Will New Fed Fuel Rules Harm Ford?

Your days of buying and driving a gas hog may soon be over. The government wants to squeeze you behind the wheel of a smaller car, one that eats less gas and emits fewer emissions.

I’m just now going over the information being issued by the feds regarding the new nationwide federal fuel and emissions rules and am beginning to wonder if this is just one more stumbling block for the auto industry. Ford, which has managed to escape the fate of General Motors and Chrysler thus far, has another challenge facing it: government mandated fuel and emissions standards which will kick in four years earlier than planned, in 2016.

New Fuel and Emissions Standards

Just seven years away, the proposal raises fuel efficiency targets to 35.5 miles per gallon for new passenger vehicles and light trucks by 2016 while bringing uniformity to the complex and varied state emissions policies currently in place.

President Obama hailed the new guidelines as an important step to help the country break its addiction on foreign oil while reducing greenhouse gas emissions.  Some scientists believe that greenhouse gas emissions contributes to global warming which may negatively impact life on earth.

The president says that the new fuel standards will help the country save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years which represents more oil than all of the oil imported from several countries combined including Nigeria and Saudi Arabia.

Change Won’t Come Cheaply

The changes coming forward will not come without a cost, adding as much as $1300 to the price of a new car.  Those costs will be passed on from the automaker to the consumer, suggesting that we’ll see sticker price like we haven’t seen it in years.

Some analysts believe that the best way for automakers to achieve higher fuel numbers is to build and sell smaller cars and a lot of them. However, automakers like Ford — who is already committed to building several new, but smaller models — may also be able to reach the higher numbers in other ways including expanding its hybrid offerings, selling electric vehicles, offering diesels and relying on EcoBoost technology.

The fed move would require that cars average 39 mpg and light duy pickup trucks 30 mpg under the proposed rule. In addition, the tailpipe emissions standard of 250 grams per mile would be a drop from the current 380 grams per mile.

At the press conference, the president was flanked by auto industry leaders,  Gov. Arnold Schwarzenegger of California and Governors Deval Patrick (Massachussetts) and Jennifer M. Granholm (Michigan).  As of this writing, the Ford Motor Company had not issued its own statement regarding the proposal but was expected to support the president.

Source: The Washington Post

AAM Weighs In On Environmental Responsibility

The Alliance of Automobile Manufacturers (AAM) is an organization that consists of many of the major automakers selling cars in the US, focusing on safety and environmental issues as well as presenting a united front with all things automotive. Lately, the organization has had to grapple with market changes coming their way including government mandates requiring that automotive manufacturers produce a greater number of vehicles that get high gas mileage while spewing out fewer harmful emissions.

Quoting Dave McCurdy, President and CEO of the AAM, “An effective climate change policy must be built on an economy-wide approach that involves all stakeholders and emphasizes the wisdom of a national, not state by state, strategy to address climate change.”

The AAM and its member companies understand that they have a responsibility to increase fuel economy and limit greenhouse gas emissions from new automobiles and are committed to being part of the solution to climate change.

Concerning the EPA’s recent analysis of the problem, the AAM says that the subject is complex and requires close study before the organization can valuate how the proposal would impact the industry. The AAM believes that the EPA’s Clean Air Act, which underwent its last major amendment in 1990, leaves out some of the tools and standards necessary to address the global issue of climate change, including requirements on how to balance the economic effects and impacts on U.S. manufacturing jobs along with the environmental considerations. Specifically, the AAM recognizes that the leading climate change proposals in Congress propose using a different framework for reducing carbon dioxide emissions.

What the automakers are doing right now is to produce CO2 efficient autos that use less fuel and emit less carbon dioxide. At the same time elevated gas prices are forcing consumers to do their part as they choose more fuel efficient autos. While the increase in fuel prices and the transition from light-duty trucks to small cars increases the importance for advanced fuel conservation technologies, it does not decrease development costs or reduce the time needed to generate them.

At present, the National Highway Traffic Safety Administration (NHTSA) is in the process of establishing fuel economy standards that will result in a minimum 40% increase in fuel economy and a minimum 30% reduction in carbon dioxide emissions by 2020, requirements which are more rigid than any other industry in the U.S.

The EPA says that autos account for 20% of all man made CO2 emissions in the U.S., but automotive manufacturers are currently offering more than 70 models of alternative fuel autos powered by hybrid electric, clean diesel ethanol and more. Moreover, more than 100 models are already available that achieve highway fuel economy ratings of more than 30 mpg.

(Source: Alliance of Automobile Manufacturers)