Automakers OK with Tougher MPG, If Rules Are Consistent

Last Updated Sep 18, 2009 11:02 AM EDT

The clock is ticking toward final approval of tougher U.S. standards for gas mileage and greenhouse gases, probably around the end of this year.

The Department of Transportation and the Environmental Protection Agency earlier this week announced the details of a plan that has the effect of accelerating by four years an earlier, Bush Administration mandate for automakers to achieve a Corporate Average Fuel Economy of 35.5 mpg.

The accelerated timetable means automakers will have to achieve that average in 2016 instead of 2020. The average requirement for new vehicles today is 27.5 mpg.

The new rules also put the federal government in the business of regulating auto-related greenhouse gases, in addition to mandating CAFE. That amounts to much the same thing, since there's a direct relationship between gas mileage and carbon dioxide emissions.

However, the worst-case scenario for the auto industry would be if different federal regulators came up with inconsistent standards, plus the possibility of different state standards on top of that.

Besides the logistical headaches that would cause, that sort of complexity makes it much more difficult to cut costs at the factory level by sharing common components across the greatest possible volume of cars and trucks.

The EPA estimates that meeting the new standards will add about $1,100 to the cost of the average new vehicle, offset by estimated fuel savings of $3,000 over the life of the vehicle.

For automakers, the upside of the new rules is that the DOT, the EPA and the state of California are all working together to come up with harmonized standards, said Michael Stanton, president and CEO of the Association of International Automobile Manufacturers, based in Arlington, Va.

As part of a compromise leading up to the new rules, automakers agreed to drop lawsuits in various states opposing the idea of state standards for greenhouse gases, Stanton said in a phone interview today.

"I'd characterize it as very challenging but do-able," he said of the new timetable.