Obama Proposes Rules For Carmakers to Meet 35.5 MPG

In May, President Obama announced new tougher fuel economy standards to take effect in 2012. Yesterday, his administration released the proposed 1,227-page set of regulations for implementing the standards, which require cars to average 35.5 mpg by 2016.

President Obama at GM Plant

Appearing yesterday at a General Motors plant in Warren, Ohio, President Obama said that building more fuel-efficient cars is helping the US auto industry bounce back.

The regulations explicitly state that car companies can meet the new standards largely by using existing technologies: “These include improvements to engines, transmissions and tires; increased use of start-stop technology; improvements in air-conditioning system; increased use of hybrid and other advanced technologies; and the initial commercialization of electric vehicles and plug-in hybrids.”

As usual, the devil is in the details. For example:

  • Automakers would be allowed to continue building and importing all classes of vehicles, from the smallest sub-compacts to the largest SUVs. (See CAFE Footprint Formula Explained.)
  • Under the regulations, automakers will continue to be able to claim mpg credits—amounting to a reduction of 1 to 1.5 miles per gallon if fully employed—by selling so-called flex-fuel vehicles capable of using a blend of gasoline and ethanol.
  • Automakers selling fewer than 400,000 vehicles in the United States—including Mercedes, BMW, Subaru and Volkswagen—would be allowed to meet a weaker standard.

The regulations now go through a 60-day public comment period. The US Chamber of Commerce and a group of automakers are expected to challenge the rules in court.


  • Eric

    The flexfuel credit is a bad decision to say the least.

    Why are import cars held to lower standards just because they sell less here? All should be held to same standards.

  • Dom

    Is this a fleet average? I didn’t see any mention of a different standard for trucks/suvs… maybe I’m blind.

    I also think it’s funny that even though it’s in the <400,000 sellers, VW is probably in a better position than most with its TDI models.

  • Samie

    The largest problem with the CAFE standards is “Automakers selling fewer than 400,000 vehicles in the United States—including Mercedes, BMW, Subaru and Volkswagen—would be allowed to meet a weaker standard.”

    Sure there is a threshold of 400,000 vehicles but for Mercedes & BMW they deal in the high end car market. Why would they match fuel efficiency required for other car companies? As I see it they have no incentive to do so and in terms of business practices they are better of selling vehicles that meet the minimum requirement w/c would give them a clear advantage in the luxury performance sector. So the point is I can see why some would try to legally challenge this if you create winners and losers by not creating universal regulations that is when looking at the luxury car market.

    Allowing BMW to be irresponsible in how they engineer vehicles only enforces divisions w/i society and may w/ newer CAFE rules encourage even greater bad behavior among consumers who can afford to do so. The other problem is that major auto markers who compete in the luxury sector will oppose this loophole and more likely use this as a wedge to fight off any new regulations.

    All this maybe a short-term problem if we move away from MPGs and start thinking in terms of kWh and battery capacity.

  • Jeff

    U.S. cars consume twice as much fuel as European and Japanese cars.
    The average in the U.S. market stands at 22.6 mpg, compared with 40.3 mpg in Europe and 40.6 mpg in Japan.
    (Ford Fiesta Econetic, With A Gas Mileage Of 65 Mpg, Will Not Be Sold In The US)
    Those are staggering differences, and they make us wonder why it will take American automakers until 2016 to reach a mandated average fuel-efficiency rating of 35 mpg,

  • DC

    I noticed the words “proposed” occur many times in this short article. Considering that the US taxpayers owns…what %?, considerable to be sure, of the domestric industry, im frankly puzzled why the government has to “ask” for Detroits compliance in this matter at all. That may not sound sound kosher for all the free-markers in the uS of A but to my way of thinking the enourmous amount of public money thats been given to GM and Chysler and yes even Ford over many decades entitiles them to demand Detroit do what is in societies best interests for a change. I also cant believe that the flex-fuel loopholescam has not been closed. No one in the uS government has figured out that detroit has turned it into a hidden subsidy and has completely failed its stated purpose by an measure? Not that flex-fuel was a good idea to begin with, even conceptually.

    And in the background, you can hear Detroits Lobby machine revving up to contest this, the more things change….

  • Proposal Loophole

    Why would VW be exempted from this is beyond me. I thought at one time VW and it’s subsidiaries were surpassing Toyota in car sales.

    Perhaps this subsidiary shell game is worth playing after all because it helps companies get around the rules. All the reason why there should not be any exemption!

  • Dj

    People, yall don`t see it by letting the European and Japanese car makers to lower standards and improving our American car maker to higher standards we are improving the standard for our cars and make better cars for American to buy. We have American cars right
    now that get 41mpg like the Ford Fusion so people don`t be fooled it is just a trap for foreign car makers.Who made the first car….we did!!!! Samething here it is a race to get off foreign oil.
    If American car makers make a good electric car or hybrid they will
    buy the cars and we have good mpg cars now so making excuses
    about American cars and go get one!!!!!

    Dj

  • Anonymous

    DJ, I see it more than a race between car makers… I see it as interest for everyone to be more efficient, no matter the make. Only competition can make this happen quickly.

    By enforcing low volume brands and often luxury segment to this standard, this can help develop and pass on technologies that will ultimately lower costs for non luxury brands.

  • Dj

    Everybody can`t afford a luxury car and most American will be
    buying a car 39k or less.It is up to American to have fate in American car companys like Fisker,Ford and Tesla. Now lets talk about luxury Anonymous.Fisker has hybrid for 87k and Tesla has
    all eiectric for 100k and both cars get great gas milage.You asked
    about Luxury…look in your own backyard before you go oversea.
    Remember people just the fact and not your opinion.We have Luxury right here in the Good Old USA!!!! Plus tax rebate for each
    level of car.

    Dj

  • Eric

    Dj,

    Actually the Fisker Karma will be built in Finland not the US.

  • Crut100

    Samie,

    I agree with you that it is irresponsible but, by the same token, no one says that you have to buy a BMW or Mercedes or …. We can vote with our wallets and if these fools decide to not up their mileage according we don’t have to buy. Besides all it takes is one of these German luxury makers to jump on board and get their mileage up and the others will be forced to follow. Audi is brining their A3 to the US and that will get over 40MPG, Volkswagon already has several cars over 35MPG. Look at BMW and Mercedes sales in the US over the last year – they are way off. If gas prices go back up – and they will, I think their sales will completely tank without high mileage vehicles. By the way, I love BMWs but won’t buy another one until they get me a 5 or 6 series that can get 35+ MPG. They could do it today but just won’t get their European diesles up to US standards. As it stands now, I’m going to get a Fisker Karma. Think I’ll send a picture of it to BMW USA and say thanks for doing nothing, love my new non-BMW!

  • Samie

    Crut100

    My point is that for the lower end car market I agree with you about consumers making choices w/ their wallets but when we talk about 40-90K vehicles those consumers don’t usually put a high value on fuel efficiency. Why is it ok for those who have more disposable income to be able to purchase vehicles w/ lax standards when that consumer market is the most vulnerable to not caring about costs at the pump? I also don’t think it is fair for others who compete in that market to follow different more stringent rules & lets remind ourselves that the luxury market has the highest profit margins so this policy only invites opposition as some needed added technologies reduce profit margins giving the BMW’s of the world clear advantages in that market and give lobbying groups the wedge to demise higher CAFE standards which is badly needed.

  • Anonymous

    DJ,

    Actually “we” did NOT make the first car….the European did… do your homework. But I DO agree with you that we should buy American….but not just from American car companies, but American car companies the build the car IN AMERICA.

  • Bradley P

    They likely do not want to destroy niche markets. Asking Ferrari to produce fuel efficient cars directly conflicts with their business model for offering highpowered exotic cars. Large manufacturers can still have niches such as SUVs and sports cars and still meet the requirements by offering a large range of fuel efficient models.

  • tapra1

    The regulations explicitly state that car companies can meet the new standards largely by using existing technologies: “These include improvements to engines,Top Web Hosting

  • Nate Dunham

    Don’t miss out the opportunity in having a forex bonus. All the participants can get money bonuses on their accounts.