With Presidential Campaigns in full swing, lately it’s been difficult to hear of anything that isn’t either slander, or a reply to a slanderous remark. But a bit of news has eked its way into the mainstream news that has most people pretty excited, while others are clamoring to find a decent cohesive argument to oppose it.
The Obama administration recently finalized new-car fuel economy guidelines for automobile manufacturers that double the mpg standard for cars and light trucks by the year 2025. The new guidelines or standards to be in place require manufactures to average 54.5 mpg for their vehicles by 2025.
Currently the mpg standard is 29.7 and only two cars currently meat that standard, the Chevy Volt and the Ford Focus BEV FWD. So it is interesting to note that there are a few vehicles already ahead of the curve by 13 years. Something that I don’t say often enough, but is well deserved here, is well done Ford, and well done Chevy! With that aside, lets continue.
As with any issue, there are the proponents who cannot wait for this to happen, and then there are the opponents who have their own views against enforcing a higher mpg rating on car manufacturers. Seemingly though, those that are opposed can only site motives, which would benefit self interest groups such as various oil companies. But I digress….
Arguments For An Enforced Raise In The Standard MPG
Money Saved In The Long Run: It is estimated that if 5 mpg were saved over the course of 15,000 miles, $500 could be saved. This is only for an extra 5 mpg saved, imagine if it were 25 mpg, which is the potential difference with the future regulation. That number would then be $2,500 over the course of 15,000 miles. Over the course of 100,000 miles, the savings under these conditions could amount to around $16,700. Remember a penny saved, is a penny earned.
Diesel Car Wales Will Wise: Diesel vehicles are 20% to 40% more efficient than regular gasoline vehicles. So they are going to be a big part of achieving the Obama Administrations goal.
Vehicle Weight Will Becomes Lighter: If there is any intention of increasing a vehicles mpg, than reducing the cars overall weight has to be one of the many priorities. Engines are becoming smaller, which may provide less power, but they are increasingly more efficient than their predecessors.
The Auto Industry Will Make More Money: Smaller vehicles generally have smaller profit margins in the US as people don’t tend to gravitate towards purchasing them. With smaller and more efficient vehicles becoming the standard, the demand for them is going to increase. If the demand rises, so will the supply, and subsequently the price. So dealerships will sell more cars as automakers will make more of them to meet this new demand. Their profit margin will also widen as a result.
Environmental Benefits: The obvious benefit to making this new standard is to lessen the impact on the environment, and reduce our dependency upon fuel. These smaller vehicles will require far less material to make, and consume significantly less fuel.
Arguments Against An Enforced Raise In The Standard MPG
Newer Vehicles Will Have Higher Upfront Costs: It is believed that these new vehicles will cost, on average, an additional $12,000 for the new technology. Because of this new price hike, it’s said that an additional 7 million people will be unable to afford new vehicles. So the question then arises, is the money saved on gas going to offset the higher purchase price? Above we stated that over the course of 100,000 miles, the savings on gas based on a 25 mpg more efficient vehicle, would save upwards of $16,700. Which already offsets the increase in the purchase price. Though, it will make it more difficult to purchase upfront for a great number of people.
Enforcing Innovation Upon Car Manufacturers: There is something to say about the government stepping in and directing business within a certain industry. It is argued that in essence, it’s not entirely fair. What if an auto company was unable to create technology themselves to meet the new standard within the 10 year window? Forcing innovation in this manner should really not be a part of the government. In a true free market economy, the market itself decides when and where innovation should take place. If a company doesn’t offer what the people want, generally they go out of business. If this new technology is what people want, then that is what will most likely be provided. Otherwise, people will look elsewhere. Government meddling is what kept these failing business afloat because they were too big to fail. Well now, the government is forcing their hand in a direction that automakers may perhaps not even care to go. That doesn’t sound much like a free market, not when the government purchases companies, sells them back, and forces their hand for future years.
Higher Upfront Cost: Drivers will be paying a higher upfront cost, which we discussed earlier. It’s obvious that over time, the savings on fuel will offset the initial increase in the cost. But will people be able to put the extra $12,000 down upfront? It’s believed many people will be unable to buy new vehicles, as this price hike will be too steep to meet.
In the end it is obvious these new mpg standards are going to help save on fuel consumption, reduce our impact on the environment, and provide a new avenue for car manufacturers to make a buck. But many people will not be able afford these new vehicles and the government really has no business directing the hand of free enterprise. It’s difficult to make a solid argument against the new standard, and that’s a good thing. As our dependency upon oil is gluttonous to say the least, and up until recent years, Americans really haven’t cared much about the environment. Before it is too late, its nice to see that perhaps we’re trying to mend our ways.
The author of this article is Damien S. Wilhelmi, an SEO tactician, and SEM strategist. If you enjoyed this piece, you can follow me on twitter @MetalPedal for more car news. I am writing on behalf of AAMCO Colorado, where if your transmission is acting up, you can go for a Free Transmission Check.