When Transportation Secretary Mary Peters announced the first draft of new fuel economy standards last month, the increases actually appeared to exceed those mandated by recent energy bill. Of course a closer inspection of the rules indicated that they weren't all they appeared to be. Because the rules mandated fuel economy based on the footprint of an individual vehicle, there existed an incentive for carmakers to stretch the wheelbase and track of vehicles so that they wouldn't have to achieve the same efficiency as a smaller vehicle. However, the reality of the situation at gas pumps around the nation means that corporate average fuel economy standards are quickly becoming irrelevant. Although manufacturers have long wanted higher fuel prices to spur demand for more efficient vehicles, politicians have been loathe to do anything that electoral opponents could hold against them at the polls.

With gasoline now at $4/gallon (an all-time high for the US, but still ranked only 111th in the world) consumers are making up their own minds. NHTSA did its calculations for the new rules with the assumption that gas would be $2.26/gallon in 2015. This, of course, is consistent with the quality of most of the assumptions made by the current administration and totally unrealistic. At least in this case, the result of drivers moving to smaller more efficient vehicles will likely be positive. At any rate, Peters has indicated that the new rules will be re-evaluated and may be toughened. Perhaps they should just forget gas tax holidays and other silliness and just let the market take its course this time.

[Source: Detroit News]

Hyundai is already far closer to meeting the new corporate average fuel economy standards than most automakers thanks to their current fleet averages of 32.4mpg for cars and 25.5 for trucks. Under the new footprint-based formula that sets individual standards for manufacturers based on the size of the vehicles they sell, Hyundai will have to reach a higher than average threshold. By 2015, Hyundai's car fleet will have to average 37.5mpg and the trucks will have to hit 31mpg. According to Timothy White, senior manager of the powertrain department at the Hyundai-Kia America Technical Center near Ann Arbor, the company expects to get about half that improvement from improvements in engines and transmissions. The company will be shifting from five to six speed transmissions over the next few years and adding direct fuel injection. Hyundai is also developing alternative powertrains like hybrids and diesel engines for vehicles like the Veracruz and Kia Borrego.

The rest of the improvement will come from a variety of other technologies including the obvious ones like improved aerodynamics, lower rolling resistance tires and reductions in vehicle mass. Other improvements will come from reductions in parasitic losses in less obvious areas. Shifting to electric power steering which uses power only when needed instead of driving a hydraulic pump continuously is one area targeted for improvement. Another is using LED lighting to reduce the electrical load on the alternator.

[Source: AutoWeek]

Ford's President of the Americas, Mark Fields, wants the company to build more E85 capable flex-fuel vehicles but he doesn't want to have to deal with state level fuel economy or carbon dioxide regulations. The former should be no surprise as every car and truck so equipped gets a credit of 1.2mpg towards its mileage rating. Fields also wants to see mileage mandates done at a national rather than at the state level. Like other car-makers, Ford's issue is apparently not so much with having to meet whatever mandate is enacted. They just don't want to do the paperwork and testing repeatedly for potentially dozens of states. Fields hasn't said where Ford stands relative to meeting the new CAFE rules but it's a safe bet that new Ford products will probably be coming with wider tracks and longer wheelbases to increase their footprint. As a result they will have a lower mileage standard to meet. Ford's upcoming EcoBoost engines will also be getting flex-fuel capability to help meet the new rules.

[Source: Ward's Auto World]

When Transportation Secretary Mary Peters announced the first round of new CAFE rules last week, there was nary a peep from the automakers who had complained so vociferously about the the 35mpg standard in the first place. Now there is a clue as to why they have been so quiet. Until now, the fuel economy rules have always been pretty simple. There was a threshold for each model year (currently 27.5mpg for cars) and the sales weighted average for all cars sold by a manufacturer had to beat that level. All companies had the same threshold. If they fell short they paid fines and if they exceeded it they could earn credits towards future years.

Now it's much more complicated. There is a sliding scale based on the footprint of each individual vehicle. The footprint is defined as the wheelbase times the average of the track width or the area within the wheels. The larger the footprint, the lower the threshold that vehicle has to meet. Therefore for two cars of similar overall size but one with a longer wheelbase, the longer one would have a lower mileage requirement. Each automaker is then assigned an individual threshold to meet based on the sales weighted average footprint of the vehicles it sells. A company that sells more large footprint vehicles would have a lower hurdle to jump. One that sells predominantly smaller cars would have to get better mileage. As a result a company like Porsche or Ferrari who sell relatively small sports cars would have to meet a higher standard than Ford or General Motors who sell more large trucks. The entire premise of this rule is absurd. This rule will likely have the effect of giving manufacturers an incentive to maximize the wheelbase and track of new vehicles in order to minimize their CAFE requirement.

The only saving grace here is that, overall, as fuel prices continue to climb, buyers are likely to migrate to more efficient vehicles regardless of the footprint.

[Source: NHTSA, AutoWeek]

We just spoke to GM's Greg Martin, Director, Policy and Washington Communications, about the fuel economy regulations that are being proposed by NHTSA today. Martin reiterated that although the new CAFE rules are tough, it is the company's position that they will meet them just as they said they would back in December when the Energy bill was passed by Congress. At an Earth Day event today in Washington, Transportation Secretary Mary Peters will announce the actual regulations that carmakers will have to meet in response to the mandate from Congress. The Energy bill called for an overall fleet average of 35mpg by 2020. The NHTSA rules will require a fleet average of 35.7mpg for cars and 26.7mpg for trucks, both by 2015.

If this pace continues through 2020, it would exceed the effective 42mpg that would be required by the proposed California CO₂ limits. Since the federal rules would exceed California's requirement, that raises the obvious question of whether that means the automakers would stop fighting the California rules. According to Martin, the issue with the state rules is not so much the mileage requirement. The real problem is the "17 or 18 distinct compliance plans that an automaker would have to manage" due to the patchwork of rules. Not all the states are taking the California rules in whole, some are cherry-picking and paperwork has to filed in each state verifying that the manufacturer is in compliance. This can be particularly problematic if the rules are based on sales within a given state and sales of different types of vehicles vary from state to state. A single national rule simplifies things and allows manufacturers to aggregate sales averages over the whole country.

[Source: General Motors]

Bob Lutz's worst nightmare appears to be on the horizon. Transportation Secretary Mary Peters is expected to unveil proposed regulations for fuel economy today that go beyond what Congress mandated in last December's Energy Bill. NHTSA appears set to require cars to achieve a fleet average of 35.7mpg of 2015 while trucks will have to get to 26.7mpg. That amounts to an average annual increase of 4.6 percent which goes beyond the 4 percent bump required by congress. In order to meet these new requirements carmakers are going to have to dramatically increase the implementation of technologies, like hybrids, biofuels, electrification and most of all reduce power.

In the arcane workings of Washington, Congress defines the requirements for fuel economy in energy bills. Meanwhile the Department of Transportation, through the National Highway Traffic Safety Administration actually defines the specific regulations that automakers have to work to. Why a safety agency is responsible for fuel economy regs remains a mystery. Finally, the Environmental Protection Agency is responsible for enforcement. The proposals will still have to go through a public comment period before they are enacted and we're still waiting for comment from the automakers. Meanwhile it's not clear what if any impact this will have on the battle between the automakers and California over that state's proposals to regulate CO2 emissions which would effectively increase mileage standards. We live in very interesting times.

[Source: Detroit News]

When Nissan introduced the Titan pickup truck earlier this decade, they became the first Japanese Automaker to directly challenge the U.S. manufacturers in the full-size truck segment. Unfortunately for Nissan, the gamble didn't pay off, but the company knows when to stop throwing good money after bad. With sales of only 65,000 a year and no sales outside of North America, it didn't make sense for Nissan to spend money developing a new generation vehicle. The capper on the deal were new fuel economy regulations. Nissan has been trying unsuccessfully for months to line up a supplier of diesel engines for the Titan. The announcement yesterday of the deal between Nissan and Chrysler to swap cars and trucks means the next-generation Nissan pickup will be built off the Ram platform.

It's not known yet if the Nissans will get the hybrid or light duty diesel engines that will debut in the Ram in 2010. Chrysler spokesman Nick Cappa told ABG that GM, Daimler and BMW would have to agree before Nissan could be included in the hybrid program. Since Daimler and BMW don't compete in the segment, and GM and Chrysler could certainly use the extra volume to bring costs down, it seems likely that the Nissan truck will eventually be found with a hybrid system. For the new light duty Cummins diesel, Dodge will probably get a period of exclusivity, but it seems likely that Nissan wouldn't even bother with a truck if they couldn't get a diesel, since everyone else in the segment will have one by 2010.

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