By Dave Guilford, Automotive News
Detroit, Michigan -- Quiet negotiations going on in Washington could change profoundly the nature of US cars and trucks over the next 13 years, making more of them electrified and more costly.
New federal fuel economy and emissions rules took effect 1 Jan 2011, requiring automakers to hit 35.5-mpg corporate average fuel economy by the 2016 model year.
But automakers and regulators from the EPA, the National Highway Traffic Safety Administration and the California Air Resources Board already are haggling over a tougher proposal initiated by President Barack Obama in October. That plan calls for a CAFE range of 47 mpg to 62 mpg by the 2025 model year.
The key issue: industry spokespeople say the 62 mpg CAFE, sought by environmentalists, could be too costly and may not be feasible.
One industry ally says hitting 62 mpg would require widespread vehicle electrification, adding nearly $10,000 to the price of a new vehicle. Federal agencies say the cost would be lower -- $3,500 per vehicle, at most -- and would be offset by consumer fuel-pump savings.
After bailing out two of the Detroit 3, federal officials are wary of imposing costs that would depress car sales and cost jobs. Speaking recently in Detroit, EPA official Margo Oge said the agency does not want to hurt auto sales.
"We will be very mindful -- and I underline 'mindful' -- of the consumer throughout this process," Oge, director of the EPA's Office of Transportation and Air Quality, said. "Unless people buy these new clean cars and trucks, and buy them in large numbers, everyone loses."
But the Alliance of Automobile Manufacturers, an industry lobbying group, has warned that the 62-mpg CAFE standard could cut car sales by 25 percent, costing the industry 220 000 jobs.
Oge was scheduled to be in Detroit again last week meeting with automakers on the issue. Her point -- that overly expensive clean technology will do little good -- is also taken up by industry allies. Analyst Sean McAlinden estimates that a 62 mpg bogey will require extensive use of pricey technology such as hybrids.
"That would require a market that's 64 percent plug-in hybrids -- that's the only way we can get it to 62 mpg," said McAlinden, chief economist and executive vice president of the Center for Automotive Research in Ann Arbor, Mich.
New-vehicle prices would rise by an average of $9970, McAlinden said. Other estimates are lower; the alliance cites a possible price increase of "as much as $6400." Either way, industry groups say they fear that sticker-shocked consumers would hold on to their old cars.
Drew Kodjak, executive director of the International Council on Clean Transportation, said a Lotus Engineering study found that automakers could use weight reduction more extensively to meet the high MPG target.
According to the study, automakers could cut vehicle mass, excluding powertrain, by 38 percent for only a 3 percent cost increase. In many cases, the study proposes replacing steel with magnesium, plastic, aluminum and other composites.
Eric Fedewa, IHS Automotive director of powertrain and technology, cautioned that automakers hesitate to put fuel economy features on cars unless consumers can see a payback in less than five years. Even then, he said, new features typically take about 13 years to win mainstream acceptance.
"You can't leapfrog," Fedewa said. "You just can't take things from zero to 100 percent, no matter how many incentives you put on them."
Environmental groups disagree, saying the technology to hit aggressive fuel economy targets is ready for broad use.
"I can say definitively that there are technologies available right now that can get to the 62-mpg level," Kodjak said. "The question is when -- what is a reasonable rate of progress that is appropriate for the industry, and what are the costs associated with it?"
A complete version of this story is available at www.autonews.com.