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GM: 4% average U.S. fuel economy improvement would add $5,000 to cost of cars

From autoindustry| April 10,2007

In the wake of the U.S. Supreme Court's 5-4 ruling on 2 April that the Environmental Protection Agency has the authority to regulate CO2 under the Clean Air Act, GM Vice Chairman Bob Lutz said at the New York Auto Show that the administration’s proposed fuel efficiency increases could add more than $5,000 to the price of a new car, since meeting them would involve introducing hybrid powertrains to nearly every vehicle on the market.

His comment echoed the debate which followed the recent EC plan to reduce average EU car emissions to 130 g/km in five years' time. Mr Lutz advocated dramatically increasing the availability of ethanol-based fuels - an ambition shared by President Bush - rather than relying on automotive technology to reduce vehicle emissions.

The Bush administration’s own analysis of its proposal for 4% average annual fuel economy increase would cost the automotive industry $114 billion between 2010 and 2017. That included a $40 billion estimate of GM' costs -- a figure GM has described as probably a low estimate.

The Bush Administration wants to reduce the country's oil usage by 20% a year, with 5% of the reduction coming from improved mandatory Corporate Average Fuel Economy standards for cars and light trucks.

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