New Standards Would Increase Gas Mileage 25% by 2015

The U.S. Department of Transportation (DOT) proposed new fuel economy standards on April 22 that will result in a 25 percent increase in fuel economy by 2015. The proposed new Corporate Average Fuel Economy (CAFE) standards apply to cars and light trucks — pickups, vans, and SUVs — starting with vehicles in model year 2011, most of which will go on sale in late 2010. The proposed standards increase fuel economy by 4.5 percent per year for five years, ending with model year 2015. For passenger cars, the proposal would increase fuel economy from the current 27.5 miles per gallon (mpg) to 35.7 mpg by 2015. For light trucks, the proposal calls for increases from 23.5 mpg in 2010 to 28.6 mpg in 2015.

The proposed standards are the first step in implementing a 40 percent increase in fuel economy by 2020, as mandated by the Energy Independence and Security Act of 2007. See the DOT press release and the article from this newsletter on the energy act.

If the new standards are put in place as proposed, they will save nearly 55 billion gallons of fuel while cutting roughly 521 million metric tons of carbon dioxide emissions. Drivers that buy the new vehicles covered by the standards will collectively save more than $100 billion in fuel costs over the lifetime of the vehicles. The DOT’s National Highway Traffic Safety Administration (NHTSA) will accept comments on the proposed standards for 60 days after their publication in the Federal Register.

In addition, the NHTSA is preparing an Environmental Impact Statement (EIS) to address the potential environmental impacts of the proposed standards and is seeking suggestions on the environmental issues and reasonable alternatives to be addressed in the EIS. The NHTSA is also requesting information from automakers on how they plan to meet the proposed rules. See the full proposal and related documents on the NHTSA Web site.

Although the new standards will mandate increases in fuel economy starting in late 2010, the current record-high prices for gasoline and diesel fuel are causing consumers to emphasize fuel economy now, and that shift in mindset is already influencing automakers’ production plans. On April 28, General Motors Corporation (GM) announced that it will cut production of its full-size trucks by eliminating one production shift at four North American assembly plants: three that build full-size pickups and one that builds SUVs. The changes will cause GM to produce 138,000 fewer full-size trucks this year. On April 29, GM launched a new edition of its Chevrolet Cobalt, called the XFE for “Xtra Fuel Economy.” Available in manual-transmission versions of both the sedan and the coupe, the Cobalt XFE will achieve an estimated 25 mpg in the city and 36 mpg on the highway through the combination of a revised engine calibration, low-rolling-resistance tires, and a higher gear ratio in the fifth gear. The Chevrolet Cobalt XFE is on sale now.