Today, EPA published the latest in a series of annual reports looking at the fuel economy and emissions of passenger cars and trucks. The news is both good and completely unsurprising: vehicles are more efficient than ever before, and manufacturers continue to comply with the strong standards driving that improvement.
Incredibly, the fact that consumers continue save bucketloads of cash ($78 billion and counting) as a result of these standards is not slowing down this administration from rolling them back. Manufacturers have plenty of technology left on the shelf…and if the administration gets its way, that’s where it’ll stay.
MPG at highest ever (again)
I’ve read countless articles about the death of sedans and the rise of crossovers, but no matter what type of vehicle it may be that customers are buying today, they’re getting choices that are (or nearly are) more efficient than ever before. Improved efficiency in each class of vehicle over the past few years has continued to push the fuel economy of all new vehicles sold to a new record high of 24.9 mpg for the 2017 model year, up 0.2 mpg from the previous year, even as cars give way to more pick-ups and SUVs.
The only major improvements in fuel economy and emissions have occurred under strong standards—CAFE standards were held flat for nearly 20 years before the first improved standards for light trucks went into effect in 2005, to be followed with standards for all passenger vehicles beginning in 2011 (CAFE) and 2012 (global warming emissions). And now EPA wants to put the freeze on that progress once again.
Manufacturers are complying with strong standards
This record level of fuel economy is no accident—driving that improvement for consumers are strong standards set in 2010 and affirmed in 2016. And, despite their statements to the contrary, we continue to see automakers complying with these emissions standards.
Manufacturers are reducing emissions in response to strong standards and have accrued a massive bank of credits (249 million metric tons!) that will help them meet even stronger standards in the future.
Automakers will be entering the 2018 model year with more than 249 million metric tons (MMT) of CO2 credits, thanks to doing better than required in previous years. While they’ve had to use some of these credits again this year, the industry used less than last year (18 MMT worth vs 30 MMT). That’s because automakers improved their fleets in 2017 at a rate greater than required, which helps illustrate the year-to-year variance in model updates and the way in which banked credits are planned as apart of an overall compliance strategy.
To put that 249 MMT of banked credits in context, manufacturers could actually do absolutely nothing to improve the efficiency of their vehicles until 2020 and still continue to comply with the standards.
Plenty of technology to choose from for future improvements
In order to achieve record high levels of fuel economy, manufacturers have been deploying a wide array of different technologies, as highlighted in the latest report (see figure). The figure below shows the percent of a manufacturer’s vehicles that employ a particular type of efficiency technology–note in particular the wide variance and numerous values well short of the majority of a manufacturer’s sales.
The latest data from EPA on some of the most common efficiency technologies shows that manufacturers have only just begun to deploy some of the most obvious ways to improve the efficiency of conventional vehicles, often focusing on just one or two technologies. That leaves plenty of room for further improvement, to meet even stronger standards.
There are two clear facts that jump out from this figure: 1) most manufacturers have invested in just a handful of technologies to-date to improve their fleet, and 2) that means a lot of unfulfilled potential yet to tap. For example, while Hyundai has focused on deploying direct injection across its fleet, it has barely invested in increasing the efficiency of its transmissions or even much deployment of smaller, turbocharged engines. Increasing investment in these technologies would provide ample room for further future improvement.
While most companies have at least begun to invest in improving their fleet, one company has essentially rested on its laurels: Toyota. As we pointed out in our 2018 Automaker Rankings, Toyota stopped investing in its trucks and SUVs for a number of years, largely relying on its Prius family of hybrids to comply with efficiency requirements—and that’s borne out in the data provided by EPA. As a result, Toyota is the only major manufacturer to actually see its fuel economy get worse over the past 5 years.
The data shows we can, and should, keep moving forward
This latest EPA report shows clearly: 1) the standards are driving improvements as intended, saving consumers money and reducing emissions; and 2) there is ample technology available to continue to improve, with manufacturers well positioned to meet stronger standards primarily by continuing to invest in reducing emissions from conventional vehicles.
Unfortunately, Andrew Wheeler’s EPA would rather ignore its own ample evidence for the benefits of setting strong standards and the ability for manufacturers to meet the challenge in order to roll back this successful program for the administration’s own ideological aims. After calling off negotiations with California, with scant evidence these negotiations truly started in the first place, it’s clear that this administration is aiming to stop this successful program no matter what, essentially halting progress at 2020 levels.
Rolling back the standards will throw the whole industry in limbo, stifling investment in many of the most obvious off-the-shelf opportunities and putting the brakes on investment in the next generation of technology. The people who will pay the most for this administration’s failure to follow the data are those who can least afford it: American workers and lower- and middle-class families who spend a disproportionate share of their income at the pump.
EPA’s own analysis shows that a rollback is the wrong way to go—but there’s little to suggest that this administration is interested in anything but driving this successful program off a cliff.