The Truth About NHTSA's Revised Corporate Average Fuel Economy Figures

Robert Farago
by Robert Farago
the truth about nhtsas revised corporate average fuel economy figures

On Friday, Senator Carl Levin condemned a draft Commerce Committee bill revising federal Corporate Average Fuel Economy (CAFE) standards. The bill would raise the required average to 28.5 mpg by 2015 and 35 mpg by 2020, with four percent annual increases thereafter. The Michigan Democrat threatened to filibuster the bill. In fact, Levin should shut the Hell up. If passed as is, the Commerce bill would create The Mother of All Loopholes.

Part of the proposed Commerce bill directs the National Highway Safety Traffic Administration (NHTSA) to change passenger car fleet averages to a system based on a given vehicle’s “footprint” (wheelbase times width divided by 144).

To understand the implications of this change, consider the impact of the same “reformed system” on light truck CAFE standards, which take effect this year (albeit on an opt-in basis until 2010).

Light truck footprint-based fuel economy standards are based on a sliding scale. Simply put, smaller vehicles must be significantly more frugal than big ones, and every light truck within that spectrum must meet a size-specific mpg target.

But there is no requirement to create a mix of vehicles whose combined fuel economy adheres to a federally mandated overall average. In other words, according to the new rules, the sliding scale IS the Corporate Average Fuel Economy standard, NOT a manufacturer's fleet-wide light truck average.

The change has freed light truck manufacturers from any obligation to build a “mixed fleet” of vehicles that meet an overall fuel economy average. I repeat: Ford, GM, Dodge, Toyota, etc. can build any size truck they like as long as it meets its size-specific fuel efficiency target.

If cars switch to this same system, they’ll be subject to a similar curve as their light truck counterparts: small cars will have to meet much higher fuel efficiency standards than mid and large-sized cars. And domestic manufacturers will be under no obligation to build a mix of vehicles that achieves an overall average. As long as any given passenger car meets the appropriate size-related standard, they’re good to go.

The United Auto Workers (UAW) appreciates the enormous implications of this rule change. The UAW’s legislative director told the House Commerce committee that his employer vehemently opposes changing passenger car CAFE requirements to a footprint calculation. lan Reuther said the move would lead The Big 2.5 to completely abandon the small car market to foreign manufacturers (eliminating union jobs in the process).

True dat. It’s an open secret that Detroit only makes econoboxes to meet CAFE standards. They’re a “loss leader” that allows them to sell large, large-profit vehicles. Without a federal obligation to build uncompetitive, unprofitable small cars, Detroit would cut bait and fish.

And if you thought that higher CAFE standards would lead to more people buying smaller cars, think again. In fact, basing standards on vehicle footprints could lead consumers in the opposite direction.

In a document outlining the impact of “reformed” standards on light trucks, the Department of Transportation noted “Downsizing of vehicles is discouraged under Reformed CAFE since as vehicles become smaller, the applicable fuel economy target becomes more stringent.”

If that doesn’t make the new bill on federal fuel economy standards all Detroit’s Christmases rolled into one, the new proposed CAFE legislation also includes a "get out jail free" card: NHTSA can lower fuel economy mandates if the agency determines they’re not “cost effective” or “feasible” in a given model year.

It’s a mostly forgotten fact that Congress has already charged NHTSA with setting CAFE standards. They’re supposed to do so at the “maximum feasible level” according to “economic practicability, technological feasibility, the effect of other standards on fuel economy and the need of [sic] the nation to conserve energy.”

Obviously, Congress has usurped NHTSA’s authority. Worse, the new proviso or “off ramp” turns NHTSA’s theoretical CAFE evaluations into an all-too-real politically-charged adjudication.

When an automaker or group of automakers ask the agency for a CAFE wavier based on poverty or technical challenges, how would NHTSA make its decision? Does Congress seriously expect NHTSA to examine an automaker’s books or R&D labs to determine whether to waive CAFE compliance?

But wait there’s more! Under the proposed legislation, Detroit automakers would be able to use CAFE credits to meet fuel economy mandates for five years (two more than currently). AND they’d be able to buy and sell credits amongst fellow manufacturers.

I’m having trouble getting my head ‘round all this. Unless the Senate strips off all these little goodies, Detroit’s bitching about a federal bill that will nearasdammit remove their unprofitable CAFE commitments.

Perhaps they’re getting the media to focus on illusory CAFE numbers so they won’t consider the fine print that renders them largely meaningless. Is Detroit really that devious? If they are, how did they get themselves into this mess in the first place?

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  • Engineer Engineer on May 07, 2007
    The Democrats want to *EXPAND* the poor class who are their primary voting block. A $5 per gallon tax would help create a permanent voting majority of poor people for them. (See Europe) $8 per gallon gas ($5 tax) has not created viable alternative energy in Europe…I wonder why…. Except that the average European uses about half as much oil as the average American. If Americans could conserve like that, imported oil would be small potatoes. Oil prices would also be much lower. If there were leadership in Washington, they would encourage Americans to conserve oil. But, oops, the lobbyists won't like that, so don't hold your breath...

  • Hondaboy55 Hondaboy55 on May 12, 2007

    For those who read, and there are less every day. Its no secret that when you look into many of the bills proposed by our leaders, the facts are, They [our leaders] are not on our side. Only in this case giving Detroit what they want means our leaders are not on their side either. As gas increases in price, and this is happening while crude except for a few short lived spikes is settling in around $64./bl. or less, individuals with shrinking dollar values will continue to drive themselves over to the more efficient brands and models. The dollar now worth somewhat less than 70 cents[vs. euro, now coming the preferred oil trading currency], a large part of that slide happening over the last 10 years accounts for a good part of the increase in the cost of crude. Remember crude is actually a commodity. Like Gold, buying Gold with depreciated dollars means you need more dollars for that brick. [Gold is also quite high, with a Dollar reference especially] As new refineries come online around the world, we will also be paying an additional penalty in purchasing finished product with our continuing depreciating dollars. I expect this trend to continue, and its not a good thing. Foolishly, Detroit never looks at the long term, but instead is always in trouble and always needs to reshuffle the deck so it can continue in its ways. The few changes required to the CAFE standards is to adjust the testing to better reflect actual driving, 70MPH on the way to work, and jack rabbit starts in city driving. Possibly two sets of numbers, one for the average driver, and one for those on the conservative side. And then to up the fleet requirements and include SUV's CUV's and small pickups as the passenger cars they are used as. Then raise the requirements. Then do not set unrealistic goals like an assumed 10% increase each year, but revisit the discussion after 5 years to see where technology is. And do away with E-85 it will cost us and the world much more in food costs than it will benefit the planet as a fuel. As gas passes $4.50/gal. [as it will in time] if Detroit is not FORCED to produce a more than half-assed small car [through tough CAFE] they will again be left out in the cold as not only car buyers drop their SUV's again, but include in that equation the very large possibility that those who now buy F-350's and F-450's switch from these 8mpg dogs over to the little Isuzu NPR's and other 4 cyl. Diesel cab over trucks. These things carry 2X or even 3X the weight of a 350 and do it for 2 to 3X the mpg. I know we have them in our landscaping fleets, and quit buying F-350's years ago. Unless Detroit is forced to do the "right thing" like the rest of corporate America they will be finished when gas comes to rest at $4.99/gal. Maybe 2 years from now.......... If they[Detroit] git their way with the new cafe thing then at $4.99/gal TTAC can begin the real Detroit death watch and it will take only a few months to complete. Even if our govment don't do the right thing [nothing new] the marketplace will when gas prices rise. later.....

  • Fahrvergnugen NA Miata goes topless as long as roads are dry and heater is running, windscreen in place.
  • 3SpeedAutomatic As a side note, have you looked at a Consumers Report lately? In the past, they would compare 3 or 4 station wagons, or compact SUVs, or sedans per edition. Now, auto reporting is reduced to a report on one single vehicle in the entire edition. I guess CR realized that cars are not as important as they once were.
  • Fred Private equity is only concerned with making money. Not in content. The only way to deal with it, is to choose your sites wisely. Even that doesn't work out. Just look at AM/FM radio for a failing business model that is dominated by a few large corporations.
  • 3SpeedAutomatic Lots of dynamics here:[list][*]people are creatures of habit, they will stick with one or two web sites, one or two magazines, etc; and will only look at something different if recommended by others[/*][*]Generation Y & Z is not "car crazy" like Baby Boomers. We saw a car as freedom and still do. Today, most youth text or face call, and are focused on their cell phone. Some don't even leave the house with virtual learning[/*][*]New car/truck introductions are passé; COVID knocked a hole in car shows; spectacular vehicle introductions are history.[/*][*]I was in the market for a replacement vehicle, but got scared off by the current used and new prices. I'll wait another 12 to 18 months. By that time, the car I was interested in will be obsolete or no longer available. Therefore, no reason to research till the market calms down. [/*][*]the number of auto related web sites has ballooned in the last 10 to 15 years. However, there are a diminishing number of taps on their servers as the Baby Boomers and Gen X fall off the radar scope. [/*][/list]Based on the above, the whole auto publishing industry (magazine, web sites, catalogs, brochures, etc) is taking a hit. The loss of editors and writers is apparent in all of publishing. This is structural, no way around it.
  • Dukeisduke I still think the name Bzzzzzzzzzzt! would have been better.
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