Jason Lomberg, North American Editor, PSD
President Trump wants to freeze Obama-era CAFE standards, potentially setting up a major clash for the 2020 elections.
Obama’s Corporate Average Fuel Economy (CAFE) standards, enacted in 2012, mandated fleetwide fuel efficiencies of 39 MPG by 2020 and 50 MPG in 2025. The Trump administration wants to pump the brakes – acting EPA Administrator Andrew Wheeler and Transportation Secretary Elaine Chao propose locking in the 2020 standards through 2026.
“The standards implemented by the previous administration raised the cost and decreased the supply of newer, safer vehicles. The government also previously failed to conduct a midterm review in the manner promised,” claimed Wheeler and Chao in a Wall Street Journal piece titled “Make Cars Great Again.”
According to National Highway Traffic Safety Administration (NHTSA) Deputy Administrator Heidi King, the average U.S. car is 12 years old, and lower emissions standards allow consumers to purchase newer vehicles with improved safety features. King estimates the Trump proposal will save about 1,000 annual traffic fatalities.
The Trump administration claims the higher CAFE standards would add $1,850-$2,260 to the cost of new vehicles.
“The proposed rule’s preferred alternative would save more than $500 billion in societal costs and reduce highway fatalities by 12,700 lives (over the lifetimes of vehicles through Model Year 2029),” notes the NHTSA.
But Trump’s math is at odds with the Environmental Protection Agency (EPA) and the International Council on Clean Transportation (ICCT), which claims per-vehicle costs of $875 and $550, respectively, to meet the 2025 CAFE standard.
According to the EPA, consumers would realize net savings of $1,650 over the lifetime of their new vehicle (i.e., net of increased lifetime costs and lifetime fuel savings). Under that analysis, the stricter CAFE standards would actually save lives, since the lifetime savings would compel more people to invest in newer, safer autos.
Naturally, both conclusions are heavily biased. The EPA’s prior analysis assumes we’ll buy into the familiar reverse-Faustian bargain – higher upfront costs for eventual savings. It’s the same unspoken agreement behind LEDs and all manner of electric and hybrid vehicles.
Trump assumes we don’t want to lay out the cash. No investment means no savings (and older vehicles on the road without modern safety features).
According to Kelley Blue Book, the average new car price runs nearly $36K, which is 80% of the nation’s median wage ($44,600), so even an extra $550 hurts.
We’ll be following this story, and all the latest automotive electronics news on powersystemsdesign.com.