by Teddy Field

In case you missed it, President Obama recently announced the Corporate Average Fuel Economy (CAFE) standards have been raised to 54.5 MPG. This means that by 2025, every automaker that chooses to hawk transportation devices in the American market will be required to sell a certain number of fuel efficient vehicles, or face millions of dollars in fines. Now, that all sounds well and good, but the reality of it is much different. And Mercedes-Benz is one of the only manufacturers with the gumption to speak the truth.

Along with VW, Daimler is one of the only car companies to oppose the regulations, mostly because they feel the CAFE numbers unfairly
target passenger cars, exacting a 5% annual increase for fuel economy, and give special treatment to large trucks with only 3.5%.

That could be, but it’s more complicated than that. In the year 2025, you’re not going to be able to pop down to your local
GMC dealer, and procure a 54 MPG 7-passenger kid-hauler. But if you trip
over enough GMC labeled econo-boxes on the way in, you can still have
your 14-MPG soccer-bus.

As I see it, the problem with the new rules has to do with the formula used to
calculate the Corporate Average. You’d need an abacus and Albert
Einstein just to understand it.

Currently, car fuel economy improves 1% per model-year, and this is due
to the high cost of developing and implementing new technology. For
example, direct-injection has been around for years, but it’s just now
becoming cost effective to put it into less-expensive cars like the
Chevy Cruze. And what the new rule effectively says is: “forget cost,
you must now improve fuel economy by 5% a year…because we said so”.

But of course, if they build a plug-in SUV, MPV, and maybe an electric
convertible, they’ll have enough “credits” to meet the new regulations.
Which is why the “real world” average is only expected to be around 36
MPG by 2030 (remember, those big MPG numbers on your window sticker are
based on an ideal driving scenario…which is meaningless when you’re
stuck idling on the 405 at rush hour).

In layman’s terms, if Chevrolet wants to keep selling pickup trucks,
they have to balance out their product portfolio with more fuel
efficient vehicles like the Chevy Volt. And the only reason that we even
have the Volt is because GM needs to meet the current CAFE target of
35.5 MPG by 2016. However, they’re not exactly flying off the shelves.

For the month of July 2011, Chevrolet only sold 125 Volts. And the
year-to-date sales tally is an equally unimpressive 2,870 units. On the
other hand, GM moved 24,000 Chevrolet Cruze’s, putting it in second
place, behind the almighty Camry (27k units sold in July).

So, the American public still wants a traditional car. Not a wheat-grass substitute.

But as long as Government Motors keeps building a car for the members
of Greenpeace, their gas guzzling trucks are safe, and they won’t have to pay steep
penalties for not meeting their Corporate Average.

Mercedes Benz and Volkswagen were among the very few who oppose to the new rule.
Partly because it favors gas-guzzling trucks (aka Domestic Automakers),
and partly because they’re tired of being penalized for making cars that
people actually want to buy.

Since 1983, Mercedes Benz has paid our government over $200,000,000.00
in CAFE fines (they paid $30.3 Million in 2007 alone!). And I’m sorry,
but that’s just bull hockey.

Expensive German cars are made for people who buy a car based on desire,
and they’re cutting-edge because it’s what their customer base demands.
If you told the chef at your favorite steakhouse that he’d have to pay a
huge fine if he didn’t have at least 5 vegetarian meals on the menu,
he’d spit in your food, and tell you to go to a Vegan Restaurant.

Captain Obvious says: “Don’t go to a steakhouse if you want Tofu”.

So in a sense, Obama is ordering automakers to build cars that he thinks
we should drive. Never mind the fact that implementing a 5% a year MPG
increase is going to cost automakers billions, which they will
inevitably pass on to us (remember, the Chevy Volt retails for
$41k…which is more than a 2011 Mercedes C350).

In order for automakers to meet Obama’s CAFE target, all the
cars in a manufacturer’s portfolio are going to have to become more
efficient. And the most cost effective way to do that is to shed weight and cylinders. Or they can just start making pick-up trucks.

What do you think? Are the new CAFE standards a good idea? Voice your opinion here!