Chrysler CEO Speaks Out Against new CAFE Regulations
New CAFE Standards Standards and Regulations Placed Upon Automotive Industries Will Make American Muscle Cars Like the Dodge Challenger “As Rare as White Flies”
This past week, following an uncertain and unprecedented delay, the Obama White House administration signed in to place an updated Corporate Average Fuel Economy, known as CAFE for short, standard agreed upon by the American Congress. These new standards will move the requirements for an automotive company to a fleet-wide average of 54.5 MPG. This 54.5 MPG benchmark number–which will not affect work related vehicles–will result in the average MPG of all passenger and light truck vehicle being more than double than current-day rating by 2025. This is the largest overall jump in those CAFE numbers since the CAFE guidelines were first put in to effect in 1978.
In his speech concerning these changes, President Obama stated that “These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil”. Environmental scientists have also pointed out the fact that these changes will result in an almost 50% reduction in release of greenhouse gases resulting from American automotive use. Other aspects of this change pointed out by Government officials and Economists highlight an average of almost $8,000 in savings for the average American family on fuel costs over the life of their vehicle, and others have pointed to possible creation of close to 570,000 jobs within the Green Energy sector and Automotive R&D areas as result of these changes.
Of course, not everybody has as rosy an outlook on the new guidelines, and the actual impact the new CAFE standards will have on the automotive industry are uncertain. Some automakers, including Ford and GM, seem ready to embrace the new standards. In anticipation of these changes–which were at one point expected to be 56.2MPG standard, and had even had a 62MPG number floated by White House officials–these two automakers have diversified their corporate portfolios. Ford has added investment stake in the all-electric automakers Tesla, and begun expanding their line-up of Natural Gas burning vehicles in to their F-Series truck market as well. Chevrolet recently invested heavily in the Electric-vehicle group Proterra, as well as the creation of their own electric vehicle plant in Maryland to support the sales of their Volt automobile, and their expansion back in to clean diesel engines, similar to those used by automakers like Volkswagen in Europe where 50-60+MPG ratings are regularly attainable at fuel conscious driving conditions.
However, others aren’t reacting as happily to this news. Many naysayers in the automotive industry have pointed to the fact that these standards will result in future automobiles being much smaller, resulting in both decreased passenger space as well as decreased vehicle safety. These same individuals are also claiming that the largely battery-based automobile will actually be more harmful for the environment as result of the chemical processes used both to create these enhanced cell batteries, as well as the waste they leave behind once they’ve stopped functioning. Finally, too, they point to increased vehicle costs to the consumer as another potential downfall of the problem.
Of the program itself, Obama’s Presidential challenger in the upcoming Election, Republican politician and former Bain CEO and Massachusetts Governor Mitt Romney branded the CAFE standards as “extreme” and claimed that they “hurt domestic automakers and provide a benefit to some of the foreign automakers”. Of the diversification by automakers in to the Electric market and the development of the electric vehicle as a viable alternative, Romney says that the electric vehicle is ““a technology that people aren’t interested in” and that if elected he would work to repeal the CAFE standards. His side also argues that repealing of CAFE, when coupled with the removal of oil drilling regulations, would result in the creation of “millions of jobs”, but have not provided any evidence to support the claim of millions or to provide a hard number, outside of the some 14,000 lost in that industry since 2008 being rehired.
Chiming in on the change, also, was the Chrysler CEO Sergio Marchionne who seems to be falling directly in between both the Obama and Romney camps. Marchionne himself seems entirely confident that Chrysler will be able to meet the 54.5MPG standard without issue come 2025, and even mentioned at one point being excited about embracing the change and the movement towards developing new technology that it will allow, but also warned of some side effects.
The most pointed to negative side effect of the CAFE changes that Marchionne pointed to was that they will ” “will change the way this industry operates” and effectively make the development and building of large, V8 powered performance vehicles like the HEMI powered 392 Challenger SRT-8 that he himself drives daily, as “rare as white flies”. Ultimately, Marchionne and other analysts who agree with him, feel that the CAFE changes will bring about the death of the incredibly popular American muscle car segment–one of the market share areas that foreign automakers have never been able to compete with American corporations at.
Some analysts point to the industry’s same worries over CAFE regulations in the late 70’s and early 80’s as proof of exactly why this won’t come to fruition. During that time period, following the first CAFe implementation, automakers were opining the event as the death of the V8 engine, yet today more, and far more powerful, V8 performance cars are available than ever before, thanks in part to large technological advances. Today, vehicle’s like the 600-plus horsepower Chevrolet Corvette ZR1 and Chrysler/Dodge’s own 640hp SRT Viper are readily available, and were the sort of thing nobody could have even imagined in the late 70’s, much less predicted would ever be available directly off of a dealer lot or showroom.
In all, the CAFE regulations will certainly change the industry functions, but how much and in what ways are currently uncertain. Experienced automotive industry analyst predicts that by 2025 the industry itself, and the vehicles which they put on the road, “will change less than anybody imagines – but more than anyone wants,” a sentiment which puts him directly in line with Marchionne. So, whether the future is in electric, hybrid, diesel, natural gas, or another newly developed alternative energy technology, only one thing is for certain: that it is the future, and we’re headed quickly in that direction. In fact, with the rise of the four cylinder in America, an engine configuration which now powers 43% of all new vehicles sold, we’re closer than we thought. Here’s to hoping, no matter what this future has in hold, that doesn’t kill off those vehicles we all love like the Challenger, Corvette, Viper, Mustang, and Camaro.