From the WSJ's Energy Roundup:
As expected, executives from General Motors, Ford, DaimlerChrysler and Toyota went to Capitol Hill today to sing their song of woe about CAFE fuel-effiency standards. They were joined by UAW President Ron Gettelfinger, who argued that auto makers’ union workers would bear the heavy cost — maybe $100 billion — of implementing higher fuel standards.
The long run demand elasticity for automobiles is probably inelastic (hmmm, not many substitutes, but a large share of the budget; a quick Google search didn't find much better than this ... I better duck my head on this assertion) which means that much of the higher cost of producing automobiles with stricter CAFE standards can be passed onto consumers.
I didn't notice the auto execs mentioning a gas tax which is more efficient than CAFE standards and would not affect the cost of producing cars ... except for the remodeling costs as consumers prefer slimmer, sleeker, younger models.
