U.S. auto makers hurt themselves by opposing tougher fuel-economy rules. Now that they have signed on to a new regime, will they stay signed on?
Dan Becker and James Gerstenzang:
The Obama administration’s clean-car program—the biggest single step any nation has taken to save oil and fight global warming—is working. The auto industry should stop trying to undermine it.
Although they pledged to meet the clean-car standards that they negotiated with the Obama administration when the taxpayers bailed out bankrupt GM and Chrysler, car companies are acting like they want to run the rules off the road.
Their obstinacy is all the more remarkable because the government’s first look at how the auto companies are doing under the new rules tells us we’re headed for a 2025 fleet in which cars’ carbon-dioxide emissions will be cut in half, also saving consumers billions of dollars at the pump.
According to an Environmental Protection Agency report, “Light-Duty Automotive Technology, Carbon Dioxide Emissions and Fuel Economy Trends,” mileage across the 2012 fleet—the most recent for which figures are available—was up 1.2 miles per gallon, a 5% step toward the administration’s 54.5-mpg standard for new cars in 2025.
The average 2012 vehicle will save $1,600 in gas over its life—far more than the customer paid for the technology that delivers the savings.
The improvement came from cars, not trucks. Auto makers failed to use modern technology to boost the mileage of their overweight SUVs, minivans, and pickups. Except for Honda, the major car companies exploited loopholes that allowed them to get away with lower performance and still be considered in compliance, according to another EPA report.
For investors, the companies’ adherence to the new rules should be considered a matter of smart business, delivering a sound, reliable product that pleases its customers. But for too long, U.S. auto makers have dragged their feet. They’ve lagged in deploying modern technology. They have left a substantial chunk of the market—car sales—to foreign competitors, and have been satisfied to make their money on SUVs and other trucks. GM and Chrysler went bankrupt after gas prices rose and truck sales tumbled, highlighting the weak spot in their strategy.