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Green Car Rule Gives Auto Industry New Challenge
WASHINGTON (AP) - President Barack Obama wants automakers to make greener
cars at a time when General Motors and Chrysler are hanging by the thread of
a massive
government loan and auto sales have plummeted to their lowest levels in more
than two decades.
Obama’s plans could bring smaller cars, more hybrids and advanced fuel-saving
technologies to showrooms, but car shoppers will probably pay more upfront
because the new rules are expected to cost the hamstrung industry billions
of dollars.
“
The consumer needs to understand that they will see significant increases in
the cost of vehicles,” said Rebecca Lindland, an auto analyst for the
consulting firm IHS Global Insight. Her firm estimated the upgrades could add
$2,000 to
$10,000 to the price of a vehicle.
Obama directed the Environmental Protection Agency to review whether California
and more than a dozen states should be allowed to impose tougher auto emission
standards on carmakers to fight greenhouse gas emissions. The Bush administration
had blocked the efforts by the states, which account for about half of the
nation’s
auto sales.
The new president also said his administration would issue new fuel-efficiency
requirements to cover 2011 model year vehicles. The rules would be the first
step toward a 2007 energy law that requires the auto industry to boost efficiency
by 40 percent to at least 35 miles per gallon by 2020.
Obama set in motion a new regulatory process at a time when the nation is
coping with an economic recession and auto sales have fallen to their lowest
pace
since 1982. Underscoring the hardships, GM said it would slash 2,000 jobs at
plants
in Michigan and Ohio.
David Cole, chairman of the Center for Automotive Research in Ann Arbor,
MI, said he doesn’t believe the EPA will approve all the waivers asked for
by the states. To do so would be economically unworkable.
“
If the industry is in total shambles, you can have any regulation you want -
it’s not doable,” he said.
Cole said the additional regulations would have to be implemented “in a
way that’s achievable in the industry.”
Environmental organizations said Obama’s approach would help the companies
in the long term, forcing them to produce fuel-efficient cars coveted by more
consumers. Roland Hwang, a senior policy analyst with the Natural Resources
Defense Council, estimated that a more efficient car would save its driver
$1,000 to
$2,000 in fuel costs over its lifetime, offsetting some of the upfront cost.
Even with the decline in gas prices from last summer’S $4 per gallon, Hwang
said, the regulatory programs would “push them in a direction that’s
going to make them more competitive, not less.”
“
Without California standards and without federal standards, there’s a real
danger of Detroit falling back in their old gas-guzzling ways,” he said.
The industry embraced a green mantle at January’s North American International
Auto Show in Detroit, outlining plans to ramp up production of gas-electric
hybrids, develop plug-in electric cars and bring more fuel-efficient technologies
to conventional
models.
Carmakers including GM, Ford Motor Co. and Toyota Motor Corp. plan to sell
electric cars that plug into a conventional wall outlet and let drivers bypass
the gas
station. By 2013, Ford Motor Co. is bringing its “EcoBoost” line
of direct-injection turbocharged engines - and their 20 percent improvement
in gas mileage - to 90 percent of its models.
The regulations may also push automakers to introduce more vehicles with
diesel engines, which can go more miles and provide more power with less fuel,
or
add technologies like those that shut off some of an engine’s cylinders when
full power isn’t needed.
But none of the changes will be cheap. The Bush administration issued a near-term
proposal last year that would have required new cars and trucks to meet a fleet
average of 31.6 mpg by 2015. At the time, the government estimated the regulations
would cost the industry nearly $50 billion.
California, meanwhile, has battled with auto companies to impose even stiffer
regulations that would force carmakers to achieve a fleetwide 35.7 mpg by 2016
and 42.5 mpg in 2020.
David Regan, vice president of legislative affairs for the National Automobile
Dealers Association, said it could lead to a state-by-state “patchwork” that
would burden the industry and force dealers to limit their sales of larger
cars and trucks.
“
We are in the midst of unprecedented economic challenges in our industry,” said
Regan. “All of these factors need to be weighed as the Obama administration
goes forward.”
The tougher requirements could bring more calls for federal aid. Rep. Sander
Levin, D-Mich., said the industry would need action on a $25 billion loan program
that Congress approved last year to help carmakers revamp their plants to build
green cars.
Levin and other members of Michigan’s congressional delegation issued
a laundry list of requests, including an additional $25 billion for the loan
program
and funding to support up to $4.3 billion in grants and loan guarantees to
develop advanced battery manufacturing.
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