Hyundai Makes Bold Fuel Efficiency Promise

Fifty miles per gallon fleet-wide by 2025 – this is the new commitment made by Hyundai Motor Company this past Wednesday.

President and CEO of Hyundai North America, John Krafcik, made the promise and also predicted that Hyundai will gain market share in the U.S. to reach 5% by the end of the year. Speculation is that the bold statement will spur further talks between California, the White House and auto manufacturers regarding the raising of fuel efficiency standards in the future.

Krafcik spoke at the Center for Automotive Research’s Management Briefing Seminars in Traverse City, Michigan. He said, “We’re committing today to a 50 mpg target by 2025. We’re all in. Let’s go as far as we can. We don’t know how to get there.”

Hyundai was the industry leader in fuel efficiency in 2008, with an average of 30.9 mpg fleet-wide. Honda Motor Corporation was number two with 30.1 mpg, and Toyota Motor Corporation ranked third with 29 mpg.

Krafcik says Hyundai needs to raise fleet percentages of hybrids and plug-ins to 15%-20% in 2025 along with around 5% fuel cell or electric vehicles. President Obama made these goals a priority for the auto industry as a whole in 2008 when he called for fuel efficiency ratings of 50 mpg by 2027.

The industry agreed to raise fuel efficiency standards 40% last year to an average of 34.1 mpg by 2016. A dozen states (including California) decided to set their own standards for tailpipe emissions, thus raising the standards higher. The current changes will cost automakers about $51.5 billion over the next five years, according to government officials.

Some, like BorgWarner Chairman and CEO Tim Manganello, say that other promising technologies are being ignored by lawmakers. He said, “The U.S. government is going a bit too far in trying to dictate the powertrain technologies of the future. It’s difficult to compete globally when governments try to pick the winning technologies and the direction changes from administration to administration.”

The current administration has turned attention away from the Bush administration’s focus on hydrogen fuel cell technology. Manganello said that suppliers need to “speak up when we feel government is going too far in the wrong direction.”

Jim O’Donnell, BMW North American CEO, agrees with Manganello, saying, “Government is being a bit unfair in penalizing diesel.” He believes that diesel technology would be faring better if it wasn’t for government interference.

O’Donnell also said, “I think diesel will take off in the U.S. I’m not so sure the U.S. is going to be the biggest market at the end of the day for hybrids…or electric cars.”

Ford Motor Company’s Mark Fields says that the company is already attempting to negotiate with the government to be more flexible on fuel efficiency requirements. He said, “The important thing is to engage in a discussion, keep the consumer in mind. Bend but don’t break the industry, so in the end of the day you can provide products that customers can afford.”

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