What will that new standard mean for cars, dealers and buyers in Canada?
We’ve all known it was coming. It’s been a topic of discussion for the past couple of years. But it was always tentative. Now it’s official. The U.S. Federal government has confirmed Corporate Average Fuel Economy (CAFE) standards that will mandate the equivalent of 54.5 mpg U.S. (4.3 L/100 km) for cars and light-duty trucks by Model Year 2025.
The final standards were developed by the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA), over the objections of many parties concerned, including the National Automobile Dealers Association (NADA).
In a press release announcing the ruling, the EPA noted that the decision followed “extensive engagement with automakers, the United Auto Workers,” et cetera. and pointed out that 13 major automakers, accounting for more than 90 per cent of all vehicles sold in the United States, supported the new standards.
A NATIONAL STANDARD
What it failed to say is that those automakers were effectively coerced into supporting it as a condition for denying California and other states the right to establish their own separate regulations. Better to be saddled with one near-impossible goal than several.
According to the Administration, this move will nearly double the fuel efficiency of 2025 vehicles compared to new vehicles of today, save U.S. consumers more than $1.7 trillion at the pumps and reduce oil consumption by 12 billion barrels annually. These figures are based on far-from-certain assumptions.
It’s a noble goal. But achieving that goal is easier said than done. And a lot can still happen between now and 2025. Mitt Romney and the Republican party, for example, are opposed to the standard, so its ultimate implementation could depend heavily on the outcome of this fall’s U.S. presidential election. Even if it does stand, a mid-term review will be conducted in 2018 to ensure that the goals are achievable.
IMPLICATIONS FOR CANADA
If we assume that the standards will be implemented, what are the implications for Canada? In a nutshell, they’ll be the same as in the U.S. Our government is committed to matching our fuel-consumption standards (they are called GHG-emission standards here but they have the same effect) to those south of the border.
Even if that weren’t the case, both North-American and overseas automakers prefer to market vehicles in Canada that are as little different as possible from those they sell in the U.S. So what they get, we’ll get.
THE CARS AND TRUCKS
Inevitably, the cars and trucks we’ll be driving and selling in 2025 will be much different from today’s. They’ll have to be. But it will be a period of evolutionary change, so we’ll all have a chance to get used to the direction as it progresses. There are also “loopholes” in the regulations that will give automakers some relief from a strict numerical average. Things like incentives and credits to encourage early adoption and introduction of advanced technologies, particularly electrification and specific technologies to reduce consumption in large pickups.
For sure, vehicles will have to become lighter, and probably smaller on average. But that doesn’t mean the end for bigger vehicles. Greater use of light-weight materials, especially aluminum and composites, will help all vehicles trim mass.
Of course, more and more fuel-saving technologies will be adopted for vehicles that aren’t using them already. Things like: cylinder deactivation, direct injection, turbocharging, multi-speed (7,8,9,10-speed) transmissions, continuously variable transmissions (CVTs), reduced tire rolling resistance and improved aerodynamics.
Certainly there will be more electrification: greater use of auto stop-start systems and regenerative braking, hybrids of all types — micro, light, full, plug-in and plug-in range extended — battery electric vehicles (BEVs) and even a few (probably very-few) fuel-cell electric vehicles (FCEVs).
WHAT ABOUT BUYERS?
How buyers will respond is the big question for everybody. In addition to perhaps sacrificing some of the room and performance they’re accustomed to, they will certainly be faced with higher prices. The Feds say the average cost premium will be in the range of $2000/vehicle. Other estimates put it much higher.
It’s possible that customers may choose to keep their older vehicles longer, thus limiting the sales of new vehicles and driving up used prices. But that balance will eventually stabilize. And, we’ve got 12 years to get there. So the period of transition will be spread out, and the adjustment less dramatic than if it happened overnight.
Keep in mind, it’s not the first time that fuel-economy/emission standards have impacted the kind of vehicles we get, or limited our vehicle choices. Remember the 1970s? We survived them too.
