Whew, it’s been quite a week for declarations, announcements and analyses on future fuel economy standards in both the U.S. and timely, too, as U.S. EPA’s technical assessment report on fuel economy is due any time now. To briefly recap the major elements of the program, these standards passenger cars, light-duty trucks, and medium-duty passenger vehicles, in MYs 2017-2025.
The final standards as currently set are projected to result in an average industry fleetwide level of 163 grams/mile of CO2 in model year 2025, which is equivalent to 54.5 miles per gallon (mpg). A summary of the standards follows below:
Earlier this week the Alliance released its findings and recommendations on the future of CAFE, which included among others:
The Alliance recommended that the midterm review should, among other things:
The Alliance also cited the impact of California zero emission vehicle (ZEV) requirements, adopted by nine other states, that by 2025 a projected 15.4% or more of new-vehicle sales be zero-emissions models, powered by batteries or fuel cells.
The figure cited by the Alliance above aligns with an analysis released this week by the World Energy Council, which stated that EVs will need to increase their combined market share to 16% by 2020 to achieve the aggressive fuel efficiency standards set by regulators in the U.S., EU and China.
Noted the report, “While EVs currently represent less than 1% combined market share across the world’s largest markets for new passenger cars, they should be considered central to any policy and technology portfolio designed to lower transport emissions.” The push for EVs continues.
Ceres, a nonprofit that works with business on improving sustainability, found that even with fluctuating gasoline prices, The Detroit Three U.S. automakers (Ford, GM and the Chrysler division of FCA) will remain profitable under the current planned corporate average fuel economy (CAFE) standards.
Five fuel price scenarios were modeled to project what would happen to automakers’ profits and suppliers’ orders if current fuel-efficiency targets requiring real-world fleet averages of 37 to 39 miles per gallon by 2025 were to stay in place, and what would happen if the government were to weaken the standards during the current statutory midterm review of the policy. The outcome of these analyses are summarized in the following chart:
No matter the scenario, the auto companies would be profitable if CAFE remains as it is, but if they were relaxed the bottom line would be negatively impacted because they would be less competitive against other manufacturers. The current standards could also insulate the three automakers against gas-price spikes.
Even the “Three Amigos” weighed in on fuel efficiency this week, with Presidents Obama and Nieto and Prime Minister Trudeau agreeing to align fuel efficiency and/or GHG standards out to 2025 and 2027, respectively. This is no surprise as the Mexican and Canadian governments had already announced their intention to follow the U.S.’ lead.