Report: Fuel Economy Standards May Grow By Up To Seven Percent Annually

May 12, 2011
U.S. House of Reps passes 35mpg CAFE standard

U.S. House of Reps passes 35mpg CAFE standard

The National Highway Traffic Safety Administration (NHTSA) is researching how much automakers can grow fuel economy between 2017 and 2025. If their math is correct, the agency estimates that automakers can boost fuel economy by a maximum of 7 percent per year, and even their “worst case” scenario has automakers stretching fuel economy no less than2 percent annually.

Under the NHTSA’s proposed 7-percent annual increase, automakers would need to reach a fleet-wide fuel economy of 62 mpg by 2025; even the more conservative 2-percent annual increase would net a fleet-wide fuel economy of 47 mpg by 2025. As if to reassure the motoring public, the agency is calling for a 2020 “interim review,” to verify that the rules set still represent the “maximum feasible standards for those model years.”

The NHTSA estimates that achieving 62 mpg by 2025 would increase the cost of a vehicle by $3,500, while achieving 47 mpg would result in a net cost increase of just $770. Achieving the 62-mpg number requires significant sales of electric vehicles, which would need to represent approximately 14 percent of vehicle sales by 2025. Fuel cost savings would offset the additional vehicle costs, at least in the eyes of the NHTSA.

Under current Corporate Average Fuel Economy (CAFE) standards, automakers must achieve a fleet-wide average of 34.1 mpg by the 2016 model year. That’s an increase of nearly 41 percent from the 2011 required average of 24.2 mpg, and automakers don’t see eye-to-eye with the NHTSA over the costs associated with increasing fuel economy. A study by the Center for Automotive Research, often cited by automakers, estimates that the increase in fuel efficiency to 60.1 mpg will raise vehicle prices by 22 percent, cut sales by 25 percent and eliminate up to 220,000 automotive related jobs.

Who’s right and who’s wrong? We’ll find out over the next 13 years.

[Detroit News]

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