It’s been one week since the administration caved to auto industry lobbyists and reopened the mid-term review of the EPA’s successful vehicle efficiency standards. In that time, there’s been a lot of hot air around what this means for the industry, so I thought I’d look into the factual basis for some of the more common assertions made around the announcement.
Scott Pruitt, Administrator of the EPA, called this action “good news for consumers”
FALSE. To date, the vehicle efficiency standards have saved Americans more than $37 billion at the gas pump. If the administration follows through with rolling back the standards under the mid-term review, the average new car buyer stands to lose about $1600. Limiting consumer choice to less efficient vehicles is never good news, not for consumers or the country as a whole.
Donald Trump, President of the United States, vowed to “eliminate the industry-killing regulations”
FALSE. There’s nothing “industry-killing” about these standards. The auto industry has had back-to-back record-setting sales years, while at the same time exceeding the level of improvement required under EPA’s standards. More than 300,000 automotive manufacturing jobs have been created since 2009, jobs like those General Motors highlighted last Wednesday building their new 10-speed transmission, a technology developed to meet the very same standards the administration is working now to undo. Perhaps the President listened a bit too long to the erroneous jobs claims pitched by Mark Fields (Ford), but even a conservative analysis paid for by the auto industry shows that these regulations are good for jobs, netting about 300,000 new jobs for the economy if we move forward with the regulations as-is.
Scott Pruitt, Administrator of the EPA claimed that “CAFE standards should not be costly for automakers or American people.”
TRUE. And they aren’t, as a rather lengthy and rigorous review already determined. These standards are poised to save consumers money, increase jobs, and reduce oil usage without posing undue burden on industry. Automakers may be trying to supplant facts with politics, but it is the American people who stand to lose the most with last week’s action.
Donald Trump, President of the United States, said he didn’t want “an extra thimbleful of fuel” to stop manufacturers making great cars.
TWO REALLY BIG THUMBS DOWN. Firstly, the regulations the administration is threatening to rollback are set to increase the fuel economy of new vehicles from an average of about 25 miles per gallon today to about 36 or 37 miles per gallon—that means well over 2000 fewer gallons of gas over a typical vehicle lifetime, hardly a thimbleful. Secondly, these rules have been pushing manufacturers to innovate, leading to a greater use of lightweight materials like aluminum, transmissions with a greater spread in gear ratios, smaller turbocharged engines, stop-start systems, and many other fuel-saving technologies which can be found throughout Motor Trend’s various Car/Truck/SUV-of-the-Year winners and other such “great” vehicles. [Also great but being driven by state policy goals—electric vehicles, which have captured three of the last seven Car-of-the-Year titles.]
Rebecca Lindland, analyst from Kelley Blue Book: “Consumers want the most fuel efficient version of a vehicle they already want to buy.”
TRUE. Thankfully, that’s exactly what these rules are designed to protect, that consumers can have more efficient vehicle choices in all types of vehicles year over year.
Philly Murtha, J.D. Power: “With current lower gasoline prices and increased consumer demand for SUVs and pickup trucks, automakers are in a difficult position.”
FALSE. Selling more SUVs and trucks actually LOWERS the fuel economy target a manufacturer needs to hit—if anything, that means selling more trucks and SUVs makes it easier for a manufacturer to meet these rules. Ford’s most efficient F-150, which represents about 1 in 5 sold, well exceeds today’s standards—in fact, it could meet standards out to 2021-2024, depending on the specific configuration. That means that Ford could sell nothing but that F-150 and still meet the standards for the next 5 years with no additional improvements.
Brent Snavely (Detroit Free Press) and Chris Woodyard (USA Today): “If the review eventually results in the standards being lowered, automakers potentially wouldn’t have to make as many cars with advanced carbon emission-cutting technology like hybrids, electrics and hydrogen fuel cells in order to hit the minimums.”
PARTIALLY TRUE. On the one hand, lower targets will certainly mean less deployment of all fuel-efficiency technologies, so that is accurate and terrible news for all. On the other hand, as we’ve noted repeatedly, these standards do not require the deployment of electric vehicles or much in the way of hybridization, so that non sequitur is a completely incorrect mischaracterization of the standards. For example, automakers’ own data shows that they can meet the standards with improvements to conventional vehicles.
Donald Trump, President of the United States: “I brought American auto companies to the White House. Mary Barra is here. Mark Fields is here. Sergio is here, and others. And none of them ever got to see the Oval Office before, because nobody took them into the Oval Office—our Presidents.”
¯\_(ツ)_/¯. While it may be technically correct that neither Mary Barra nor Mark Fields have, in their short tenures as CEO, met with a sitting president at the White House, auto companies have not had any difficulty getting an audience with the past few presidents. In fact, Sergio Marchionne probably knows this best of all, having been in extensive meetings with the Obama White House ever since his tenure as CEO began, first with the Chrysler-Fiat merger and bailout and then pursuant to the fuel economy standards to which he signed on. Also:
Bette Grande, Research Fellow at the Heartland Institute: “The review and subsequent pullback from EPA’s CAFE standards…is a win for oil producers and mineral owners, because when consumers are free to choose the vehicles of their choice, domestic oil demand will increase.”
TRUE. Bette is right—oil demand will increase, increasing emissions, decreasing national security, and raising prices for everyone. Yay?