Federal regulators are quietly gathering data, running simulations and publishing report after report. This summer, a two-year, $35 million investigation by the EPA and National Highway Traffic Safety Administration will spark a long-simmering debate about the future of green cars in the U.S.
Automakers and environmental groups are watching closely as the agencies assemble an argument for maintaining or adjusting federal fuel economy targets. This midterm review is part of the deal finalized in 2012 to double the U.S. fleet's average fuel economy from that of 2008.
The 2025 model year goal calls for a 54.5 mpg fleetwide average -- or an adjusted real-world average of about 40 mpg on Monroney stickers. The review promises to be tense as gasoline prices remain low, consumers turn away from green cars and costs of new technology stack up. The feds' analysis will affect automakers' product strategies for a decade.
"This is not by any means a "check-the-box' exercise," said Christopher Grund-ler, director of the EPA's Office of Transportation and Air Quality. "There's a lot at stake."
In June, the EPA, NHTSA and the California Air Resources Board will publish a report outlining key factors for the midterm review. This will be followed by discussions, a proposed rule in 2017 and a final decision by April 1, 2018.
Automakers have a cornucopia of green options that include lightweighting, downsizing engines and electrification to boost fuel economy, so the question isn't if they can rise to the challenge, but how? And crucially for consumers, how much will it cost?
Curbing greenhouse gas emissions from cars and trucks -- which generally reflects lower fuel use -- is a cornerstone of the Obama administration's plan to tackle climate change. The stair-step approach bases mpg standards on vehicle size and gradually raises fuel economy targets. The midterm review lets regulators assess technological progress, costs and market acceptance.
Auto executives and regulators have wildly divergent viewpoints.
Auto execs see that the national average price of regular gasoline is just $2.08 per gallon. And although consumers rank mpg and range as the third-highest consideration for new-vehicle purchases, their willingness to pay for fuel efficient technologies remains low, according to a 2015 J.D. Power and Associates survey. U.S. vehicle sales have soared, yet the U.S. market share of hybrids and electric vehicles sold is in decline.
When will the industry need to go all-in on hybrids and EVs? This question hangs over the midterm review.
"Incrementally, we can refine today's gasoline engine, we can downsize it, we can boost it, we can [use] direct injection, we can add a nine-speed transmission -- but you're only going to go so far," said Jay Baron, CEO of the Center for Automotive Research and a co-author of the National Research Council study.
The researchers concluded that engine improvements could get halfway to the 54.5 mpg goal -- topping out around 45 mpg for a midsize car.
To go all the way, "the answer is, of course, electrification," said Baron.
Rolling out an array of electrified vehicles is a dicey proposition if consumers aren't buying. U.S. sales of hybrids and EVs peaked in 2013 at 3.8 percent of industry sales, according to the Automotive News Data Center, HybridCars.com and National Renewable Energy Laboratory.
Analysts, automakers and regulators are divided over when -- or even if -- hybrids and EVs will be necessary to hit fuel economy targets. The EPA and environmental groups point to the pace of innovation in gasoline engines.
"If you look at what's happened the last 10 years, there was no gasoline direct injection. Turbocharger vehicles were 3 percent of the market," said John German, a researcher at the International Council on Clean Transportation. "We're really confident that the technology in 2025 is going to be very much improved."
One key, German says, is computers.
For instance, General Motors, Delphi and startup Tula Technology are developing an improved cylinder deactivation system that uses sophisticated algorithms to boost mpg 15 percent. The technology, dubbed Dynamic Skip Fire, uses software to monitor and selectively fire the engine's spark plugs based on demand. Once perfected, the system is to appear in GM vehicles within five years.
The debate over electrification might be moot, considering state regulations.
California, the largest car market in the country, is requiring 15 percent of vehicles sold in the state to be zero emission by 2025. Seven other states are pushing for 15 percent of sales to be zero emission by the same year.