Government Sees Car Industry Progress on Greenhouse Gases

In new comments, the federal government reported:

[T]he U.S. Environmental Protection Agency (EPA) released a Manufacturers Performance Report that assesses the automobile industry’s progress toward meeting greenhouse gas (GHG) emissions standards for cars and light trucks in the 2012 model year — the first year of this fourteen year program. The report reveals that consumers bought cleaner vehicles in the first year of the program than the 2012 GHG standard required, and that automakers are off to a good start in meeting program requirements.

And added:

The trend towards more efficient, cleaner cars and trucks continued in model year 2012. According to EPA’s most recent Fuel Economy Trends Report, fuel economy improved by 1.2 mpg in 2012 compared to 2011, the second biggest improvement in the last 30 years. Further, in 2013 there were twice as many sport utility vehicle models that achieved at least 25 miles per gallon (mpg), and seven times as many car models that achieved 40 mpg or more, compared to just five years ago.

Increasingly, the progress will come with a price for the industry. It will have to add new materials to decrease weight. While steel is currently plentiful, the costs for lower weight composite tend to be higher because of less effective manufacturing processes. And, the work to squeeze more horse power out of every engine increases R&D costs. Products like the Ford Motor Co.’s (NYSE: F) EcoBoost engine have reached close to the limits of what their manufacturers can build, at least with current generations of technology. As Tesla Motors Inc. (NASDAQ: TSLA) has proven with its effort to build its own factory, the cost of lowering the price of electric engines remains high. Tesla CEO Elon Musk believes he can cut these with his own manufacturing facility. However, for the time being, that is just a vision.

The car industry will find it harder to squeeze more MPG out of future cars than it has in recently built ones. And in what may be a difficult effort, manufacturers will need to try to pass that along to consumers.