Why Automobile Fuel-Economy Likely Will Fall Short of CAFE Standards

When the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) published the Corporate Average Fuel Economy (CAFE) standards last year, the target performance for model year 2025 new cars was set at 54.5 miles per gallon. The target was developed with input from the automakers, and most of us assume that those targets will be met by actual improvements in fuel economy. Not quite.

A new report from Michael Sivak and Brandon Schoettle at the University of Michigan Transportation Research Institute compares the CAFE targets for new light-duty vehicles with the NHTSA estimates of what actually will be achieved by automakers. The NHTSA data indicates that the mileage performance projected to be achieved by model year 2025 is 46.2 miles per gallon, significantly below the CAFE target.

The difference is one of definition. Here is how the report states the issue, citing the EPA/NHTSA standard:

These performance levels assume that CAFE targets will be met purely through fuel-economy improvements. However, it is likely that manufacturers will also use alternative credits not related to improvements in fuel economy to assist in reaching these goals. Examples of these credits "include the ability of manufacturers to pay civil penalties rather than achieving required CAFE levels, the ability to use Flexible Fuel Vehicle (FFV) credits, the ability to count electric vehicles for compliance, the operation of plug-in hybrid electric vehicles on electricity for compliance prior to MY 2020, and the ability to transfer and carry-forward credits," in addition to air-conditioning improvement credits and/or off-cycle technology credits.

The projected achieved CAFE performance is what consumers can actually expect from their new cars because it does not include any of the various credits that have nothing to do with automobile technology.

Sivak and Schoettle have analyzed data for model years 2012 and 2013, including only fuel-economy improvements actually achieved, excluding the various credits. Interestingly, CAFE fuel-economy improvements actually achieved surpassed the projected achieved CAFE performance. For 2012 model year light vehicles, the projected mileage performance from NHTSA came to 28.7 miles per gallon, compared with an actual achieved improvement to 28.9 miles per gallon. The projected improvement for 2013 CAFE improvements came to 29.7 miles per gallon, and the actual improvement came to 29.8 miles per gallon. The CAFE targets for 2012 and 2013 were 30.1 miles per gallon and 31.1 miles per gallon, respectively.

The ever-increasing fuel-economy ratings of new cars and light trucks are a major contributor to lower U.S. consumption of petroleum. The EPA/NHTSA CAFE targets may not be reachable without some flimflammery, but the projected achievements appear to be within range, and meeting those over the years will lower U.S. petroleum consumption even more.