Wednesday, August 17, 2005

Update on CAFE changes

Danny Hakim provides an update on coming changes in CAFE standards for light-trucks. Here are the interesting tidbits:
The Bush administration is expected to abandon a proposal to extend fuel economy regulations to include Hummer H2's and other huge sport utility vehicles, auto industry and other officials say.
Current CAFE stnadards are applicable to light-duty vehicles with gross vehicle weight of 8500 pounds and lower. One of the proposals under consideration was to raise this limit to 10,000 lbs. This is not an insignificant part of vehicle population as noted by NHTSA:
A study prepared for the Department of Energy, in February 2002, by the Oak Ridge National Laboratory found that 521,000 trucks with GVWR from 8,500 to 10,000 lbs were sold in calendar year 1999. The vast majority (82%) of these trucks are pickups and a significant number (24%) were diesel. At the end of 1999, there were 5.8 million of these trucks on the road accounting for 8% of the annual miles driven by light trucks, and 9% of light truck fuel use.

So strike one against the upcoming changes. March on:
Its broad plan to overhaul the light-truck mileage rules would change the regulatory system from one using averaged mileage for an automaker's entire annual light-truck output to one that sets up five or six classes, determined by a vehicle's size.
...Under the Bush administration plan, about half a dozen size classes will be determined by the vehicle's length and width. Instead of an overall mileage requirement for the total fleet of light trucks a manufacturer sells in a model year, makers will have to meet some kind of target or average within each size class.
...Under the administration's plan, for 2008 to 2010 models automakers will have a choice of complying with the new size-based system or the current system, though a further increase beyond 22.2 miles a gallon is expected in the current system. After 2010, the current system will be eliminated.

This is consistent with the previous reports on CAFE changes. One of the obvious criticisms of the size class based approach is that OEMs will increase the size of the vehicles to escape meeting higher CAFE standards in small size classes. It is not that simple unless everybody decides to do that. Also, it is not always possible to increase vehicle length and width without affecting aesthetics and cost of making the vehicle, although you may argue that with light-trucks this is less of an issue. So the next obvious question is how big the difference is between adjoining size classes. Recollect that both Japan and China have adopted vehicle weight class based fuel consumption standards.
Even more important question is how big of an increase above 22.2 mpg can NHTSA argue for while also trying to preserve the choices between vehicle sizes. I would argue that this is going to be much harder, and I would expect 0.3 to 0.5 mpg improvement in overall light-truck CAFE standards. This would imply that light-truck CAFE standards for 2008 would be around 22.5 mpg, for 2009 around 22.9 and for 2010 around 23.4 mpg. This is just an intelligent guesswork on my part. We will see what NHTSA has in store next month when the ANPRM comes out.

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