White House Wants 56.2 MPG by 2025, But Auto Industry Says Not so Fast

With the White House and regulators informing automakers that they intend to push for fuel economy standards in the US to rise to an average of 56.2 MPG by 2025 you can count on an industry to push back and say "slow down."

The automakers (and not just the Big 3) are looking for a more measured increased in the CAFE standards, which currently average 30.2 MPG for new vehicles and will rise to 34.1 MPG by 2016.

From the auto industry's stand point, increasing fuel economy 5% annually between 2016 and 2025 will be too costly for automakers and for consumers. From the perspective of regulators in Washington, the cost incurred by consumers will be recouped fairly quickly with the money people save on gas.

Both sides have valid arguments. But unlike 2009 when the Obama administration pushed for, and secured higher fuel economy standards, the auto industry is in a position where it can and will push back. This is one of several reasons why many believe the next CAFE standards will wind up being lower than 56.2 MPG. I can already hear people on both sides howling that anything under 50 MPG will be too little or too much.

All of this raises the question of how much the type of vehicles we buy and the engines in those cars and trucks will change. There is no doubt that as we move closer to 2025 we will see more electric vehicles that will get well over 50 MPG. But it won't be a huge increase. Heck by 2020, it's estimated just .6% of the cars and trucks sold in the US will be electric according to J.D. Power & Associates. Where will likely see a larger impact is with gas/electric hybrid cars. There will be more for sale and it won't be unusual to see them parked in driveways across the country. J.D. Power estimates by 2020, 8.7% of the the vehicles sold in this country will be gas/electric and plug-in hybrids. What about vehicles powered by the traditional internal combustion engine? Yes, they will still be around and yes, they will be much more fuel efficient. As it is, look at the number of I-C powered cars currently for sale that average over 40 MPG.

What about SUV's and crossovers? Will they still be around? You bet. The difference is that they will be more fuel efficient. They may not get 56 miles per gallon, but their fuel economy will steadily increase. Remember when SUV's averaged just 15 or 16 MPG? Now, the newest models get over 20 MPG.

So as you watch the tug of war between the Obama administration and automakers keep in mind 56 MPG is just the starting point. And unlike 2009 when the auto industry was on its knees and in no position to effectively push back, the industry is in a different place today.

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