In 2012 the Obama Administration laid out new fuel economy standards that require American-made cars to meet an average of 54.5 MPG by the year 2025. Many have viewed the standard to be out of reach or unnecessarily ambitious, but Fiat Chrysler CEO Sergio Marchionne thinks its entirely doable.
At the North American International Auto Show in Detroit last week, Marchionne told The Guardian that automakers currently possess the technology to average 54.5 MPG fleet-wide.
“There is nothing wrong with owning ambitious targets,” Marchionne said of the 2025 target. “You can see it here with all this hype about hybrids and self-driving cars and everything else; technology is undoubtedly available to make those numbers.”
The only problem, the Italian-Canadian executive explained, is many of these technologies are not feasible due to cost. Weakening the case for extremely efficient vehicles is consumer demand. With low fuel prices, buyers are scooping up bigger SUVs and trucks, which offer much bigger profit margins than hybrids and EVs.
This lack of consumer demand for hybrid vehicles makes it hard for automakers to justify the cost of developing fuel-saving technologies. Apart from meeting the 2025 targets set in place by the government, there is little incentive for producing efficient vehicles so long as oil prices stay where they are. If gas is cheap, automakers will be forced into a difficult balancing act between having legal fleet-wide average fuel economy while trying to keep development costs at minimum.
“That’s going to be a big challenge; especially with low gas prices,” a spokesman for General Motors told The Guardian when asked to comment on Marchionne’s statements. “When you have low gas prices, you don’t have the natural pull from consumers to spur development of electric technology.”