The Real Impact Of Stricter Emissions Regulations

In a win for environmentalists, yesterday President Obama ordered the federal government to reconsider its position on state regulations of auto emissions. California enacted more stringent emissions standards long ago, but other states have thus far been restricted from following a similar path. Late last year, Vermont won the right to regulate emissions in that state, and other states are also looking for ways to have a bigger say in their air quality.

For automakers - both foreign and domestic - the challenge is to meet more stringent emissions regulations in the timeframes that some states are proposing. The question of how to balance the inclusion of more fuel-efficient technologies into the automotive design cycle has long vexed the automakers. Most vehicles have a 3-5 year design cycle from concept to production.

Generally, technological advances are incorporated into vehicles gradually, allowing manufacturers and their suppliers to make the necessary investments to support newer production requirements. Newer technologies also typically come with higher production costs. Traditionally, vehicle makers have introduced the latest technology into their premium lines, where the cost of advancement is better borne by upscale purchasers.

With the slowdown in the economy, car makers are taking hits on many different fronts. Research and development dollars have been slashed from budgets, meaning that fewer technological advances are being put into production. Consumers and legislators are demanding smaller, more fuel-efficient cars, which have lower profit margins. The reduced income means that the manufacturers have less cash on hand to modernize production facilities, fund research and development, and push new technologies into less expensive product lines.

Further, technologies that will help reduce greenhouse gas emissions are very expensive, and while they may be attractive to consumers, 8 of 10 consumers aren't willing to pay more for environmentally friendly vehicles. In the near term, the automakers may be better served by concentrating on improving the efficiency of internal combustion engines as a quick way to reduce emissions.

Much of the gains in fuel efficiency are coming from reducing the weight of a vehicle. Currently, after the engine, the second heaviest component in a vehicle is the wiring harness. Automakers are looking into small scale electronic controls and multi-function chip controllers to reduce the weight of the harness, and still include the required and desired technologies that regulators and consumers are both looking for.

The intermediate term tradeoff for lower emissions may be fewer model choices. Carmakers may need to concentrate on technologies that will meet legislative requirements first and consumer preferences second. Initially, this may have a negative impact on vehicle sales, and may force consumers to keep older, less-efficient cars on the road for longer periods of time.

In the long term - perhaps as long as 20 years - automakers will develop more fuel-efficient, safer and more environmentally friendly vehicles, but they also need the cooperation of individual states to balance emissions targets with the realities of the technological developments that can make those targets a reality.