The New CAFE Standards

The United States has some of the weakest standards in terms of fuel economy ratings among first world nations; with an estimated average 25 mpg in the US versus 45 mpg in the European Union. However, the Corporate Average Fuel Economy (CAFE) regulations are getting their biggest change since 1975 starting in 2011. Auto makers will be required to progressively increase their fleet's fuel economy, reaching the new standards by 2016. New cars must meet a standard of 37.8 average miles per gallon, an increase from 27.5 mpgs. Light truck standards will increase from 23.5 to 28.8 miles per gallon. This will be a total increase of 37% for cars and 23% for trucks. The CAFE regulations will allow auto makers to average their miles per gallon across all models. Companies like Ford and Chevrolet may have trucks that do not meet the CAFE standards, but their coupes and sedans do which will cancel out the “guzzlers.” The new standards will also take into consideration the vehicles footprint when figuring out its fuel economy must be. The footprint will be measured as the product of the vehicles wheelbase and its track, in square feet. For example, the Ford Focus will be required to have a much better fuel economy then the Mercedes S-Class due to the difference in size of the vehicle.

In the past many manufacturers have found it easier to just pay the CAFE penalties instead of trying to meet the standards. Then there are other automakers which produce a large fleet of subcompact cars and gain many fuel-economy surpluses. With the new regulations the National Highway Traffic Safety Administration has been instructed to establish a credit trading and transferring system. Manufacturers can now transfer their credits between categories or choose to sell them to other manufacturers who may not meet the standards with their fleet.

These new standards are estimated to increase the cost of a 2016 model compared to a 2011 model by about $1000. These new regulations are not making the automakers too happy, but with the rising cost of gas at the pump and the consumers interest in saving the planet these new "greener" cars will be a welcome addition for the customers.