Game Over for Gas Guzzling, With New Auto Efficiency Rules

May 19, 2009

President Barack Obama announced today that his administration will enact dramatically tougher fuel economy standards and the first ever greenhouse gas pollution mandates for cars. He made the announcement at a press conference attended by auto executives, labor leaders, California governor Arnold Schwarzenegger and Michigan governor Jennifer Granholm.

The proposal will require carmakers to reach an average of 27.3 mpg by 2011, and 35.5 mpg by 2016—four years faster than previously scheduled. This means an average of 39 mpg for cars, and 30 mpg for trucks and SUVs. Currently, cars must average 27.5 mpg and trucks must get 24 mpg.

The increase to 39 mpg within one or two product cycles will mean a radical change to product lineups—effectively requiring the discontinuation of the worst gas-guzzlers and the introduction of a wide array of fuel-saving technologies in vehicles of all sizes. The only cars currently on the market capable of reaching the 2016 benchmark are hybrid gas-electric vehicles, meaning that conventional gas-powered cars, on average, will need to achieve the same level of fuel efficiency as today’s hybrids—or significantly more hybrids and other electric-drive vehicles must be put on the market and sold in high quantities.

John DeCicco, senior fellow for automotive strategies at Environmental Defense Fund, said today’s announcement represents a major breakthrough. “It will give a boost to hybrid technologies as well as to advanced engines, lightweight materials and other engineering solutions,” said DeCicco in an interview with HybridCars.com. “It’ll be important for helping the Detroit automakers develop much more robust recovery plans, and of course it’s a huge step forward for climate protection.”

President Obama explains how new rules on auto fuel efficiency and emissions will create a single clear path for car companies to follow.

For several years, California and 13 other states have attempted to apply tougher emissions standards than the CAFE standards mandated by the federal government, leading to a court battle with the EPA and fierce opposition from the auto industry. The administration’s proposal puts an end to that fight.

One MPG Law of the Land

This compromise between the auto industry, labor, legislators and environmentalists brings an end to a major challenge facing the administration in delivering on its promises for radical change on energy policy. According to Rep. Edward Markey, who co-wrote the previous CAFE standards, the administration has “solved the energy and economic policy equivalent of a Rubik’s Cube.”

Perhaps the most shocking thing about the new standards is how it came with the blessing of carmakers and the auto unions, who had so virulently resisted the California standards. Their agreement was won through the establishment of a single law of the land, cutting the cost of producing and marketing different cars for different states. In addition, the industry can expect a doubling of the $25 billion in low-interest retooling loans already promised by the administration. In a background briefing late Monday, a senior administration official said that the new standards had resulted from extensive negotiations with the industry, which has thus far unanimously endorsed the plan.

Cost Issues

“The fact is, everyone wins,” said Obama at today’s event. “Consumers pay less for fuel, which means less money going overseas and more money to save or spend here at home. The economy as a whole runs more efficiently by using less oil and producing less pollution. And companies like those here today have new incentives to create the technologies and the jobs that will provide smarter ways to power our vehicles.”

How exactly automakers plan to meet the standards so quickly isn’t entirely clear at this point, but the Obama administration estimates that average additional cost to the consumer will be around $1,300 per vehicle, a cost it says will be offset by gasoline savings within the first three years of ownership. Over the life of the vehicle, the average savings to the consumer is expected to hit $2,800. The administration is basing its calculations using an average price of $3.50 a gallon. If auto industry executives are uncertain about how to achieve the goals at a reasonable cost, if consumers will respond to a new landscape of more efficient cars, or feel like Obama has been heavy-handed with the specific goals, they are quietly nodding along at this stage.

The auto industry’s move to greater fuel efficiency and advanced technologies, such as hybrids, has been underway for a few years. The new fuel economy goals will rapidly accelerate the trend.


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  • Rob M

    The new CAFE standards will be a nice stick…even though I’d like to see the details. For example, it will be a disaster if flex fuel vehicles will be counted as high mpg vehicles even though the average person will use 100% gas in them. SUV’s should be treated like any other 5-6 person vwehicles, not given a lower Mpg target then a wagon type car.
    Also, the new CAFE may mandate vehicles for which there is no demand and could incent people to buy older used cars instead of buying new cars. Will BMW be exempt because they sell fewer than 60000 cars per year?
    Instead of having just a stick we also need a carrot in the form of an instant rebate or extra fee that a buyer will receive or have to pay when they buy a new vehicle. A fee-bate program will produce immediate and sustained demand for high MPG vehicles.. which will drive innovation. Within a vehicle class, e.g. 4 person car, thye’d pay a fee if it gets less than x mpg and a rebate if it gets a higher mpg. This progrram will be revenue neutral (no net taxpayer cost) and technology neutral.

  • Trevor

    Obama is a freakin idiot for enacting this. Like John Rich said, Shuttin Detroit Down. That is exactly what he is trying to do here. It’s ridiculous. I live on a farm and I need “Gas Guzzling” vehicles to work. Not only that, its my choice on what vehicle I purchase. If I can afford the gas, then its not a big deal. He pisses me off doing all of this stupid crap. Help our economy! Don’t make it worse than he has already!

  • Pablo

    If I were Obama I would transfer the hidden part of the gasoline cost from the taxpayer to the price at the pump, I would add strategic oil dependence surcharge and global warming penalty. At that price Trevor could exercise his choice on what vehicle to purchase if he can afford the gas, not a big deal.

  • Shines

    Trevor, you really live on a farm? You make up less than 5% of the population and if only farmers drove “Gass Guzzling” vehicles for work there wouldn’t be a problem. The problem is the suburban hot dogs that own souped up hemi powered oversized rigs and use them just to commute to work. And soccer moms driving solo in oversized V8 powered SUVs in that are wasting resources and causing excessive polution. It is true that in America that is everybody’s right, but the priveledge is being abused by too many people. I don’t agree completely with this policy. I’d rather see the price of fuel rise to the point where people realize their excess and cut back on their own. Still, if this is applied evenly across the nation it is a step in the right direction.
    I have to say it is likely to cost a whole heck of a lot more than $2800 per vehicle. Right now the only cars that hit the 2016 target are hybrids and they cost at least $5000 more than their conventional counterparts.
    We’ll see…

  • Samie

    Timeout Trevor you live on a farm and complain about what gasoline? I hope you have all diesel trucks for heavy hauling not V8′s. Also really don’t know many farmers without diesel tractors. Most states have diesel discount programs for farmers if you don’t mind the weird dye color or the large tank on the side of your shop or covered feedlot. Also many farmers use ATV’s old Isuzu or Ford Ranger trucks with a clutch for general use vehicles. Not sure what you are complaining about….

    Great news! I agree once details are given we will know more. We can’t have special exceptions for BMW or any other luxury brand. The BMW’s need to excite their crowd with the extra torque that EV’s, Hybrids, or even diesel will give customers .

    Great timing as the government has lots of leverage and the car companies don’t have as many friends on the Capital. I suspect some type of cash for clunkers program to be started and I doubt the buyers in the upper vehicle sector will hold onto cars longer b/c they have to pay an extra 3K on a 54K vehicle. Many, if they can afford it, often trade in vehicles every 3-4 years becasue of the “new feeling” of styling or driving performance of a new car. Also there may not be as much costs for the entry level vehicles that run off 4-cyls. Most V-6 sedans will use stop-n-go or turbo engines if hybrid or EV costs are too expensive to meet standards.

    One downer I see great danger in 2012 with a slash and burn politician like Regan reducing many industry regulations along with removing investments to retool the industry by trying to slash our national debt at the expense of progress and stir everyone up with the 10% unemployment rates that will happen. Hope for CAFE that Obama stays in office for a full 8 years or else the industry maybe told to just walk away from this, setting us back yet again… Let’s hope not

  • Less NOx

    I was hoping he’d have been a little more agressive in the CAFE targets. If a mid-size Prius in 2003 could easily meet the standards 13 years ahead of schedule is it that hard for others to follow suit? The batteries and computer software should be much better by then.

    Also, seeing that an Insight starts under $20 K and the 2010 Prius won’t be much more, I don’t agree w/ Shines that the cars cost $5000 more than the conventional counterparts now, let alone in 2016 when there will be so much more competition.

    Plus since these call for average fuel economy over a model type, a car maker can still make a guzzler for Trevor to drive on his farm to get a govt. subsidy for not growing crops as long as some other vehicles are hybrids or other high mileage vehicles

  • John Miller

    Trevor is just another right wing liar ( Limbaugh Lover ) out there to try to fill up posts, forums with lies to get people to follow the republican party line. I doubt he lives on a farm. Like the other poster said, farmers use diesel in their tractors and semi trucks which this would not effect him. Most farmers use big pickups around the farm as well ( Dulles ) which run on diesel also. You aren’t fooling me. Take it from a REAL farmer…

  • sean t

    How could the Japanese foresee this and started making hybrids more than 10 years ago? What did Rick and Bob see?

  • steved28

    I certainly did NOT pay a $5000 premium for my Altima hybrid, which meets 2016 standards today.

  • stuck in Shizuoka

    Big deal. Our Daihatsu is a standard 4 cylinder automatic and his now in it’s 10th year. It gets 40 mpg or more in the city. Yes, smallish but fits my 6ft (180 cm) frame with ease, and can take 4 adults down the highway comfortably at 80-90 km/h. It has airbags, power steering etc. The new model gets over 50 mpg in the city (26 km/l) and is even roomier.

    Japanese car companies were doing these things over 10 years ago. They just cannot send their microcars to the U.S., because they are deemed too light and unsafe. Why not lower the speedlimit and allow car companies to make micro cars? The technology is far from leading edge.

    Oh, and the Daihatsu….it was $11,000 new for the “upscale version” and has had ONE part replaced in ten years.

    Give me some reasons why North Americans might think the new CAFE standards will be some sort of uphill battle or problematic!!

  • uktiger

    The price of cars will come down, not go up. The chinese and Indians will see to this. We had the technology to meet these mileage standards 30 years ago, now the US manufacturers will be forced to change and build some new products.

    As far as the fake farmer post above. The Limbaugh comment that “If I can afford the gas I can drive whatever I want” is false on many grounds. If you want to drive on public streets you have to follow rules. How bad would traffic be if everyone drove a school bus? Vehicle size and GVW must be regulated as well as mileage… but this is a good step in the right direction.

  • New cars

    Cars Prices and sells are down globally.

  • David

    What did the Japanese see? Their own market. Their market (100% of their oil is imported) demanded small, fuel efficient vehicles. So when the US market needed them, Japan was ready to export to us while Detroit went “Huh?”

  • stuck in shizuoka

    True enough about the market here in Japan–their own market demanded small cars, though there was something of a “big-car” trend a few years ago that is now being replaced by a hybrid car trend. Hopefully this will only be a trajectory course towards fully electrified transport.

    As for small cars/hybrids etc., I would add that the micro cars that were often the “second-car” in a two car family are now becoming the primary car instead and a scooter and/or bicycles take over for local transportation. The micro cars are a truly a thing of beauty–trucks, vans, wagons, and small sedans that boast 660 CC and mileage in the high 40s to mid 50s. But the reasons go beyond energy security. The country is largely urbanized, the roads narrow, speeds slower and gasoline much higher. I would suppose that at 115 yen per litre now, we are paying about $3.50 a gallon for gas. The microcars and hybrids fit the conditions here perfectly.

    I wish that North Americans could only see how easy it is to adapt to small cars (much smaller) than is the norm there now. Obama just has to have will to impose a gradual tax on privately owned vehicles and lower the speed limits.

  • Dave K.

    Not only did the Japanese forsee this but so did your own government, just Google PNGV. They threw $1billion at the big 3 (not so big now) to help them develop hybrid technology. In 2000 (when the money stopped) G.M. and Crysler just blew it all up and are now way behind T & H so they deserve whatever happens to them. Ford is the exception, they continued their development program and we now have that great Fusion Hybrid.

  • Dom

    I know this is a hybrid cars site, but I think the statement in the article
    “The only cars currently on the market capable of reaching the 2016 benchmark are hybrid gas-electric vehicles,”
    is false, or at least misleading. Many small gasoline cars, and most diesel cars (not SUV or truck) can also easily meet this target as well (35.5 mpg average), and a lot more cars probably could as well with a little tuning for less power so as to increase fuel economy.

  • uktiger

    Check out DOM (above) with the big brain. If Tata can build a $2,500 Nano that meets the requirements then why can’t the US?

  • Charles

    Cars that meet the 39 MPG mark:
    Toyota Prius
    Honda Civic Hybrid
    Honda Insight
    Ford Fusion Hybrid
    Mercury Milan Hybrid

    Cars that meet the 35 MPG mark
    Smart fortwo

    SUVs/Trucks that meet the 30 MPG mark
    Ford Escape Hybrid front wheel drive

    The Camry and Altima hybrids come close to the 35 MPG mark (34 MPG).

    The new CAFE standards are not going to be cheap to meet. Can Ford get a Focus to 39 MPG by just adding a small turbo, start/stop and electric power steering? If not we are going to be seeing a lot of hybrids (not a bad thing).

  • Fred Smilek

    I just think that our president is doing the right thing. I am so proud of him because this was supposed to be done many but many years ago.

  • DaveR

    Up to now, the CAFE standard have used the EPA tests from 1975, when NHTSA was formed, to measure the MPG, not the current EPA tests. Using the current EPA tests for measuring MPG, the CAFE 27.5 MPG is more like 22 MPG. Unless how the CAFE standard is measured has been updated to the current EPA test, and I don’t think it has, there are probably a lot more cars that already meet the 39 MPG average for 2016 then many think.

  • Dom

    Charles said “The Camry and Altima hybrids come close to the 35 MPG mark (34 MPG).”

    Also, Jetta TDI (34mpg) and Yaris (32mpg).

  • Charles

    Dear DaveR,

    I think you are correct, but I hope not. 39 MPG sounds good, but if it is the old 1975 standard, that is bad and needs to be changed.

  • Dave ES

    Now thats what I’m talking about !

  • Shines

    steved28, You may have found a way to get your Altima hybrid on the cheap. I did a simple comparison (yes I know I’m over simplifying here) I went to autotrader.com and compared what each dealer was selling the Altima hybrid for, compared to their non-hybrid versions. I also did this for the Civic hybrid. (and I had done it previously for the 2010 Fusion) I compared the least expensive hybrid to their least expensive non-hybrid. In every case the difference was at least $5000. You could argue that I should compare the top of the line models of the non-hybrids with the hybrids but in the end I could buy a non-hybrid of the same make and model brand new for at least $5000 less.
    I am not saying I would want to, in fact I hope I can afford my next car to be a hybrid. Certainly the fuel savings make up a huge difference in that premium over the years and especially if fuel prices continue to rise (which I think they will).
    I think hybrid technology is an excellent transition from ice to electric. But I just want people to understand the reality that they are signigficantly more expensive. You still have the ICE and then you have to add a big battery, electrionics, regenerative braking, and the large electric motors. It’s expensive, but costs will come down with increased competition. I just thhink the numbers in the article are a little over-optimistic…then again maybe I’m just a pessimist ;-D

  • DaveR

    Charles,

    I have done a little more research and am now nearly 100% certain that my former statement is correct. Based on what I have found, the CAFE rating of 35 MPG is equivalent to 26 MPG in the current EPA rating, so the 39 MPG CAFE (for cars) rating is probably a current EPA of 29 or 30 MPG.

  • steved28

    Shines, It’s hard to compare a base Altima with the hybrid, since the hybrid comes with some extras as part of the “package”. i.e. TCS and VDC (not sure about the CVT). It also has some exterior upgrades. Of course there is always the $2350 tax credit, but I didn’t include that in my comparison. FWIW, I paid $23,500 (sticker was $28,200).

    Charles, if Dave R. is correct, then indeed my Altima does meet 2016 standards, as my window sticker (07) reads 42 city/36 hwy. BTW, these are very obtainable figures.

  • Al

    This is like trying to solve the country’s weight problem by forcing restaurants to limit calories per plate; its ridiculous. CAFE standards dont work.

    Look at history in the US. In the 70s (twice) and last year. Price of gas went through the roof, drivers demanded more efficient cars. SUV/big car sales tanked. Months of waiting to get a new TDi or Prius. In the meantime, while CAFE standards have been around, we’ve slowly but surely increased average weight and power of cars and actually decreased economy. Why? People vote with their wallets and their hearts. Their hearts tell them “more power, more room” and as long as their wallets can take it, they’ll continue.

    Forcing the manufacturers to make cars that people dont want…isnt going to get people to want them! DUH Make people WANT to drive efficient cars by making it cost too much to do otherwise! Taxing fuel directly and fairly increases the cost to each individual. Use more? Pay more! Cant pay more? Get a more efficient car! Simple

  • thimst

    everyone knows there are exceptional cases where people need the gas guzzlers and you may have that exception being a farmer. It is the 99% of the population that requires no more than compact car daily that is the target. Justification should be needed to drive a vehicle that puts the US in a begging position to OPEC!

  • sean t

    Al,

    There is no silver bullet for the problem.
    We need more than one means.

  • kengrubb

    The Fusion hybrid meets the 2016 standard now, and it’s a mid sized car. Not a micro car. It also pays for itself after just 37K miles of city driving. Combined with plugins and EVs–depending upon how they’re counted in CAFE–39 MPG shouldn’t be all that big of a hill to climb. Car makers were already moving to more hybrids and plugins when gas was $4 a gallon.

    Fusion hybrid savings assumes $2.25 a gallon

    $27,270 – Hybrid MSRP
    $23,975 – SEL MSRP w/4 cylinder (SEL & hybrid are closest in terms of features)
    $1,700 – Federal tax credit
    $1,595 – Hybrid premium

    23,975 + 1,700 + 1,595 = 27,270

    41 MPG city – 9.8 cents a mile – hybrid
    23 MPG city – 5.5 cents a mile – non hybrid

    You save 4.3 cents a mile in city driving with the hybrid so $1,595 will be repaid after 37K miles of city driving.

  • Collin Burnell

    C’mon shines, You have to do a better job than just selecting the least expensive non-hybrid vs. the least expensive hybrid. Hybrid ‘versions’ right now come very well equipped and you have to compare a comparably equipped version of both cars. Maybe the solution for the companies that already make hybrid versions is to offer a baseline hybrid as well.

  • fred smilek

    I agree with Ken Grubb. I also have a hybrid and all the benefits that Ken mentioned were true.

  • Daniel Richards

    When I learned that Germany, China, Japan, Korea already are beating our new 2016 standards, I felt hood winked by the auto companies that say they “can’t”.

    As a taxpayer, we are lining their pockets and I am disgusted by our culpability and complacency. I will buy American, but it will be a Prius or an Insight or an Escape made here in the U.S.

    It took a law to get us to wear seat belts. It took a law to get us to use airbags. It is about time for a law to get us to drive responsibly.

    Then again, doesn’t it just piss you off that we are buying oil from a part of the world that wants to bring us to our knees. I believe it is in our national interest to not need oil from other countries. So, let’s solve two problems – dependence on foreign oil and greenhouse gas emissions – go green, not just with transportation, but in electric power generation.

  • Randy Heasley

    I find that pretty funny. I don’t wear seat belts because of any law. We certainly don’t need that law, if someone doesn’t want to wear a belt that’s their choice and they accept the consequences of that choice. We use foreign oil because we aren’t smart enough to drill for our own. We would rather be snobs and let third world countries do the dirty work and then complain about paying them.

    I drive a Prius because it’s the smart thing to do, not because of foreign oil. To pay less and use less foreign oil, we need to drill here and use our own. I also tow a trailer with a 2500 GMC pickup truck. You can’t do that with anything above this comment. Drill here, drill now, pay less. The bleeding heart liberal decisions are what have driven California to ruin. Learn from it and change, or follow them down.

  • RoJo

    So exchanging 18 mpg for 22mpg earns $4,500. Wantiing to exchange 20 mpg (93 Camry) for Prius (50) earns $0.

  • Michael Frank

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    Michael Frank