U.S. 2025 Auto Fuel-Economy Target Gets Support From Suppliers
(Bloomberg) -- The U.S. should maintain President Barack Obama’s 2025 automotive fuel-economy target because the goal spurs innovation and job growth, an executive for vehicle-parts maker Eaton Corp. said, echoing the findings of a survey of parts suppliers.
By setting a long-term target similar to those of the European Union, Japan and China, Obama is providing the auto industry with a stable market big enough to support sustained innovation, said Mihai Dorobantu, director of technology planning and government affairs for Eaton’s Vehicle Group.
“Instead of being driven by changing oil prices, our investments are now driven by the timeline given in these regulations,’’ said Dorobantu, whose Dublin-based company supplies automakers with engine control systems and air conditioners.
Obama wants average U.S. auto fuel economy to rise from 35.5 miles per gallon this year to a projected 50.8 mpg in 2025. His successor will make a preliminary decision next year on whether to stick with that goal. A recent technical assessment report by the Environmental Protection Agency and other departments concluded that automakers can meet the target mainly with existing technologies such as turbochargers.
“Suppliers are quite optimistic they can help the automakers achieve these targets,’’ Dorobantu said. Eaton, which has its North American base in Cleveland, also makes components for aircraft manufacturers, miners and oil and gas drillers.
His comments reflect the sentiments from a survey of 23 suppliers big enough to sell parts directly to the automakers, released Wednesday and funded by Calstart, an organization that includes technology providers, fleet operators, vehicle makers and component manufacturers and pushes for cleaner, more efficient transportation systems.
Of the suppliers surveyed, including Eaton, 70 percent said the U.S. shouldn’t change its 2025 goal, said John Boesel, president of Pasadena, California-based Calstart. Fifty-nine percent said the target is spurring job growth.
The supplier outlook on the fuel economy target is more optimistic than that of Mitch Bainwol, president of the Alliance of Automobile Manufacturers, a Washington-based trade group whose members include General Motors Co. and Toyota Motor Corp. At an industry conference in August, Bainwol said the regulations could make new cars too expensive.
Suppliers may be more inclined than automakers to make risky investments in technology, because that’s their only way to survive, Boesel said.