How the Carmakers Trumped Themselves
These are strange times for America’s car industry.
This month, the White House will decide the fate of a set of federal rules called the Corporate Average Fuel Economy standards, or CAFE standards. These laws regulate the miles-per-gallon number of “light-duty vehicles”—that is, sedans, minivans, Ford F-150s, and anything else that’s street-legal and weighs less than 10,000 pounds.
The rules work mostly by getting a little more stringent every year. In 2018, CAFE requires new vehicles to average about 29 miles per gallon (or mpg). By 2025, they must hit 39 mpg. (The government talks about fuel economy with two different numbers: A “CAFE” figure, which estimates a car’s idealized miles per gallon; and the EPA’s “window sticker” number, which is used by dealerships to estimate real-life fuel economy. In this article, unless otherwise indicated, all mpg estimates approximate the window-sticker scheme.) Note that these are fleet-wide numbers: Some small cars will run more efficiently, pushing 50 mpg; pickup trucks will probably hunker in the high 20s.
Or, at least, that’s how the law has worked. It now seems likely that the Trump administration will freeze the standards in 2020. In other words, starting next fall, the U.S. government would no longer require new cars to become steadily more fuel-efficient. For environmentalists and consumer advocates, it amounts to a nightmare proposal.
Does the car industry want the same? That’s an interesting question. They certainly seem to find the CAFE standards frustrating. For the last two years, they’ve claimed the rules are expensive and out of step with what Americans desire; they also argue that the Obama administration rammed CAFE down their throats. And the industry’s lobbyists have been complaining about the rules to any Trump administration official who would listen, up to and including the president.
But now they claim they don’t want the freeze. What gives?
Setting the stage for this farce is a development that almost everyone—including the car industry—says is a good thing: New cars and trucks sold in America burn much less fuel than they did a decade ago. In 2007, new vehicles in the United States averaged about 20.0 mpg. Last year, they averaged 25.2 mpg.
This happened, in short, because the government ordered it.
On May 21, 2010, President Obama unveiled an ambitious new set of CAFE standards. They aimed to get idealized U.S. fuel economy to 50 mpg by 2025. (Real-life fuel economy would lag behind this number.) They also doubled as climate-change policy, since more fuel-efficient vehicles release less carbon-dioxide pollution. Obama said the rules would save Americans money and “create or save more than 700,000 jobs.”
The car industry seemed less frustrated on that sunny morning. The chief executives of Daimler Trucks and Volvo flanked Obama as he made that announcement, nodding along with the young president. An overwhelming coalition endorsed the rules: Environmentalists, labor endorsed or acquiesced to the new standard.
