(Bloomberg) — Consumers may be in for sticker shock in the
coming decade as automakers turn to increasingly costly
technology to meet tighter U.S. fuel-economy mandates, according
the National Research Council.
Cars and light trucks in the U.S. are supposed to average
54.5 miles per gallon (0.425 km per liter) by 2025, double the
“New vehicles will be more fuel-efficient, lighter, less
polluting, safer, and more expensive to purchase,” according to
the report released Thursday.
The National Research Council, an arm of the independent,
nonprofit National Academy of Sciences, was asked by the
National Highway Traffic Safety Administration to look at how
automakers are coping with the fuel-economy targets.
“The increasingly stringent fuel economy and greenhouse-gas emission standards will drive the development of new
powertrain designs, alternative fuels, advanced materials, and
significant changes to the vehicle body,” according to the
How much consumers are willing to pay for fuel-saving
technology is a critical question, and studies conducted so far
are inconclusive, the report found. Automakers aren’t sure their
customers will buy more expensive cars if they can’t save enough
in fuel to offset the added costs within a few years.
Consumers have shown they’re willing to pay more for cars
with the safety features and infotainment systems they value,
said Michelle Krebs, an analyst with Autotrader.com.
Millennials, who will become the largest segment of car buyers
over the next decade, will play a huge part in determining
whether the fuel economy improvements gain acceptance, she said.
“We have a long way to go until 2025,” Krebs said. “We
have another 10 years for developing these technologies and
seeing what the costs are, and how these costs get passed down
One question is how many gas-electric hybrids or fully
electric battery-powered cars will need to be sold to meet the
goals. Those cars are generally more expensive to build.
California and nine other states are requiring a portion of car
sales to include “zero-emission vehicles.”
Roland Hwang, one of the NRC panel members, said that
technology costs have actually dropped since the council’s
previous review of fuel economy four years ago. A midsize car
could meet the 2025 standards with $1,181 to $1,689 in added
costs, Hwang said.
The 2011 study estimated $3,200 to meet the standards, said
Hwang, director of the transportation program at the Natural
Resources Defense Council, an environmental advocacy group.
That’s consistent with the history of auto regulation, which
shows the industry tends to innovate, coming in on time and
under budget, Hwang said.
Automakers have been laying the groundwork for a challenge
as the U.S. Environmental Protection Agency and NHTSA have
promised to review the regulations next year.
In recent months the lowest average gasoline prices in more
than four years have led to fewer small-car and hybrid sales,
making it harder to meet fuel-economy targets.
Still, fuel economy is becoming an item consumers are
willing to pay for, like safety and connectivity, according to
Bloomberg Intelligence analyst Kevin Tynan. More attractive
terms are leading more car buyers to consider leasing to offset
costs, Tynan said.
“Leasing has become the new initiative for
affordability,” Tynan said. “People will go in with a monthly
budget and get all of these features for that number.”
The NRC study shows regulators should stay the course, said
Daniel Becker, director of the Safe Climate Campaign, a
Washington watchdog group.
“The study shows the EPA and the Transportation Department
largely got their projections right,” said Becker. “There is
no justification for weakening the standards, as some automakers
To contact the reporter on this story:
Jeff Plungis in Washington at
To contact the editors responsible for this story:
Jon Morgan at
Steve Geimann, Ros Krasny