Carmakers seek clarity on emission standards
As industry stakeholders, environmental groups and various levels of government wrestle over the direction of future vehicle emissions and fuel economy standards in the U.S., all the auto industry wants is a common standard on both sides of the border, said Flavio Volpe, president of the Automobile Parts Manufacturers’ Association. That will also be Volpe’s advice in a submission to Canadian officials this week. Ottawa is currently soliciting opinions on whether Canada should go it alone in setting tougher environmental standards for vehicles if the U.S opts to lower previously set benchmarks. “My answer will be no,” Volpe said.
“We want one standard, not to be different than the American industry. If you have differing standards here, you make it more difficult and diminish the value of manufacturing in this market.” Volpe’s comments came as the U.S. Environmental Protection Agency and the U.S. National Highway and Transportation Safety Administration held public hearings Tuesday in Dearborn, Mich. Another session on the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule was held Wednesday in Pittsburgh.
The U.S. government is considering extending the 2020 fuel mileage standards for cars and light trucks through 2026 rather than implement the more demanding benchmarks scheduled to go into effect in 2025.
The 2020 standard calls for an average, of all vehicles, to be 37 mpg or 59.2 km per gallon. The proposed 2025 target had been 54.5 mpg.
Under the Trump administration, the EPA is also proposing to take away the ability of individual states’ to set their own emission standards.
Volpe said auto manufacturers aren’t interested in returning to the days when they ’d build vehicles separately for California and then every other part of North America. “Building to two different standards would make North American product less competitive,” Volpe said.
Volpe said regardless of the changing standards, the Windsorbuilt Pacifica is well-positioned in the market.
Fiat Chrysler Automobiles also offers the only hybrid minivan, which is capable of attaining 84 mpg.
“The minivan segment is pretty much Chrysler, so they’re in good shape,” Volpe said.
“They have enough powertrains to ensure its (future).” Volpe said Ford’s two Windsor engine plants, which supply five-litre V8s for the company’s enormously popular F-150 pickup trucks and Mustangs, is the perfect example of the dilemma facing automakers.
“Those engines don’t help you on the fuel economy side with regulators, but that’s what keeps Ford profitable,” Volpe said.
“You need those profits to invest in developing the technology to create different product mixes.” Volpe said Windsor’s auto sector, along with the region’s supporting tool-and-die and mould-making firms, will be fine as long as the regulators don’t negatively affect the economics of companies. At Tuesday ’s hearing, Steve Bartoli, FCA’s vice-president, global fuel economy and GHG (greenhouse gas) emissions compliance, said the auto industry’s non-compliance gap between the actual fleet average and 2020 standards will grow to 3.5 mpg. Bartoli said the forecasts in 2012 used in setting future standards have proven inaccurate. He urged regulators to consider the new realities but made it clear FCA supports striving for annual improvements in the standards. “From FCA’s perspective, the three most significant changes to the assumptions we made then are: sustained lower gas prices, a dramatic shift in consumer preference from cars to utility vehicles and the lack of penetration of alternative fuel technology,” Bartoli said.
Car purchases now represent only 36 per cent of all sales when they were forecast to be 21-percent higher. Larger, less fuel-efficient SUV sales have grown from 30 to 40 per cent of the market. Hybrids and electric cars are also failing to gain significant traction as the U.S. market share is stuck around three per cent. Electric-vehicle sales in Canada represent 1.5 per cent of 2017 total sales, according to website fleetcarma.com. Fleetcarma is a technology company that tracks and promotes the growth of electric vehicles.
“The combination of low gas prices and consumer concerns over product cost and range (of electric vehicles) have inhibited uptake,” Bartoli said.
“The reality that residual value of electrified vehicles can be as much as 40-per-cent below those with a conventional powertrain compounds the financial concerns for prospective consumers.” Currently, there are about 500 vehicles on the market that achieve 48 km per gallon (30 mpg ) or more on the highway. There are 45 hybrid electric models and 50 electric plug-in vehicles available to consumers.
Volpe said the loss of Ontario’s electric-vehicle incentive program isn’t going to make much difference in luring consumers into the electric vehicle market.
“It was part of the previous government’s plan and it didn’t work,” Volpe said.
“We had less than one per cent of the market.”
Those engines don’t help you on the fuel economy side with regulators, but that’s what keeps Ford profitable.