GM’s Lutz: 4% per Year Fuel Economy Proposals Could Add $6,000 to Vehicle Cost
5 April 2007
|Proposed nominal international fuel economy standards. Due to the different test cycles used in different countries, a normalized plot would likely show a wider gap between the US and others. (An and Sauer, 2004) Click to enlarge.|
Speaking to reporters after unveiling the three GM concept minicars at the New York International auto show, GM Vice Chairman Bob Lutz said that meeting a mandated increase in fuel economy of 4% per year could add $5,000 to $6,000 to a vehicle’s cost.
Following President Bush’s State of the Union address in which he proposed such a 4% per year increase in fuel economy through 2017, Congress has introduced a number of bills, with some variations, built around that basic approach.
“You tell me what happens to the market if these cars come out and everybody looks at the one they own and the new one is six or seven thousand dollars more expensive,” Lutz said.“This technology does not come for free.”
US Transportation Secretary Mary Peters countered Lutz’s assessment, saying that the 4% proposals are “realistic.” A Bush Administration analysis of its proposal concluded it would cost the auto industry $114 billion between 2010 and 2017, including $40 billion for GM. The Administration also said that increased savings on fuel would offset the increased cost to the consumer.
Lutz said that wider use of E85 would accomplish a far greater reduction in gasoline consumption and reliance on foreign oil than an increase in fuel economy, and suggested a national push on building out the E85 infrastructure. He did not suggest where the ethanol would come from.
Lutz also said that while GM will build at least one of the minicars, it currently was unlikely that GM will offer them for sale in the US, absent a prolonged increase in fuel prices or an “unforeseen” change in fashion for small cars in the country.
Lutz said that all of the minicars would get in the high 40 or 50 mpg fuel economy range, could be priced starting at $10,000 and could be built in either China or India. The vehicles currently are not being designed to meet US safety requirements.
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