Recommendations for dramatically increased fuel economy over the next decade and beyond have garnered considerable attention. Currently, the rules call for a 35.5 mpg Corporate Average Fuel Economy (CAFE) requirement by the 2016 model year. The big question is: What then? Proposals for gas-mileage targets ranging from 47 to 62 mpg have been stated, to take effect no later than 2025. Will fuel savings offset the higher cost of such a fuel-efficient vehicle?
A recent study by the Center for Automotive Research found that with a 62-mpg standard, the amount that a motorist would save in gasoline over a five-year period would not exceed the increased cost of the complying vehicle. As a result, the 62-mpg requirement favored by environmentalists would not be cost-effective. In contrast, several of the less dramatic CAFE targets (47, 51, or 56 mpg) would result in fuel savings that exceeded the increased cost of an average vehicle.
The Obama Administration has put forth a preliminary proposal for increased CAFE standards in 2025, but a specific figure has not yet been stated. Automakers claim the situation deserves more study–but that’s generally a euphemism for outright opposition.
Titled “The U.S. Automotive Market and Industry in 2025,” the report asks how “anticipated mandates for increasing vehicle fuel economy and improving safety” will affect the auto industry. Data comes from the National Research Council and J.D. Power and Associates, and is used to project the financial impact of the most stringent gas-mileage goal under consideration for the future.
Like nearly every analysis of future CAFE standards, this one focuses solely on the monetary aspects, overlooking shoppers who buy fuel-efficient vehicles because of environmental concerns, or to reduce the use of fossil fuels.
The CAR study determined that between 2008 and 2025, the average cost of new vehicle would rise by at least $3,810, or as much as $11,390. The difference depends largely on the target mileage goal established for CAFE. Fuel savings over the first five years of ownership of a new car in 2025 would fall in the range of $5,917 to $8,339, according to CAR–again, depending on the CAFE goal that’s decided upon.
According to CAR, the Obama administration’s preliminary proposal used a different research method, which showed savings for consumers even with the 62-mpg standard.
Although the nonprofit CAR organization is partly funded by the automobile industry, this particular study is said to have been funded internally. An earlier report had brought criticism from the International Council on Clean Transportation.
Following talks with automakers this summer, as well as discussions with California regulators, the Administration is expected to submit a formal CAFE ruling in September. A final decision won’t be made until July 2012.
