President Barack Obama proposed the most dramatic increases in fuel economy standards today since Corporate Average Fuel Economy (CAFE) regulations were introduced following the oil embargo of the 1970s. With support from most major automakers, the United Auto Workers, and California legislators — who can legally reject federal environmental standards — the president garnered the support to raise the federal corporate fuel economy standards to 54.5 mpg by 2025, nearly double what it is today.
“This agreement on fuel standards represents the single most important step we’ve taken as a nation to reduce our dependence on foreign oil,” Obama said at the public announcement.
Coming out in support of the proposal, representatives from the UAW, Chrysler, Ford, General Motors, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo attended the announcement. Toyota, while initially opposed to the legislation, changed its public opinion on the matter just a few days ago, and representatives from Mercedes-Benz parent company Daimler and Volkswagen have expressed ongoing opposition to the regulations, choosing not to attend the conference.
“Higher standards are good for the county, good for the auto industry and good for consumers,” a Hyundai spokesman said in an interview with Automotive News earlier this week. “They’ll save new car buyers money at the gas pump and reduce the country’s consumption of oil.”
Building on the CAFE regulations in place until 2016 that will mandate a 39 mpg average for cars and a 30 mpg average for light trucks, the new standards will increase those figures 5 percent per year for cars and 3.5 percent per year for trucks. Truck standards will be re-evaluated in 2021 and may go up to 5 percent per year from there. As recently as last fall, the National Highway Traffic Safety Administration said a 5 percent increase per year could add as much as $2,100 in additional costs per vehicle by 2025.
“This is not easy, but the companies are being very cooperative,” Transportation Secretary Ray LaHood, who runs the NHTSA, said in an earlier interview with the Detroit News. “Frankly, everyone is working 24-7. These deliberations are going on somewhere between 12 and 18 hours every day for the last several days.”
Traditionally, CAFE regulations have favored car-heavy lineups from import brands, such as Toyota and Honda, which have been able to adjust to the mandates with ease. Domestic manufacturers have tried to keep up despite selling more gas-guzzling trucks. With a higher percentage of efficient cars, regulations had previous allowed foreign automakers to make more big trucks and SUVs with less of an impact to their CAFE averages.
However, the new proposal’s tiered setup will allow Chrysler, Ford, and GM a better opportunity to make more efficient cars without sacrificing their bread and butter truck lineups. While domestic automakers have traditionally opposed federal fuel economy increases, part of the 2009 bailout packages Chrysler and GM received called for a program to build more efficient automobiles.
While Obama unveiled the initial plans for the 54.5 mpg standard, the Administration will nail down all of the details sometime in September before it heads to Congress next July.