Changing buyer tastes may cause lowered mpg standards

Michael Wayland
The Detroit News

Dearborn — America’s resurrected love affair with pickups and sport-utility vehicles could drive federal officials to relax upcoming fuel economy regulations of 54.5 miles per gallon for a fleet average by 2025.

Federal officials and industry experts on Tuesday discussed the 2022-2025 regulations with cautiously optimistic outlooks despite a host of factors, including lower gas prices and consumers not purchasing enough fuel-efficient models to outweigh the growing number of pickups and sport-utility vehicles.

The regulations, when announced by President Barack Obama in 2012, were based on consumer behaviors around the 2008-2010 model years that have changed as the economy has strengthened, gas prices have fallen and automakers have released more-efficient large vehicles.

Officials would not outright say federal officials will have to lower the 2022-2025 corporate average fuel economy (CAFE) standards, but a review is under way and it appears consumer behaviors have changed.

“We agreed the midterm review would take a fresh look ... That those (regulations) would be based on updated data, updated information,” Kevin Green, chief of U.S. Department of Transportation’s CAFE Program Office, in Cambridge, Mass. told The Detroit News following a presentation at Automotive World’s Megatrends USA conference in Dearborn. “I can’t see how we would not use an updated assessment of the market.”

Green, during his presentation, said the 54.5 mpg targets are “not solid ground” because each automaker’s number is going to differ based on fuel economy credits, their mix of light-duty trucks and passenger cars, and other factors.

Green’s office, among other things, provides CAFE-related analytical support to NHTSA.

Chris Nevers, Alliance of Automobile Manufacturers director of climate and fuel economy, told The News consumer behavior is going to be “key” for the midterm review.

“This is a consumer-driven program,” he said. “These vehicles have to be sold, not just produced.”

Nevers, whose trade organization represents 12 automakers, including Detroit’s Big Three, said that based on U.S. Environmental Protection Agency figures, only 3.1 percent of 2013 model-year vehicles met the government’s 2025 fuel economy regulations.

Michael Olechiw, EPA director of the light-duty vehicle and small engine center, said the organization is working with NHTSA, other agencies and major stakeholders to assess the feasibility of automakers being able to meet the 2022-2025 regulations for midterm review.

Steps in the midterm review include issuing a technical assessment report for public comment by June 2016, followed by a preliminary determination and the EPA issuing a final ruling on whether to decrease, increase or keep the standards by no later than April 2018.

Olechiw said officials are researching for the midterm review of the post-2021 standards, which follow 2017-2021 standards that were set in 2012. He said the EPA and its partners are looking into nearly every aspect of the automotive industry — from sales and gas prices, to electric vehicles and new combustion engine technologies.

Electric vehicles haven’t taken off as many five years ago thought they would. Sales have remained anemic, as automakers increase the fuel efficiency of combustion engines and gas prices decline.

Automakers represented at the conference, including Ford Motor Co. and Volkswagen AG, said they are not giving up on electric vehicles because there is no silver bullet when addressing the fuel economy standards, which provide credits for selling electrified vehicles.

Ford calls its strategy “the power of choice.” It offers customers a range of different powertrains, including hybrids, all-electric, plug-in hybrids and turbocharged engines.

“The strategy is really set up very well for this,” said Mike Tinskey, Ford global director of vehicle electrification and infrastructure. “If a customer, for whatever reason, gravitates toward one technology versus the other, we can respond to that.”

Powertrain innovations to help meet fuel economy standards was one of three major topics at the conference hosted by United Kingdom-based Automotive World in Dearborn. Others including connected cars and lightweighting.