Is reaching 54.5 mpg realistic for America’s vehicle fleet?

It’s difficult to predict what’s in store for the CAFE standards technical assessment to be released later this year, the first step in a thorough process to revisit fuel-efficiency standards for cars, trucks and SUVs. But by looking to the past, we can learn a lot about whether it’s feasible to get to the stated goal: an average of 54.5 miles per gallon across the U.S. fleet by 2025.

At first glance, the figure seems preposterously high. But when you look at the many credits the feds have provided to help automakers boost their fleet-wide mpg, getting to 54.5 doesn’t seem so farfetched.

The Corporate Average Fuel Economy standards date to 1975, when Congress passed — and President Ford signed into law — guidelines meant to help reduce the nation’s oil dependence. The latest iteration came out in 2012, when the Obama administration and automakers worked together to establish the 54.5 mpg target. The Environmental Protection Agency (EPA), National Highway Transportation Safety Administration (NHTSA) and California Air Resources Board (CARB) are conducting a mid-term review of the CAFE standards, to determine whether the nation is still on track to hit 54.5 in just nine years.

But how could we even come come close to that number when the average for new vehicles sold in the U.S. has hovered around only 25 mpg for the past two years, according to the University of Michigan’s Transportation Research Institute?

stickerThe first thing you have to realize is that the goal isn’t actually 54.5, at least not in the real world. The mpg estimates you see on window stickers for vehicles? That’s the real-world number, and doesn’t include the various credits offered by the federal government. (Robert Duffer of the Chicago Tribune wrote a handy explainer in 2014, and it still holds up.)

Automakers only need to attain a real-world average of about 40 mpg by 2025. Why are there credits on the table? Because the public benefits from cars using less gasoline, which means less imported oil (that’s where NHTSA comes in), and less pollution emitted from tailpipes (which is EPA’s purview).

Those credits, up to this point, have been wide-ranging. Makers get credits for:

  • Electric vehicles and plug-in hybrids. These are expensive to build and represent a fraction of new-car sales. But the credits are prized because the “upstream” emissions generated in the process of making the fuel (like dirty coal used to make electricity to power a Tesla) aren’t counted against the vehicles; only tailpipe emissions, which are minuscule.
  • Flex-fuel vehicles. Vehicles that run on E85 ethanol blend produce fewer emissions, which is better for health and the environment. And automakers had to spend very little to make the engines adjust for any mixture of ethanol or gasoline. There are nearly 20 million FFVs on the road.
  • Other innovations, like greener coolants used in air-conditioning systems and lighter metals, that reduce fuel consumption and/or emissions.

Automakers only get the credits for the vehicles they sell, not just the ones they build. So it’s in their interest to put their research and design efforts behind vehicle technology the public likes and can afford to buy. These days, that means trucks, SUVs and crossovers that tend to guzzle more gasoline than smaller vehicles.

Another complication in the formula is that there are different CAFE thresholds for different classes of vehicles, depending on their size or “footprint.” Smaller vehicles have higher expectation as far as fuel efficiency, while bigger trucks and SUVs get a gentler ramp-up curve to increase efficiency.

DartCompanies like Detroit’s Big Three — Ford, GM and Fiat Chrysler — might naturally decide to focus on selling lower-mpg (but hot-selling, and extremely profitable) F-150s, Suburbans and Escalades at the expense of smaller, more fuel-efficient cars that people don’t want, especially when gas prices are low. Fiat Chrysler announced in January it would no longer sell the smallish sedan, the Dodge Dart. In February, Toyota said it would get rid of the Scion line of vehicles, which were primarily aimed at young drivers. When buyers stop buying smaller cars, auto companies stop making them.

“If you have these niche vehicles that don’t sell real well, why keep producing them?” said Robin Vercruse, Fuel Freedom Foundation’s Vice President of Policy and Environment. “Why not focus your R&D energy kind of more narrowly on more consumer-friendly cars that can give you better benefits overall?”

The Renewable Fuels Association has a petition going to urge Detroit to keep making flex-fuel vehicles. Which they’d be more likely to do if the FFV credits were continuing; instead, they’re being phased out, partly because not enough people are using high-octane E85.

So what credits will go into the formula to make 54.5 more attainable for automakers? Will those manufacturers push back and try to get the overall number decreased, or lobby for other exceptions? As Bill Vlasic of The New York Times wrote this week:

Proposed changes could include extending the time frame on mileage targets and expanding emissions credits to include enhancements for safety and autonomous driving — such as the move that carmakers announced last week to make automatic braking standard on all models by early next decade.

A “final determination of the” so-called Midterm Evaluation of the CAFE standards won’t be out until April 2018. Whatever is in that document will reflect both federal goals of reducing oil consumption and emissions. But it will also have to reflect the realities of the car-buying public.

“It’s why the CAFE standards have not inspired any opposition,” Vercruse said. “Because they’re very sensitive to the consumer angle.”