Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – The rather complex carbon cap-and-trade discussions under way in Washington are terribly important to the auto industry, because whatever rules are made will have an effect on how much clean cars and fuels will cost.

The May 16 announcement by regulators of one national standard for fuel economy of 35.5 mpg (6.6 L/100 km) by 2016 was a big help for the industry because it eliminates doubts about the future.

But the cap-and-trade legislation also would play a critical role, as it would affect the price of oil and electricity, the two fuels of future cars.

“Our industry will be an important element” of the national effort to reduce carbon-dioxide emissions, says Sue Cischke, group vice president-sustainability, environment and safety engineering for Ford Motor Co.

“Customers drive vehicles in an energy-conscious fashion,” she says. Changes in driving habits in recent decades depended considerably on the cost of gasoline.

The average car traveled 9,500 miles (15,000 km) annually in the early 1980s. But when gasoline prices were low from 1986 to 2001, the average rose to 12,000 miles (19,000 km). After prices passed $3 a gallon, consumers began to drive fewer miles again and rapidly switched from trucks to cars.

Cars were only 40% of the new-vehicle market in August 2005, and swung to 60% of monthly sales when gasoline prices hit $4 a gallon last year. Now the mix is back to about 50/50 cars and light trucks.

To reduce CO2 emissions from light vehicles, “we need lower carbon fuels and customer encouragement,” Cischke says, and the government has considerable effect on customer encouragement through regulations and taxes, including the costs involved in cap and trade and the new 35.5 mpg goal.

In the next five years, Ford will attack CO2 by better leveraging existing technology such as new transmissions and its EcoBoost direct-injection turbocharged gasoline engines that went into production three months ago, plus components such as electric power steering.

Midterm, Ford plans to take 250 lbs.-750 lbs. (113-340 kg) out of vehicles and expand hybrids, plug-ins and battery-electric vehicles. The long term will see volume introduction of EVs and plug-ins, Cischke says.

For now, Ford will double hybrid production with second-generation Fusion and Milan hybrids that get 41 mpg (5.7 L/100 km) in city driving.

Ford will sell the electric Transit Connect in 2010 and have its electric Focus on the market in 2011, but Ford’s goal is to have its future platforms designed as plug and play, ready to be used with batteries, gasoline, diesel and hybrid powertrains.

High volumes of fuel-saving technologies are required to make a big difference in overall CO2 emissions. EcoBoost, she says, has an economic payback in 2.7 years with gasoline at $2.60 a gallon and driving 15,000 miles (24,000 km) a year. For hybrids and EVs, the payback period is a decade or more.

Ford is part of the 2007 U.S. Climate Action Partnership, with which it pledges “we are committed to a pathway that will slow, stop and reverse the growth of U.S. emissions while expanding the U.S. economy.”

The debate in Congress on cap and trade involves a significant part of the American economy, Cischke says. “We support an energy policy that signals the market about where prices are going.”