The path to fuel economy is clear, even with truck sales in high gear

Blog Post | March 26, 2018 - 10:30 am
By Eric Junga, Senior Research Analyst, Industry and Transportation

The Trump administration appears to be nearing a decision to roll back light-duty fuel economy and greenhouse gas standards. Automakers have promoted this reckless action by claiming that the standards are too tough now that consumers are buying larger vehicles, which typically use more fuel. Indeed, car sales have fallen over the past few years, while sales of light trucks — which include SUVs, minivans, pickups, and all-wheel-drive crossovers — have grown.

However the standards were designed to accommodate shifts in the market. Every vehicle sold in a given model year has a unique fuel economy target based on its size and whether it’s a car or truck. For example, a typical mid-size sedan meeting its 2025 fuel economy target will get about 41 miles per gallon in real-world driving, while a full-size pickup truck meeting its 2025 target will get about 26 miles per gallon. Furthermore not every vehicle a manufacturer sells has to meet its own fuel economy target, because a manufacturer’s overall fuel economy requirement is based on the sales-weighted average fuel economy target of all vehicles that it sells.

Consequently the current truck boom does not make the standards any more difficult to meet. Increased truck sales simply mean lower overall fuel economy targets for the manufacturers. In fact the truck standards are less demanding in relative terms; the rate of fuel economy improvements required for cars currently exceeds the rate for trucks. The most striking example is full-size pickup trucks, whose targets are set to increase very little between 2016 and 2020 (figure 1). Regulators went easy on pickups when they adopted the standards in 2012 to give automakers extra time to invest in fuel-saving technologies for these vehicles.

Percent increase in fuel economy targets for a car and a full-size pickup, model years 2012-2025

In the coming weeks, we’ll be homing in on this highly profitable segment of the vehicle market — one that is vital to domestic automakers — to understand what manufacturers have been doing with that extra time. We’ll take stock of recent fuel economy and technology changes for each major pickup line to find out whether manufacturers are delivering the cost-effective efficiency improvements that can save Americans thousands of dollars at the pump. Are manufacturers adopting the technologies identified by the agencies when they set the standards, and are the technologies delivering the expected fuel efficiency improvements? Or are these technologies being used for other purposes? For example, the 2018 Ford F-150  deploys fuel-saving technologies such as multiple fuel injectors and 10-speed transmissions, but the technology has also provided a considerable boost in power and torque as well – possibly at the expense of larger fuel economy gains.  We’ll share our findings in future posts.

In the meantime, watch for the administration’s next move on the standards. Rolling back fuel economy and greenhouse gas standards might look like a gift to automakers, but it would come at the expense of the future of the domestic auto industry and American consumers. By contrast, leaving the standards in place would support the global competitiveness of U.S. manufacturers, create jobs at home, and protect Americans’ health and financial well-being.