New engineering, consumer buy-in essential for new auto efficiency standards
This article first appeared in the St. Louis Beacon, Aug. 8, 2011 - President Barack Obama delivers remarks on a program to improve the fuel efficiency of vehicles to be built between 2017 and 2025, in Washington July 29, 2011.
More fuel-efficient engineering may lead to higher sticker prices for new vehicles on the market in the next few model years.
With gas prices on the rise across the nation and more emphasis on reducing oil consumption, the American auto industry is committing to boost the current 27 miles a gallon average fuel efficiency of cars and light-duty trucks to 54.5 miles a gallon by model year 2025.
Engineering and marketing experts agree that these new standards for more fuel-efficient vehicles may cause higher sticker prices, but will provide savings in fuel costs over the life span of these vehicles.
Joseph Goodman, assistant professor of marketing at Washington University, believes that these new standards will not slow the auto industries sales because fuel-efficiency is already marketable.
"It is always a hard sell to get the consumers to pay more money upfront for a product," Goodman said. "The initial price is only one factor, it is going to be important to sell all of the cars benefits to the American consumer and how they will save at the pump in the long run."
The announcement of this agreement for stricter standards, the largest increase in mileage requirements since the government began regulating car consumption of gasoline in the 1970s, came last week from President Barack Obama and 13 major automakers.
Kenneth Ragsdell, professor of engineering management and systems engineering at the Missouri University of Science and Technology, believes that reducing the mpg in these vehicles is not going to be an easy, but he has confidence that it can be done.
"Higher efficiency is good for everybody; building these vehicles and selling them to the American consumer is going to be the challenge," Ragsdell said. "This can be done without a doubt. Auto companies wouldn't have agreed to it if it couldn't be done."
Ragsdell, a consultant for General Motors, said that engineering is going to be the key for these new standards. The automakers will begin by looking at their current vehicle structures as they attempt to make their vehicles lighter for less fuel consumption. Engines will have to be redesigned to be lighter while more efficient and Ragsdell believes that automakers will also turn more toward hybrid vehicles as battery technology becomes more advanced.
"Engine design is a never-ending cycle of design and research," Ragsdell said. "I hope that the buying public will see the value in these vehicles that will be built from these standards."
To meet these new standards, automakers will run on a credit system. Although the specifics for this system have not yet been made public, companies can earn credits by producing battery-powered vehicles, alternative-fuel models and hybrids. The intention of these credits is to develop cars with lower emissions and new alternative technologies.
Goodman believes that these new technologies are already marketable for consumers and the Obama administration and automakers have already begun to stress the benefits of these standards for American families. It is estimated that a family that purchases a new car or truck will save thousands of dollars in fuel over the lifetime of the vehicle and those savings are projected to steadily increase to nearly $8,200 for a new vehicle purchased in 2025.
Obama addressed the consumer market and the need for oil independence in a press conference on the new fuel efficiency standards.
"For decades, we've left our economy vulnerable to increases in the price of oil. And with the demand for oil going up in countries like China and India, the problem is only getting worse," Obama said. "The demand for oil is inexorably rising far faster than supply. And that means prices will keep going up unless we do something about our own dependence on oil. That's the reality."
Consumer backing may already exist as gas prices rise across the nation. Currently six of the 10 best-selling vehicles in America are small or midsized cars including the Toyota Camry, the Nissan Altima, the Ford Fusion and the Honda Accord.
"The most profitable cars on the market area all highly fuel efficient," Goodman said. "As gas prices continue to rise, this is only going to help generate more need for these fuel efficient vehicles."
Goodman, who just returned from a trip to Europe, cited Europe as the perfect example of the demand that high gas prices can spark. The average gas prices in the European Union runs to about $8.70, almost twice of what Americans currently pay at the pump.
"Europe has some of the smallest, most fuel efficient cars in the world and it is a direct result of their fuel prices."
Jamie Spencer, a St. Louis resident, chose a smaller vehicle when he purchased his Honda Accord in 2009. At the time, Spencer worked two jobs traveling 40 miles to and from work a day for five days a week.
"I had heard good things about the miles per gallon and the craftsmanship of the car and those were factors in my purchase," Spencer said. "This car allowed me to get to work at an affordable cost."
Making fuel-efficient vehicles that are affordable for consumers like Spencer will be key to meeting these standards while making a profit.
"Consumer preference drives the market and getting that buy in from the consumers will be the greatest innovation," Ragsdell said.
The White House is confident that these new standards will save consumers $1.7 trillion at the pump by 2025 and that this will provide a boost to the auto industry. These standards are estimated to also dramatically cut the oil Americans consume by a total of 12 billion barrels and by 2025, reduce oil consumption by 2.2 million barrels a day.
"These standards will help spur economic growth, protect the environment, and strengthen our national security by reducing America's dependence on foreign oil," U.S. Transportation Secretary Ray LaHood said in a press release. "Working together, we are setting the stage for a new generation of clean vehicles."
Jonathan Ernst, a student at Saint Louis University, is a summer intern at the Beacon.