Today the Detroit News reported that the Obama Administration has set its sights on doubling fuel efficiency to 56.2 mpg by 2025. 56.2 mpg would continue the 5 percent rate of improvement the automakers agreed to for 2012 to 2016. We continue to support 60 mpg as the best standard for consumers, and reducing pollution and oil dependency. Unfortunately, it appears the auto industry is fighting back, just like it always has against new pollution, fuel efficiency and safety requirements. The auto industry wants a weak standard of just 2 or 3 percent rate of improvement, equivalent to just 43 to 47 mpg, which can be met through incremental improvements to today’s conventional gasoline cars.
If the auto industry gets their way, it will be bad for consumers, bad for oil dependency and bad for their own competiveness. After receiving close to $90 billion in government loans to restructure and retool, the auto industry now needs to step up and support standards that will require them to deliver efficient, advanced technology cars.
Good deal for drivers: 56.2 mpg, while not as ambitious as the level we have been advocating, is a doubling in fuel efficiency from today’s average passenger vehicle and would cut drivers fuel bills in half. According to the agencies’ estimates, the average price increase would be $2,375, but pay for itself in 3 years [see note 1]. That’s a very attractive 33% return on investment. The net consumer savings would be $6,412 over the life of the vehicle.
By 2030, we estimate the 56.2 mpg standard would save drivers $700 billion in cumulative fuel costs, if the program is implemented without big loopholes. In contrast, a weak 47 mpg standard would forego $300 billion in cumulative fuel cost savings compared to 56.2 mpg.
Biggest single step to cut oil and pollution. Strong standards are the best way to cut oil dependency and pollution. 60 mpg is the single biggest step the Administration can take to cut both oil dependency and carbon pollution. We estimate the cumulative benefits by 2030 of the Administration's 56.2 mpg proposal, if implemented without substantial loopholes, would be to cut oil consumption by up to 4.7 billion barrels and reduce carbon pollution by 2,100 million metric tons.
Strong standards drive advanced clean cars; auto industry’s weak standard does not. According to the agencies’ analysis, a 56.2 mpg would require half the new vehicle fleet to be advanced technology, either conventional hybrids, plug-in hybrids or battery electrics. In contrast a 47 mpg scenario would require just 11 percent advanced technology vehicles, a level that analysts say should be achieved by 2016. The U.S. cannot afford to fall behind China, Germany, Japan and Korea in the race to lead the market for advanced technology cars.
Consumers and taxpayers need a return on our $90 billion investment. The U.S. government has provided close to $90 billion in loans to the auto industry to restructure and to retool to build fuel efficient, advanced technology cars [see note 2]. But the auto industry has returned the favor by asking for weak standard that would not require them to mass produce these clean cars that taxpayers have paid for.
Survival of the ambitious. The President needs to set the bar high for the automakers. We have seen repeatedly the consequences when oil prices spike of setting the bar low . Twice now the U.S. government has had to bail out Detroit automakers that ignored the clear signs that they needed to raise fuel efficiency.
We have always been an ambitious country. We should demand the same from our auto industry.
Notes:
1) The agency price range increase for 5%/56.2 mpg is from $2100 to $2600 for an average of $2,375. The agency payback period for 5%/56.2 mpg is from 2.5 to 3.6 years, for an average of 3 years.See the September 30, 2010 agency analysis on this page.
2) See CNN website. GM, GMAC and Chrysler have received $77.6 billion in bailout loans. GM and Chrysler supplier have received another $3.5 billion. Ford, Nissan and Tesla have received $8 billion in Section 136 retooling loans.