Back on April 1st, Transportation Secretary Pete Buttigieg
announced new CAFE (Corporate Average Fuel Economy) standards
for all vehicles to be sold in America, starting in 2024-2046. The US
Department of Transportation (DOT) has a propaganda
an informational page
on the new standards which require a CAFE of 49 mpg by '26. To borrow a quote
from the wonderful Mark Steyn, it reads like a refrigerator manual written by
someone who really loves refrigerator manuals.
The new Corporate Average Fuel Economy standards require an industry-wide fleet average of approximately 49 mpg for passenger cars and light trucks in model year 2026, the strongest cost savings and fuel efficiency standards to date. The new standards will increase fuel efficiency 8% annually for model years 2024-2025 and 10% annually for model year 2026. They will also increase the estimated fleetwide average by nearly 10 miles per gallon for model year 2026, relative to model year 2021.
Clarity? Not much.
Stepping back a bit, I've been writing on battles and skirmishes over CAFE standards for a long time, starting with the push to create a 54.5 mpg standard from the first Obama term's DOT back in 2012. CAFE Standards are best thought of as the "A" in the name - the average over the vehicles they sell. Regulating the average says that every vehicle in the manufacturer's lines doesn't need to get 49 mpg, just that the average mileage of everything they sell needs to hit this magic number. The rules specifically apply to "cars and light trucks" while heavier trucks are in a different class. The fact that cars are treated differently than trucks is one of the reasons for the popularity of SUVs versus station wagons. You don't see many station wagons being made these days. There is great legal wrangling and fighting over how to classify any given vehicle because not every vehicle has a prayer of hitting that kind of mileage. If the requirement can't be approached, the companies have to restrict the number of SUVs or other light trucks they can sell to push the average up. This has to all be calculated out in advance as they're determining how many of which models to make.
I never worked in the auto industry (but I did stay in a ... sorry) but I'm pretty sure that they're working on the preparations for the '23 model year now. My guess would be that it's too late to make any substantial changes to the 2024 models and preparation for the '25 models isn't likely to be much better. The way I read that line that, "The new standards will increase fuel efficiency 8% annually for model years 2024-2025 and 10% annually for model year 2026." may be something lawyers would make a million bucks on, but if 2025's CAFE can be 10% less mileage than 2026, that's 44.1 mpg. 2024 can be 8% lower, or 40.6 mpg and 2023 can be 8% lower than that or 37.3 mpg. The DOT says the current standard is, "a combined fleet-wide fuel economy of 40.3-41.0 mpg."
Car makers need to figure out how many of their SUVs or muscle cars they can sell balanced against anything in their fleet that gets over 50 mpg (and the higher the better) to bring their averages up.
Regular readers know I'm fond of pointing out that physics is a bitch and you don't get something for nothing. The only places where the laws of physics get broken is in commercials and Looney Tunes. The internal combustion engine has been optimized as a system for over a hundred years, and you're not going to suddenly make it much more efficient. Instead, to reach the new standards the cars will get lighter, with more plastics and thinner metal structures. The shorter way to say that is they'll be less safe. The new standards will cost more lives.
Reporting on the new standards, the Center for Automotive Research (CAR, of course) quotes DOT indirectly.
The NHTSA press release notes that under the new standards, fuel consumption will decrease fuel use by over 250 billion gallons through the year 2050 compared to sustaining the previous Trump-era standards. Less reliance on foreign oil, consumer savings on gas, and reduced emissions were also emphasized in the announcement as an advantage of stronger standards. Officials highlighted that carbon emissions would be reduced by 2.5 billion metric tons and estimated that consumers could save almost $1,400 in fuel expenses over the lifetime of a 2029 model vehicle under new rules. However, it is also estimated that the new regulations will likely drive up the cost of new vehicles by nearly the same amount.
Two reactions: first, saying "almost $1,400" is recognizing that we're currently in a situation with very high fuel costs, and if we had lower fuel prices the savings would go down. Saving that amount over the life of a car is a pretty trivial savings. $140/year or $11.67/month for a car kept 10 years. Second, I don't believe that the cost will be equal to what's saved on fuel. The last several times this was studied the car costs went up more than the money saved on fuel.
I'm going to reuse a graphic from my 2012 article on the CAFE standards, which
shows the annual cost of gas at three prices per gallon from $1.50 to $5.00
gallon, versus the car's mileage and assuming driving 15,000 miles per
year. The curves display a similar shape, illustrating the diminishing
returns for each incremental increase in mileage. At the top curve, a 10
mpg increase from 20 to 30 mpg saves $1,250 or 33.3% less for 50% higher
mileage; a 10 mpg increase from 40 to 50 mpg saves $375, or 20% less for 25%
higher mileage. All of the bigger gains were taken on the left end of that plot.
The problem, as always, is that government has no business regulating this sort of thing. It's the most common, fatal conceit of our single-minded bureaucrats that they think they know better than the free market. I've got news for the administration: a real half ton pickup (the most common size) that got twice the current MPG would be snapped up so fast it would set every truck sales record there is. Nobody's against that. We're just against being forced to pay more for a flimsier, less safe vehicle than we save by buying it, and we're against getting stuck with one that doesn't do everything we need it to do.



















