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]

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]

According to a new poll of Michigan residents, they don't think that holding back on raising fuel efficiency and emissions standards will help the domestic automakers. Instead most people think the industry that employs (at least for now) so many of them needs some tough love. Two-thirds of households that include people that work in the business and seventy-two percent of all people in Michigan think an increase to 40mpg would benefit GM, Ford and Chrysler. Forcing the automakers to increase fuel efficiency, although it would cost money to redesign vehicles, would result in products that are more competitive with foreign brands.

In the same survey, eighty-four percent of respondents felt that the US auto industry is in major trouble. Michigan already has the highest unemployment rate in the country, and the state legislature is facing another $1 billion dollars in cuts to balance the budget this year. In addition, school districts in the state are facing over $300 million in mid-school year funding cuts. It looks like people in Michigan think John Dingell needs to back off on trying to stop fuel efficiency increases, and actually push back against the industry he has defended in Congress for over fifty years.

[Source: 40MPG.org]

U.S. Senator Rick Santorum of Pennsylvania, who is up for reelection, and his opponent, state treasurer Bob Casey, recently answered questions on their views on environmental issues. When asked about the Bush administration's attempts to improve fuel economy standards, Casey replied that both the president and Senator Santorum's improvements would have '...little to no effect on improving fuel economy, reducing consumption and reducing emissions.' The senator states he is still open to any changes in Corporate Average Fuel Economy (CAFE) standards though wants the automakers to be more involved in the decision making process.

Other questions and the men's replies can be found at the link. We felt confused at the above responses but especially Senator Santorum, who previously opposed government involved in the CAFE standards. Analysts are still divided over the recent CAFÉ changes though agree they will increase costs to the automakers.

Related:

• Senators harp on Detroit for not providing better fuel economy, push for tougher CAFE standards

[Source: Associated Press via phillyBurbs]

The Washington Post reports nine U.S. states are suing the administration of George W. Bush for being too soft on future fuel economy standards. The lawsuit calls it unconscionable that the Bush administration is not requiring greater fuel economy for light trucks. The 1.9 mile-per-gallon increase is considered to be insufficient to curb our energy use in a significant way. In addition, it seems a couple of loopholes have snuck in with this tightening fuel economy standard that could “create incentives to build larger, less fuel-efficient models” and attempts to pre-empt a California law requiring a reduction of greenhouse gas tailpipe emissions. The nine states filing the suit are California, Connecticut, Maine, Massachusetts, New Mexico, Oregon, Rhode Island, and Vermont. I don’t expect to see Michigan join that group any time soon.

[Source: Washington Post]