Law & Order

Government Finalizes Proposal to Double Vehicle Fuel Economy by 2025

The U.S. Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) issued draft regulations to set fuel economy and carbon dioxide (CO2) emissions limits for model year (MY) 2017–2025 vehicles. The fleetwide average will rise from 35.5 mpg at the end of 2016 to 54.5 mpg for MY 2025—a nearly 5% annual increase with slightly lower standards for light-duty trucks. The government estimates that the standards will cost about $157 billion to implement, with net benefits ranging from $252 billion to $358 billion. It is also estimated that the rules would add $2,000 to the price of a new passenger car sold in 2025, but save more than $6,000 in fuel costs over the vehicle’s lifetime. In order to obtain the fuel savings, the automakers will rely on improvements of conventional technologies, including more efficient engines and transmissions and higher-strength, light-weight materials. Some manufacturers may also pursue more advanced fuel-saving technologies, such as hybrid vehicles, clean diesel engines, plug-in hybrid-electric vehicles and electric vehicles.

The fuel-economy standards were agreed to in principal earlier this summer by most of the automakers. The agreement preserves California’s authority to regulate CO2 emissions and other greenhouse gases while creating a single national standard. CO2 emissions and fuel economy are linked since carbon dioxide is a byproduct of fossil-fuel combustion. Although the agreement is intended to preserve vehicle affordability, choice and safety, the National Automobile Dealers Association (NADA) has expressed concern about the added costs to consumers and whether buyers will have access to vehicles that meet their needs.  

For more information, please contact Stuart Gosswein at stuartg@sema.org.