Ford Wants “Robust” Review of Fuel Economy Rules

Cheap fuel causing shift in consumer demand, warns Ford CEO Fields.

by on Dec.11, 2014

Ford CEO Fields is looking forward to a "robust" debate over the 54.5 mpg CAFE standard.

With gas prices plunging to a national average of barely $2.60 a gallon, there’s been a an equally sharp shift in the U.S. new car market, with dealers struggling to keep up with demand for pickups, SUVs and muscle cars.

Small cars, as well as battery-electric vehicles and other high-mileage models, have been piling up on showroom lots, however, and that’s worrying automakers who fear the shift will make it difficult to meet the tough new Corporate Average Fuel Economy standard set to take effect in 2025. And Ford Motor Co., for one may seek to have the CAFE mandate rolled back or revised, the maker’s CEO said Thursday.

Fuel for Thought!

While insisting the company is “dedicated to meeting” the 54.5 mile per gallon target, Fields said he is also looking forward to 2017 when the feasibility of the standard will come up during a meeting between industry officials and federal regulators.

“I expect we’re going to have a very robust mid-term review and will be very data-driven,” stressed Ford Chief Executive Mark Fields during a discussion with reporters following a corporate year-end briefing. “It’s a great opportunity to talk about the feasibility and the timeframe to meet those requirements.”

(Ford rolls out all-new, easier-to-use version of its Sync infotainment system. Click Here to check it out.)

Putting the review into the legislation authorizing the big jump in the CAFE rules was critical to winning industry support for the largest-ever jump in the U.S. fuel economy standard.

At the time the regulation was passed there was plenty of debate over whether it would be possible to deliver more than 50 miles per gallon from the typical U.S. vehicle – and, if so, whether consumers would be willing to accept the cost.

(New car fuel economy slips as fuel prices plunge. Click Here for more.)

The target seemed to become a bit more realistic in recent years, as fuel prices surged as high as $4 a gallon, with some petroleum industry officials suggesting $5, $6 and even higher prices were in the offing.

Instead, a glut of oil – driven in large part by expanded U.S. production – has seen prices plunge to four-year lows. According to the AAA, the average is now $2.632 per gallon of regular self-serve across the country, and that is expected to drop even lower in the coming weeks.

That has had a clear impact on U.S. auto sales trends, with pickups and SUVs rapidly building demand, while the small cars and alternative-power vehicles that were gaining momentum in 2013 have slipped precipitously down the sales charts.

The fuel economy of the average American vehicle sold in November slipped to 25.3 mpg, according to a recurring study by the University of Michigan Transportation Research Institute. That was down from 25.8 mpg in August.

A major challenge for automakers is how to plan for the future. Officials across the industry are struggling to determine whether the fuel price plunge is a short or longer-term problem. If it’s not likely to last, consumer demand could rapidly shift in the other direction once fuel costs resume an upward trajectory.

But if prices hold much under $4, industry planners generally agree, it will become increasingly difficult to sell American motorists on the hybrids, battery-cars, fuel-cell vehicles and other green machines that would be needed to reach anywhere near 54.5 mpg.

While Ford’s Fields declined to say what the carmaker might ask for, it could seek to delay or even reduce the 54.5 mpg mandate. But any such move would likely be met with strong resistance from consumer and environmental groups.

The industry may also seek to pressure California regulators to roll back their own clean car initiative which will require automakers to make 22% of the products they sell in that state by 2025 so-called Zero-Emissions Vehicles. California is the country’s largest market for such products but is still far short of that target. But barring a rollback, any maker that misses the target would be barred from selling any of its vehicles in the state.

(Ford investing in new high-tech incubator, seeking the “next big idea.” Click Here for the story.)

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3 Responses to “Ford Wants “Robust” Review of Fuel Economy Rules”

  1. Jorge says:

    Ever major car maker is well aware that the 54.5 mpg CAFE decree pulled from Obama’s orifice is not attainable with current technology. Unfortunately as we have seen Obama and the EPA are pushing impractical EVs at a tremendous cost to the populace. That’s bad government and they should be held accountable for their ignorance and evil acts against the populace.

  2. Logan says:

    Jorge you r absolutely right. In addition the liberals are hippocrates as they no longer want to buy so called green cars when gas prices are this low. When push comes to shove their motto is do as I say and not as I do.

  3. nobsartist says:

    I don’t agree. The problem is the auto companies FIRE innovattors because they tend to make upper management look stupid. Now if they can steal it they will.