In 2012, the Obama administration unveiled new Corporate Average Fuel Economy (CAFE) standards that required carmakers to achieve a fleet average of 54.5 mpg by 2025. The target, which is actually closer to 40 mpg in terms of the figures consumers see on window stickers, was the most ambitious of its type ever enacted in the U.S.
But now the regulatory agencies overseeing CAFE are backtracking. The Environmental Protection Agency (EPA), National Highway Traffic Safety Administration (NHTSA), and California Air Resources Board (CARB) now say the 54.5-mpg standard is off the table, according to Automotive News (subscription required).
The decision came as part of a scheduled assessment of carmakers’ progress toward improving fuel economy. And here’s the zinger: CAFE standards must be reassessed not because carmakers aren’t improving efficiency, but because consumers don’t want to buy efficient cars, regulators said.
The auto industry is “adopting fuel economy technologies at an unprecedented rate,” the agencies said in a statement. They also said carmakers have been able to meet current regulations at the same cost or less than predicted in 2012, and will be able to meet upcoming standards with improvements to gasoline engines, rather than heavier reliance on hybrids and electric cars.
What regulators didn’t account for was Americans’ insatiable demand for SUVs and pickup trucks. Low gas prices have led to a boom in SUV sales, while sales of more efficient models have remained stagnant. Most of those SUVs get better fuel economy than the gas guzzlers of a decade ago, but they still drag down fleet averages, because those averages are sales weighted.
Officials now say the 54.5-mpg target was never a mandate, but rather an estimate of where the industry could be in 2025. That estimate was based on the assumption that 67 percent of the market would be cars and 33 percent would be SUVs, pickups, and other light trucks. New estimates assume a more even split between car and truck sales.
Accounting for greater SUV sales, regulators believe average fuel economy will hit 50 to 52.6 mpg by 2025. The change likely has carmakers popping champagne, but environmental groups probably won’t be happy. The EPA will make a final decision on adjusting fuel-economy targets for model years 2022 to 2025 by April 1, 2018.
