President Barack Obama — joined by Detroit's Big Three CEOs, the California governor and the head of the United Auto Workers union — is expected to unveil a landmark deal today to boost fuel efficiency standards of cars and light trucks to 54.5 miles per gallon by 2025 in a move that will reshape what Americans drive.
Last-minute haggling over final details was still taking place late Thursday, but automakers were confident a final deal would be reached before today's late morning event.
This is the largest increase in mileage requirements since the government began keeping score in the 70s. There has been some grumbling about the higher standards, including a letter to the President signed by the entire Michigan congressional delegation minus John Conyers, who decided to stand on the side of sanity. But flexibility concerning trucks, coupled with a consumer market that has definitely turned their wallets to purchasing fuel efficient cars, has most everyone on board with this. Our Michigan lawmakers are now tentatively showing favor, the UAW applauds the rules, California won't demand higher standards, Mazda and Volvo have flipped in the last few days, and only Daimler and Volkswagon are still voicing complaints.
Automakers were heading in this direction anyway, and with more hybrids coming in the future, they should be able to meet this demand. Consumers are already there.
And the auto companies have gotten a lot better at building popular small cars that are fuel efficient — thanks to gas-electric hybrids and advances in battery technology — and consumers are responding. Six of the 10 best-selling vehicles in America are small or midsize cars, and one of the most popular pickup models on the market is a Ford F-Series with a high-mileage, six-cylinder engine.
The new mind-set in Detroit has been helped by some give and take on the government’s side. G.M., Ford and Chrysler pressed for less onerous mileage goals for their profitable pickup trucks and got them. And the administration agreed to revisit the new requirements halfway through their course, with the possibility of adjusting them.
Speaking of those trucks, both light and heavy, they are making giant strides as well. Ford announced that they are teaming up with Azure Dynamics to introduce plug-in hybrid technology to the Super Duty F-Series by 2013. The Ford Explorer SUV is getting an EcoBoost engine to boost fuel economy. Chrysler recently topped Ford in light truck sales in Canada based on sales of the Dodge Journey, which gets better gas mileage than traditional SUVs - and they are now testing an electric version of the popular Dodge Ram trucks. No plans for production just yet, but you can bet that will change in the coming years.
About the only thing that can slow this down now are massive cuts in funding to R & D efforts championed by the Department of Energy. Better hope that this bill doesn't make it through in its current form, or we might have to revisit those mileage requirements in a few decades. If foreign automakers get funding from their government for new development and we don't make the same investment, domestics could find themselves behind the curve once again. Hopefully, they are already well on their way and can escape the new austerity movement that will put some American efforts on the sidelines.
Whether or not their customers can do the same is unknown at this point. Cuts that are slowing economic growth and job creation will have consumers pulling back on auto purchases - predictions are still that we should see sales improve this fall, keep your fingers crossed that holds true.
Update: Some facts from the White House press release on the event that are worth noting:
These programs, combined with the model year 2011 light truck standard, represent the first meaningful update to fuel efficiency standards in three decades and span Model Years 2011 to 2025. Together, they will save American families $1.7 trillion dollars in fuel costs, and by 2025 result in an average fuel savings of over $8,000 per vehicle. Additionally, these programs will dramatically cut the oil we consume, saving a total of 12 billion barrels of oil, and by 2025 reduce oil consumption by 2.2 million barrels a day – as much as half of the oil we import from OPEC every day.
The standards also curb carbon pollution, cutting more than 6 billion metric tons of greenhouse gas over the life of the program – more than the amount of carbon dioxide emitted by the United States last year. The oil savings, consumer, and environmental benefits of this comprehensive program are detailed in a new report entitled Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil, which the Administration released today.
Go to it!