Fuel economy mandates are costlier than you think

Earlier this month, President Barack Obama signed into law new fuel economy regulations that raise the corporate average fuel economy to 35.5 mpg by 2016. The current average is 27.5 mpg for cars and 23.1 for light trucks. Federal officials say the new law will increase the cost of a new car by $926 by 2016, a cost consumers will recover in reduced fuel costs.


Before getting into specifics, a little of background.

The 35.5-mpg target was originally set for 2020 by the National Highway Traffic Safety Administration under President George W. Bush. This wasn't an unreasonable deadline; it takes three to five years to re-engineer a car from scratch. So even as consumers are looking at cars for the 2011 model year, product planners have their plans mapped out until at least 2014. Under the original plan, this would give manufacturers ample time to raise the billions of dollars necessary to re-engineer an entire lineup of vehicles.

Now, the deadline was moved up. Quickly. Look for manufacturers to rework their vehicle lineups to meet this goal.

And the government isn't making the process easy.

First, each vehicle size must meet a government-mandated fuel economy standard. Then, each manufacturer will get its own corporate average fuel economy standard calculated by how many cars of each vehicle size are sold. So, the more small cars they sell, the higher their fuel economy standard.

Do automakers know how to extract higher mileage? Sure. But it costs.

The Ford Escape Hybrid with four-wheel drive, base price $31,610, returns 29 mpg; the base nonhybrid four-wheel drive Escape, starting at $22,770, returns 22 mpg. That's a difference of $8,840.

Even if Ford decided to produce only the hybrid model, it wouldn't meet the new mpg target: 32.9. Even the most fuel-efficient Escape, the front-wheel-drive Hybrid, rated at 32 mpg , would miss it.

So, to meet the target, expect Ford to use more exotic materials or technologies to boost fuel economy — which, you guessed it, cost more.

Domestic manufacturers aren't the only ones facing the challenge.

The diminutive 2010 Honda Fit hatchback, when mated to a five-speed automatic transmission, returns its highest mileage of 31 mpg, the EPA says. To meet 2016 targets, the Fit has to get more fit: Its mileage target jumps to 41.1 mpg. Or consider the 2010 Nissan Murano, which returns 20 mpg. In 2016, that will have to be 30.6. Even Toyota will be challenged to have its 2010 Sienna minivan, which yields 19 mpg with front-wheel drive, to return 28.2 in six years.

You may think the answer is to add a diesel engine, right? Well, there are emission requirements, which limit diesel's practicality for car use, though they could see widespread use in full-size trucks.

Instead, look for even the smallest cars to get the sort of technology once reserved for high-end machines. Dual-clutch, six-speed or continuously-variable transmissions, hybrid technology and costly lightweight materials could become much more common.

Yes, the technology increases fuel economy, but it costs more, and so far, consumers are unwilling to belly up to the bar.

Pretty soon, we won't have a choice.


Larry Printz: larry.printz@pilotonline.com