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Stringent CAFE Standards Push Automakers

Existing technologies to improve engine fuel efficiency will get a boost, but it’s still unclear what approaches are most cost-effective to meet the standard of 54.5 miles per gallon.
August 29, 2012

As automakers engineer their way to meeting higher fuel economy standards, expect the internal combustion engine to shine and electrification to play a supporting role.

General Motors and other auto companies will save fuel with better engines and more microhybrid technology included in GM’s Buick LaCrosse. Credit: GM

The Obama administration yesterday finalized Corporate Average Fuel Economy (CAFE) standards that require automakers to nearly double fuel economy to 54.5 miles per gallon by 2025. The Transportation Department says the landmark decision, which creates a single national standard, will reduce oil consumption by 12 billion barrels, save consumers $8,000 on fuel over the life of the vehicle by 2025, and reduce greenhouse emissions.

The standards are expected to accelerate the use of existing engine technologies and create demand for hybrids, particularly start-stop systems that use small batteries. Automakers agreed to the measures, but there will be an interim assessment in 2017 to review both the cost and effectiveness of different approaches. (See “What New Emissions Standards Will Mean to Automakers”).

Plug-in hybrids and electric vehicles do bring a jump in fuel economy, but their higher cost means that automakers will focus primarily on engine improvements which can get bring light-duty vehicles to about 40 miles per gallon, according to the Center for Automotive Research.

Already, automakers are swapping out six-cylinder engines with four-cylinder engines equipped with a turbo or super charger, which improves economy while maintaining horsepower. Other engine changes that improve efficiency are seven or eight-speed transmissions or continuous variable transmissions. Manufacturers will be encouraged to pursue efficient diesel engines as well.

Lightweight materials will play a bigger role and displace cast iron and traditional steel. Advanced high-strength steel, aluminum, composites, magnesium, and titanium will all be used more in components, says Jay Baron, the president of the Center for Automotive Research and an expert on materials and auto manufacturing. Other likely changes include low-resistance tires, aerodynamic designs, window coatings to reduce heat, and more efficient air-conditioners.

These types of technologies are already available from existing company supply chains or will be soon but automakers haven’t adopted them en masse because they add cost.

Indeed, that National Automobile Dealers Association complained that full implementation of the standards will add so much cost that fewer people will buy new cars. Car companies had already agreed to a 34.5 mile per gallon average by 2016 but getting to 54.5 miles per gallon by 2025 will add $3,000 to the average price of a new vehicle, it warns.

“This increase shuts almost 7 million people out of the new car market entirely and prevents many millions more from being able to afford new vehicles that meet their needs. If this rule suppresses new vehicle sales, achieving the nation’s greenhouse gas and energy security goals will be needlessly delayed,” NADA president Bill Underriner said in a statement. 

Proponents of the stricter efficiency standards say that any higher purchase price will be made up in fuel savings and that automakers will invest in new job-creating technologies. “Thanks to these standards, this is just the beginning of the fuel-saving choices consumers will have on the showroom floor,” Jim Kliesch, research director for the Clean Vehicles program at the Union of Concerned Scientists said in a statement

As automakers consider their options, they are well aware that sales of plug-in hybrids and battery-electric vehicles are very low, just a blip in the overall volume of cars sold. General Motors sold about 10,666 Chevy Volts through the end of July and this week decided to suspend production until next month because of lower-than-hoped demand, according to reports.

On the other hand, traditional hybrids or mild hybrids, where a small battery powers a car when it’s idle, are poised for greater use. Mild hybrids, which car makers have started introducing in the U.S., are most compelling because the incremental cost delivers a few percent improvement in efficiency, say experts.

In practice, car buyers may not necessarily have a large pool of cars with 54.5-mile-per-gallon efficiency to choose from in 2025 because the EPA rating is done in test conditions.

One of the most important questions facing the auto industry is the relative cost of different approaches. Average buyers tend to buy based on purchase price and not figure in fuel savings over time, says Baron.

“There are so many technologies out there and so much complexity and diversity, automakers say they don’t know which pathways will succeed. So they have to cover all their bases, which will be expensive,” he says. 

Car companies will likely begin to cooperate on technology development to keep costs down. Ford and Toyota, for example, last year announced a joint development project to make hybrid powertrains for light-duty trucks and SUVs.

The new CAFE standards also include incentives for automakers to advance specific technologies, including electric vehicles, plug-in hybrids, and fuel cell vehicles. Natural gas vehicles, which are made and sold in the U.S by Honda, also qualify for these credits. 

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