New Study on Fuel Economy and Safety Mandates




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. Exclusive: Downtown Royal Oak Draws Four Restaurants, Including B Spot Burgers
    Four new restaurants are coming to downtown Royal Oak, including a B Spot Burgers by Iron Chef...
  2. DSO to Kick Off 2015 with Televised Gala, Performance
    The Detroit Symphony Orchestra is teaming up with Detroit Public Television to ring in 2015 with...
  3. Midtown and Northwest Detroit Draw New Apartments, Businesses, Expansions
    Business is booming in Midtown and northwest Detroit, where several stores and restaurants are...
  4. ‘Hell’s Kitchen’ Heads to Southfield for First-Ever Michigan Casting Call
    The Great Lakes Culinary Center in Southfield may be best known for its cooking classes,...
  5. Alaskan Brewing Co. Enters Eastern Time Zone Via Michigan Market
    Alaskan Brewing Co. is bringing its products for the first time to the Eastern time zone,...
  6. M-1 Rail Line App Will Highlight Merchants, Tours, and Landmarks
    With construction under way on the M-1 Rail line in Detroit, the Woodward Avenue Action...