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12-7-2011 News
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MPG Standards Stand a Chance, Now that Consumer’s in the Driver’s Seat

Last month, the Obama administration unveiled a proposal to set stronger fuel economy and greenhouse gas pollution standards for model year 2017-2025 passenger cars and light trucks. The new standards build on the 2012-2016 program, which sets an average fuel efficiency of 35.5 mpg as its target for the next five years. The latest proposal would boost that mark to 54.5 mpg by 2025.

The administration claims its efforts to increase the nation’s energy efficiency could save Americans over $1.7 trillion at the pump or more than $8,000 per vehicle by 2025, reduce America’s oil consumption by 2.2 million barrels per day, and slash six billion metric tons in greenhouse gas emissions over the life of the programs.

There’s something to be said for setting the bar high—a man’s reach should exceed his grasp, after all—but the bar may not even be visible from here. Just because the government sets a standard does not mean industry can achieve it. Some experts consider these mileage goals completely unrealistic. Automakers have improved the fuel efficiency of the nation’s fleet by about 25 percent in the past 30 years; how likely is it they can gain another 25 percent in the next five years, and a further 50 percent in just 10 years after that?

The simplest way to improve fuel efficiency is to produce lighter cars and trucks, which places producers of steel and aluminum at the center of the debate. Of course, makers of both metals contend that greater use of their product is the answer.

“One thing is clear: a transition to strong, affordable and carbon-reducing materials like aluminum is already under way. It will enable cars and trucks to get lighter, not necessarily smaller, and more fuel efficient—a good thing for consumers and the environment,” says Randall Scheps, chairman of the Aluminum Association’s Aluminum Transportation Group.

Aluminum has an inherent advantage and an inherent disadvantage in the competition for a greater share of the automotive materials market: it has a much better strength-to-weight ratio, but it costs three to five times more than steel. Aluminum makers note that when the entire system cost is taken into consideration, aluminum competes quite successfully with other materials. They point to a recent study by Ducker Worldwide that confirms automakers are shifting away from conventional mild steel toward greater use of advanced, highly crash-absorbent aluminum alloys in new car and light truck construction. Aluminum is expected to double its share of the average automotive materials mix by 2025.

Steelmakers reference the very same Ducker study to make their case that steel will remain the dominant automotive material. The manufacture of steel emits less than one-fifth of the greenhouse gases of other materials. Taking the entire lifecycle of a vehicle into consideration, including the environmental costs of initial production and ultimate end-of-life recycling, steel offers a major advantage, the ferrous industry claims. Advanced high-strength steel, not aluminum, is actually the fastest growing automotive light-weighting material, they add. AHSS presently accounts for about 175 pounds per vehicle, but will nearly triple to 500 pounds per vehicle once the 54.5 mpg standard is finalized. More than 20 new AHSS grades are expected to be commercially available by 2020.

Carmakers are heavily invested in developing advanced fuel-saving technologies: new gas and diesel engines, improved aerodynamics, lower tire rolling resistance, hybrids, plug-in hybrids and all-electric vehicles, among other innovations. The government’s latest proposal even includes a number of incentive programs to encourage early adoption and introduction of “game changing” technologies, such as hybridization for pickup trucks.

After decades of foot-dragging, why have automakers finally embraced the fuel-efficiency challenge? Their motivation is different this time around. Rather than reluctantly responding to a government mandate, they are scrambling to stay ahead of consumer preference. Research shows that fuel economy is now top of mind among prospective car buyers, who are convinced $3-plus gas is here to stay. The consumer has spoken, and he is demanding a gas-sipping SUV.

“Once consumers have spoken as they did on air conditioning, on seatbelts, on airbags, on electric windows and on SUVs, they seldom turn back,” says Ducker’s Richard Schultz. “That’s marketing. You figure out what the consumer wants, sometimes before the consumer even knows he wants it.”

  
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