Obama Announces New Standards To Double Vehicle MPG By 2025

Will your next vehicle get much better gas mileage than your current one? Ask most car shoppers and it’s a priority. A new government mandate formally announced on Friday makes it even more likely you’ll find one with significantly higher mpg. The Obama administration and U.S. Environmental Protection Agency have
come to an agreement with 13 major automakers–as well as the state of
California and its Air Resources Board, and the United Auto Workers
(UAW)–about fuel economy.

The new standard, which will eventually
require a 54.5-mpg fleet average (roughly 163 grams of CO2 per mile),
will effectively double the average fuel economy of U.S. vehicles by
2025.

Backed by automakers, and a big move against oil dependence

President
Obama cited the rising burden of gasoline costs at a time when budgets
are tight, and called the new rules “the single most important step
we’ve ever taken in reducing our nation’s dependence on foreign oil.” He
also argued strongly for taking oil and gas subsidies and funneling the
funds toward clean-energy research and “a more balanced approach.”

According
to the Administration, the new rules, which were reached without the
need for legislation, will save U.S. families $1.7 trillion in fuel
costs, and by 2025, save an average of $8,000 per vehicle. And they’re
estimated to help save 2.2 million
barrels of oil a day by the time they’re fully implemented.

There
are massive greenhouse-gas reductions, too; the new rules will cut more
than six million metric tons of CO2 by 2025–more than the U.S. emitted
in total this past year.

The new regulations build their
trajectory from existing rules that apply to model years 2012 through
2016, raising fuel efficiency to a 35.5-mpg fleet average by
then–increasing the required fleet average by 3.5 percent each year for
five years, then five percent per year after that.

Getting
automakers and the State of California involved will also help ease
worries about that state trying to enact its own more stringent
regulations about fuel economy and CO2.

To achieve the gains, it’s
likely that we won’t see automakers relying broadly on any single
technological developments or powertrain types; rather they’ll be
applying a portfolio of strategies like hybrids, plug-ins, pure electric vehicles, and range-extended electric vehicles.

There’s
a mid-term evaluation built into the program, in which agencies will be
able to evaluate how well the national framework is working–and how
well automakers are keeping up. Some environmental groups are already
calling foul, saying that this could be a launch point for automakers to stall
the incremental improvements, as happened in the 1980s and 1990s.

But can Americans afford higher vehicle prices?

While
the new rules might save thousands in fuel costs over the life of the
vehicle, they introduce one significant concern, however, and that’s new
vehicle prices. The Center for Automotive Research (CAR) has estimated
that it’ll cost an average of $6,700 per vehicle, though that includes
the higher cost of electric vehicles. Other estimates place the cost in
the range of $1,500 to $2,500 per vehicle, with much of that cost going
to the lighter materials and more advanced technologies required.

“If
car and truck buyers cannot or are not willing to pay for these new
vehicles, there will be little to no environmental benefit, serious
ramifications for American workers, and a negative impact on the
economy,” said the National Automobile Dealers Association (NADA), which
noted that it is still analyzing how the standard will affect the
market.

According to an official White House press release, the 13
automakers represent together more than 90 percent of the vehicles sold
in the U.S.

And
while a number of automakers released statements supporting the new
regulations, several German automakers said otherwise. “The proposal
encourages manufacturers and customers to shift toward larger, less
efficient vehicles, defeating the goal of reduced greenhouse gas
emissions,” said Volkswagen
Group of America communications chief Tony Cervone, who also remarked
that the new rules have no consideration for the impact of clean
diesels.

Some other analysts and experts pointed to gains in
fuel-efficiency and questioned whether diesels are a better way to
accomplish these gains. Diesel Car sales are definitely up, several automakers have recently announced plans to offer new diesel models (such as in the 2013 Chevrolet Cruze as well as some 2013 Mazda models). And J.D. Power forecasts that diesels will make up 7.4 percent of the vehicle market by 2017.

After
the U.S. cleaned up its passenger-car diesel fuel (by greatly reducing
sulfur content) several years ago, many insiders expected the market for
diesels to open up rapidly. It hasn’t, and some automakers (like Honda nd Subaru) have actually reversed plans to put diesels in the mix.

CAFE bell curve yet to be announced

While
the EPA has set a trajectory for fuel economy, it hasn’t yet set the
specifics of how the fleet-average numbers will be calculated. To help
level the playing-ground for full-line manufacturers who still might
want to offer bigger vehicles, pickups and sports cars, current incentives give automakers a significant boost
from vehicles that run on ethanol blends. With those incentives almost
certainly going to the wayside, new incentives are expected for more
efficient air conditioners, electric vehicles, and perhaps hydrogen
fuel-cell vehicles. Automakers would also be allowed to bank CAFE
credits that they’ve earned under the 2010 through 2016 regulations all
the way through model-year 2021.

The
other issue is that the new regulations are likely to equate even less
to real-world fuel efficiency than they do now. An analysis from the Union of Concerned Scientists
suggests that we might be paddling backwards in allowing so many
credits and incentives–and in counting electric vehicles, like the Nissan Leaf, the way we do. Their calculations find that by 2025, the true average
on-the-road fuel economy (when they anticipared a 62-mpg CAFE) would
only be about 39 mpg–making the promised 54.5-mpg feel a little bit like
vaporware.

This story originally appeared at The Car Connection

So, what do you think? Are these new standards the right move? Voice your opinion here!