While some experts say consumers will benefit, others warn that lower standards will lead to more pain at the pump, especially if gasoline prices rise and put U.S. automakers at a competitive disadvantage in the global market.
Most agree though, in the near term — the next five years — not much will change for car buyers who seek fuel-efficient vehicles, electric or hybrid cars.
“Automakers will stick to the course,” said Jeremy Acevedo, Edmunds’ manager of industry analysis. “There’ll be a growing number of electrified vehicles and vehicles that push the envelope on fuel economy.”
Most carmakers have invested heavily in technology, especially electric cars, and are “too far along to cut bait on this,” Acevedo said.
The Trump administration on Thursday recommended freezing mile-per-gallon standards for cars and light trucks after the 2020 model year and stopping California and other states from setting tougher standards. It said this will keep prices lower for consumers and improve safety despite concerns that it will hurt air quality.
The proposal increases the odds that fuel standards will be frozen after 2020. But the final decision may depend on whether a compromise can be reached among automakers, the administration and a group of more than a dozen states led by California that have long insisted on their ability to set tougher standards for cars and light trucks. Or it might be decided by the courts based on lawsuits that have been filed against the administration.
“California has drawn a line in the sand along with 20 other states that are going to challenge this,” said Acevedo. “It could be a lengthy court” proceeding ahead.
More efficient vehicles?
California and the other states have already filed a lawsuit trying to stop the Trump administration in its attempt to revisit the standards put in place through an agreement with then-President Barack Obama’s administration in 2012. It called for the average mile-per gallon standard across the U.S. fleet of cars to hit 34.5 mpg in model year 2016 and then increase to 54.5 mpg by 2025.
The administration’s proposal is fair to both consumers and automakers, said Rebecca Lindland, executive analyst with Kelley Blue Book.
“I don’t think we were ever going to get to the 54.5 mpg because it’s such a hockey stick, such a sharp turn up from where we are today,” Lindland said.
The average fuel economy of 2018 vehicles is 25.1 mpg, an increase from 21.8 mpg in 2011, one year before current standards were adopted, said the Consumer Federation of America.
“We’re not going back to gas-guzzling SUV days. But there’s the opportunity to set more realistic targets,” Lindland said. “We need one national standard, and the consumer could in fact benefit.”
That’s because many automakers developed electric and hybrid vehicles largely to improve their average corporate fuel economy despite little demand for the vehicles. Without a heavy fuel economy mandate, automakers could conceivably devote more resources to making, “super-clean and fuel-efficient vehicles that 95 percent of the consumers want to buy,” she said.
And, for those concerned with climate change, Lindland said, “You will still be able to buy an electric or hybrid vehicle. The manufacturers have pledged to continue to develop fuel-efficient vehicles.”
Gas prices could rise
There also is the evolution of mobility with ride-sharing, ride-hailing and the development of self-driving cars, Lindland said. All of those provide car companies an increased opportunity to introduce electric and hybrid technology to the market, while sharing the cost to do so with the consumer.
“Multiple manufacturers have told me their AVs will have to be electric,” said Lindland. “So that’s another opportunity for emissions and getting cleaner vehicles on the road,” with consumers and manufacturers sharing the cost through a ride-sharing or a taxi-like platform.
Acevedo of Edmunds said while this issue gets sorted out, automakers will continue to “make vehicles that meet current standards, which will include a healthy mix of SUVs and fuel-efficient vehicles.”
Oil prices, which remain unstable, and will likely rise again, said Acevedo. That means that while some buyers may desire SUVs and pickups now, at some point, gas prices will escalate to a breaking point and automakers and consumers will need to be prepared for it.
“We got a taste of gas prices going back up, so if you don’t continue to push the envelope on fuel efficiency and gas prices continue to go back up, it’ll be a problem at the pump,” said Acevedo.
Indeed, some argue the administration’s proposal threatens to put U.S. automakers behind in the global competition for cleaner, fuel-efficient cars and it will hit consumers hard in the wallet when they fuel up.
“The existing standards would have saved families up to $122 billion at the pump, saved more than 12 billion barrels of oil and kept 6 billion metric tons of dangerous carbon pollution out of the atmosphere,” said Howard Lerner, the executive director of the Environmental Law & Policy Center in a statement.
Myron Ebell, director of the Libertarian think tank Competitive Enterprise Institute’s Center for Energy and Environment, argued that less government is good for consumers.
“It means that the federal government will have slightly less control over the kinds of cars and trucks people can buy,” said Ebell in a statement. “It might even cause car prices to stop increasing so rapidly.”
Maybe the best person to ask is one who is on the front lines with the car buyers: A car dealer. Adam Lee is chairman of Lee Auto Malls in Maine, which has 19 dealerships in eight cities across the state. His position on the administration’s proposal is succinct.
“This rollback will be bad for business,” said Lee in a statement.
Fiat Chrysler, General Motors and Ford compete in a global economy, Lee said.
“China, India, Japan, South Korea and the European Union all have higher fuel-economy standards than the U.S. The world is moving to cleaner, more efficient vehicles,” said Lee. “You don’t have to care about clean air to see that reversing on fuel efficiency would put our automakers out of step with a global market.”
Said Lee, “Do you think Honda, Nissan and Toyota are planning to make cars that are less efficient? When did America start to believe that losing our competitive edge was a good thing?”