Cost of U.S. Car Fuel Standards Could Be 40 Percent Lower

The cost to implement tough fuel-efficiency standards for cars imposed by the Obama administration for the first half of the next decade could be up to 40 percent lower than previously estimated using existing conventional technologies, according to a report from a nonprofit group released on Wednesday.

If accurate, the report could present a challenge to automakers which have lobbied strongly against the implementation of the standards largely on the grounds of excessive cost.

Technologies like turbo-chargers, advanced transmissions and use of lighter weight materials - such as aluminum instead of steel - could reduce compliance costs by 34 percent to 40 percent per vehicle from 2022 through 2025, according to the report by the International Council on Clean Transportation (ICCT), an independent research group.

"All of those evolutionary changes, just getting a few percent here and a few percent there from those allow more cost-effective implementation of the regulations, said the report's principal author Nic Lutsey.

Instead of an average cost of $875 per vehicle for incremental technology needed to meet the new standards, as compared with 2021 standards, estimated by the U.S. Environmental Protection Agency (EPA), the ICCT's analysis of available data is for an additional cost of $551.

Under former Democratic President Barack Obama the EPA and the National Highway Traffic Safety Administration, in cooperation with the California Air Resources Board (CARB), negotiated the rules with automakers in 2012.

They were aimed at doubling average fleet-wide fuel efficiency to 54.5 miles per gallon (mpg) by 2025, although the real-world mileage figures would be much lower - the ICCT report assumes 35 mpg in 2025 versus a fleet average of 26 mpg today.

Republican U.S. President Donald Trump, who took office in January, last week ordered a review of those standards which many in the industry expect will lead to a relaxation of the fuel-efficiency targets or a slowdown in their implementation.

Automakers, through their lobbying groups, have said the Obama rules were too expensive and could cost American jobs.

California is expected to press forward with the Obama administration rules at a CARB meeting being held this Thursday and Friday. 

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