The average cost for Detroit's Big Three automakers to meet the proposed fuel efficiency targets of 31.6 miles per gallon by 2015 has been pegged at $30.6 billion. In contrast, the average cost for the Japanese automakers sits at less than half that amount at "only" $14.85 billion. These numbers come courtesy of a recent study by Global Insight. In a real shocker, General Motors alone is expected to pay out $15 billion alone. Why the disparity? Simple: the Japanese brands already offer more fuel efficient models. With that reasoning, it seems unlikely that the U.S. companies will get much sympathy from the buying public.

Global Insight also predicts that many new technologies which are just beginning to make a dent in sales today will make up a huger percentage of sales by 2015. These new developments include direct injection, turbocharging and diesel engines. Hybrids, the current darling of the fuel efficient crowd, will continue to gain market share, especially as more new models are rolled out which feature the hybrid drivetrain as an option or as standard equipment.

There is a glimmer of hope out there for automakers which are finding it tough to move vehicles in today's troubled climate. Global Insight predicts that there will be a pent-up demand for the replacement of aging models which owners have clung to in the face of high gas prices and a poor U.S. economy sometime around the year 2015.

[Source: Automotive News - sub. req'd]

U.S. House Speaker Nancy Pelosi (D-CA) has been involved with the ins and outs of the CAFE standards for a long while. This week, following the NHTSA's call for a 31.6 mpg average (35.7 for cars and 28.6 for light trucks) by 2015, Pelosi had some kind word for the President and the NHTSA. So, first the automakers say they're OK with these stricter numbers and now Pelosi lauds Bush? What's going on here? You can try to figure it out for yourself by reading Pelosi's statement in full after the jump, but for a flavor of what she said, check out the opening bit that says, "The Bush Administration should be commended..."

Of course, Pelosi later says that the Administration continues to block progress on climate change legislation by fighting California's efforts to install its own rules. Whew, that's more like it. Thought for a moment there we weren't going to have a bumpy ride to 35 by 2020.

We all know that the Democratic Representative from the Automakers Michigan, John Dingell, is a foe of state-based regulations over the auto industry. Back in February, he tried to revive an excised portion of the energy bill that would have made federal CO₂ limits take precedence over state rules. In an editorial in Automotive News (subs req'd), Edward Lapham writes that it's Dingell who will be of very few lawmakers who "get" why America needs a national fuel economy law instead of allowing states to set their own rules. The three major presidential candidates, Lapham writes, don't get it and neither do many other in Congress. Lapham even equates states setting their own fuel economy rules "would be akin to letting them print their own money." For Lapham and Dingell, the protracted wait between federal increases in the CAFE standard must have looked pretty good. If all the power sits in Washington, then you can slow laws down there and be all set. I mean, if the feds retain control, then Dave McCurdy might be able to stay home more.

[Source: Edward Lapham / Automotive News (subs req'd)]

At the National Automobile Dealers Association (NADA) meeting last weekend, GM CEO Rick Wagoner asked car dealers to lobby their state and local governments to not regulate tailpipe emissions. The NADA is going to take the legislative battle over CAFE fuel requirements seriously, something that NADA chairwoman Annette Sykora said at the same conference.

Sykora said that flexibility in the CAFE regulations are going to be a priority for her organization and that - stop us if you've heard this before - CAFE can't restrict the consumer's freedom of choice. According to Automotive News, Sykora said, "The consumer will decide what works and what doesn't. It's that simple. You can't wave a government wand and make consumers buy a particular type of vehicle. This is not Europe."

Yawn.

While Sykora's statement that "We don't want the jalopy effect, where car owners keep their older, less fuel-efficient vehicles much longer" is a valid one, using the Europe boogeyman is tired and not very helpful. That sort of talk might work in Texas, where Sykora is a Ford dealer, but it doesn't have a place in an educated debate about making cars cleaner. You know, I could swear it was just last year that the previous NADA chair said that fuel-efficient vehicles are the way to built market share. Anyway, you can read Sykora's speech here (PDF).

[Source: David Sedgwick / Automotive News]

This afternoon, the energy bill that requires 35 mpg by 2020 CAFE handily passed Congress. After passing in the Senate last week, the first increase in average fleet fuel economy in 32 years sailed through the House of Representatives 314-100. The auto industry's best friend in Congress, Rep. John Dingell, D-Mich., "was key to a compromise on vehicle efficiency increases," as the AP put it. As we mentioned, part of that compromise meant stripping out tax provisions for renewable energy requirements and the elimination of new incentives for plug-in hybrid vehicles. Oil companies were also spared higher taxes. President Bush has said he will sign the bill.

The new CAFE standard is part of a broad energy bill and includes a massive boost to ethanol producers. As the AP reports:

In a dramatic shift to spur increased demand for nonfossil fuels, the bill also requires a six-fold increase in ethanol use to 36 billion gallons a year by 2022, a boon to farmers. And it requires new energy efficiency standards for an array of appliances, lighting and commercial and government buildings.

With the negotiations over, the auto industry now needs to get all of their wonderful concepts out of the auto shows and onto the roads. Thirteen years should be plenty of time, even in the notoriously slow auto industry. They'll need to work hard, based on the number of cars we can buy today that will offer 35 mpg - not many.

[Source: AP]

You might make a case that a car company that only sells a few hundred or even a few thousand vehicles in a 16-million-vehicle-a-year market doesn't really make much of a dent in emissions or fuel consumption. This is particularly true if the cars they sell are high-performance models that typically only get driven a few thousand miles a year at most. This is the case for companies like Ferrari and Lamborghini that only sell about 5,000 cars a year worldwide with perhaps half of those in the United States. By comparison, Porsche sold over 34,000 vehicles in the US in 2006 and about 100,000 worldwide.

Is a company that builds 100,000 vehicles a year low volume? Porsche would have you think so. Currently car companies that build fewer than 10,000 vehicles per year are classed as low-volume and are exempted from paying fines for exceeding the corporate average fuel economy standards. Ferrari, Lotus and Lamborghini fall into this class. However a little-mentioned provision of the energy bill passed by the Senate last spring would change that hard 10,000 unit threshold to a variable 0.4 percent of US market share. At current market volumes that amounts to about 64,000 cars a year and it could be more if the market ever starts growing again. This would allow Porsche to save the $4.6 million in CAFE fines they paid last year. As with so many other things about CAFE, this is a bad idea. Leave the low-volume threshold where it is or even lower it. Sales of 64,000 vehicles a year may be small compared to GM or Toyota but those are the kind of volumes that will make a difference. Those that can afford sports cars and SUVs priced from $50,000-150,000 can afford to pony up a little more if the vehicles don't meet the fuel economy threshold. Although Porsche may build higher performance vehicles than most companies, at their current volumes they should not be treated any differently from any other mainstream car-maker.

[Source: Automotive News - Sub. req'd]

Forget MPG, just pull into a gas station with your Tesla Roadster and smile....
(Photo by Jurvetson. CC 2.)

Hm. While Toyota has been pushing for less stringent CAFE standards (and taking a beating for it), a group that Toyota is part of, the Association of International Automobile Manufacturers, has told Congress that the stronger 35 mpg is acceptable. The twist is that they want "more time" than is being talked about to meet that goal (so, no 2020 implementation). As AIAM president Mike Stanton told Automotive News, 35 mpg CAFE is coming, so "Why beat your head up against the wall?"

AIAM is for asking the deadline, should it be 35 mpg, to be pushed back by "several years." Automotive News says that the AIAM's call "adds to the likelihood that Congress will pass a tough fuel economy measure this year." The Auto Alliance, which also represents Toyota, is calling for implementation of weaker CAFE standard that would put cars and trucks into two categories and calls for a 32 mpg average by 2022. Talk about covering your bases.

[Source: Harry Stoffer, Automotive News]

Automotive News says (subs req'd) that a Buick, Pontiac, GMC and Cadillac dealer in Lawrence, Kan. told the National Automobile Dealers Association this week that the way the Detroit 3 can turn their troubles to triumph is by designing and building more fuel-efficient vehicles. For proof, he pointed to a 37 percent increase in hybrid sales in the U.S. The dealer, Dale Willey, also said innovative cars (he cited the Buick Enclave and Ford Edge) must be part of the equation.

Willey said a U.S. House of Representatives bill that increases corporate average fuel economy standards for cars and light trucks to 32 to 35 mpg by 2022 is "the only bill that calls for responsible CAFE reform." The NADA as a whole supports the House bill instead of a somewhat similar (35 mpg by 2020) bill in the Senate. The bill "would pose a significant threat to vehicle choice, safety and affordability."

[Source: Ryan Beene / Automotive News]