Green-car rules will put automakers in bigger bind

WASHINGTON — President Barack Obama wants automakers to make greener cars at a time when General Motors and Chrysler are hanging by the thread of a massive government loan and auto sales have plummeted to their lowest levels in more than two decades.

Obama's plans could bring smaller cars, more hybrids and advanced fuel-saving technologies to showrooms, but car shoppers probably will pay more upfront because the new rules are expected to cost the hamstrung industry billions of dollars.

"The consumer needs to understand that they will see significant increases in the cost of vehicles," said Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight. Her firm estimated the upgrades could add $2,000 to $10,000 to the price of a vehicle.

Obama on Monday directed the Environmental Protection Agency to review whether California and more than a dozen states should be allowed to impose tougher auto emission standards on carmakers to fight greenhouse gas emissions.

The president also said his administration would issue new fuel-efficiency requirements to cover 2011 model year vehicles. The rules would be the first step toward a 2007 energy law that requires the auto industry to boost efficiency by 40 percent, to at least 35 mpg, by 2020.

Carmakers including GM, Ford Motor Co. and Toyota Motor Corp. plan to sell electric cars that plug into a conventional wall outlet and let drivers bypass the gas station. By 2013, Ford Motor Co. is bringing its "EcoBoost" line of direct-injection turbocharged engines — and their 20 percent improvement in gas mileage — to 90 percent of its models.

But none of the changes will be cheap. The Bush administration issued a near-term proposal last year that would have required new cars and trucks to meet a fleet average of 31.6 mpg by 2015. At the time, the government estimated the regulations would cost the industry nearly $50 billion.

California, meanwhile, has battled with auto companies to impose even stiffer regulations that would force carmakers to achieve a fleetwide 35.7 mpg by 2016 and 42.5 mpg in 2020.

Industry officials anticipate the costs of the federal standards could surpass $100 billion by 2020 and California's rules could cost even more.

David Regan, vice president of legislative affairs for the National Automobile Dealers Association, said it could lead to a state-by-state "patchwork" that would burden the industry and force dealers to limit their sales of larger cars and trucks.