Carmakers, White House haggle over tailpipe emission standards

A window sticker on a car, displaying manufacturer's mileage estimate.

ADRIENE HILL: New tailpipe emission standards are in the works. Right now, the government mandates that a typical car get about 30 miles per gallon. But by 2025, the Obama administration is reportedly looking to nearly double that.

Negotiations between the White House and U.S carmakers are heating up. New standards are expected in September.

Marketplace's Mitchell Hartman is with us live to discuss the story. Good morning, Mitchell.


MITCHELL HARTMAN: Hi Adriene.

HILL: So, the Obama administration pushed an earlier set of standards right about the time of the auto bailout - looking at 35 miles-a-gallon by 2016.

HARTMAN: Well, the administrations wants to go much higher by 2025 -- to an average of 56 miles a gallon. The administrations says it's the only way to reduce America's consumption of foreign oil. This would save billions of barrels and get greenhouse gases down.

In a word, or maybe two words, the industry's response is: "it's too expensive." Paul Eisenstein covers the auto industry at TheDetroitBureau.com.

PAUL EISENSTEIN: They worry that it could raise costs to the point Americans pull back on the number of cars they buy. And that it could cost some studies have forecast hundreds of thousands of jobs.

HILL: Well, how realistic then is this 56-mile-per-gallon goal then?

HARTMAN: Well, the politics are definitely interesting. The auto industry fought higher mileage standards for decades, and then it lost a round when they were being bailed out. Now, the industry is saying "don't kill us with added costs and tiny little electric cars we can't sell, just when we're off our deathbed."

On the other hand, Europe, Japan and China are already ahead in fuel efficiency, and to compete American automakers may have to get to the same levels anyway.

HILL: Thanks Mitchell.

HARTMAN: You're welcome.


UPDATE

HARTMAN: Hitting an average of 56 miles per gallon for U.S. cars and trucks by 2025 would be a big challenge. It could possibly be achieved by going the direction of Europe, pushing consumers to buy tiny, ultra fule-efficient cars on a massive scale. But there's a problem says Eisenstein:

EISENSTEIN: The reality is that Americans do drive differently than we see people driving in Europe. They drive longer distances. They tend to drive larger cars.

HARTMAN: The U.S. auto industry is pushing for less-ambitious full-economy goals and more wiggle room to meet them. But critics point out that Europe, China, and Japan are already ahead of the U.S. in fuel efficiency. Europe's expected to reach 60 miles per gallon by the end of the decade. They say U.S. automakers will have to get up to the same levels sooner or later if they want to compete in foreign markets.

UPDATE 2

HARTMAN: Environmentalists say go higher, 60 miles per gallon. It would save us all thousands filling up, and cut foreign oil imports, and cut greenhouse gases.

Now, the auto industry interestingly enough doesn't say hitting these high fuel-efficiency goals is technologically impossible, they just say it's really expensive -- maybe pushing up the price by $10,000 per vehicle.

The reason may also be U.S. consumers. Will we buy electric cars that have to be charged every few hundred miles, or tiny little hybrids?

EISENSTEIN: Hybrids simply are not gaining market demand. If you were to remove the Toyota Prius, the amount of hybrids that are being sold are almost insignificant. They're little more than an asterisk on the sales charts.

HARTMAN: In fact, Americans are buying big pickups again -- even with higher gas prices. We just really like our big cars and trucks.

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