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Fuel diseconomy standards

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You may have read about recent changes making the automobile EPA fuel economy requirements much stricter, rising to 54.5 miles per gallon by 2025. But is that actually true? Or does the complexity of the new requirements really just hide a bias towards big, profitable SUVs?

As a baseline, let's first look at the current fuel economy requirements. The current highway mileage requirement - the only one that counts for regulatory purposes - is 30.2 miles per gallon (mpg) for cars, and 24.1 mpg for "light trucks" - SUVs and minivans. Those highway numbers correspond to EPA window sticker numbers of about 23 mpg for cars, and 18 mpg for SUVs. Now, what are the standards going to be in 2025?

That's where things get complicated. Instead of just setting two numbers - and gradually getting them to converge to a single number, as was proposed during the Bush administration - the new regulations base the allowed fuel consumption on the size of the vehicle's floorplan. Specifically, the allowed fuel consumption is the area in the rectangle defined by the vehicle's four wheels. In addition, the requirements for cars and light trucks diverge, rather than continuing to converge.

For small cars, the improvement in required fuel efficiency actually will be substantial - they'll be required to get 61.07 mpg on the highway by 2025, the equivalent of a 43 mpg EPA window sticker. That's about 40% higher than a typical small car, like the Honda Fit, today. Achieving that goal will likely require expensive hybrid technology.

At the other end of the spectrum, for large SUVs, the improvement in required fuel efficiency will be minimal - to 30.19 on the highway by 2025, equivalent to a 23 mpg window sticker mpg, and the same as cars are already required to get today. That's only about 20% higher than a current light truck of that size, like the Ford F-150, gets today. Hybrid technology will likely not be required for most vehicles in this category, so production costs will remain low.

So what's likely actually to happen? Well, cars will become more expensive; SUVs less so. People will thus be pushed towards buying SUVs. Worse, from an environmental standpoint, they'll be pushed towards buying longer, wider SUVs, since those will be allowed greater fuel consumption and thus better performance. With the move to larger vehicles, actual average fuel economy will improve minimally or not at all.

That isn't to say the regulations will have no effects. The move towards larger vehicles, which have higher profit margins, will benefit automakers. And the move towards SUVs will particularly benefit domestic automakers like GM. The supposed regulators have allowed the regulations to be captured by the industry lobbyists, with further distortions due to the government's stake in GM.

Meanwhile, environmental concerns have been pushed aside, sacrificed on the altar of political expediency. It looks like fuel efficiency will only actually improve as scarcity causes fossil fuel prices to rise, and people voluntarily choose more efficient vehicles.

New fuel efficiency guidelines:
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On October 2nd, 2012 06:03 am (UTC), izmirian commented:
From reading the first part of the report it looks like you are correct that the rules may incentivize a shift towards larger vehicles. Their explanation is, "in recognition of the utility requirements of full-size pick-up trucks and the unique challenges to improving fuel economy compared to other light-duty trucks and passenger cars, NHTSA intends to propose a lower annual rate of improvement for light-duty trucks in the early years of the program" which certainly may be politically motivated to some extent. Still, the fuel efficiency for all types of vehicles is going up so I see it as a glass half-full situation. Of course it could be better.
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