing,” he says. “We’re talking about squeezing more efficiency out of the internal-combustion vehicle. That’s going to be more cost-effective.”
However, Margo Oge, director-Office of Transportation and Air Quality at the U.S. Environmental Protection Agency, admits the federal government must do a better job explaining to consumers how they will save money by paying for fuel-saving technology.
Oge points to the window stickers recently redesigned by the National Highway Traffic Safety Admin., and her agency currently is working with the National Automobile Dealers Assn. on additional ideas to help consumers estimate cost savings from fuel-saving technologies.
Younger buyers likely will become more aware of the potential cost savings than their elder peers, she adds, because they generally share information better.
NHTSA and the EPA concluded public hearings on the proposed rules two weeks ago.
Ron Medford, deputy administrator at NHTSA, says feedback was overwhelmingly in favor of the rules. “We heard from every sector about the importance of these standards,” he says.
Adrian Lund, president of the Insurance Institute for Highway Safety, expects the 54.5-mpg standard will make cars safer. He cites a recent IIHS study showing hybrids weigh an average 10% more than conventional vehicles and that the greater mass gives them an edge in crashes.
The industry can comment on the rules until Feb. 13, although U.S. Transportation Secretary Ray LaHood tells WardsAuto here he expects the final standard coming this summer to look much the same as it does now.