Automakers unlikely to end quest to boost fuel economy
Even if Trump eases standards, most see value in efficiency.
Just because President Donald Trump’s administration might ease up on U.S. fuel economy requirements, don’t expect gas guzzlers like the giant 13 mpg Hummer H1 to make a comeback.
Executives from automakers and suppliers gathered at a conference outside of Detroit this week said looser fuel economy standards might allow for sales of more trucks in areas where they’re popular. But otherwise, the pursuit of fuel-efficiency technologies will proceed unabated.
Trump came to the Detroit area this week to announce that his Environmental Protection Agency will re-examine gas mileage requirements that
were affirmed in the Obama administration’s last days. Those regulations require the fleet of new cars and trucks to average 36 mpg in real-world driving by 2025, about 10 mpg more than the current standard.
Executives at the Fuel Economy Detroit conference said the billions of dollars already invested in more-efficient vehicles makes reversing course impractical. And while the U.S. might ease some rules, other countries are toughening them, leaving the industry no choice but to keep researching ways to make gas engines more efficient and develop cheaper and longer-range electric and hydrogen fuel cell vehicles.
“We’re all global companies. We have to design our vehicles to be fuel efficient not only in the U.S., but in Europe and Asia,” said John Juriga, director of powertrain at the Hyundai-Kia technical center near Ann Arbor, Michigan.
Automakers lobbied Trump to get the government to reopen a “midterm review” of the standards for 2022-2025. They say the EPA under Obama rushed out the review just seven days before Trump took office, and reneged on promises to get industry input. The agency also didn’t place enough weight on the pronounced consumer shift to SUVs and trucks, according to the automakers.
Given Trump’s promises to auto CEOs about easing regulations, it’s likely the requirements will be weakened when the new review is finished by April of next year.
Here’s what that could mean for new vehicles:
What will change
Truck and SUV sales likely will keep rising. Auto companies don’t expect a major cut in the 36 mpg requirement. But they’re hoping for standards that are flexible enough for them to sell more trucks and SUVs without penalties. Those highprofit, bigger vehicles made up over 60 percent of new vehicle sales last year, up from less than 50 percent five years ago.
Lower mileage requirements will let the industry sell more trucks and sport utility vehicles in areas like the Southwest, where they are popular.
Profits from those high-margin sales will help pay for low-margin electric and other efficient cars sold on the West Coast, says Sam Abuelsamid, a senior analyst for the market research firm Navigant.
If the standards remain the same and gas prices stay low, the industry says it would lose money trying to sell more fuel-efficient cars to people who don’t want them.
Like other automakers, Hyundai and Kia have the technology to meet the standards, but the cost has to be weighed against consumer demand, Juriga said.
What won’t change
Automakers and parts companies will continue to make more fuel-efficient vehicles. Paul Nahra, director of the Advanced Engine Group for parts maker BorgWarner, says his company sells to automakers worldwide including regions with stricter gas mileage standards. “We need to be pushing the right technology that’s going to get broad acceptance,” he says. For instance, China, Europe and Japan will all require fleets to average 47 miles per gallon or higher by 2020.
Work continues to downsize engines, shed weight and on new engine technology that makes a gas engine perform like a more efficient diesel. “So far there’s no indication there’s going to be any backtracking on this stuff,” says Abuelsamid.
The fallout
Environmental groups and the states of California and New York took legal action after Trump’s announcement and claimed that higher pollution could harm children and senior citizens. “
Juriga said it’s possible that automakers would delay rolling out new fuel-efficient vehicles in some markets if demand is low.
California and more than a dozen other states have the power to set stricter fuel economy standards than the federal government and likely would if Trump rolls back federal standards. That almost certainly would lead to a court fight.