The EPA has decided not to change government fuel economy requirements that force automakers to significantly increase the efficiency of new cars and trucks.
The decision announced this week follows a mandatory review of the standards established in 2012, when gas averaged $3.60 a gallon and small cars and hybrids were gaining favor.
The standards had required the fleet of new cars to average 54.5 miles per gallon by 2025. But there was a built-in reduction if buying habits changed — and they have, dramatically. Now, gas is averaging close to $2 a gallon and three of every five new vehicles sold in the U.S. are trucks and SUVs. As a result, the 2025 fuel-economy number drops to 50.8 mph.
That decline isn’t enough to satisfy car companies. They say they’re building small cars and electrics to meet the standards, but few consumers are buying them. Automakers had petitioned the government to lessen the standards.
Environmental Protection Agency Administrator Gina McCarthy said in a statement that based on the agency’s technical analysis, automakers have the technology to meet emissions standards and mileage through 2025. The requirements will increase the new-vehicle fleet’s average gas mileage requirement from 34.1 mpg this year while cutting carbon pollution and saving drivers billions at the pump, the EPA said.
“Although EPA’s technical analysis indicates that the standards could be strengthened for model years 2022-2025, proposing to leave the current standards in place provides greater certainty to the auto industry for product planning and engineering,” McCarthy said.
The EPA will take public comments on the decision until Dec. 30, meaning McCarthy could finalize the standards before President-elect Donald Trump is inaugurated in January, even though a decision wasn’t required until April 2018. Trump has said he wants to get rid of the EPA and Myron Ebell, the leader of Trump’s EPA transition team, is director of a libertarian think tank that gets financial support from the fossil fuel industry and opposes “global-warming alarmism.”
The EPA, however, denied the rushed timetable was due to Trump’s election.
The Alliance of Automobile Manufacturers, a lobbying group that represents 12 automakers, including BMW, Ford, Toyota and General Motors, called the quick decision a “premature rush to judgment” and said it has asked Trump to review post-election regulations.
Ford Motor Co. called the EPA move “eleventh-hour politics in a lame-duck administration” and said it will work with the new administration and Congress. Ford has been a frequent target of criticism by Trump due to its plans to move some production to Mexico.
Environmentalists backed the EPA’s decision. Daniel Becker, director of the Safe Climate Campaign, said the standards already have pushed average new-vehicle gas mileage up by 5 mpg since 2007, reducing America’s oil use and helping to drive down gasoline prices worldwide.
Janet McCabe, EPA’s acting administrator for the Office of Air and Radiation, said automakers have multiple technological pathways to meet the standards, from direct-injection gas engines to hybrids and electric vehicles. The industry is ahead of schedule, she said. More than 100 vehicles on the market are already meeting standards set for 2020. But electric vehicles still haven’t caught on. Last year EVs were less than 1 percent of U.S. new car sales.
“Leaving the standards as they are would give automakers the time they need,” McCabe said.
Automakers have warned that meeting the standards would result in additional costs that would be passed on to the consumer. McCabe said Wednesday that the estimated cost of the standards has fallen. The cost per vehicle to meet the 2025 standards is now $825, down from $1,100 in 2012, she said. Owners can easily make that back in savings at the pump, she said.
The industry has argued that the costs and consumer reluctance to buy the smallest, most efficient vehicles mean the industry will have trouble complying. “The evidence is abundantly clear that with low gas prices, consumers are not choosing the cars necessary to comply with increasingly unrealistic standards,” the Auto Alliance said.
Even if Trump rolls back the standards, the industry will continue to sell fuel-efficient cars in the U.S. because it has to meet mileage standards in other countries and California. “Automakers will still be on the hook to develop and produce these vehicles and will need economies of scale to make them profitable,” said Autotrader Senior Analyst Michelle Krebs.