As the use of electric and hybrid vehicles increase, and the fuel efficiency of newer vehicles becomes better, states are finding that the per-gallon fuel tax is no longer generating enough income to fund road maintenance and operations. In response to the declining revenue, late last year California legislature approved a Bill to examine the implementation of a road usage charge.
In May of 2009, California, the White House and auto manufacturers worked together to reached a deal for fuel efficiency standards from 2012-2016. The final agreement will see vehicles with a 34.1 mpg fuel efficiency… an agreement that is estimated to cost the auto industry over $50 billion to develop the technology to reach this goal. The 2017-2025 fuel efficiency standards proposed have been much more aggressive, and has automakers showing much more resistance. Automakers have warned that obtaining the proposed 56.2 mpg could have consumers paying over $2,000 more per vehicle. In response to this the White house has eased their fuel savings proposal to 54.5 mpg in an attempt to convince automakers to sign on. According to VW of America President and CEO Jonathan Browning, the talks have been constructive. “Everyone is focused on making sure that the final agreement is both fair to the auto industry and is still affordable to consumers.”
The administration has also been in talks on credits for automakers to meet the requirements through air conditioning improvements and building flex-fuel vehicles. NHTSA Administrator David Strickland told officials that the government was committed to treating all automakers fairly. The new plan will not only make the fuel efficiency more obtainable, but will offer special rules for heavier light duty vehicles used for construction.
In April of 2010, when the Department of Transportation (DOT) and the Environmental Protection Agency (EPA) came out with their national greenhouse gas emission standards, there were concerns about how the new requirements would be received. It was expected that automobile manufacturers would turn to more efficient conventional technologies, while others would go one step further and pursue more advanced fuel saving technologies like diesel, hybrid and electric vehicles. Today, with gasoline prices on a steady rise, Americans are demanding that their new cars not only meet, but exceed the standards set by the government. Because some consumers are still skeptical of the new hybrid and electric technologies, many have chosen to trade in their V-6’s for more fuel efficient four cylinder engines.
Four cylinder engines now account for almost 65% of all vehicles built in the U.S., Canada and Mexico. This is the biggest shift since the 1980’s when consumers traded in their V-8’s for the smaller V-6 engines. It is expected that within the next five years, over half the vehicles in the U.S. will be four cylinder engines. But todays consumers don’t have to give up power to drive the smaller engine vehicles. New technologies have left the underpowered four cylinder engines a thing of the past, and automakers have changed their marketing strategies to focus on the horsepower and fuel economy instead of the number of cylinders a vehicle has.
Ford new generation Explorer will soon offer two liter four cylinder “Eco Boost” engine and are already working on a 1.0-liter, three-cylinder engine.
BMW, who has not built a four cylinder engine in the U.S. for over a decade is now offering their customers the new Z4 sports car scheduled to go on sale this year, and have also been working on a three cylinder engine.
Hyundai has almost abandoned anything bigger than a four-cylinder, which accounts for nearly 90% of its U.S. sales.
And finally, automobile manufacturers like Honda, Toyota and Nissan, who were once criticized for their small powerless vehicles, are now leaders in the new fuel efficient, environmentally friendly technologies.
During April, the sales of small fuel efficient cars made up almost 20% of the automotive sales market, that equates to a 19% increase from a year ago. Governments incentives to have more environmentally friendly vehicles on the road as well as rising fuel prices, has led consumers to re-think the buying of big trucks and SUV’s. Some of the big sellers include the new Ford Focus and the Chevrolet Cruze.
The overall industry is expected to report slightly higher sales, as the market continues to recover from the recession. Automobile and automobile part shortages as well as the lack of discounts will be a big factor in consumers decision to purchase new vehicles. Consumers may decide to keep driving their old vehicles until the deals return.
Energy Secretary, Stephen Chu, announced during a visit to Ford’s headquarters that it will receive a loan of $8 billion, out of the $25 billion intended for loans to automakers to speed up development of more fuel-efficient vehicles. Ford will initially borrow $5.9 billion to be disbursed through 2011 for retooling 11 plants in Illinois, Kentucky, Michigan, Missouri and Ohio. The loans will help in employing about 35,000 engineering and factory personnel. Ford intends to begin repaying the loans in 2012.
Ford says that the loans will help it make 13 Ford models more fuel-efficient and intends to start selling four electric vehicle models by 2012.
Nissan will receive $1.6 billion in loans to be used in overhauling its factory in Tennessee where it will start building electric vehicles which it hopes will eventually build 150,000 electric cars annually. It estimates that the project will create 1,300 new jobs.
Tesla Motors, a California company, will get $465 million in loans to make electric vehicles. Tesla is only a six-year-old company which has been concentrating on producing electric vehicles. It intends to build two plants in California one to assemble its Model S, a battery-powered sedan it intends to start selling in 2011 for about $57,000. The second plant will be used to build battery packs and electric drive trains for both its own cars and those made by other manufacturers. The two plants could create as many as 1,650 new jobs.
The bankruptcies by General Motors and Chrysler made them ineligible for this first round of loans. It is expected, however, that similar loans will be approved at a later time.
If you think the vehicle you are driving may be a lemon, in California, call the Law Offices of Delsack & Associates at 888-Ex-Lemon (888-395-3666) for a Free consultation.
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