2017-2025 CAFE Rules Tentatively Settled

Flanked by executives from most of the major automakers, as well as union officials and other environmental stakeholders, on Friday President Obama announced the compromise settled on for federal fuel efficiency standards for 2017-2025.

Subject to final approval, the Corporate Average Fuel Economy (CAFE) for vehicles weighing less than 6,000 pounds sold in the U.S. is to be 54.5 mpg. Because the government calculates the number differently, this will equate to about 40 mpg on vehicle window stickers.

The “54.5” number is down from an initial push for 62 mpg, and gives a break to American manufacturers of the heaviest of the fuel-consuming light trucks, such as pickups and big SUVs.

Nonetheless, it represents a significant bump toward greater efficiency that will mean more integration of electrical hybrid solutions, as well as a host of other updates needed to let vehicles squeak past.

The CAFE number for 2012-2016 was 35.5 mpg, and this new jump upwards is touted by the Obama administration as able to save American families $1.7 trillion at the pump through to 2025.

Sliced another way, the operations cost reduction would be about $8,000 per vehicle.

“Additionally, these programs will dramatically cut oil consumption, saving a total of 12 billion barrels of oil, and by 2025 reduce oil consumption by more than 4 million barrels of oil a day – more than America currently imports from the Persian Gulf, Venezuela, and Russia combined,” said a White House press release.

As for pollution reduction, through 2025, it is expected that 6 billion metric tons of greenhouse gases will be eliminated. The White House said this is equal to an entire year’s worth of U.S. CO2 emissions.

Pending approval

As we previously reported, final rules will not be passed until a lengthy public comment period has passed.

If formally adopted, the new CAFE standard would require passenger cars to become 5-percent cleaner each year from 2017-2025 and pickups and heavy SUVs, etc. to become 3.5-percent cleaner each year during the same period.

Already known is not all stakeholders are thrilled with the new rules. Among them, Volkswagen and Daimler said they give the Detroit Three a pass for their fuel-swilling and best-selling over-6,000-pound trucks.

At the same time the rules do nothing to stimulate further development of fuel-efficient diesel technology.

“Volkswagen does not endorse the proposal under discussion,” VW Executive Vice President Tony Cervone said in a statement Monday. “The largest trucks carry almost no burden for the 2017-2020 timeframe, and are granted numerous ways to mathematically meet targets in the outlying years without significant real-world gains. The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles, defeating the goal of reduced greenhouse-gas emissions.”

In Europe, where fuel prices are more than double compared to the U.S., diesel has already been widely accepted under the austerity forced on consumers there.
Cervone said VW is in position for U.S. diesel proliferation in a way that would be manufactured in America at the same time.

“Our new mid-size Passat TDI, built here in the U.S. in Chattanooga, Tenn., achieves 43 mpg highway and can travel almost 800 miles on a single tank of fuel. If one-third of the vehicles on the road today were clean diesel, the U.S. would save 1.4 million barrels of oil a day. Yet there is no consideration in the current proposal for the positive impact clean diesels can have on fuel consumption here in the U.S.” He said VW looks forward to continuing to lobby to achieve a national standard that is “fair and equitable.”

One loser

Whether it is a case of unintended consequences, or policymakers have pending contingency plans in mind, the new CAFE standard will otherwise drastically cut money available for highway, bridge and transit maintenance.

These infrastructure improvements are funded by a per-gallon federal tax on diesel and gasoline. Cutting sales of the same stands to chop an estimated $65 billion from the Highway Trust Fund.

California warned

One clause in the new CAFE standards empowers automakers to sue the state of California if it decides – as it has in the past – to pass even more stringent rules. For its part, California promised to abide by the federal rules.

Dynamics in play

The rules as presently established call for a mid-term review in 2021 wherein federal authorities will decide whether to stay the course or reduce the progressively increasing fuel efficiency standards.

This decision will be made based on how successful the rules are deemed in 2021 based on technological challenges, costs and marketability.

While most automakers showed support last week for the 54.5 mpg (40 mpg equivalent) standard, since last year the negotiations were as controversial as a kid fighting with its parents not to be forced to take a bath.

Automakers expressed concerns over being able to make a profit, and staying competitive. Alienating foreign investors – such as disgruntled Europeans – in the already weakened U.S. economy is another concern.

Rules are expected to be finalized by 2013, and wiggle room is already built in for when they have a much better view 10 years from now whether the Obama administration CAFE standards were indeed a good idea.

Edmunds


  • Anonymous

    One broad consequence of these standards is that by reducing oil consumption, they will allow more sustainable growth.
    The Clinton administration had the benefit of oil at $20 per barrel, whereas the price steadily increased during the Bush administration to near $100 per barre and has remained near that level. Worldwide economic growth drops roughly .5% for each $10 increase in the price of oil, with effects being greater for more oil dependent economies. Thus, it is not surprising that the economy tanked during the Bush administration and has not recovered well during Obama’s stewardship. Such effect create an underlying trend that compounds the effects of the financial crisis. Oil price increases have more than offset the benefits of the 2001 tax reductions for the average consumer. More efficient transportation is one way to minimize the future effects of such changes on the U. S. economy.

  • James Davis

    Well, here goes the rich-bitch-whining again. You would think that if these three big auto makers in America wanted to continue to make that billion dollar profit every year without going bankrupt, they would greatly embrace the clean energy act and start mass producing electric cars; then, they would not have to worry about MPGs or any other fossil fuel. They have had over a hundred years developing ICE vehicles and they still can’t get 60 MPG. How pathetic is that? Give up the fossil fuels, because you can never meet your goals and turn to electrics, where it is possible to meet and exceed your goals in less than ten years. The three big auto makers in America is acting like spoiled children and should be turned across someone’s knee and spanked until they see red skin for the next 200 years. What is the problem with these three Auto makers, are they so brain dead and stupid that they can’t manufacture a vehicle that can get 60 MPG when Japan already has a vehicle that can? How pathetic these Socialists Republican ran businesses are…

  • TD

    Unfortunately, James, it doesn’t matter what big corporations do. They are too big to fail.

  • Gary

    Hi,
    It would be nice if in these articles where you talk about the CAFE requirements you always give what the equivalent current window sticker mpg would be. This would give people a way to compare to the current cars they know.
    The CAFE number is so far from reality that the 54 mpg is not very useful — what would that be in the real current epa window sticker?

    Gary

  • Anonymous

    i’m not familiar with the weight classes, but will the 6000 lb threshold have unintended consequences like the suv/truck loophole from years ago? (i.e. makers make even bigger cars that consumes more gas than ever)

    for example, hummer already exceeds 6000 lbs. other vehicles like cadillac escalade and toyota seqoia are already within 200 to 300 lbs of that limit. it’s easy go beyond that limit to evade the new fuel efficiency requirements.

  • Anonymous

    further to my post above, is the 6K lb weight based on curb weight or gross vehicle weight rating (GVWR)?

    if based on the latter, the cafe standard would have very little impact since most of the gas guzzlers already exceeds 6,000 lbs GVWR

  • Yegor

    In 1975 US Congress enacted Corporate Average Fuel Economy (CAFE) regulations that called were suppose to bring cars real world MPG to 27.5.
    30 years later in 2005 the real world MPG was 1.5 times lower than what regulation called for – EPA 18 MPG (CAFE 24 MPG) because of enormous loopholes. How is it going to be this time?

    Do not expect a miracle. Only 49% of new vehicles today are cars, 51% what qualifies as light trucks. Expect the share of cars shrink even more as standard becomes more stricter – I think to 25%.
    Expect real world fleet average CAFE 41 MPG in 2025 which is EPA 30 MPG. :(
    Expect real world fleet average CAFE 35 MPG in 2021 which is EPA 26 MPG. :(

    And 2025 is really, really far away. :(

  • Yegor

    Look at Chrysler who straggles today to meet CAFE standards: the share of cars is only 25% while the 75% are light trucks!
    http://media.chrysler.com/newsrelease.do?id=11225&mid=2

    This what we are going to see not Chrysler alone by in all automakers quite soon by 2015!

  • AP

    James Davis, I know you like to rip on only the US manufacturers, but here you should rip on Toyota too. They were equally vocal in protesting the law. It would cut down on Tundra (which trails its class in MPG) sales.

  • Yegor

    Here is my public comments:

    1) There should be one standard for all vehicles (cars and light trucks) to avoid a loophole. Large Pickups make only 10% of all vehicles sales so it is a small portion of all vehicles – it does not have a huge impact on Fleet average fuel economy. So there is no need to separate trucks into a separate standard. This way manufactures will shift back from crossovers/SUV to cars production – it will allow them to meet CAFE standard 10% easier because a car has 10% better fuel efficiency than the same size crossover (compare Honda Accord and Honda CR-V).

    2) Implement the standard in EPA real world drive cycle 40 MPG instead of virtual CAFE 54 MPG. Otherwise manufactures will find a new tricks to improve their vehicles CAFE ratings while their EPA ratings will remain low.

    3) Increase idle time in EPA test cycle to reflect real world driving.

  • Charles

    Yegor, if I may add to your list:

    4) Turn on the AC.

    5) Run the test at different temperatures (20, 45, 80 and 100).

    6) Make a real world test using real world data. The number of GPS systems (including smart phones) in cars is in the millions. A simple app that collects speed, acceleration (1 axis only), elevation and time (elapsed, not real) and sends anonymous data to a web site is almost a no-brainier. I think a lot of people would be willing to let their data be collected. This could be used to build a much better test cycle.

  • Anonymous

    The CAFE standards are simply a joke. Government regulation of what the market should control. The slave owners (those that turn us into slaves via regulation of everything) think they know what is best. But the “five year plans” in the Soviet Union only brought economic woe and increased corruption.

    The questions you need to ask:

    (1) Why did we not have the $2000 dollar option of “e-assist” 5 years ago?

    (2) Why were plug in vehicles not available 5 years ago?

    (3) Why give the “bridge to no-where” folks the power to regulate what the market should decide?

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