The BulleTin • Sunday, april 25, 2021 D9
How stricter fuel-economy standards could backfire
BY BREANA NOBLE AND RILEY BEGGIN
The Detroit News
F
ederal regulators directed by President Joe Biden
to reevaluate national fuel economy rules and
encourage the transition to electric vehicles are expected to
raise the standards — though it’s unclear just how high.
Gas- and diesel-powered vehicles, however, still earn
automakers their profits. Many companies say they don’t
intend to invest more in such engines, instead using the
excess cash to invest in electrified vehicles favored by
governments seeking carbon neutrality.
But more stringent regu-
lations, especially for pickup
trucks and SUVs, potentially
could do the opposite of what
policymakers want and lead to
more investments in products
with internal-combustion en-
gines — especially if demand
for electric vehicles fails to ma-
terialize as predicted.
“A different regulation
through 2030 may send that
signal to engine engineers —
and by that I mean internal
combustion engineers — their
days are not numbered,” said
Warren Browne, an auto sup-
plier consultant and former
General Motors Co. executive
who worked at the automaker
for 40 years.
It wouldn’t be the first time
altered fuel-economy standards
resulted in unintended conse-
quences. When regulators first
set Corporate Average Fuel
Economy standards in 1975,
they sought to limit gasoline
use in the wake of an oil em-
bargo that limited supply and
raised prices. The requirements
created a fleet-wide average for
how far a vehicle must be able
to go on a gallon of gas.
The government, however,
set more lenient rules for trucks
and SUVs compared to pas-
senger cars. Once demand for
V-6 and V-8 engines rose again
after fuel prices leveled, auto-
makers responded with more
gas-guzzling SUVs and trucks,
which became the new family
station wagon.
“They realized the loophole,”
said Sam Fiorani, vice president
of global forecasting for Auto-
Forecast Solutions LLC. “Con-
gress thought they could legis-
late smaller, more fuel-efficient
vehicles, not seeing they would
shift from cars to trucks.”
By 1992, the standard was
27.5 mpg for cars and just 20.2
mpg for trucks, Fiorani said.
Trucks and SUVs in the 1970s
had been more rugged and util-
itarian, but in the ’80s and ’90s,
they more commonly had au-
tomatic transmissions, power
steering and power windows.
It was the advent of vehicles
like the GMC Yukon, Chev-
rolet Tahoe, Ford Ranger and
Explorer, Dodge Durango and
Jeep Wrangler series and Grand
Cherokee — vehicles that drive
profits at Detroit’s three auto-
makers today.
Trucks and SUVs “could be
sold for a higher price, could
have a bigger engine and could
make buyers happy,” Fiorani
said. “They had extra room
and didn’t count as much as a
Crown Vic,” referring to Ford’s
Crown Victoria sedans.
The increased standard ulti-
mately did deliver the desired
effect of significantly reducing
emissions and gas consump-
tion from what they were in
JIM WATSON/AFP via Getty Images
Then-presidential candidate Joe Biden speaks at the United Auto Workers Union Headquarters in Warren, Michi-
gan, in September. Unintended consequences are possible as Biden directs regulators to look at fuel standards.
1970, notes Sam Abuelsamid,
e-mobility analyst for market
research firm Guidehouse Inc.
But Americans had fallen for
the larger vehicles that in many
cases pollute more than se-
dans and bump against calls for
more environmentally friendly
vehicles.
Case in point: Dodge on
Tuesday said it was expanding
the number of its 2,000 “sold-
out” supercharged V-8-pow-
ered Durango SRT Hellcat
SUVs. The vehicle is only being
offered for the 2021 model year
due to evaporative emission
regulations on the Durango
platform.
Dodge can nix a special-edi-
tion vehicle like that from its
lineup, but automakers at this
point can’t afford to lose the
truck and SUVs that are staples
for their operations and prof-
its. They’re starting to roll out
more EV options from the Ford
Mustang Mach-E SUV to the
GMC Hummer EV, but elec-
tric vehicle leader Tesla Inc. still
relies on selling competitors its
emission regulatory compli-
ance credits to make a profit.
And EV sales remain a sliver of
WE WANT TO BE YOUR MECHANIC
Let us have the privilege to work for you the next time your
auto gives you trouble or is in need of scheduled maintenance.
Chances are, you’ll become a customer for life, just like so many
of your neighbors. Our reputation is riding on it.
☑ 3 YEAR/36,000 mile warranty on most repairs
☑ Friendly, courteous service
☑ ASE technicians equipped with the latest tools
and equipment to fi x your car right the fi rst
time.
TRUST THE EXPERIENCE
"Since coming to Marshells, I have found them to be reliable, trustworthy,
and explain what they did in a manner in which i can understand. I truly
recommend them to anyone who has automobile needs."
-Maxine M., Redmond
all U.S. sales.
“They’re going to be invest-
ing in improved (internal com-
bustion engine) vehicles for the
foreseeable future,” Fiorani said
of traditional automakers. “In
the best-case scenario, by 2040,
40% of vehicles built worldwide
will be fully electric; 60% will
have an internal combustion
engine in them.”
GM is targeting no longer
to sell gas- and diesel-powered
light-duty vehicles by 2035.
Ford Motor Co. has refrained
from disclosing such a date,
and so has Stellantis NV, whose
CEO, Carlos Tavares, says the
company is “trying to leverage
everything we can and use the
existing capacity as much as we
can with the existing” combus-
tion engines.
An automaker’s fleet as a
whole must meet fuel-economy
standards, not each model sold.
That means automakers can
offset larger, less fuel-efficient
vehicles with smaller or electri-
fied ones.
If there is a larger increase in
fuel-efficiency targets for trucks
than cars, that could encourage
automakers to invest more in
internal combustion engines
to keep those profitable, in-de-
mand products competitive,
Browne said.
Under the assumption that
auto companies would have
time to adjust, former President
Barack Obama implemented
stricter CAFE standards be-
ginning in 2012 that phased-in
mileage increases for trucks
through 2020. It did result
in innovations like start-stop
technology that shuts down
an engine at red lights and ad-
vancements in air-condition-
ing systems. Former President
Donald Trump, however, dra-
matically scaled back those
goals.
“Higher standards, especially
for trucks, as it has in the past,
will lead to improvements to
those vehicles to keep the prof-
itability going,” Browne said.
“Regulations don’t increase de-
mand. They’re not going to get
out of the SUVs and pickups.
They’re going to say, ‘Give me
another 2 miles per gallon.’”
Of course, after increasing
internal combustion engine
efficiencies to 35% to 40%, ev-
ery incremental increase from
there becomes much more ex-
pensive, Abuelsamid said.
“Your margins start to go
away and any extra margins
that you had over a comparable
electric vehicle, you no longer
have as an incentive to invest
in those at all,” he said. “Rather
than to tweak, it might be bet-
ter to give up and go to electri-
fication entirely.”
Today, some companies,
such as Ford, are closer to
meeting the Obama-era stan-
dard than other companies,
such as GM or Stellantis, said
Brett Smith, director of tech-
nology at the Center for Auto-
motive Research in Ann Arbor.
“We’re at a point when those
pickup trucks curves are get-
ting potentially much more
challenging, but those are the
things people want, and you
can sell lots of them,” he said.
“But if you sell lots of them,
that means you’re going to miss
their standards.”
If the Biden administration
returns to the Obama-era stan-
dards, that’s bad news for auto-
makers, Smith added. If there
is not an economically feasible
way to improve their trucks,
they might have to raise the
price of trucks to push buyers
to EVs.
Still, automakers may be hes-
itant to advocate against raising
the standards, Smith said, be-
cause they don’t want to be seen
as part of the problem or to
jeopardize a relationship with
the White House.
The messy history of un-
intended consequences un-
derscores the importance of
having the auto industry repre-
sented in the decision-making,
said Daniel Ives, an analyst at
investment firm Wedbush Se-
curities Inc.
Despite the campaign prom-
ise of stricter standards, how-
ever, Biden’s focus as of late
is not on the supply side of
the industry, but the demand
side. His $2 billion infrastruc-
ture and jobs proposal would
include $174 billion to “win”
the global electric vehicle race
against China and Europe.
AUTO • TRUCK • RV
SNOW’S
TRANSMISSIONS
Welcome to Snow’s Transmissions! We have been serving
Central Oregon since 1985 providing motorists with dedicated
transmission repair. We are known throughout Central Oregon
for our honesty and quality of workmanship. We are a family
owned business with advanced technology installed by ASE
Certifi ed and experienced technicians.
We do everything possible to get your vehicle repaired and
back on the road quickly. We know your time is valuable.
We are proud to say we have an excellent reputation
and following amongst the Central Oregon area. Snow’s
Transmissions is known as being a trusted transmission repair
business.
4 x4’s • Overdrive • RV’s • Clutches
Front Wheel Drive • American
Foreign • Transfer Cases
Automatic • Rebuilt & Exchange
Standard • Shift Kits/Coolers
“Where Quality Comes First”
484 N. W. Larch St. • Redmond
www.marshallsautomotive.com
2110 S Highway 97, Redmond (next to Arby's)
541-548-5239
541.923.8726
Mon. - Fri. 9:00am to 5:30pm