U.S. automakers might get a reprieve in the push to boost fuel economy, thanks to the Trump administration’s call on Wednesday for a mid-term review of existing standards—but they also risk falling behind in an efficiency race already underway worldwide.
Speaking in front of auto industry representatives in Michigan, Donald Trump said, “We’re going to work on the CAFE [Corporate Average Fuel Economy] standards so you can make cars in America again.”
The fuel economy standards were a key part of predecessor Barack Obama’s legacy on climate change, along with rules to cut carbon emissions from power plants. In January, the outgoing administration drew protests from the industry when it finalized 2025 targets months ahead of schedule, a week before Trump’s inauguration.
But on Wednesday Trump said he would reinstate a midterm review of those efficiency standards. “And we are going to ensure that any regulations we have protect and defend your factories,” he said.
The transportation sector accounts for more than one-quarter of the country’s greenhouse gas emissions, most of those coming from cars and trucks. The Obama administration, taking up an effort begun under George W. Bush, revived Corporate Average Fuel Economy (CAFE) standards that had been stagnant since the mid-1980s, setting new targets in 2009. Those rules have already driven a more than 10 percent increase in average fuel economy performance between 2011 and 2015, with automakers exceeding the standards year on year.
But as gasoline prices hit a 12-year-low, U.S. consumers are gravitating toward larger vehicles, a reality that forced the Environmental Protection Agency to revise its 2025 model-year targets down from an average of 54.5 miles per gallon across the fleet to 51.4, reflecting a bigger share of trucks in the mix. The current average for the whole American fleet is 32—which reflects a market that stretches from the Hyundai Ioniq electric car (136 miles per gallon) to the Toyota Prius (41 mpg) to the Jeep Wrangler (18 mpg).
In a recent letter to new EPA chief Scott Pruitt, the Alliance of Automobile Manufacturers asked for a reversal of the previous administration’s action, citing costs and the predominance of conventional vehicles on the road.
“Even under EPA’s optimistic estimates, the automotive industry will have to spend a staggering $200 billion between 2012 and 2025 to comply” with the standard, the group said, noting that only 3.5 percent of today’s new vehicles—hybrid, electric, and fuel-cell models—could meet a 54.5 mpg target.
But efficiency advocates point out that a low market share of electric cars is already factored into the rules, and that most of the gains could come from technologies that incrementally make conventional cars and trucks better, saving money in the long run.
“The standards have been structured so that they are pegged to the size of the vehicle,” says Therese Langer, transportation program director with the American Council for an Energy-Efficient Economy, which supports the regulations. Any suggestion that the goals are unrealistic because trucks are gaining popularity “is a complete red herring,” she says, because cars and light trucks are subject to separate targets—about 55 mpg for the former and 39 for the latter by 2025.
Standards are already set through model year 2021—freezing them at that level would result in U.S. gasoline consumption being as much as 230,000 barrels (9.6 million gallons) per day higher than it would have been under the newly finalized 2025 targets, according to the research firm CV Energy.
In announcing the shift, Trump added, “We’re setting up a task force to identify and remove any regulations that undermine auto production.”
He said, “We’re here to devote ourselves to a new future of American automobile leadership. We want to be the car capital of the world again, and we will be.”
The Race for Better Fuel Economy
Smaller engines, advanced, high-speed transmissions, and lighter materials are among the ways automakers are already making cars more efficient.
“What this really comes down to is the pace of technology innovation. It’s been extraordinary,” says John German, senior fellow with the International Council on Clean Transportation, a nonprofit research group. “Technology is increasing at such a pace that the 2025 vehicles are going to blow away the better vehicles of 2014.”
German, who previously worked for both Chrysler and Honda, says manufacturers are “extremely risk averse. They have to be.” Faulty design changes can be costly, or worse, dangerous.
But, he says, for every fuel-saving technology that doesn’t work as anticipated—for example, faster dual-clutch transmissions that have caused problems for U.S. manufacturers—there are four or five more improvements that do work. Automakers can choose from a host of options that improve efficiency, such as better tires, engine lubricants, and aerodynamic designs all aimed at reducing drag.
Much of the innovation has focused on lighter materials and more efficient power trains. German says customers love increasingly common features such as turbochargers, which can boost the power of a smaller engine by squeezing in more air and fuel, and nine-speed transmissions, which also help extract better performance from fewer gallons of gas.
If automakers slow down that progress, German says, it will cost consumers money in the long run by reducing savings at the pump, and it could hurt U.S. competitiveness. U.S. cars already lag behind those of Japan, the European Union, and South Korea in terms of average carbon emissions and fuel consumption. China, too, is pursuing more aggressive fuel economy levels.
“The other countries are not going to roll back. It’s only going to be the U.S.,” German says.
The Auto Alliance referred a request for comment to its existing letter to the EPA. In addition to seeking more time to meet the standard, the industry is looking for more flexibility, says Jay Baron, president and CEO of the Ann Arbor, Michigan-based Center for Automotive Research.
The center works with both manufacturers and suppliers that stand to gain from stricter fuel economy. Baron says many suppliers want formal credit within the standards for even small measures such as tinted windows and paint colors that reflect heat, which could reduce fuel demand for air-conditioning.
He also suggested that some technologies, while considered improvements, haven’t yet delivered big fuel savings. Even though materials are getting lighter, with more use of aluminum and plastic composites, for example, cars generally are not. That’s because new cars have more “content,” Baron says: airbags, stereo speakers, seat heaters, and other safety or performance amenities that consumers now expect.
One Market, Many Minders
Even with a loosening of federal standards, the auto industry must contend with another power: California. It is the only state allowed to develop its own emissions rules under the Clean Air Act, and several states including Massachusetts, New York, and Washington have adopted its standards as their own. In addition, California has its own “zero energy vehicle” (ZEV) mandate setting official goals for getting clean cars on the road, which has also been adopted by several states.
California’s rules “without question put the federal government on the path to adopting vehicle greenhouse gas emission standards in the first place,” Langer says, and now federal agencies must take its rules into account. “California continues to have leverage.”
The fact that California’s Air Resources Board, the EPA, and the National Highway Traffic Safety Administration all have a hand in determining fuel economy targets is part of why the auto industry objects to EPA’s January decision. Automakers wanted EPA to rescind its confirmation of the 2025 targets and work jointly with NHTSA on its planned evaluation.
“I would like to see one national program,” Baron says. “Regulations are important and helpful. The questions is how aggressive should they be, and can they be harmonized so they’re appropriate.”
If federal standards are relaxed, yet California’s waiver remains in place, German points out, “then the manufacturers are back where they say they don’t want to be—with two different standards.”
In recent years, to prepare for the updated rules, U.S. automakers have made investments that are finally bringing cars in line with the more stringent fuel economy seen in other countries.
Disrupting that momentum could “wreak havoc in the market” by hurting companies that invested a lot in fuel economy, all while undermining competitiveness globally, Langer says: “The behavior of the auto industry could come back to bite them.”
On Twitter: Follow Christina Nunez.