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to increase the target range for the federal funds rate in June.”


If June is not the month the Fed picks to raise rates, and the nation’s economic situ- ation seems to meet its criteria for doing so, then an increase could come later in the year. And if June is the month for an increase there is always the chance one or more increases also could come later in the year.


The White House Then there is the small matter of the


presidential election. Common wisdom holds that Republican presidents are bet- ter for the economy and that Democratic presidents are better for social programs. To paraphrase what Voltaire wrote in 1764 in Dictionnaire Philosophique, common


Electric vehicles powered by hydrogen fuel cells are among the highest-tech clean car alternatives, but it is projected to take many years before they are built in even moderately large quantities.


wisdom is not so common, nor so wise—particularly when both the Democratic and the Republican candidates have outlandishly high unfavorability ratings. What may be easier to predict is that if elected the Demo- cratic candidate would be more likely to take a hard-line stance on keeping the 54.5 mpg CAFE standard that is on the books. This standard is the third and fi nal stage of three that the federal government established in 2010. It is set to take full effect in 2025. The 54.5 mpg fi gure is a chimera that is based on theoretical calculations and laboratory tests, but not on real-world results. The real-world results likely would fall in the 48.7–49.7 mpg range, according to the EPA. The middle stage of the CAFE standards, the one staring automakers in the face right now, covers the model years from 2017 through 2021. The standard for the midpoint of this stage, is 37 mpg. That, according to a report in the New York Times, is a fairly easy target for automakers to hit. But, the paper noted, the climb gets steeper from there. Regulations, according to the EPA, “are projected to require, on an average industry fl eet wide basis, a range from 40.3–41.0 mpg in MY 2021.’’ These are not numbers that are impossible to reach for traditionally powered vehicles of a small size, but they are much more daunting when they are taken as an industry wide average. It is at this second stage that hybrids, plug-in hybrids and pure electric vehicles will have to start selling in large quantities. What remains to be seen is whether the


buying public is willing to buy these vehicles in large quanti- ties, particularly given their added cost.


The Hybrid Hypothesis For example, a 2016 Chevrolet Malibu Hybrid sedan is rated by the EPA at 47 mpg city and 46 mpg highway and has a base price of $28,645. A gas-powered 2016 Chevrolet Malibu 1LT is rated at roughly 10 mpg less (27 city/37 high- way) but also has a lower base price: $25,895. Will Ameri- cans be willing to make monthly payments on a higher price for a payoff in fuel savings that will only come two or more years down the road? They haven’t so far, turning instead to larger pickups and utility vehicles. A midterm review of the fuel-economy rules is slated to begin this summer. Auto manufacturers may seek adjust- ments to the government’s formula for increasing mileage and cutting greenhouse gas emissions in order to reconcile governmental wants and needs with those of the market- place. A proposed determination is due in about mid-2017, months after a new president takes offi ce. A fi nal determina- tion is due before April 1, 2018. There are many pieces of the jigsaw puzzle that will form what the next decade of automobile production looks like. What makes the puzzle especially complicated is that the pieces can fi t together in any number of ways.


13 — Motorized Vehicle Manufacturing 2016


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