In order to grasp vehicle greenhouse gas and fuel economy rules, the first thing to understand is the so-called “attribute-based system.” In this second part of our “Anatomy of a Rule” mini-series, we’re going to take a moment to demystify it.
In 2007, when fuel economy standards were revamped by Congress (and vehicle greenhouse gas standards were first implemented), a key design change was made. Instead of operating on a simple averaging scheme where all cars sold by a manufacturer had to meet one average and all trucks had to meet another, an attribute-based system was developed that allowed companies focused on larger vehicles to be held to weaker standards than companies focused on smaller vehicles. The “attribute” in question is the vehicle’s footprint — the wheelbase multiplied by the average track width or, effectively, the area between the vehicle’s four tires.
Under this attribute-based system, each vehicle is assigned a “target” mpg (or gram-per-mile level in the case of greenhouse gas standards) based on its size. This target, in short, is what the vehicle should achieve in order to pull its own weight in meeting the company’s standard. As noted above, larger vehicles have weaker targets, and smaller vehicles have more stringent targets. A company’s corporate requirement (known as its CAFE requirement) is simply the sales-weighted average of its products’ targets.
Importantly, companies DON’T have to make all of their cars and trucks reach any single number. If they want to sell only compact cars, they can, and their CAFE requirement would be more like 60 mpg in 2025. If they want to sell only big SUVs, they can, and their CAFE requirement would only be about 30 mpg in 2025.
Let’s take a look at the figure below. This shows the target fuel economies for passenger cars in 2012, 2016, 2021, and 2025. As you can see, a couple things are apparent: (a) larger cars are held to weaker targets, and (b) over time the targets collectively become more stringent. It’s important to note however, that these targets are just that: targets. Companies can produce models that fall above or below the target levels, as long as the (sales-weighted) average of their products doesn’t fall below the average of those products’ targets. If that’s a mouthful, let’s look at a quick example.
Running the numbers
To illustrate that point, let’s say, for example, that I decide to produce three cars. Two of those cars have a footprint of 55 square feet; one has a footprint of 45 square feet. As shown in the figure below, the 2012 targets for those vehicles are 28.4 mpg and 33.4 mpg, respectively. Thus, the average target based on the sales mix of those models comes out to 29.9 mpg. That is the “standard” (as opposed to target) that applies to my company.
Now, let’s say I surpass the target in Model A by six-tenths of an MPG. And let’s say I fall short of Model B’s target by 1.4 mpg. Will I still be compliant with the law? As shown in the table below, the sales-weighted average of my actual fuel economy comes out to 29.9 mpg, so yes I am compliant.
|Jim’s Cars||Footprint||Number Sold||Target (from chart)||Actual MPG|
|Model A||55 square feet||2||28.4 mpg||29.0 mpg|
|Model B||45 square feet||1||33.4 mpg||32.0 mpg|
|Sales-weighted Average of Models A and B||n/a||n/a||29.9 mpg||29.9 mpg|
It perhaps goes without saying that this is a gross oversimplification. In reality, a different set of curves exists for passenger cars and light trucks (minivans, SUVs, and most pickups). And manufacturers have multiple flexibilities in meeting their standard, including banking credits from the past, borrowing credits from the future, trading credits between their car and truck fleets, applying for extra-credits for the use of certain technologies, etc. But the following general principles remain:
- Models with larger footprints will be held to weaker targets than models with smaller footprints.
- Manufacturers that produce a greater share of large vehicles will be held to weaker standards than manufacturers that produce a greater share of small vehicles.
What this means is no company’s standard will be the same. Ford’s will differ from GM’s which will differ from Honda’s which will differ from Nissan’s, and so on. Produce a lot of big trucks? Weaker standard. Produce a lot of small cars? Stronger standard.
What this WON’T mean is the (patently false) notion that if your vehicle doesn’t meet 54.5 mpg, it can’t be sold. In fact, the 54.5 mpg number cited in the media merely refers to the anticipated fleet average equivalent-mpg of all vehicles sold in 2025 based on an assumption about the size mix of those vehicles.
The bottom line
The bottom line is that from now through 2025 we will continue to see the same range of cars and trucks, large and small alike, serving our broad array of mobility needs. While some models will always be more efficient than others, over time the fuel economy of these vehicles will — as a whole — progressively improve. That’s an attribute I can support.
Questions? Comments? Anything about the attribute-based system that I didn’t touch on? Please weigh in…