strength steel. FCA US (Auburn Hills, MI), the former Chrysler, introduced a new Pacifica that utilizes high-strength steel and other materials, including magnesium, to reduce weight. The vehicle makers also moved to make available gasoline- electric and plug-in hybrids as well as fully electric vehicles. The question is whether customers will be willing to pay for the investment to meet the standards. “Don’t extrapolate the last three or four years of progress for the next 10 years,” said Jay Baron, president and CEO of CAR.
“The consumer is not buying it,” McAlinden said. “The
government forecasts the price of gasoline staying under $3 a gallon through 2025.”
CAR issued a study in September saying more than 1.13 million jobs could be eliminated under the most severe of nine different scenarios involving the fuel mandates. The job losses are worse under scenarios where fuel prices stay low and the cost per vehicle to meet the standards increases. The 1.13 million figure (910,140 automotive manufacturing job losses and 149,500 job cuts at dealerships) assumes a gasoline price of $2.44 per gallon (in 2015 dollars) and and additional $6000 per vehicle.
Challenges
One of the nine scenarios, with a gasoline price of $4.64 a gallon in 2015 dollars and additional per vehicle cost of $2000, resulted in an employment increase. Even that was modest, with a manufacturing job gain of 103,620 and a dealership job increase of 41,400.
“The scenario combination of high fuel economy mandate costs and low gasoline prices can produce truly catastrophic job losses for the future of an economy still locked in a pain- fully long recovery from the 2008–2009 Great Recession,” according to the study. “It is difficult to recommend the best public policies for accommodating the current fuel economy mandates for 2022–2025 in a moderate or low gasoline price future when some policies are considered politically infeasible.” The standards are more stringent for cars than trucks, but automakers have a tough path to meet the standards for either. Detroit-area automakers GM, Ford and FCA rely on large pickups for the bulk of their profits. “It’s going to get hard for trucks in the last three years” of
the regulations, McAlinden said. “You have to boost fuel ef- ficiency 20%. Trucks are sold on performance. If truck sales fall by 20–25%, the company is at zero profit,” he said.
Originally, the target of the regulations was for automak- ers to have a fleet average of 54 mpg (23 km/l) by the 2025 model year. The US Department of Transportation, the US Environmental Protection Agency and the California Air Re- sources Board more recently issued what’s known as a draft Technical Assessment Report (TAR). That draft said the 54.5 mpg target wouldn’t be met because consumers are buying more trucks than originally estimated. The 54.5 mpg target figure assumed two-thirds of vehicle sales would be cars. In the first 10 months of 2016, trucks comprised 58.9% of light-vehicle sales, according to Autodata. The draft TAR assumes a range of 50–52.6 mpg (21.3–22.4 km/l). The regulations themselves weren’t changed in the draft report.
Automakers and suppliers have less time to recoup their investment in technology expenditures because of the up- coming standards, said Brett Smith, a CAR assistant director.
“The industry is investing. Engineers see the hurdles.”
Companies, he said, are putting “money into six different baskets with expectations that three of them are going to pay off. You can’t keep changing technologies every two or three years. You don’t get paybacks anymore.” The need for improved fuel efficiency is pressuring auto-
maker. In the early 2000s, GM and Ford jointly developed 6-speed automatic transmissions. At the time, it was an unusual move for the two competitors.
Those transmissions “will be obsolete in the next two to
three years,” Smith said. The automakers said in 2013 they’d work together to develop new 9- and 10-speed transmis- sions for cars, trucks, sport-utility vehicles and crossovers. A 10-speed transmission is available in the 2017 Ford F-150 pickup and 2017 Chevrolet Camaro ZL1 sports car. GM has said the 10-speed transmission will be available in eight more vehicles by 2018.
Adjustments will be made as new materials become more commonplace. For example, CAR’s Baron said, some tool and die shops have difficulty with high-strength steel. “Dies are breaking,” he said. “The steel is so strong, they’re wear- ing out the dies.” Regardless, work will progress because it has to do so. “We don’t see the regulations going away,” said CAR’s
Baron. “The industry is investing. Engineers see the hurdles.” December 2016 |
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