Toyota Prius Plug-in Hybrid  (Source: Toyota)

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2009 Chevrolet Camaro Concept  (Source: General Motors)

Pontiac G8 GT  (Source: General Motors)
Toyota applauds new CAFE standards, General Motors not so sure

A new energy bill passed in the House of Representatives last week which would raise Corporate Average Fuel Economy (CAFE) fuel economy standards 40 percent to 35 MPG by 2020. The measure passed 235-181 and calls for the standards to be progressively implemented starting with the 2011 model year.

Not surprisingly, reaction to the higher CAFE standards have met with mixed reactions from the automotive industry. Toyota, which has recently come under fire for a faux-green facade, is fully committed to working towards the 35 MPG standard.

"We commend congressional leaders for their diligence in hammering out a difficult deal on fuel economy. We at Toyota have long said that we want a bill this year and now the Congress appears poised to deliver," said Toyota Motor Sales President Jim Lentz. "This bill will challenge all automakers to achieve dramatic fuel economy increases. It represents a major step in the right direction that will result in significant oil savings and reductions in CO2."

Toyota is sitting pretty with a current overall CAFE average of 29.0 MPG (34.8 MPG cars/24.1 MPG trucks), so the comments from Lentz are not surprising. The company already has a bevy of fuel efficient cars including the Yaris, Corolla, Prius and Camry Hybrid. The company is also working on making its entire vehicle fleet hybrid by 2020 and will add a diesel engine to its gas-gulping Tundra full-size pickup within the next two model years.

Commentary from General Motors, however, didn't sound so enthusiastic. "Maximum" Bob Lutz, Vice Chairman of GM, was less optimistic about the plan.

"The minute we have confirmation of the 35 mpg rule, that is the point where we go through all of our forward product plans and probably introduce, frankly, massive restructuring of the product plan," said Lutz to Automotive News. "A 35 mpg fleet mix means there is a bunch of stuff out there that is going to have to be 40 and 50 mpg."

Lutz went on to add, "We will have to take a look at everything because we’re going to have to come up with a plan which gets us to 2015, 2017, gets us part of the way there, and with clarity on how we’re going to get the rest. Then we will have to start raising prices as we introduce the new technology."

Whereas Toyota is sitting at 29 MPG for its corporate CAFE average, GM is further back at 24 MPG (28.1 MPG cars/21.3 MPG trucks).

GM has done much to introduce more efficient vehicles over the past few years including the Saturn Vue Green Line, Saturn Aura Green Line and Malibu Hybrid. The company is also lining up its Tahoe/Yukon Hybrids, Silverado/Sierra Hybrids and the all-electric Chevrolet Volt.

However, Lutz's main worries are with regards to the potential gas guzzlers in the company's current roadmap. The company is on the verge of releasing its high-performance Pontiac G8 sedan which comes with either a 3.6 liter V6 engine or a more potent 6.0 liter, 362 HP V8. Also on tap is a new Impala using the G8's platform/engine, a new Camaro with a requisite V8 engine option and a small RWD Pontiac G6 performance sedan built on the Alpha platform.

Bob Lutz is likely one of the most vocal and most high-profile executives in the auto industry, so his comments aren't too surprising. Other auto manufacturers, however, have remained relatively mum on the new CAFE standard. Those with the most to worry include Ford with a corporate CAFE of 24.3 MPG and [former] Daimler-Chrysler with a corporate CAFE of 23.3 MPG.

Honda and Hyundai-Kia are within striking distance of Toyota with corporate CAFE ratings of 28.7 MPG and 28.6 MPG respectively.

The House energy bill also includes provisions for a $21 billion USD tax on oil companies and will require electric companies to get 15 percent of their energy from renewable sources. The bill is having trouble in the Senate because of these two provisions.

"[Oil] is the most profitable industry on earth and we need to pay for the bill," said Democratic Senator Debbie Stabenow. On the opposite side of the spectrum was Republican Senator John Cornyn of Texas. "This bill could pass in a day if they stripped the taxes out and the renewable portfolio standard" for electricity production."

Tougher fuel economy standards are likely to come down eventually no matter how long politicians and car companies tried to avoid the possibility. It's likely in the best interest of auto manufacturers to buckle down and plan ahead instead of hoping that the "worst thing possible” -- i.e. tougher fuel economy standards -- will never happen.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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