CAFE standards will bring consumer savings — report

Source: Ariel Wittenberg, E&E reporter • Posted: Friday, May 6, 2016

Consumers will see significant savings from buying cars and trucks that comply with federal fuel economy standards that take effect in 2025, even if gas prices remain at record lows.

A new report on the upcoming corporate average fuel economy (CAFE) standards says most buyers will see savings of about $3,000 per car and $4,200 per truck over the life of the vehicle if gas prices remain the same.

The report — prepared by Synapse Energy Economics Inc. for Consumers Union, the policy and action arm of Consumer Reports — says savings could reach up to $5,600 per car and $7,300 per truck if prices go up.

“Consumers often rate fuel economy as a key factor in choosing their next vehicle. This study confirms that increasing fuel efficiency for cars and trucks will result in healthy fuel savings for those buyers,” said Shannon Baker-Branstetter, policy counsel for Consumers Union.

“By meeting the existing CAFE standards for 2025, automakers will help save consumers money on operating costs and protect them against future gas price shocks,” she said.

Consumers who use auto loans to finance new cars will start realizing savings in the first year of ownership, said the report. Those who pay for their vehicles in cash will see greater savings overall but may not start seeing those savings for three to five years.

The report bases the costs of automakers complying with CAFE standards on estimates from the National Highway Traffic Safety Administration (NHTSA) and U.S. EPA. Analysts based fuel savings on gas price predictions from the U.S. Energy Information Administration.

The report comes as NHTSA and EPA are gearing up for their midterm review of standards for vehicles built in 2025 and beyond. Current standards require model-year 2025 cars and light trucks to achieve at least 54.5 and 39 mpg, respectively.

Automakers have already begun to push for a reduction in those standards, saying currently-low gas prices make fuel economy less of an issue for consumers.

“Less than 4 percent of current models meet 2021 projected targets, and the sales of these most energy-efficient vehicles remain low — especially with low gas prices,” Alliance of Automobile Manufacturers spokeswoman Gloria Bergquist said last month (E&ENews PM, April 25).

In the meantime, environmental and consumer groups have been advocating for the standards to remain in place, noting that automakers have had success in meeting current standards.

“We’re already seeing automakers beating today’s standards, which only underscores the potential for future progress in this space,” Baker-Branstetter said.