New Study on Fuel Economy and Safety Mandates



Published:

ANN ARBOR, June 14, 2011 – The Center for Automotive Research has released its latest study focused on the impact of anticipated fuel economy and safety mandates on the U.S. automotive market and industry in 2025.

The report, “The U.S. Automotive Market and Industry in 2025”, asks the question “What will anticipated mandates for increasing vehicle fuel economy and improved safety do to the automotive industry in the United States?” The study relies on technology and market forecast data from the National Research Council and J.D. Power and Associates to project the technology segmentation necessary to achieve anticipated fuel economy mandates in 2025.

Increased fuel economy mandates based on reducing emissions ranging from 3 percent to 6 percent per year are under consideration by the government. The highest increase, 6 percent, will raise the Corporate Average Fuel Economy (CAFE) from 35.5 mpg in 2016 to 62 mpg in 2025. Costs for safety mandates are less certain, but are conservatively estimated to add an additional cost of $1,500 to a new automobile by 2025.

A few of the report’s conclusions are:

  • The average increase in vehicle cost necessary to achieve the higher CAFE mandates range from $3,700 to over $9,000.
  • The higher mandates will increase vehicle prices that exceed the savings in fuel costs (over five years), even if gasoline costs $6.00 per gallon (in 2009 prices) for most scenarios under consideration.
  • Consumers will shun these technology costs by holding onto their used vehicles longer, especially if fuel prices are low (e.g., $3.50 per gallon), resulting in lower sales and a loss of automotive employment. Over 260,000 jobs may be lost if the highest mandate is passed and fuel prices stay low at $3.50 (2009 prices).
  • The authors seek moderation in raising fuel economy mandates and recommend periodic review to assess the rate of technology development and cost reduction of advanced technologies leading up to 2025.

The full report is available at www.cargroup.org

Most Popular

  1. Zehnder’s and Bavarian Inn Tops in U.S. with Number of Guests Served Last Year
    Zehnder’s of Frankenmuth and the Bavarian Inn, both popular restaurants among Michiganders,...
  2. MyLocker.net Moves Headquarters to Detroit’s Corktown, Adds 70 Jobs
    MyLocker.net, an e-commerce website offering custom apparel for middle and high school teams, has...
  3. Exclusive: Princeton Enterprises Acquires Detroit's Oslo Building, Grows to 1,000 Apartments
    Working with Japanese and other Far East investors, Princeton Enterprises in Bloomfield Hills has...
  4. The 5 Greatest Economic Downturns in Michigan
    Michigan is experiencing some of the best economic times in more than a decade. Despite this,...
  5. Which Wich Plans More Michigan Locations, Including Downtown Detroit
    Riding the wave of investment in downtown Detroit, Which Wich Superior Sandwiches, a national...
  6. Load One Looks to Build World HQ, Invest $10M in Wayne County
    Load One, a distribution and logistics firm based in Taylor, is looking to invest more than $10...