The federal government has a screaming deal for automakers that have struggled to find a market for electric vehicles: Two for the price of one.
Automotive News reported that in 2017 through 2019 model years, regulators will count each EV produced as two when calculating whether automakers are meeting new fuel-economy standards for light vehicles.
The standards, finalized in August after a year of discussion, have a simple-sounding goal: cut fuel consumption and emissions. But the rules — at 1,994 pages and more than half a million words, they are roughly the length of War and Peace — are anything but straight- forward, filled with little-known peculiarities and fine print added to help get automakers on board.
Each automaker’s vehicle fleet ultimately will have to average at least 54.5 mpg — unless gasoline prices drastically change, new technologies emerge, consumers behave differently or any other assumptions that the government made while drafting the rules turn out to be way off. On top of that, the 54.5 mpg figure is based on strict federal testing criteria, with real-world fuel economy expected to be around 40 mpg.
And, five years from now, the government could decide that the standards are too difficult or costly and change the game again.
“This is a very confusing rule,” says Sandy Stojkovski, president of Scenaria Inc., a consulting firm that is helping manufacturers prepare for the new standards. “There’s a lot of complexity involved with this.”
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Three top House Republicans asked the White House to delay finalizing the 2017-25 fuel economy rules.
The Detroit News reported that House Oversight and Government Reform Chairman Darrell Issa, R-Calif., Rep. Jim Jordan, R-Ohio, who chairs the subcommittee overseeing regulations, and Rep. Mike Kelly, R-Pa., an auto dealer, wrote to the Obama administration’s top regulatory review official, calling for further review.
The committee asked Boris Bershteyn, acting administrator of the White House Office of Information and Regulatory Affairs, “to return the rule to the agencies for further consideration of its adverse consequences to consumers and the economy.”
“Higher fuel efficiency standards is a goal I share — but not at the expense of consumer safety and not when those rules are implemented under a cloak of secrecy in a manner outside the law.The process followed by Obama administration officials to develop these standards was politicized, not rooted in sound science and was a political end run around seasoned experts who are required by law to lead the process,” Issa said.
Kelly said “the new CAFE standards will limit choice, compromise safety, and increase costs for millions of Americans who are already struggling to get by in the Obama economy. The American consumer was not given fair representation at the CAFE negotiation table, and they have since been put on the menu.”
The National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) last week abandoned a self-imposed deadline of finalizing the 2017-25 rules by as early as today (Aug. 24), with one House Republican suggesting the administration was having second thoughts.
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The following is a column by Rick Cranz of Automotive News analyzing the viability of Chevrolet’s development of a mid-size truck to help meet pending CAFÉ standards.
Now that General Motors has announced Chevrolet will market a mid-sized pickup, the next step is making it appealing to buyers, especially those who prefer full-sized trucks such as RVers needing a heavy-duty tow vehicle.
It may require some tough tactics.
GM recently announced that the Colorado pickup will be redesigned and get bigger. The rumor had been circulating Detroit for months
Specifically, production of today’s Colorado, a slow-selling compact pickup, will end in the 2012 model year, and it will be replaced by a wider and longer mid-sized pickup, GM calls it.
Last week GM showed journalists in Detroit the mid-sized Colorado, a very attractive pickup concept. Specifications were not revealed.
The next-generation Colorado is a response to proposed CAFE regulations that require an overall light-duty vehicle average of 54.5 mpg by 2025. Under the proposal, cars are required to improve fuel economy by 5 percent annually, while trucks require a 3.5 percent improvement. The final regulations will be announced next year. The 2012 model year regulation calls for an overall mpg standard of 30.1 mpg.
The mid-sized Colorado pickup will be lighter and more fuel efficient than today’s full-sized pickups, serving as an alternative if fuel prices climb to a level not been seen before. Details were not revealed.
The full-sized, two-wheel-drive 2012 Chevrolet Silverado 1500 gets 15 mpg in the city and 21 mpg on the highway, or 17 mpg combined. The redesigned Colorado will be aimed at buyers who prefer a pickup but do not need the capability a full-sized truck.
Early this year I interviewed Jamie Hresko, who at the time was vice president of GM’s global powertrain engineering. Hresko suggested mid-sized pickups were inevitable for the industry. Automakers would need mid-sized pickups to meet stiffer CAFE regulations. A business plan based on unlimited sales of full-sized pickups would no longer be viable under stiffer CAFE regulations. Since the interview, Hresko has retired from GM.
Of course, now we know a mid-sized pickup is on the way for the Chevrolet brand. Presumably, also for GMC. Ford, meanwhile, has no plans to sell a mid-sized pickup here. Chrysler has gone back and forth on the subject.
Hresko, in the interview earlier this year, suggested mid-sized pickups likely would be a tough sell. After all, bigger is better in the pickup world. But for an automaker to meet tougher CAFE regulations, some of these buyers would need to shift to a mid-sized pickup.
How? Make full-sized trucks less attractive to some buyers.
One possibility: Raise the price of full-sized pickups. The intent is to push buyers not requiring a full-sized pickup for their job into the lower-priced and more fuel efficient alternative, a mid-sized truck.
Another possibility is eliminating the wide range of luxury options available on full-sized trucks, such as leather seats and high-end navigation systems, limiting the “sky’s the limit” luxury features to mid-sized models.
The full-sized pickups arriving after 2020 might be marketed much as pickups were in the 1950s and 1960s: basic workhorses for tradesman, farmers, ranchers, construction workers and government employees.
Mid-sized pickups are coming, at least at GM.
The question is, will the market accept them?
The federal government is making automakers meet tough new fuel efficiency standards, which is making some in the RV industry nervous, according to a report by WNDU TV, South Bend, Ind.
“For light trucks and the light truck category, which includes SUV’s – which is really the category that tows our products primarily – they need at least 28 miles a gallon by the year 2016 as an average,” said Jayco Inc. President Derald Bontrager during the 2011 Elkhart Economic Development Summit held at the Lerner Center Thursday (Oct. 13).
The tough new standards come at a time when the RV industry has never been more reliant on tow vehicles to survive as around 80% of all RV products being shipped today are towables. The question becomes, can the auto industry meet the new fuel efficiency standards while continuing to meet the towing needs of the RV enthusiast.
“There’s a concern that the availability to the consumer of vehicles that are able to tow the products we build will be less accessible in the future,” said Bontrager. “And it’s just not our industry, think of the horse trailer industry, and construction industry. We still need products out of Detroit to be able to tow many different forms of RVs or trailers or whatever it might be.”
The concern was voiced at a time when some finally see the economic glass as half full.
“The 10% reduction in unemployment here basically came back through the RV industry – they’re good, they’re resilient, they know what to do, they’ve been up and down a lot of times,” said Elkhart Mayor Dick Moore.
“The RV industry, as Jayco has, has seen pretty steady growth and we have hired back,” said Bontrager. “We had a job growth of about 50% since our low point in 2009 and we see that continuing to grow.”
The state of the RV industry, especially locally, is to a degree a fairly good barometer of how Elkhart County is fairing economically. It’s not out of the woods yet, but it is heading in that direction. That fact was supported by the recent distinction that the Elkhart-Goshen area was named one of the top areas in the country for the growth based on the value of what they make.
“Elkhart County as a whole is seeing some recovery. We have seen about $45 million worth of new investments so far this year and right around 1,400 new jobs announced,” said Dorinda Heiden-Guss from the Elkhart County Economic Development Corp. “We’ve already announced in Elkhart County, $46, just shy of $47 million worth of expansion projects.”
As for the future and the fuel economy standards, the RV industry has been experimenting with new materials to make units lighter and more aerodynamic, but the waters it’s wading into are still uncharted.
Big pickups with small V-6 engines — the red-haired orphans of truck country — always occupied the back rows on dealers’ lots.
As reported by the Dallas Morning News, no one but fleet buyers and bargain hunters ever wanted them anyway.
But this year, as automakers reach for every tool to prepare for dramatically tougher fuel economy standards in 2016, those orphans are shoving aside king V-8s, even in bigger-is-better Texas.
“We’d put them (V-6s) on the front row today if we could get them,” said Randall Reed, who owns nine dealerships in Texas, including Prestige Ford and Park Cities Ford/Lincoln in Dallas.
The challenges ahead are daunting.
Cars’ fuel economy will need to increase more than 29%, from the current 30.2 miles per gallon to a 39 mpg average by model year 2016.
Truck mileage must increase 27.6% — though that number is misleading because no full-size pickup can even achieve the current standard of 23.5 mpg, including hybrids.
And those are just the first steps. By 2025, automakers’ fleets will need to average 54.5 mpg before exemptions for full-size trucks are figured into the complex formula.
“It’s definitely a radical step up from where we were,” said Mike Omotoso, senior manager of global powertrain forecasting at J.D. Power and Associates. “The party’s over.”
Consider this: Only two of the top 10-selling vehicles in the U.S. last year — both cars — averaged 30 mpg. The rest didn’t even meet current standards.
Called corporate average fuel economy, or CAFE, the federal standards were enacted decades ago to cut the nation’s dependence on foreign oil and, more recently, to reduce greenhouse gases.
For years, CAFE standards have remained flat, allowing automakers to focus on sexier — and more profitable — attractions such as bigger, more powerful engines.
Manufacturers often had to pay millions in fines for not meeting CAFE standards, but they were considered just a cost of doing business.
As a result, Todd Turner has little sympathy for the auto industry’s CAFE struggles.
“Think about the millions that manufacturers sunk into size and performance over the last two decades,” said Turner, president of Car Concepts of Thousand Oaks, Calif. “It could have been devoted to fuel economy.”
Still, most automakers now need to invest billions to improve fuel economy — and those costs will likely be passed on to consumers.
Fuel-saving technology, more efficient engines and transmissions, and other equipment will cost an average of $2,700 per vehicle, Omotoso said. What is still unclear is how much of that will be added to the sticker prices.
“We could have a real disconnect where people will perceive that they are getting less car and being charged more,” said George Hoffer, a business professor at the University of Richmond who follows the auto industry. “The government is effectively ordering all this technology. What if buyers won’t pay for it?”
Ford Motor Co., which, like many automakers, still makes most of its profit from trucks, is encouraged by the early success of its new V-6 engines — though the company realizes that even sales stars like the EcoBoost V-6 are just a start.
“This is the first time since 1985 that we’ve sold more V-6s than V-8s — a very, very pleasant surprise that sets us up to keep building toward those (2016) standards,” said Doug Scott, truck marketing manager.
Mazda is offering a sneak peek at its new crossover, the CX-5, which will make its debut at next month’s Frankfurt Motor Show. But, according to a report by MSNBC, the sculpted styling reveals the practical application of the Japanese maker’s new Kodo design language, what really matters is hidden under the hood.
The SkyActiv powertrain is designed to give the CX-5 and other Mazda products a significant bump in both performance and, perhaps more importantly, in fuel economy. Like its competitors, Mazda is struggling to meet consumer demand for better mileage — a push that will come to shove now that the Obama administration has approved plans to boost the corporate average fuel economy, or CAFE, standard to 54.5 mpg by 2025.
That’s a modest retreat from earlier proposals that would have stretched as high as 62 mpg, but even though industry leaders grudgingly endorsed the new rules, they caution it will be a costly and difficult challenge that may require a significant number of technological breakthroughs to achieve.
“Obviously, there is still a great deal of uncertainty,” said Jim Lentz, Toyota’s top American executive, “which is why we are rolling out and testing a range of alternative fuel options.”
Indeed, as GM’s retired but still very active “car czar,” Bob Lutz, is fond of saying, “There is no silver bullet.”
What will motorists likely see in their driveway in 2025 as a result of the changes?
On the powertrain front:
• The internal combustion engine won’t go away, not that soon, anyway, so gasoline engines will apply even more advanced forms of direct injection, more aggressive turbocharging and possibly the use of lasers to replace conventional spark plugs.
• New and even cleaner diesels will almost certainly migrate from Europe to the U.S. Chevrolet hopes to get more than 50 mpg on the highway with the diesel-powered Cruze sedan it announced last month.
• Automatic transmissions will continue to add more gears, like the 9-speed Chrysler is developing, while more cars will switch to “manumatic,” or clutchless manuals.
• Downsizing will be essential. Ford is working on a 1.0-liter, 3-cylinder version of its EcoBoost, while pint-sized V-6s could deliver V-8 performance in its big F-Series pickups.
• A number of experts believe that the new CAFE rules may force the industry to migrate more and more towards alternatives to the internal combustion engine.
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The Recreation Vehicle Industry Association (RVIA) is urging association and industry members to provide comments on a rule being jointly proposed by the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) that would issue the first-ever Corporate Average Fuel Economy (CAFE) and greenhouse gas standards for medium- and heavy-duty vehicles, the RVIA reported in a news release.
Typically these standards have only impacted lighter-weight vehicles, but the new proposal would include the RV industry’s most popular tow vehicles – pick-up trucks between 8,500 and 10,000 pounds – as well as most motorhomes, beginning in 2014.
EPA and NHTSA have issued an NPRM (a notice of proposed rulemaking) that provides specific information concerning the proposed standards. Comments on the proposed rule are being accepted until Jan. 31.
“RVIA has long worked with regulators and lawmakers to address the need for adequately powered tow vehicles as miles per gallon standards have been considered for cars and light trucks,” said RVIA President Richard Coon. “We are continuing this important effort to insure the needs of the RV industry are addressed as this new proposal is considered.”
RVIA has already met with NHTSA and EPA to provide specific information about the impact these new standards would have on the RV industry. While RVIA members are being encouraged to provide their own comments, RVIA will also submit formal comments and urges members to contact Jay Landers, senior director of government affairs (email@example.com) to incorporate any key RV industry message points.
Automakers facing new U.S. fuel-economy rules in 2012 have questions about getting credits for fuel-efficient technologies and being penalized for not complying with the law, but they will ultimately support the proposed national standards, officials from an industry group say.
The Alliance of Automobile Manufacturers, a lobbying group of 11 automakers, has until late next month to decide which parts of the government’s proposed emissions rules are fodder for official comment, spokesman Charles Territo said in an interview with Automotive News reporters and editors.
The Alliance and individual automakers plan to weigh in, but they don’t want to get in the way of getting the Coporate Average Fuel Efficiency (CAFE) standard officially passed by the beginning of April.
In remarks prepared a Wednesday public hearing in Detroit about the emissions rules, Julie Becker, the alliance’s vice president for environmental affairs, said all parties involved must start moving forward toward passing the legislation.
“A final rulemaking prior to April 2010 is essential to providing manufacturers with the certainty and lead time necessary to plan for the future and to cost-effectively add new technology,” Becker said.
The Alliance is considering giving opinions on how the government should give automakers credits toward their fuel-efficiency scores for using emissions-reducing technology such as improved air conditioning units, Territo said.
In addition, the Alliance may issue comments on how the government should penalize automakers who don’t meet emissions standards or how regulators should account for diesel emissions in an automaker’s companywide average, he said.
In May, President Obama said the United States would implement a single national emissions standard, harmonized between the EPA’s greenhouse-gas regulations and the National Highway Traffic Safety Administration’s (NHSTA) fuel-economy parameters.
The proposed standard calls for the vehicles sold in the United States to average 35.5 mpg, although individual manufacturers’ fleet averages would vary. All manufacturers would have to hit targets for emissions based on each vehicle’s wheelbase. The result would be a 40% improvement in fuel economy from current levels.
The proposed rules on how to meet the new standard came out in September. Automakers have until Nov. 27 to submit written comment on the potential regulation.
In the meantime, the government has scheduled three public hearings this month in Detroit, New York City and Los Angeles to allow citizens to voice their opinions on the legislation. The first is today.
Despite plans to weigh in, “at the end of the day, we will support this program,” Territo said. “If it isn’t finalized, we would revert to the California program, and that is the worst-case scenario.”
The proposed rule supersedes a waiver California has received to develop its own fuel-economy standards.
The Alliance also plans to stress to regulators the importance of moving on to develop a national standard for 2017 to 2020, Territo said.
“The more time you have to develop new technologies, the less expensive it is,” he said.
The Alliance’s members are BMW Group, Chrysler Group, Ford Motor Co., General Motors Co., Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche, Toyota Motor Corp. and Volkswagen Group.
Electric Motors Corp. a leader in the emerging electric vehicle industry, continues to move forward with its plans to establish a strategic manufacturing center in northern Indiana. As part of this initiative, the company has announced an agreement with Livernois Vehicle Development, one of the largest automotive engineering firms in Detroit, according to a news release.
An industrial automation and assembly expert, Livernois will provide the engineering services to ensure that EMC’s electric drive train systems are fully compliant with the chassis and body parameters of light-, medium- and heavy-duty vehicles, including the Ford F-150 pickup, which will be retrofitted with EMC’s electric drive train systems. Livernois will be launching an electric vehicle engineering division as a direct result of its joint venture with EMC.
“Livernois is very excited about partnering with EMC on this exciting new project,” said Norma Wallis, president of Livernois Vehicle Development. “It’s a real boost for the economies of both Indiana and Michigan. We’re creating new products as well as a new future by bringing the automotive market here in Michigan, together with the expertise of the recreational vehicle industry in Indiana.”
In addition to its new partnership with Livernois, EMC has entered into agreements with several other automotive manufacturing companies in Indiana and Michigan, including recreational vehicle manufacturer Gulf Stream Coach Inc. “Our partnership with Livernois, as well as with other leading companies, represents the beginning of a much larger network of suppliers, manufacturers, and other vendors to the electric vehicle industry,” said Wil Cashen, EMC’s CEO. “Incorporating electric drive systems into existing vehicles is fast becoming a significant part of the automotive industry’s future. Livernois’ superb engineering skills will help us achieve that goal faster and more efficiently.”
Part of EMC’s grand design is to establish Elkhart County, Ind., as the center of the electric vehicle industry in the United States. Elkhart, known as the capital of the recreational vehicle industry, has been hit especially hard by the recession, with unemployment topping 18%. EMC’s Elkhart County facilities are expected to drive a significant number of jobs to the area.
“There are three factors coming together to make the ‘perfect storm’ for the electric vehicle industry,” said Cashen. “The availability of federal loans will stimulate even more innovation in this area, and tougher CAFE standards means the auto industry as a whole is taking EV technology very seriously. But beyond government programs, the biggest factor driving this fledgling industry is the renewed entrepreneurial spirit we’re seeing once again throughout the automotive community, as established auto manufacturers and new innovators alike create a whole new class of automotive technology. We’re proud to be a leader of that movement.”
May 22, 2009 by Bob Ashley · Comments Off
With struggling American automotive manufacturers agreeing to work toward a dramatic increase in fuel economy over the next seven years, the Recreation Vehicle Industry Association (RVIA) finds its hands tied in efforts to realistically influence the outcome of any national energ Wind Power, Wind Turbine Blades, Home Wind Turbines-75% Comm. y-related issues.
That, says RVIA President Richard Coon, is why RVIA won’t be taking a more aggressive stand against the national CAFE standards proposed this week by President Obama.
“The RVIA doesn’t have any leverage,” Coon told RVBusiness. “We are still opposed to CAFE increases. We are just as adamant.”
In a press release earlier this week, RVIA urged Congress and the Obama administration to take into consideration the need the RV industry has for heavier tow vehicles.
Although Chrysler LLC is in bankruptcy and General Motors Corp. faces a June 1 deadline to restructure, automakers apparently have accepted standards laid out by the California Air Resources Board (CARB) and endorsed on Tuesday by President Obama.
Under the plan endorsed by President Obama that still needs to go through Congress and the regulatory process, cars and light trucks together would need to average 35.5 miles per gallon (mpg) by 2016 with car standards rising from the current 27.5 mpg to 39 mpg and light trucks increasing to 30 mpg from 24 mpg.
That has many in the RV industry worried that automakers soon won’t be building trucks with enough horsepower to tow larger travel trailers and fifth-wheels.
Coon said that RVIA will continue to work with a coalition that includes the Recreation Vehicle Dealers Association (RVDA), American Recreation Coalition (ARC), National Automobile Dealers Association (NADA), Alliance of Automobile Manufacturers and the SUV Owners of America to limit fuel-mileage increases outlined by Obama.
California’s air board was preparing to set its own standard by limiting tailpipe emissions on vehicles sold in that state, and 16 other states were considering adopting CARB-like standards.
“Not having all the states setting their own standards is a plus,” Coon said. “But when you look at the auto manufacturers, they’ve got big problems at the moment and CAFE just adds to their barrel of misery.”
The 2016 date would move up by four years standards signed by President Bush in 2008 requiring auto manufacturers to meet a fleet average of 35 miles per gallon by 2020.
Pickup and medium-duty trucks used for towing RVs are scheduled to be the target of a separate set of standards to be established by the National Highway Transportation Safety Administration (NHTSA).