Obama Fuel Economy Regs Will Cause Vehicle Cost Increases of Over $11,000 by 2025

August 23, 2011 - 12:15 PM

Mideast Libya

Moammar Gadhafi's son, Seif al-Islam, top left, gestures to troops loyal to his father in Tripoli, Libya, Tuesday, Aug. 23, 2011. Seif al-Islam, who was earlier reported arrested by Libya's rebels, (AP Photo/Imed Lamloum, Pool)

(CNSNews.com) - The Obama Administration’s new fuel economy standards will result in the retail price of average motor vehicles rising over $11,000, according to a study conducted by the Center for Automotive Research.

“A fuel economy standard of 37.6 mpg is associated with a price increase of $5,244, 18.1 percent higher than the 2009 National Automobile Dealers Association (NADA) average price of $28,966. A fuel economy standard of 40.8 mpg is associated with a price increase of $6,770, 23.4 percent higher than the 2009 NADA price,” says their report called, “The U.S. Automotive Market and Industry in 2025.”

“A fuel economy standard of 44.8 mpg is associated with a price increase of $8,214, 28.4 percent higher than the 2009 NADA price. The fourth fuel economy standard of 49.6 mpg is associated with an $11,290 increase in retail price. It is assumed that manufacturers and dealers will pass on the cost increase in fuel economy and safety technology to the consumer, at a retail price equivalent.”

The Obama administration’s new fuel economy standards would require automakers to produce cars and light trucks with an average fuel economy of 54.5 mpg by 2025. The Center for Automotive Research says their study is “the result of 11 months of effort and investigation by researchers at CAR in 2010-2011.”

Zoe Lipman, the National Wildlife Federation’s Senior Manager for Transportation and Global Warming Solutions argued on a conference call held Thursday that the estimated fuel savings due to these standards will outweigh the “modest” motor vehicle price increases for consumers.

CNSNews.com asked the participants on the call, “The Center for Automotive Research says the new passenger vehicle standards could eventually cost consumers an additional $5,000-$6,000 for each new vehicle. Will these standards result in higher automobile costs for consumers and are these standards a good idea especially in a fragile economy?”

Lipman responded, “I would push back. I think we’re seeing with this final rule some really clear, not speculative, but really clear numbers on what the up front costs look like and if anything they’re lower than initial projections. I think the punch line here is that the fuel savings hugely exceeds any up front costs. Yes, there are modest costs that result from the fuel economy improvements – that’s technology generally being built here going into these vehicles but the savings far outweigh that.”

Their new report called, “Standards Deliver ‘Trucks That Work’ For Wildlife, Economy” says, “under the final standard, heavy duty pickup and van owners save over $6,000 over the life of the vehicle.”

Erika Nielsen, director of marketing and public relations at BorgWarner Inc. and David Perkins, president of UAW Local 171 at Volvo Powertrain also appeared on the conference call but did not respond to the question.

Thomas Pyle, the president of the Institute for Energy Research disagrees with Lipman.

“The Obama administration’s latest fuel economy mandates are an aggressive step away from consumer choice and towards government control,” he said in a USA Today op-ed.

“Every day, Americans are seeing the negative consequences of the administration’s increasingly aggressive meddling in the economy—more government control and less consumer choice.”