Time for a big increase in CAFE?
There has been much talk in the blogosphere regarding CAFE and future fuel economy requirements with some hoping that a huge increase in CAFE is forthcoming. Others claim such an increase will mean many consumers will hold onto older gas guzzlers much longer as automaker profits turn into red ink due to declining profit margins.
Recently a few studies have claimed that much higher fuel economy can be cost-effectively achieved with today's technologies at a much faster pace than automakers appear ready to embrace.
So how crazy is the idea of 60 mpg by 2025?
According to recent analysis, the current uptick in CAFE standards is “very modest”. Instead of 34 mpg by 2016, 38 mpg “would have delivered additional benefits of $140 billion over the life of the vehicles covered.”
Likewise, moving to 60 mpg by 2025, “will add hundreds of billions of consumer savings and reduced greenhouse gas emissions by hundreds of millions of tonnes.” More important, the costs of the technologies to achieve such standards provide enough savings in fuel costs to more than pay for themselves according the Consumer Federation of America (CFA).
So, 60 mpg by 2025 would be good for consumers, but would it be good for US automakers?
A study by the University of Michigan also claims such fuel economy standards could be achieved without consumers losing any “creature comforts” they are used to today. It's just that over time, engineering needs to focus on making current engines more fuel efficient not more powerful. Similar to the CFA study, the Michigan study also concludes, this “revolution by evolution” pays for itself over time.
Still, does it mean less profits for automakers?
While the extra technologies might pay for themselves over time, that doesn't mean such technologies will be as profitable as sticking closer to the status quo as long as possible, and that means automakers will balk. Thus, 60 mpg by 2025 is certainly crazy talk, at least in America.
Other places in the world, however, might embrace this crazy talk, especially emerging markets – and the future of the world's auto industry. The wheel doesn't have to be reinvented to make huge gains in fuel economy. It's NOT all about plug-in vehicles and super grids. Today's technologies, if not for crazy American consumer demands, could be far, far more efficient.
Emerging markets, however, might find much more sanity in their consumers. And, why not keep it as simple, efficient and cost-effective as possible instead of trying to reinvent transportation through the plug and/or hydrogen? Wouldn't that be the more crazy path in economies with less money to spend on transportation?
Emerging markets don't have to immediately leapfrog today's technologies to succeed in the auto markets of the future, they just have to be more reasonable and responsible than America. That's not really so crazy, is it?