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54.5 MPG by 2025 - Positive or Negative For Car Sales?

New Fuel Economy StandardsWhiteHouse.gov Infographic

By now most people are aware that the EPA has passed new regulations regarding minimum fuel efficiency standards that will take effect in 2025. But not too many people are completely aware of what this will mean to them and to the American automotive industry.

 

The New EPA Regulations in a Nutshell

The EPA is the government agency charged with monitoring the fuel efficiency and emissions of all cars made and/or sold in the United States. They have promulgated numerous regulations in the past decades in regard to both emissions and fuel efficiency. Until now, most fuel efficiency regulations have dealt with how vehicle manufacturers are to perform fuel efficiency tests and how they are to announce the results of these tests.

The new regulations basically state that by 2025 all vehicles sold in the United States for consumer or corporate fleet vehicle use must be able to achieve an average of 54.5 miles per gallon. This action was taken based upon a Presidential Memorandum issued in 2010. Since they’re a bit wordy, I’m going to break them down a little. The ruling is officially called the 2017 and Later Model Year Light Duty Vehicle GHG Emissions and CAFE Standards.

The ruling takes effect in two stages: model years 2012-2016 come first, and this portion states that by model year 2016, vehicles sold in the US must meet an average fuel economy of 35.5 MPG.  The next jump states that by 2025, the average jumps to the aforementioned 54.5 MPG. 

There are also greenhouse gas standards that must be met. By 2016, affected vehicles must meet a combined average emissions level of 250 grams/mile of carbon dioxide. There are also credits that can be made available to vehicle manufacturers for air conditioning systems improvements that further reduce GHG emissions.  By 2025, CO2 emissions will be further reduced (at approximately 5% per year) to an average of 158 grams/mile.

 

What This Means for Consumers

This is similar to some of the other new car government regulations in the past, such as seatbelts and safety glass. One side of the argument is stating that these regulations will make it impossible for Americans to be able to afford to buy new cars once the regulations are fully adopted. But that was what was also said about seatbelts and safety glass.

However, a look at a recent survey from the Kelley Blue Book shows that most Americans are concerned with high gas prices and fuel economy and are moving away from less fuel efficient vehicles. These survey results have been interpreted to mean that Americans will embrace higher fuel economy standards, even if they have to pay a little more initially. Sales numbers from dealerships and manufacturers support this, with SUV sales down significantly since model year 2007.

According to the report cited above, the writers of the report/ruling, the EPA and the National Highway Traffic Safety Administration, the average American driver will save between $5,700 and $7,400 on gas over the expected ten year life of a new vehicle meeting the fuel economy standard. The National Automobile Dealers Association has stated that the new requirements would add approximately $3,000 to the cost of a new car over the 2011 model year cost.

Realizing that most Americans don’t keep their cars for the full ten year expected lifespan, it can more reasonably be expected that the average consumer will break even on the bargain with a projected 3.3 year average ownership.

 

How Some Foresee the Requirements Being Met

There are a number of different ways that are being discussed for how the new fuel efficiency standards can be met. One of the easiest ways is to reduce the weight of the vehicle. Obviously, the lighter the vehicle, the less power, and thus fuel, is required to accelerate the vehicle to speed. Most industry analysts agree that weight savings will bring the largest gains to fuel economy.

Improvements to a vehicle’s aerodynamics will also be used to keep fuel consumption down. A vehicle with a lower coefficient of drag also requires less fuel to accelerate to speed, but also requires less fuel to maintain that speed.

Of course, more improvements in the engine bay will also be required. Most likely Ford will make improvements to its Eco-Boost system. Chrysler and GM will also come out with major new systems and technologies to address this need.

Many universities and research facilities have produced technologies for research vehicles that delivered fuel economy numbers of as much as 150MPG in the past. We may see some of this technology make it into new cars by model year 2025.