Tensions Expected to Follow Release of Federal Fuel Economy Report

Automakers and U.S. environment regulators may begin clashing over the “54.5 mpg” fuel economy target.

Federal regulators will soon be releasing a review of future mileage targets, with tougher standards scheduled to take effect in six years. It could spark more debate over U.S. car buyers’ willingness to pay for emissions-cutting technology such as plug-in electric vehicles and whether the mileage increase mandates should be relaxed.

While reports quoting a figure of “54.5 mpg” often go forth without qualification, notable is this is not what will be seen on window stickers. It is rather another standard federal authorities us, and equates to closer to 40 mpg on window (Monroney) labels.

In any case, auto executives argue that the standards were solidified in 2012 when gas prices soared to record highs. As gas prices have stayed down, sales of vehicles with higher fuel economy have slipped in recent years.

Regulators will seek public comment before proposing whether mileage targets intended to cut tailpipe emissions should be relaxed, toughened, or left unchanged. But federal regulators have already been signaling a determination to stand pat.

“Oil and gasoline prices fluctuate and are unpredictable,” an Environmental Protection Agency spokeswoman said. “The standards…function as insurance so that fuel prices don’t stall progress on cutting greenhouse gases.”

SEE ALSO: Are Automakers Pushing Back Against US Fuel Economy Standards?

But some automakers are not buying it.

“Imagine if you were the CEO of McDonald’s and they say to you … 25 percent of your business is going to be vegan. Go make it happen.” said Scott Keogh, Audi US chief.

Federal regulators became more skeptical about automakers’ intention after Volkswagen admitted being deceptive about U.S. diesel emissions tests. Other automakers have been dragged into frays with government agencies in the U.S., Europe, and Japan.

The June technical report and subsequent midterm review of mileage targets will set the tone for negotiations covering mileage targets between 2022 and 2025. They’ll be closely watched by automakers and suppliers needing to lock in designs for future models.

GM, Ford, Toyota, and other automakers are canvassing congressional staffs to remind them that car makers must sell, not just build, vehicles getting higher mileage, said a person familiar with the matter.

Wall Street Journal