Advertisement
Business Costs & Regulation

Putting the Brakes on Fuel Efficiency

The White House plan to freeze fuel economy standards faces a rough ride.

Within the next few months, the Trump administration is expected to finalize its rules modifying the fuel-economy targets set during the Obama administration. Under the new standards, vehicle sticker prices could be cheaper. But because cars would be less fuel-efficient, you’ll pay more at the pump.

To recap: In 2012, the U.S. Environmental Protection Agency and the Department of Transportation set new corporate average fuel-economy (CAFE) standards that require automakers to sharply increase fuel economy and reduce greenhouse gas emissions. The target by the 2025 model year was 54.5 miles per gallon—or close to the mid 40s under real-world conditions.

Advertisement - Article continues below

The Trump administration countered this past August with its Safer Affordable Fuel-Efficient (SAFE) vehicles rule, which would lock in a fleet-wide target of 37 mpg (about 30 mpg in real-world driving) for model years 2020 through 2026. The Trump administration says that the new standards will save drivers an average of $2,340 in ownership costs and argues that the savings will enable more Americans to upgrade to newer, safer cars—and therefore save lives. Opponents say fuel-saving technology (such as improvements to internal combustion powertrains) is advancing so fast that automakers can meet the stricter standards without raising vehicle prices all that much, and that savings at the pump will outweigh higher sticker prices. As for safety, strong, light materials such as aluminum do a good job of protecting vehicle occupants in a crash—and allow larger vehicle designs that don’t guzzle gas.

Advertisement
Advertisement - Article continues below

Environmentalists and the state of California, which has the authority under the Clean Air Act to set its own air pollution rules, have vowed to fight back. The federal government wants to revoke California’s ability to set stricter vehicle emissions standards, which align with the targets set by the government in 2012. California, along with at least 16 other states and the District of Columbia—most of which have adopted California’s standards—are preparing to challenge the final rule in court.

Advertisement - Article continues below

Automakers are calling for a compromise that would allow a single national standard. Although the industry would appreciate lower fuel-economy standards, trying to produce vehicles to meet two different standards is an unwanted scenario, says Jeremy Acevedo, an analyst at Edmunds.

Plus, with relatively low gas prices, more buyers have been choosing SUVs and pickups over fuel-efficient sedans. SUVs and pickups accounted for 62.9% of sales nationwide between January and September 2018, according to Kelley Blue Book. The share of hybrids and plug-in electric vehicles was just 1.7%.

Status quo. Lawsuits could drag on for years, so expect the status quo to remain in place for now. Jack Gillis, of the Consumer Federation of America, says automakers would comply with California’s rules by default. “It’s too complicated and expensive to figure out how to build cars for two different environments in the U.S.,” he says.

Regardless of the final outcome, manufacturers will continue to improve fuel economy, and automakers are already investing in fuel-efficient technologies to comply with stricter standards in countries around the world./

“Whether or not America is championing the cause, a lot of very important markets abroad are focusing on fuel efficiency, so this technology can’t go by the wayside,” says Acevedo.

Advertisement

Most Popular

2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020

Recommended

Sales Tax Holidays in 2020
state tax

Sales Tax Holidays in 2020

Sixteen states are having sales tax holidays this year. If you plan your shopping around these tax-free periods, you can save big on back-to-school cl…
July 1, 2020
13 Luxury Goods That Are Cheaper at Costco
spending

13 Luxury Goods That Are Cheaper at Costco

You could be missing out on huge savings: Costco sells a limited selection of luxury goods at discounted prices, both in-store and online.
June 27, 2020
COVID-19: A Once-in-a-Lifetime Chance to Change Our Spending Habits
spending

COVID-19: A Once-in-a-Lifetime Chance to Change Our Spending Habits

The coronavirus pandemic has changed everything, including how we spend money. Are you spending less right now? Many people are. Here’s how to make th…
June 17, 2020
24 Best Travel Websites to Save You Money
spending

24 Best Travel Websites to Save You Money

Traveling is fun and you can do it without breaking the bank — you just have to know where to go online first.
June 12, 2020