Trump Administration Lowers Fuel Economy Standards Through 2026

Rebecca Lindland | March 31, 2020

The Trump administration has revised fuel economy standards downward, easing future increases from Obama-era vehicle emissions rules which called for a 5% mandated annual improvement through 2026. Instead, manufacturers are obliged to improve fuel economy by 1.5% annually, a significant relaxing of the regulations installed in 2012.

"When finalized, the rule will benefit our economy, will improve the U.S. fleet's fuel economy, will make vehicles more affordable, and will save lives by increasing the safety of new vehicles," EPA spokesperson Corry Schiermeyer said.

However, not all parties see such a rosy future. California and 22 other states are challenging the revision, since this ruling revokes states’ ability to offer promotions and incentives for low- and zero-emissions vehicles.

California Attorney General Xavier Becerra, a Democrat, said the Trump administration is weakening “standards that protect our health and environment from polluting contaminants emitted by cars and trucks,” according to Reuters.

Manufacturers continue building more and more fuel-efficient vehicles even under a cloud of regulatory uncertainty. According to the EPA, fuel economy improved 30% from 2004-2018, a nearly six miles per gallon increase, even as buyers gravitated towards car-based SUVs.

Environmentalists want more improvements and a significant move to electric vehicles as the Obama-era rules outlined. But the challenge for environmentalists and automakers alike is the complexity of consumer buying behavior.

In 2019, 72% of the 17.1 million new vehicles sold were some form of truck, including 41% of crossovers and 8% SUVs, according to Statista.com. These trucks and crossovers are packed with the very latest in fuel-efficient technologies, bringing the automotive industry a long way from the gas-guzzling SUVs of the 90’s. The EPA reports nearly half of all 2019 vehicles had at least seven transmission gears, 24% had continuously variable transmissions (CVT), and 36% had automatic stop-start technology, all methods to improve fuel efficiency.

Similarly, about 9% of new vehicle models are some form of hybrid or electric. But vehicles with these technologies accounted for just 1.9% of new vehicle sales in 2019, falling from about 2.1% in 2018, according to insideevs.com. Despite years of $7,500 federal incentives often enriched by state-level enticements and the much-lauded success of brands such as Tesla, consumer demand for hybrids and electrics is extremely limited.

Gas prices and fuel savings are not providing incentives to change consumer behavior, either. After peaking in July of 2008 at $4.11, a gallon of fuel has averaged nationally between $2 and $3 since November 2014. This is a far cry from the $3.50-$4.00 range seen in 2012-2013 when the Obama regulations went into effect. Consumers are spending less on gas than ever before, further aggravating the argument for prioritizing fuel efficiency in vehicle purchase decisions.

Regardless of regulations, nothing is preventing a manufacturer from continuing to increase the fuel economy of its vehicles. The question is whether consumers will demand better efficiency and lower emissions, and whether they are willing to pay for it.

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