54.5 mpg? Not quite.
This week, the U.S. Environmental Protection Agency lowered its 54.5 miles per gallon fleet average that carmakers were supposed to reach by 2025. The new projection for fleet average will be between 50 mpg and 52.6 mpg. The change five years after the rules were made comes from the government having a difficult time figuring out what kinds of vehicles people would buy in the future. Its crystal ball got a little cloudy.
Back then, there was a consumer trend toward more people buying cars than trucks and SUVs. The EPA expected that by now, two-thirds of new vehicles sold would be cars. Yet that number remains roughly 50 percent cars and 50 percent trucks.
See, the entire Corporate Average Fuel Economy plan puts the onus on carmakers to create fuel efficient vehicles and find ways to make people buy them. (The intent is good, but the road of unintended consequences is fraught with so much speculation and absurd logic.) Most businesses have struggled with the problem of finding ways to get people to buy their wares. Carmakers are no different. But carmakers face the additional struggle that they can get punished if people really like their less efficient vehicles.
But the changes by the EPA are really nothing that unexpected. When the rules originally came out, this examination and resetting of goals in 2016 was part of the plan. The bigger problem is that the changes stem from a fundamental flaw in CAFE itself.
First, let’s look at that EPA fleet average. The EPA number is not actually the number fleets must achieve. That has almost never been the case. While it may appeal to everyone (54.5 mpg sounds great on television) it’s not real. The real fuel economy, the one you’ll see on your sticker, is about 20 percent lower. Over the years, there have been adjustments for the removal of lead gasoline, the addition of ethanol and a number of other changes. Instead of just making the new number available, we have this nonsense number that feels more like a PR spin than anything else.
While it may appeal to everyone (54.5 mpg sounds great on television) it’s not real – the EPA number is not actually the number fleets must achieve.
The new 50 to 52.6 mpg is more like 40 to 42 mpg. Carmakers have resorted to all sorts of legal and illegal methods just to reach the stated EPA mileage on window stickers – and still many people never realize that number. Does anyone suspect that they won’t reach this lofty average without a little help?
Now the math. Figuring out how to calculate a fleet’s average fuel economy requires a doctorate. The EPA uses harmonic averaging in order to weight fleet fuel economy by the type and volumes of vehicles a carmaker sells.
Furthermore, every carmaker has a different goal set by the EPA depending upon the footprint – the area between all four tires – of the vehicle and how many it sells. When the footprint model was adopted, it created sliding standards that favored trucks and SUVs, which have bigger footprints. In fact, there’s an incentive for carmakers to have vehicles with bigger footprints because then their efficiency goal is lower.
Personally, I don’t have an issue with favoring trucks, mostly because I like trucks. But when I write truck, I mean it in the body-on-frame, rattle-your-fillings kind of truck. Today, the definition of a truck has changed considerably. The Honda Fit, with a scant 40 square-foot footprint has a combined fuel economy of 36 mpg. But the Honda HR-V, the Fit-based crossover (classified as an SUV) gets 5 mpg less but has a lower overall standard. It’s also outselling the Fit by nearly 10,000 units.
Many of the top selling crossovers, which are fundamentally poorer performers on the road than their car siblings, have muddied the definition of what is what. The Ford Escape, Toyota RAV4, and Nissan Rogue all (arguably) handle and perform worse than the car-based version of the same platform.
If the government was really serious about tailpipe emissions, instead of creating convoluted formulas, it would simply increase the gas tax to make gasoline cost about $5 a gallon. It could take all of that extra money (more than $100 billion a year) and spend it, I would wish, on the roads.
High gas prices put the butts of consumers in the seats of fuel efficient cars. Everything else the EPA does is bureaucratic smoke and mirrors designed to obfuscate and confuse the public.