Apr 4, 2010

34 Miles Per Gallon for Auto Industry by 2016

The Obama administration unveiled final rules Thursday that set a 35.5 mpg average for the U.S. auto industry by 2016, which the government said would cut fuel use 40%.

While the rules will cost the industry $52 billion to meet, automakers embraced the standards as a way to avoid a patchwork of state and federal rules and called on the government to begin work immediately on rules for the 2017 model year and on.

Administration officials calculate the rules would add less than $1,000 to the average price of a new vehicle in the 2016 model year and that many consumers would earn back the cost in fuel savings over three years.

"This is the most aggressive fuel-economy standard ever set" in the U.S., said Transportation Secretary Ray LaHood.

It also has the potential to revisit the troublesome 1970s, when early fuel-economy and emissions rules taxed automakers' expertise and put stumbling, stalling cars on the road.

"The complexity is good for the dealers," because they'll make money fixing tech-heavy new vehicles, said Jim O'Donnell, CEO of BMW North America, at an auto forum in New York this week.

The rules, in effect, give each vehicle model its own mileage requirement based on its "footprint," or square feet it covers.

To a limited extent, the rules are easier on big vehicles than small ones, recognizing that it's much tougher to make larger, heavier models that get the same mileage as smaller, lighter ones.

For new models, automakers may think, "If I make my vehicle 1 square foot bigger," hitting a target might be easier, says Larry Dominique, head of product planning for Nissan in the U.S.

The joint rule by the Transportation Department and the Environmental Protection Agency is the first U.S. limit on greenhouse gas emissions after a Supreme Court ruling classifying carbon dioxide as a pollutant under federal law.

Automakers backed the rule. The actual fuel-economy target is a minimum 34.1 mpg. The difference is to be made up through more-efficient air conditioning that reduces carbon emissions.

The California Air Resources Board and environmental groups also hailed the rule.

The unsteady d├ętente between the industry, environmentalists and the state of California could disappear if California moves to set its own state standards for years beyond 2016, a move automakers oppose.

"America needs a road map to reduced dependence on foreign oil and greenhouse gases, and only the federal government can play this role," said Dave McCurdy of the Alliance of Automobile Manufacturers. "Now we need to work on 2017 and beyond."

By 2016, the average fuel economy for cars is estimated to be 37.8 mpg, while light trucks are expected to average 28.8 mpg.

Automakers will get credits for building electric vehicles, plug-in hybrids and hydrogen fuel-cell models.

Contributing: James R. Healey usatoday.com 4-1-10

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