Corporate Average Fuel Economy (CAFE)

Corporate Average Fuel Economy (CAFE) is a federally mandated program enacted in 1975 that requires automakers to achieve a particular miles-per-gallon average over their entire vehicle fleet. What are the requirements now?

Current CAFE requirements are 27.5 MPG for passenger cars, and 20.7 MPG for light-duty trucks. For example, if an automaker sells a luxury sedan that gets 18 MPG, that car must be offset by an equal number of sales of a subcompact car that gets 37 MPG, so that the average comes out to 27.5 MPG for their fleet. CAFE is a sales-weighted average, dependent entirely on what vehicles consumers buy, not on what vehicles manufacturers produce.

What were the recommendations by Kerry and McCain?

Senators Kerry and McCain wanted to raise the CAFE requirement to a combined car and light-duty truck average of 36 MPG. By eliminating the vehicle class distinctions between cars and light-duty trucks in the current CAFE set-up, their legislation would have threatened the existence of entire vehicle lines. For example, one of our member companies would have had to average 81 MPG from its cars to meet the 36 MPG average for its trucks. That’s an impossible standard to meet. The Senate can’t mandate the laws of physics. It takes a certain amount of energy (fuel) to move a vehicle of a given weight down the road. Automakers would not have been able to meet that standard and still offer consumers the features that they want in their vehicles.

What is the auto industry’s position? What can Congress do to improve fuel economy?

Automakers make 50 different models that get 30 MPG or better. Indeed, the top 10 highest MPG cars account for only 2 percent of sales. To encourage consumers to buy cars with higher fuel economy, automakers would like to see Congress pass consumer tax credits for the purchase of advanced technology vehicles, such as hybrid-electric cars and trucks. Because hybrid-electric vehicles run on two power systems – a conventional engine and a battery-powered electric motor – they will cost between $2,000-$7,000 more than conventional internal combustion engine vehicles, depending on the model. With several of these vehicles already available for sale and many more slated to be introduced over the next few model years, automakers believe it is critical for consumers to have an incentive to pay extra for these cars to achieve desired levels of market penetration.

Does this mean that automakers don’t care about clean air?

There is a difference between fuel economy and clean air. Automakers care deeply about the environment and have made incredible progress in emissions control technology over the past few years. Beginning in 2004, all new cars and light-duty trucks will be 99 percent cleaner than their 1960s counterparts. Moreover, as a result, of new Environmental Protection Agency standards, new cars, and light-duty trucks will meet the same emissions requirements. Driving a typical new car 100,000 miles produces fewer emissions than riding a Jet Ski on the ocean for seven hours! The best thing consumers can do for the environment is to buy a new or late-model pre-owned car.

What is the auto industry position on drilling for oil in Alaska? Is the industry doing anything to decrease use of petroleum?

The Alliance has no official stance on the Arctic National Wildlife Refuge (ANWR). We are doing our part to reduce oil use by creating advanced technology vehicles such as hybrid electrics, lean-burn and alternative-fuel vehicles. For example, there are more than 1 million alternative fuel vehicles on the road today.

The biggest gas-guzzler and emission polluting cars are the pre-1982 cars. Why don’t auto manufacturers offer to buy pre-1982 vehicles to meet CAFE and help the air quality at the same time?

The current energy legislation before Congress contained a scrappage provision to encourage people to retire older, higher-emissions vehicles to get them off of the road. Many automakers support such programs. We also recognize that auto enthusiasts collect and restore older cars.

Why are manufacturers pursuing different vehicles to improve fuel economy?

Any new technology has trade-offs. Hybrid-electrics, for example, cost more because they have two power sources. When fuel cells come to market in the next few years, they will face cost hurdles, as well as infrastructure challenges, such as the need for a network of hydrogen fueling stations. The biggest challenge automakers can anticipate is the need to create broad consumer acceptance of new technologies. We are hopeful that Americans will embrace these new cars in large numbers. That’s why automakers support tax incentives to encourage consumers to buy these vehicles.

The Alliance of Automobile Manufacturers is a trade association of 13 car and light truck manufacturers who account for more than 90 percent of U.S. vehicle sales. For more information, visit the Alliance website at www.autoalliance.org.

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.

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