Study: No savings with CAFE target of 62 mpg
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Raising federal fuel economy standards to as high as 56 mpg in the 2025 model year would yield fuel savings to consumers that more than offset higher vehicle prices, a new study found.
But lifting corporate average fuel economy to 62 mpg would result in vehicle price increases that exceed fuel savings over a five-year period, according to the nonprofit Center for Automotive Research.
The report highlights room for compromise on the Obama administration's preliminary proposal to raise CAFE to between 47 mpg and 62 mpg from the 2017 to 2025 model years.
"Assuming consumers behave rationally, there is lots of opportunity for the Obama administration to achieve its fuel economy goals," said Center president Jay Baron.
Environmental groups have pushed for 62 mpg, while automakers have called for more study.
Current rules require a 35.5 mpg CAFE by the 2016 model year.
The center in Ann Arbor, Mich., is partially financed by the auto industry but this study was internally funded, President Jay Baron said.
The June 11 report revises an earlier study in response to criticism by an environmental group, the International Council on Clean Transportation.
"Our review uncovered so many fundamental technical and scientific errors as to make it clear that (the Center for Automotive Research's) analysis cannot, without significant correction and improvement, serve as a basis for serious policy discussions," the environmental group said in March.
The Center's initial study found that vehicle price increases in 2025 would far exceed fuel savings under every mpg target examined.
These December findings were cited by the Alliance of Automobile Manufacturers, the leading automaker group, in a letter arguing that the administration was overstating consumer benefits.
Among the latest findings:
Technology changes would drive up the average cost of a new vehicle by between $3,810 and $11,390, depending on CAFE targets, from 2008 to 2025.
Fuel savings would range from $5,917 to $8,339, depending on CAFE requirements, over the first five years of a 2025 car.
Under 47 mpg, 51 mpg and 56 mpg targets, fuel savings would exceed the increased cost of a new vehicle.
Under the 62 mpg standard favored by environmental groups, the vehicle price increase would top fuel savings by about $1,450.
Center chief economist Sean McAlinden said raising the target to 62 mpg would prompt consumers to hold onto their vehicles longer, resulting in less fuel-efficient vehicles on the road.
The study also found that the new standards would have an impact on jobs.
The economy would gain as many as 26,000 jobs under a 47 mpg standard, assuming a gasoline price of $6 a gallon, the report said. But as many as 166,000 jobs would be lost at 62 mpg.
The administration's preliminary proposal used different research methods that yielded net savings for consumers even under the 62 mpg standard.
It estimated price increases from 2017 to 2025 rather than the longer interval, and found that costs would rise by between $770 and $3,500 during that period.
The administration also estimated fuel savings over the life of the vehicle rather than just the first five years, and found savings of between $4,900 and $7,400.
The administration is in talks with automakers and California regulators as it prepares to submit a formal CAFE rule proposal in September and make a final decision by July 2012.