Buss: Collision coming on fuel standards
Jim Lentz is confident Toyota Motor Co. can meet the strident federal fuel efficiency standards for passenger cars by the 2025 deadline. And with a company that makes the Prius — the most popular hybrid car — he’s in a better position than many to comply.
“We supported the standards, and are in good shape with passenger vehicles,” Lentz, CEO of Toyota North America, said in an interview with The Detroit News this week during the North American International Auto Show.
But “passenger vehicles” is key. It means cars, sedans, hatchbacks and various other cars that are only half of his company’s vehicle fleet. Those cars — especially the small ones — are the high-mileage models.
But the Corporate Average Fuel Efficiency (CAFE) standards also apply to larger and relatively gas-guzzling pickup trucks and SUVs.
Light trucks make up the larger and more profitable side of the industry. That’s where Lentz says Toyota and other automakers might come up short, if consumer demand, technology, and gas prices don’t change.
“We are all going to have to do enough — weight reductions, new transmissions. We’re going to unturn every stone,” he says. “Everybody is working as hard as they can.”
Lentz noted when Toyota and other automakers supported raising the CAFE standard to an average 54.5 miles per gallon — double the current 27.5 mpg — it was based on certain assumptions. One of those was that the relatively high price of gasoline would make smaller electric and hybrid vehicles attractive to consumers.
But the price of oil hit $30 a barrel this week, and shows no indication of rebounding toward the $100 mark.
“Is this a short-term issue or a long-term one?” Lentz says. “That will determine how well we do at meeting the standards.”
Lentz, like other automotive executives, is looking to the mid-term review of the higher CAFE mandates, scheduled for next year. He’s not yet saying Toyota will ask for relief, but as long as gas prices favor trucks, he’s not optimistic about meeting the targets.
“On light trucks, I don’t see a way to get there,” he says. “But the clock is still ticking.”
Lentz is hopeful the federal government will provide relief if requested.
“The administration spent billions saving the industry,” he says. “I don’t think it wants to hurt it.”
Fiat Chrysler Automotive CEO Sergio Marchionne is also waiting before declaring the 2025 mark unreachable.
“It’s too early to decide if a review in 2017 is needed or can be dismissed,” he said at the auto show. “2025 numbers are very high, but it’s technologically doable.”
Marchionne and Lentz both raise the question of whether consumers will support the technology necessary to make vehicles, particularly light trucks, ultra fuel-efficient.
“Technologically, anything is possible,” Lentz says. “Are consumers willing to pay what it costs to build cars that fit within regulations?”
This auto show illustrates, if nothing else, that technology is the name of the game in the auto future. And as long as there continues to be improvements to fuel efficiency, the automakers might squeeze by on the 2025 standards and be able to continue to meet consumer demand for larger vehicles.
But as Lentz says, “Who’s going to spend $85,000 for a pickup truck?”
Kaitlyn Buss is an editorial writer at The Detroit News. Write to her at firstname.lastname@example.org.