Automakers Embrace Tough New 54.5-MPG Standard

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Automakers Embrace Tough New 54.5-MPG Standard
By Anita Lienert, Correspondent | Published Jul 29, 2011
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Just the Facts:
In an amazing about-face, major automakers stood shoulder-to-shoulder with President Obama on Friday as he proposed tough new fuel economy standards that will require a 54.5-mpg corporate average by 2025.
"Gas prices have just been killing folks at the pump," Obama said. "It (the new standards) means filling up your car every two weeks instead of every week. It will save a typical family more than $8,000 in fuel costs over time."
The Washington event had the look of an auto show, with the president standing in front of 10 vehicles, including the 2012 Range Rover Evoque, the 2011 Nissan Leaf, the 2012 Honda Civic Hybrid and the 2011 Chevrolet Cruze LTZ.

WASHINGTON — In an amazing about-face, major automakers stood shoulder-to-shoulder with President Obama on Friday as he proposed tough new fuel economy standards that will require a 54.5-miles-per-gallon corporate average by 2025, up from the current 27.5 mpg.

It is the largest increase in mileage requirements since the government began regulating vehicle fuel economy in the 1970s. Just four years ago, the Detroit automakers were so enraged about higher fuel-economy standards that executives camped out in Washington in an attempt to defeat them. Initially, the Obama White House aimed at a more ambitious target of 62 mpg by 2025.

"Gas prices have just been killing folks at the pump," Obama said. "It (the new standards) means filling up your car every two weeks instead of every week. It will save a typical family more than $8,000 in fuel costs over time."

The Detroit Three's meek acceptance of the new standards follows a federal bail-out of Chrysler and General Motors at the height of the Great Recession. Without mentioning that specifically, Obama noted that the U.S. auto industry is just emerging from a "difficult time." But it may explain the docility of auto executives in accepting the strict new rules.

The Washington event had the look of an auto show, with the president standing in front of 10 vehicles, including the 2012 Range Rover Evoque, the 2011 Nissan Leaf, the 2012 Honda Civic Hybrid and the 2011 Chevrolet Cruze LTZ, as a band played stirring John Philip Sousa marching tunes. Also on display were the 2012 Volvo S60 T5, the 2010 Toyota Plug-in Hybrid concept, the 2011 Hyundai Sonata Hybrid, the 2011 Ford F-150 4x4 with EcoBoost, the 2011 Dodge Ram 4x4 SLT and the 2011 Kia Optima Hybrid.

Obama was flanked during the announcement by a Who's Who in the global auto industry, including GM CEO Dan Akerson, Ford CEO Alan Mulally, Hyundai Motor America CEO John Krafcik, Chrysler CEO Sergio Marchionne and Jim Lentz, president and chief operating officer of Toyota Motors Sales USA — among other top auto executives.

"We're up to the task," said Scott Becker, Nissan Americas senior vice president of administration and finance in a corporate statement supporting the Obama plan.

Other automakers, including GM, Toyota, Chrysler and others, quickly issued statements saying that they supported the plan — at least "in principle."

"Obviously, there is still a great deal of uncertainty as to how the market will respond and what vehicle technologies consumers will embrace, which is why we are rolling out and testing a range of alternative fuel options," said Toyota in a statement entitled "Toyota Agrees To Ambitious New Fuel Economy Standards."

The warm-and-fuzzy fuel-economy standards announcement stood in stark contrast to the vitriolic federal debt crisis talks going on in Washington at the same time.

"This ought to serve as a valuable lesson for leaders in Washington," Obama said. "You are all demonstrating what can happen when people put aside differences. When it comes to tackling the deficit or growing the economy, the American people are demanding the same kind of resolve and spirit of compromise that all these folks on stage have shown."

The White House issued a statement on Friday saying the new standards will save an estimated 12 billion barrels of oil over the life of the program. The standards will also help the president's goal of reducing oil imports by a third by 2025.

The announcement was marked by a few light moments, especially as Obama surveyed the line-up of impressive automotive hardware sharing the stage.

"I'm glad I have a chance to see some of the great cars today," he said. "It's only a matter of time until (13-year-old daughter) Malia gets her learner's permit."

Obama said he longed for "a model with a top speed of 15 mph and an ejector seat any time boys are in the car."

Inside Line says: Obama and the automakers appear to be singing from the same hymnal when it comes to the new fuel economy standards — but it still will take about a year until the president's proposal is cast in stone.

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