Corporate Average Fuel Economy – An analysis

Corporate Average Fuel Economy LogoCorporate Average Fuel Economy (CAFE) target is 54.5 mpg for 2025

54 miles per gallon (mpg) sounds pretty good, doesn’t it? That is the projected target for Corporate Average Fuel Economy (CAFE) standards for 2025. As we see it, there are a couple of issues with this target:

  • Automakers have shown little interest in improving fuel economy unless motivated by market forces
  • The new standard may reduce availability of certain fuel efficient vehicle segments

From 1955 to 1978 actual CAFE (not the standard) rose from 16.1 miles per gallon to 19.9 miles per gallon. In other words, over 23 years, corporate average fuel economy improved 23.6 percent, or about 1 percent per year. But when you look at the numbers, you will see that fuel economy actually dropped from 16.1 miles per gallon in 1955 to 13.0 miles per gallon in 1973 before the Arab oil embargo kicked in and made the industry change their vehicles. So really, from 1973 to 1978 the CAFE improved from 13.0 mpg to 19.9 mpg, a much more impressive gain of 53 percent in five years. Amazing what market forces do to drive change.

From 1978 through 2004 we had a pretty significant gain – from 19.9 mpg to 29.1 mpg. Here we had a gain of over 46 percent. But when not driven by an oil crisis, it took 26 years to achieve a smaller gain than the industry proved was possible to accomplish in just five years time when pushed by need, rather than legislation. An analysis of these years shows that the most significant gains occurred from 1978 through 1988 as real CAFE moved from 19.9 mpg to 28.8 mpg. In other words, real CAFE improved only 0.3 miles per gallon from 1988 through 2004. Clearly, the auto industry has things other than fuel economy on their agenda.

Our second bullet point above refers to the CAFE standard model that has been developed by the National Highway Traffic Safety Administration (NHTSA). Based on new footprint standards as of 2012 (see figures 1 and 2 in the previous link), larger footprint vehicles (ie: SUVs, large pickup trucks, and large sedans) have much more relaxed fuel economy standards. How relaxed? In 2016 a small footprint passenger car will have a CAFE standard of over 40 mpg. A large footprint passenger car will have a CAFE standard of just over 30 mpg – or roughly 25 percent less. 30 mpg is only slightly more than many vehicles were achieving in 2004, and significantly less than many vehicles are meeting today. Footprint is simply measured as vehicle wheelbase (how far the front wheels are from the back wheels) by vehicle track (how far the driver side wheels are from the passenger side wheels). So rather than making more small, extremely fuel efficient vehicles, manufacturers could make larger, less fuel efficient vehicles and still meet the new standards.

Certainly, consumers will ultimately determine the vehicles built with the power of their wallets. But it is painfully obvious that in almost 50 years time, legislation has had little impact on CAFE. The driver of fuel efficient vehicles – both large and small – will be the continued (and guaranteed) rise in the cost of fuel as finite supplies are used and global vehicle demand increases.

This entry was posted in Industry News, Is the Nissan LEAF right for me?. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.