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Posts Tagged ‘CAFE standards’

Obama Raises Fuel Economy Average to 54.5 MPG

August 29th, 2012

President Obama Signs 2025 54.5 MPG Corporate Average Fuel Economy Law

President Obama has signed into law the long-proposed official government mandate saying automakers doing business in the U.S. must achieve a 54.5 mpg Corporate Average Fuel Economy (CAFE) rating by 2025. Though the 54.5 mpg target has been all but decided for over a year, the negotiations are over and the mandate is now official.

With hybrid, electric, and alternative-fuel powertrain technologies leading the way, automakers will first be required to meet a CAFE standard of 35.5 mpg by 2016. Then from 2017 to 2025, annual increases of 5% for cars and 3.5% for light trucks will be required to meet the 54.5 mpg standard.

It’s worth noting that the CAFE standard uses a different method for calculating efficiency than the lower EPA number you see on the window sticker. With its 50 combined mpg EPA rating, the 2012 Toyota Prius easily already meets the 2025 CAFE target today.

The National Automobile Dealers Association estimates the new regulations will pass on increased costs of $3,000 per car to the consumer. Still, U.S. drivers are expected to save $1.7 trillion on gas as a result of the new law. The standards will be reviewed for feasibility in 2017.


CAFE Regulations Set Standard of 54.5 mpg by 2025

August 2nd, 2011

President Obama announces CAFE standards.

President Obama, in concordance with top execs from 13 major automakers, has announced Corporate Average Fuel Economy Standards set to run from 2017 to 2025, leading to a 54.5-mpg target by the end of that time period. That figure is attained through annual 5% increases in mandated fuel efficiency for passenger cars. Pickups and other light-duty truck-based vehicles need to attain 3.5% increases for the 2017 to 2021 model years, followed by 5% increases from 2022 to 2025.

The move has been near-universally applauded by the major players in the industry, including government organizations, automakers and environmentalists. While lower than the considered 62-mpg 2025 target, the new standards should save consumers nearly $2 trillion in fuel costs, Obama says. Once made official, the new standards are set to be made law in 2012.

Concerns about heavy efficient powertrain development costs being passed onto consumers remain, though the industry sees the 54.5-mpg target as attainable. Expect heavy reliance on electric and other alternative-powertrain cars to meet the standards. Due to different methods used to calculate CAFE fuel economy and EPA window-sticker fuel economy, the standards should mean around 36 EPA-estimated mpg.



Republicans Want to Double Fuel Economy By 2017. But at what cost to the consumer?

June 27th, 2011

The Republican Party is pushing for strict fuel economy mandates.In a letter to President Obama, prominent Republicans are urging a doubling of Corporate Average Fuel Economy (CAFE) standards, set to go into affect between the years 2017 to 2025.

All automakers need to meet the average across their entire fleet or pay heavy penalties to continue to sell cars in the United States. Just where to set the standards has been the topic of much debate, but those signing the letter would like to see an approximate 6% annual increase during that 9-year span.

The Republicans’ main point is that by increasing fuel economy standards the nation can decrease perilous dependence on foreign oil:

“If oil continues to be a primary driver of our economy and security, we will hand our destiny to other nations, many of which do not share our interests,” the letter reads.

Whether or not fuel cost savings will outstrip increased vehicle base prices is a hotly contested subject, but suffice to say the industry is closely watching the EPA, NHTSA and the White House for an official proposal by this September to see how this all shakes out.


Study Finds New Fuel Standards Will Boost Car Prices. Duh. And Cut Jobs. Huh?

June 16th, 2011

Will strict fuel economy mandates cut auto industry jobs?

A recent study conducted by auto industry think tank the Center for Automotive Research has concluded that adopting proposed strict government fuel economy guidelines—expected to mandate between 47 and 62 mpg by 2025—will not only raise car prices by a significant margin but could eliminate up to 260,000 industry jobs as well.

The center estimates an increase in the average new car sticker price of between $3,744 and $9,790 by 2025, depending on how strict the new Corporate Average Fuel Economy (CAFE) standards are set.

This paints a sharp contrast when compared with official Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) estimates of between $770 and $3,500.

CAFE standards above 60 mpg by 2025.

CAFE standards are set through 2016, by which time automakers will need to average 34.1 mpg across their entire light-vehicle fleets to avoid paying heavy fines.

The Obama administration is set to offer a new CAFE standard proposal by this fall, most likely to order annual mpg increases of between 3% and 6% between 2017 and 2025.

The standards will be finalized and made into law by July of 2012.

But aren’t extremely fuel efficient cars exactly what the public wants? Yes and no.  While consumers will save lots of money at the pump, the price increases necessitated by new CAFE standards will likely result in an average new vehicle price increase of up to 28%, adjusted for inflation.

Fewer vehicles sold means fewer vehicles produced, cutting jobs as consumers hold on to older vehicles longer because they simply cannot afford newer cars high on efficiency-increasing technology.

Efficiency-increasing technology is expensive.

Environmentalist-friendly groups such as the Union of Concerned Scientists join the government agencies in supporting the 60+ mpg standard, but only time will tell just how much of an impact this has on job growth.


Environmentalists Going Mental with CAFE 62 mpg by 2025

May 23rd, 2011

New stricter CAFE mpg standards are in the works.

A great debate is raging on Capitol Hill regarding the future of government-mandated fuel economy. The Corporate Average Fuel Economy standard applies to every full-line automaker selling cars in the U.S., and influential environmentalist groups want to raise it to 62 mpg by 2025.

CAFE mandates are set through 2016, by which time car and light truck manufacturers must average 35.5 mpg across their total lines. The numbers don’t quite match up when compared with the EPA fuel economy ratings you’re used to seeing due to different calculation methods. Union of Concerned Scientists President Kevin Knoblach says that a 62 mpg CAFE rating equates to around 44 mpg on the window sticker, Motor Trend reports.

Auto industry execs deem such a large increase unfeasible, with some analysts predicting that new technology required to meet the standards would add up to $10,000 to the average price of every new vehicle. The government claims the actual resultant price increase would be much lower, around $3,500.

Toyota Prius Plug-in Hybrid

Stricter CAFE standards will mean heavy reliance on expensive new technologies.

A scenario could result where new, more fuel-efficient car buying becomes too expensive, and average Americans keep older cars on the road longer and longer. This would defeat the emissions-saving purpose of CAFE and put the recovering auto industry in jeopardy once again.

So what happens if automakers fail to meet the standard? Some manufacturers, Porsche and Mercedes-Benz among more recent offenders, have paid heavy fines as a result of sub-par mpg.

The great CAFE debate will continue on in the coming months, with President Obama set to lay down a proposal later this year for standards set to begin in 2017.

Bottom line?  That’s just it: by forcing manufacturers to strive for a seemingly impossible task, at the end of the day, the consumer will end up footing the bill, both in the pocket and in performance.