Log in | Subscribe | RSS feed

What’s New

US CAR warns about risks from fuel economy standards

21 June 2011

The US Center for Automotive Research (CAR) published a report—titled "The U.S. Automotive Market and Industry in 2015"—predicting the economic effects of the fuel economy standards for 2017-2015 model year light-duty vehicles that are being developed by the US EPA and the NHTSA.

The study concludes that the risk from the 2025 CAFE standards for the automotive industry and for the US economy in general is very serious. CAR recommends that the development of the necessary technologies and their costs be assessed through a periodic review process.

The starting point for the study were technology predictions from a 2010 study by the National Research Council (NRC), conducted under contract to the NHTSA. CAR further expanded the number of vehicle technology pathways to nine, considering a ranging degree of electrification (hybrid electric vehicles (HEV), plugin hybrids (PHEV), battery electric vehicles (BEV)), vehicle mass reduction and start/stop technology. For each technology pathway, the fuel economy and the vehicle cost increase were estimated.

Four fuel economy scenarios for the 2017-2025 MY vehicles were outlined in the Interim Joint Technical Assessment Report (TAR), developed by the EPA, NHTSA and the California ARB. The scenarios range from 3% to 6% in the annual increase in stringency from the 2016 CO2 emission level of 250 g/mi. The CAR study predicts the corresponding increases in vehicle retail prices as follows:

The study also estimated the economic effects of the 49.6 mpg real world fuel economy standard (including the likely safety technology mandates through 2025). The cost to the consumer of purchasing a motor vehicle would rise by nearly 40% and the net cost by 27.7% over five years. As a result, US sales of vehicles would fall by 5.4 million units and US vehicle production by 3.3 million units. Motor vehicle and parts manufacturing employment would fall by 264,500, causing a total employment loss for the US economy of 1.69 million. This loss would happen by 2025 but would start to cumulate with the increase in standards in 2017. Requirements to downsize vehicles would only increase these loss estimates, as the consumer value of vehicles would be reduced. The average age of vehicles on US highways and roads would rise from its record level of 10.4 years in 2010. This would reduce the effect of safety and fuel economy mandates, as the replacement rate for operating vehicles would fall to record low levels.

Source: US CAR