WASHINGTON (Reuters) - Car companies are resurgent financially and attracting support from powerful Republicans in Congress, placing them on firmer ground to challenge moves toward even stricter fuel-efficiency standards.
While industry touts cleaner burning engines and is more serious about batteries for hybrids and electric plug-ins, car companies are seeking to slow or soften any requirement to nearly double efficiency by 2025 to 60 miles per gallon.
Two years ago, struggling automakers, some receiving billions of dollars in taxpayer aid, agreed with the Obama administration to raise average fuel efficiency 40 percent to 35.5 miles per gallon by 2016, the largest jump ever.
But they are drawing the line at more aggressive mandates, making it their top lobbying priority in Washington as they emerge from a four-year slump that devastated U.S. production.
“Fuel economy regulations are by far the most expensive regulations that automakers face,” Shane Karr, vice president of government affairs for the Alliance of Automobile Manufacturers, said in a January letter to House Oversight Committee Chairman Darrell Issa.
The 2012-2016 standards are estimated to cost more than $50 billion, and the 2017-2025 standards are likely to be even more expensive, Karr said.
Karr’s group represents big auto companies, including global No. 1 Toyota Motor Corp, General Motors Co, Ford Motor Co, and Volkswagen AG.
Philip Gott, an auto industry analyst at IHS Global Insight consultants, said the more aggressive fuel standard would add thousands of dollars to the price of each vehicle.
The final fuel economy requirements will determine product plans for years and could run counter to market demand if consumers continue to want less-efficient large vehicles.
Sport utilities and pickup trucks sell for more than small cars and remain a huge source of industry profit, especially for U.S. manufacturers.
Automakers are emboldened in their regulatory battle by an 11 percent jump in U.S. sales last year and renewed profits, strengthening their position with policymakers and Congress.
Executives have more leverage to argue that aggressive regulation could stunt their long-term prospects and slow their ability to create and preserve jobs that politicians are desperate to promote with U.S. unemployment stubbornly high.
Investors have supported GM, which emerged from government ownership to launch a successful IPO, and Ford, which is cutting debt and building its line up of efficient vehicles.
Even Chrysler, which nearly collapsed before its bailout and bankruptcy, has pulled off a surprising turnaround under the management of Italy’s Fiat SpA and is planning a share offering.
“The automotive sector’s ability to continue to add jobs and contribute to the health of the U.S. economy depends on regulations that provide clarity and certainty,” Karr said.
Industry’s hand has also been bolstered by regulation-skeptical Republicans assuming control of the House of Representatives in January.
Issa has already solicited industry views on regulatory overreach, while Energy and Commerce Chairman Fred Upton proposed legislation challenging the Environmental Protection Agency’s regulation of tailpipe emissions, an issue automakers unsuccessfully litigated in the past.
The move by Upton, from Michigan, is viewed as an effort to neutralize the influence of California, a trailblazer in environmental policy, on federal tailpipe emissions policy.
Is also seen as a way to return sole responsibility for fuel efficiency rulemaking to regulators at the National Highway Traffic Safety Administration, which is considered more friendly to the auto industry than the EPA, which helped develop the 2016 goals.
Transportation and environmental planners are now studying a 60 mile-per-gallon benchmark for the 2017-25 period, which one industry insider in Washington called terrifying.
GM Chief Executive Dan Akerson was subtler. He said after a recent meeting with members of Congress that the target requiring 6 percent annual gains was “pretty ambitious.”
The biggest U.S. carmaker is joining other manufacturers in raising concerns over the lofty efficiency aims.
Brendan Bell, a lobbyist for the Union of Concerned Scientists, said the biggest car companies are “back to their old behavior” when they fought fuel economy increases for years.
“I think the auto industry is feeling the wind at their back,” said Bell.
Reporting by John Crawley; Editing by Tim Dobbyn
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