CAFE to cost Japan half what it will cost Detroit

The cost of the United States' new CAFE regulations has been widely speculated - and the figures are generally expected to be high - but the first real calculations of what impact the legislation will have on the industry are beginning to be developed. One analyst firm things the American Big Three will end up paying at least twice what Japan's three largest auto makers will have to pay to comply with the standards.

The cost of meeting the goals, which require makers to average 31.6mpg fleet-wide for passenger vehicles by 2015, will exceed $30 billion for Ford, GM and Chrysler, according to Global Insight, an industry analyst company, reports Business Week. Those numbers match up well with earlier our earlier report on the Detroit companies that had the figures pegged at $17 billion for GM, $7 billion for Ford and $6.3 billion for Chrysler - a total of $30.3 billion.

The Japanese - Toyota, Honda and Nissan - will only end up spending an estimated $14.85 billion to reach full compliance with the new standards. It's arguably true that the Japanese companies will actually end up having spent close to the same amount, with their past decade having been spent engineering new fuel-saving technologies. But the ability to amortize that cost over a greater period means they will have less to shoulder in the future, and will have an easier time remaining profitable as vehicle prices rise and sales volumes decline.

It's not like these numbers are a shock to the companies themselves, however. They campaigned vocally against the new, stiffer CAFE regulations before they were enacted for precisely this reason. Now they have to get down to the business of making more efficient cars for the least amount of money possible. To do so, they are expected to leverage existing technologies like direct injection, turbo- and super-charging, stop-start ability and hybrid powertrains.

One of the biggest single expenses for the American makers will be their pickup trucks and SUVs. They form a major portion of all three makers' line-ups and are very difficult to reform in terms of fuel efficiency. Of the $30 billion to be spent gaining CAFE compliance, as much as $17 billion is expected to be spent on light trucks alone. Hybrid drivetrains, smaller platforms and possibly diesel or alternative fuel vehicles will be among the solutions applied to this specific problem, in addition to the technologies mentioned above.