54.5 mpg by 2025

A Wall Street Journal (28 July 2011) describes an agreement between the auto manufacturers and the US government to double the average mileage from 27.3 mpg to 54.5 mpg. Attaining this mileage can involve use of solar panels, battery power, credits for hybrid trucks, use of alternate fuels etc.  The calculus is that savings in fuel will cover the added cost of technologies to attain this fuel efficiency while decreasing environmental impact.  But the details of the regulation provide lower mileage requirements for trucks.  Will the regulation increase the incentive for consumers to drive trucks and thus worsen gasoline consumption ? Given the options to attain this limit without physically improving mileage, will competition result in solutions that do not improve mileage but rely on other cost saving loopholes ? Will attaining this mileage limit require the Federal government to subsidize creation of battery charging stations that are externalities across the industry ? Finally, how will consumer preferences impact manufacturer choices ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , . Bookmark the permalink.

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