The Obama administration and the auto industry agreed to regulations in 2012 that require automakers to reach average fuel economy of 54.5 mpg across their entire fleet by 2025. The EPA reaffirmed those standards in January, but President Trump said last week that the agency’s decision was rushed and a new review of the standards would be conducted.
The ICCT analysis found that the cost of meeting the 2025 regulations would be $886 per vehicle on average, compared to $1,378 in the EPA’s analysis. The difference is attributed to small improvements over time in the cost and efficiency of technologies produced by the automakers and their suppliers. And though consumers may pay more for the vehicle itself, they could expect to save two to three times that amount on gas based on projected future fuel prices, ICCT concluded.
“That’s not going to reduce sales. That’s probably going to make a more compelling option for consumers,” said Nic Lutsey, a program director at ICCT and one of the report’s authors.
The automakers are not so convinced. They’ve argued that the fuel standards require them to spend more on research and technology, increased costs that could lead companies to trim their workforce. The industry trade group Auto Alliance, citing numbers from the EPA, put the cost at $200 billion between 2012 and 2025. (The EPA also estimated the “net benefit to society” of the rules totaled $100 billion for just 2022 to 2025.)
Ford’s chief executive, Mark Fields, reportedly told Trump that the standards put 1 million jobs at risk, and the president assured autoworkers last week that environmental regulations would not put jobs and factories in jeopardy.
Lutsey said the increased investment in fuel efficiency technology could actually lead to more jobs — both in the auto sector and across the economy. “Everything I’ve seen suggests this is probably job creation, not what the counter arguments would suggest about losing jobs,” he said.
The Auto Alliance has argued that the EPA failed to consider consumer preferences for larger, less efficient vehicles when it upheld the standards in January, a conclusion that was reached in the waning days of the Obama administration and more than a year ahead of schedule. About 60 percent of new vehicles sold in the U.S. last year were light trucks, crossovers and SUVs.
The association is aware of the ICCT report but may not bother to review it, spokesman Wade Newton said.
“The report looks 13 years into the future to 2030, and the government hasn’t even finished assessing the appropriateness of the 2025 targets,” Newton said via email. The association is focused instead on the EPA’s renewed review of the fuel standards.
The ICCT report concluded automakers could meet the 2025 fuel standards solely through technology improvements to gasoline-powered vehicles, even if electric vehicles remain at about 3 percent of new car sales annually. That contradicts claims from automakers, who have said the standards would be difficult to meet so long as consumers continue to buy gasoline.
Electric vehicles may be important to meeting stringent fuel standards beyond 2025, the report concluded, but the cost of batteries will have dropped significantly in that time.
The ICCT study is likely the first of many to come out over the next year as environmental groups, industry associations and others try to influence the review. If the EPA decides to ease the standards, it would almost certainly face a legal challenge from environmental organizations and certain states, especially California, which has the power to set its own vehicle emission standards.
ICCT may be best known for conducting independent emissions tests that later revealed the Volkswagen diesel emissions scandal, which has since lead to regulators recalling millions of vehicles, imposing billions in fines against the company and indicting several company executives.
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