WASHINGTON — The Trump administration has finalized its downward adjustment to Corporate Average Fuel Economy (CAFE) standards, aiming for more modest improvements to fleet fuel economy.
On March 31, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) released the final Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, which requires a 1.5% improvement in CAFE and emissions standards each year for model years 2021 through 2026. This compares to standards set by the NHTSA and EPA under President Obama in 2012 that would have mandated a 5% annual improvement.
The projected industry average fuel economy for model-year 2021 to 2026 vehicles would be 40.4 miles per gallon vs. the 46.7 mpg requirement for model-year 2025 under the 2012 standards.
The Trump administration has argued that the Obama-era regulations were “costly” and “increasingly unachievable” for automakers. It said most automakers were not meeting the 2012 standard through selling more highly efficient vehicles alone and instead were relying on using credits to be compliant. After President Trump was elected in 2016, automakers lobbied the president to revisit the Obama-era standards, pointing to difficulties meeting the original CAFE guidelines. Consumers were increasingly buying less fuel-efficient SUVs and trucks because gasoline prices were trending lower than when the Obama-era requirements were finalized.
According to the EPA and NHTSA, the SAFE Vehicles Rule will reduce the average price of a new vehicle by about $1,000 because it will not require automakers to include expensive fuel-economy improvement technology to meet the 2012 standards. This lower price, they argue, will encourage consumers to buy newer vehicles with better safety features and emissions profiles earlier than they might have; however, an analysis by Consumer Reports found that the more modest fuel economy increases under the SAFE Vehicles Rule would increase fuel costs for consumers by an average of $3,200 per new vehicle.
California Moves Forward
Meanwhile, another automaker is in talks with California to join a voluntary pact to cut emissions past the federal guidelines. This comes as the state remains locked in a legal battle with the federal government over its right to set tougher emissions standards.
The Obama administration granted California a waiver of federal Clean Air Act standards so that it could set its own tougher standards to fight smog. More than a dozen states and the District of Columbia follow California’s standards.
In September 2019, the Trump administration officially revoked California’s waiver and pushed for all 50 states to follow the same federal standard. That same month, California and 22 other states sued the NHTSA and the EPA over the move. Eleven automakers—including General Motors, Toyota, Hyundai Motors, Mazda, Nissan, Kia and Subaru—have sided with the Trump administration on its push for a single, federal fuel economy standard.
California has since forged a voluntary framework with four automakers—Ford, Honda, BMW of North America and Volkswagen Group of America—in which they agree to pursue annual reductions in greenhouse gas emissions. These reductions would be more modest than the original Obama-era standards, but higher than the SAFE Vehicle target.
Now, California is in talks with Volvo to join its voluntary emissions agreement, Reuters reported. The Swedish auto brand, which is owned by Zhejiang Geely Holding Group, said in a statement that making a deal with California “will serve as a national path forward.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.