The average cost of a car sold in the US could rise by more than 20% if regulators institute the Obama administration’s aggressive targets for increasing fuel economy, according to a Centre for Automotive Research study.
The Michigan-based centre said the targets would add US$6,400 to the cost of new vehicles if the government sets a mandate for an average fuel economy of about 60 miles per gallon by 2025.
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This would prompt consumers to hold on to their cars for far longer, costing more than 220,000 auto manufacturing jobs as new vehicle sales fall, the study added.
The new steps being considered follow those adopted in April this year that target an increase in the average fuel economy of cars to 34 mpg by 2016.
The centre based its study on estimates for the cost to automakers to roll out technologies to improve fuel economy ranging from improvements to petrol engines, hybrids and pure electric cars.
It assumed that Americans would continue to buy trucks and SUVs in the same proportion, at roughly half of the market.
It said US auto sales would be held at 13.4m vehicles in 2025, about a quarter less than they would be otherwise if the fuel economy proposals are implemented. That would cost the auto industry US$62bn in lost annual revenue, according to the projection.
