What Do Obama's New Fuel Economy and Emissions Standards Mean for Automakers?

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After decades of hemming and hawing, the U.S. government has finally hashed out concrete fuel economy and emissions standards for cars and light trucks. The new rules, generated by the National Highway Traffic Safety Administration and Environmental Protection Agency, are contentious, to say the least. Here's why.

Beginning with 2012 model vehicles, automakers have to improve the fuel economy of their fleets and cut greenhouse gas emissions by about 5% each year through 2016. That means 2016 model year vehicles will need to meet an estimated combined average emissions level of 250 grams of carbon dioxide—a requirement that will bring vehicles up to an average of 35.5 mpg if all carbon reductions come directly from improvements in fuel efficiency. More specifically, cars will average out to a target of 37.8 mpg by 2016, and pickups, minivans, and SUVs will average 28.8 mpg. The EPA will also allow automakers to each credit 200,000 of their EVs as having a 0 gram rating for CO2 (read: zero emissions rating) through 2016. Any EVs over the 200,000 cap will have to take into account the CO2 generated from electricity used in charging. It's a fairly low cap—Nissan will build 150,000 of its all-electric Leaf vehicles in 2012 alone—but lawmakers believe that emissions generated from electricity production have to be taken into account at some point.

The most intriguing part of the whole thing? Fuel efficiency isn't king—it's all about greenhouse gas reductions. This is probably the EPA's attempt at preparing for a future where most vehicles aren't just juiced up by gasoline. Carmakers shouldn't necessarily get off scot-free if their EVs are ultimately powered by coal-fired electricity plants, after all.

Most environmentalists are ecstatic about the announcement, which will save 1.8 billion barrels of oil and cut down on 960 million metric tons of greenhouse gas emission. The downside? Obama's rules will tack on $926 to the cost of purchasing a car within five years, and cost automakers a staggering $52 billion to get up to speed with regulations. Still, the NHTSA rationalizes that people who buy a 2016 model year car will save $3,000 over the life of the vehicle thanks to fuel efficiency improvements. As for automakers, they'll just have to suck it up.

So far, reactions from the auto industry (and auto dealers) have been mixed. The AP reports that Ed Tonkin, the car dealer in charge of the National Automobile Dealers Association, called the rules "the most expensive fuel economy mandates in history. Tonkin also warned that rising vehicle prices will prohibit many Americans from buying new cars. But in a response to an earlier FastCompany.com piece about the fuel efficiency rules, Scott Monty, Ford's head of social media, rationalized, "One of the ways we're addressing this issue at Ford is by making fuel efficiency affordable for all. With every new vehicle that we launch, we've committed to being best in class in fuel economy. Lighter weight and higher strength steel allows customers to save at the pump while our vehicles can still achieve 5-star crash ratings."

In the end, we have to side with the U.S. government, which assures us that "Although the standards can be met with conventional technologies, EPA and NHTSA also expect that some manufacturers may choose to pursue more advanced fuel-saving technologies like hybrid vehicles clean diesel engines, plug-in hybrid electric vehicles, and electric vehicles." Any ruling that gives automakers the much-needed kick in the pants to switch their fleets over to hybrids and EVs is alright by us.

[NHTSA]

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2 Comments

  • Rainmaker1984

    Hasn't the government done enough to restrict the car companies? Over-regulation has done irrepairable harm to an industry that was once the backbone of our country. Global warming has occurred on other planets (without automobiles or humans). As far as improving mileage in autos, haven't we done that since the Arab oil embargo and now we import triple the amount of oil from the middle east.

  • Jamie Christenson

    The problem with this is that to meet the new standards, the cars will have to become lighter, and made with weaker materials. At what point do we say "enough"? When head-on collisions at 40 MPH are generally fatal?