As most automakers are still scrambling to meet the 2016 Corporate Average Fuel Economy (CAFE) target of 35 mpg, efforts are already underway to set an even higher standard for 2025. The proposed 62 mpg CAFE standard, however, would have adverse effects on the price of vehicles and auto industry jobs, according to a recent study.
The Obama administration has set a preliminary CAFE range of 47 mpg to 62 mpg from 2017 to 2025. The nonprofit Center for Automotive Research studied the proposed 62 mpg CAFE target and concluded that car companies would have to add costly technology to its vehicles in order to reach the high standard. At 62 mpg, the Center estimates a $9,790 increase in the price of cars with only $8,339 saved on fuel. Instead, the Center has suggested CAFE targets of 47 mpg, 51 mpg and 56 mpg, stating that those figures would result in fuel savings that would “exceed the increased cost of a new vehicle.” For example, it estimates that a 56 mpg CAFE would result in a $6,714 rise in the average cost of vehicles with $7,479 saved on gas. The study is based on the first five years of owning a new 2025 model year vehicle.
The administration proposed the 62 mpg target after it received pressure from environmental groups, pushing for higher standards. A recent poll conducted by Consumer Federation of America also found that 62 percent of Americans support a standard of 60 mpg, though it was never stated how much they would be willing to pay for the technology needed to reach that target.
Additionally, the Center studied the impact the CAFE targets would place on the automotive workforce. According to the study, the 62 mpg target would result in a loss of an estimated 166,000 jobs. On the flip side, the study claims that the 47 mpg target would create about 26,000 jobs in the auto industry.
The administration is scheduled to complete a CAFE proposal this September and plans to make a final decision by July 2012.
The complete study can be found on the Center for Automotive Research’s website.
Source: Automotive News (subscription required), Center for Automotive Research