Nov. 8, 2012 - A positive step toward improved fuel efficiency for automobiles and light trucks takes effect next month as the miles-per-gallon standards for a variety of new vehicles built for the 2025 model year moves to 54.5 mpg. While there are a lot of wonky elements that come into play, the important takeaway for business is that as fuel prices continue their projected rise the new mileage standards may help ease that "pain at the pump."

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54.50 and No Fight: An End to Uncertainty Puts Everyone on Same Page for Fuel Economy Standards

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On Dec. 16, 2012, the automotive industry will have its collective eyes focused on 2025 as a federal rule calling for that model year’s cars and light trucks to have a corporate average fuel economy (CAFE) of 54.5 miles per gallon takes effect. That translates to about 35-40 mpg in real-life driving -“ still a marked improvement over today’s results.

With gas costs fluctuating between $3 and $4 a gallon, and often spiking closer to $5, more and more new cars are getting close to the 2016 standard of 35.5 (again, in real-world terms, about 25 m.p.g.) today, so what’s the big deal?

It’s who is on board with that 20-mpg increase over nine years and why that matters.

Phyllis Cuttino led the forum.

A recent forum on fuel economy and innovation, sponsored by the Pew Environment Group’s Clean Energy Program, was held in the Automotive Hall of Fame in Dearborn, Mich. Led by Phyllis Cuttino, the program’s director, the forum featured representatives of an automotive think tank, an automotive supplier, a global engineering consultant and the United Auto Workers. That meant there were two PhDs, a Chartered Engineer (a UK designation) and a multi-degreed labor union executive. They were there to tell attendees how the industry is going to get to 54.5 by 2025.

Not at the conference were representatives of the automotive manufacturers. They are on record favoring them. The only industry group that’s unsure is the dealers.

Cuttino reminds the conference that the U.S. is exporting $1 billion a day to pay for our dependence on foreign oil. “That’s a risk to our economic security.” Additionally, the uncertainty of price volatility, taking oil “from as low as $35 a barrel to as high as $147, poses a significant risk to consumers at the pump.” It’s not just domestic consumers who have to deal with high fuel prices. As Corp! has noted earlier, the Department of Defense is actively engaged in a fuel economy program of its own. Beside the direct costs of fueling military vehicles, Cuttino raises another related aspect of importing oil: “The Rand Corporation estimates that we spend between $67 billion and $83 billion a year with the U.S. Navy to protect oil shipping routes. That is just another hidden cost to us at the pump.”

Cuttino further says that estimates show that the new CAFE standards will save the average motorist about $8,000 over the average life of a vehicle.

Turning to marketing, Cuttino pointed out that the global market for fuel-efficient vehicles is expanding at a rapid place and that the technology expertise gained in reducing the fuel requirements for American cars and trucks will be a plus in the marketplace in countries such as China and India. “We have got to invest in technology and innovation not only to keep up but to be able to export it,” she says.

What’s required in terms of technology and innovation to get to 54.5 by 2025 -“ and beyond? For that we turn to the panel members.

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