CFA Tells EPA: Americans Care About Fuel Economy and Support Stronger Fuel Economy Standards

Car Companies Are Meeting the CAFE Requirements and Saving Consumers Money – This is Not the Time to Roll Back the Standards

Washington, D.C. – In a testimony today before the U.S. EPA, the Consumer Federation of America’s Jack Gillis reported that increasing federal fuel economy standards for cars and light duty trucks, to 42 MPG by 2025, is supported by 79 percent of Americans (68 percent of Republicans), and opposed by only 18 percent, according to a recent national survey[1] commissioned CFA.

“One reason for the widespread support of higher standards is that a large majority (79%) of those intending to purchase a motor vehicle, think that the vehicle’s fuel economy is important,” said Gillis.  In part, this concern reflects the genuine belief that gas prices will rise in the future, as evidenced by the unprecedented flooding in Houston.  When asked to predict the price of gasoline in five years, the average price given by all respondents was $3.90.  Today’s average price is $2.64, up 37 cents in just the last month.

“Our analysis clearly indicates that the car companies are fully capable of meeting the CAFE standards and they are able to do so with great savings for consumers,” said Gillis.   “Rolling back the standards at this point would not only hurt America’s already financially beleaguered consumers, but they would hamper vehicle sales and put U.S. car companies at a distinct competitive disadvantage to the Asian car companies who will meet the standards,” said Gillis.

Fuel Efficiency Doesn’t Cost More—It Saves Money and Sells Vehicles

Congress and the Administration are receiving pressure from the car companies to roll back the nation’s fuel economy standards which they, the unions, consumer groups and environmental organizations agreed to in 2012.  They say it costs too much to comply and increased costs won’t be accepted by consumers and sales will drop. “Nothing could be further from the truth,” said Gillis.

When CFA looked at actual fuel efficiency and increases in MPGs among newly introduced vehicles, improvements in MPGs more than pay for themselves. Among the “all-new” 2017 vehicles[2] – the one’s which manufacturers have had a chance to make fuel economy improvements we found:

  • 27% (21) of the “all-new” vehicles introduced in 2017 actually cost less than their 2011 version and got 1-10 MPG better fuel economy.
  • When calculating 5 years of fuel costs (using lower than current gas prices), nearly half of these 2017 vehicles cost less to buy and fuel than their 2011 counterparts.
  • 58 of the 79 vehicles increased in price, however;
    • 15% (12 of 79) had fuel savings that offset the entire price increase;
    • 52% (41 of 79) had fuel savings that offset the increased cost of fuel economy technology;
    • 6% (5 of 79) were more expensive in 2017 but their fuel economy stayed the same or decreased from 2011.

Benefits Far Outweigh the Costs

Looking at the cost/benefit average for these 79 all-new models—the added cost of fuel economy averaged $320 per vehicle but will save the buyer an average of $946 over the next 5 years, putting $626 back into consumer pocketbooks.

Consumers are Buying the More Fuel Efficient Vehicles

Comparing the sales figures for 2016 SUVs and light duty trucks with the 2011 models, those that increased the fuel efficiency by over 10% sold nearly 20% more vehicles than those with a less than 10% increase in fuel efficiency.

Car Companies on Track to Comply

Auto manufacturers are making good progress in complying with the law:

  • 70 percent of the “all-new” 2017 vehicles had a CAFE-compliant trim, compared to 41 percent of the “all-new” 2015 vehicles.
  • A record breaking 6 vehicles are compliant all the way to MY 2025.
  • In looking at all of the 2017 models, “gas guzzlers” getting below 14 MPG are a miniscule 0.4% in 2017, down from 8.5% in 2011.
  • A record 78% of the “all-new” light duty trucks had a CAFE compliant trim for 2017. Percentage-wise, trucks beat cars for CAFE compliance in 2017.
  • 15 of the 17 manufacturers improved their CAFE compliance rate from 2015 to 2017.

The standards are readily achievable for a variety of reasons:

  • The cost of current compliance is below the NHTSA/EPA projections and far below inflated industry estimates.
  • The standards are well within the technological capabilities of the industry, as determined by NHTSA, EPA, but also MIT and the National Academy of Sciences.
  • The rate of improvement is consistent with historical periods where standards were implemented.
  • The standards are consistent with (or slightly below) other advanced industrial nations.
  • And most importantly, fuel economy sells.

Fuel Economy Standards Have Saved Trillions

“Fuel economy standards are one of the biggest consumer pocketbook issues the Trump Administration faces,” said Dr. Mark Cooper, Senior Fellow for CFA.

Gasoline and diesel fuel oil, the two sources of energy most directly affected by the standards, are a major consumer expense, representing over 3 percent of total household expenditures. Typically, it is about the 6th largest household expense. Fuel economy standards between 2008-2016 have resulted in extremely large consumer savings and benefits, including:

  • Consumer pocketbook savings of close to $500 billion.
  • Macroeconomic benefits of over $300 billion, with light duty vehicles accounting for seven-eighths of those gains.
  • Environmental, public health and other benefits worth about $120 billion.

“With costs at just under $120 billion, and the overall benefit of about $900 billion, the benefits of the regulations are over eight times their cost,” said Cooper.

The Consumer Federation of America is a nonprofit association of more than 250 consumer groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.

[1] The survey was conducted for CFA by ORC International, which interviewed a representative sample of 1,008 American adults by landline or phone on July 13-16.  The margin of error for the survey is plus or minus three percentage points.

[2] Only about 10% of each model year represents these “all-new” vehicles.