EPA/MPG - What's next for car rules as 5-yr milestone approaches, auto/biz/consumer experts available

EXPERT AVAILABILITY & ANALYSIS

October 6-15, 2017

MEDIA CONTACT: Christina Heartquist

415-453-0430, christina@catercommunications.com

CAR STANDARDS: Consumer, industry and business leaders available ahead of milestones

Washington, DC — October 15th marks the five-year anniversary of current light-duty vehicle miles-per-gallon standards becoming law. As the date approaches, consumer, industry and business representatives are available to discuss what's next for the rules that have come under scrutiny by the administration.

The public comment period for the Environmental Protection Agency’s re-do of the midterm evaluation of the standards closed yesterday. The administration can choose to stay the course on the standards or weaken them. The decision could impact model year vehicles from 2021-2025. The first midterm evaluation of the standards, finalized in January 2017, was based on a technical assessment built on two years of research and stakeholder input that determined automakers were achieving the standards faster and more economically than original projections. (https://nepis.epa.gov/Exe/ZyPDF.cgi/P100OYFR.PDF?Dockey=P100OYFR.PDF)  

The fuel economy standards were jointly developed and agreed upon by the automakers, the EPA, National Highway Traffic Safety Administration and California, enjoy majority bi-partisan support, even among Trump supporters. (http://consumerfed.org/press_release/poll-finds-trump-voters-support-mpg-targets/)

Below are the latest statistics and analyses from these and other leading expert consumer, business and industry groups.

EXPERT AVAILABILITY:

Adam Lee (http://www.leeauto.com/dealership/about.htm) , Chairman, Lee Auto Malls of Maine

Lee is a third generation auto dealer. He and his partners manage 19 dealerships in eight cities.

John Boesel, (http://www.calstart.org/Members/Membership-Directory.aspx) President and CEO, CALSTART

CALSTART is an industry organization with auto supplier and manufacturer members.

Shannon Baker-Branstetter (http://consumersunion.org/experts/shannon-baker-branstetter/) , Policy Counsel, Consumers Union

CU is the policy and advocacy arm of Consumer Reports.

Jack Gillis (http://consumerfed.org/expert/jack-gillis/) , Director of Public Affairs, Consumer Federation of America

CFA represents more than 250 non-profit consumer groups across the country and tracks consumer attitudes towards standards.

David Richardson (https://www.impaxam.com/about-us/team/impax-asset-management-group-plc/executive-committee/david-richardson) , Executive Director, Impax Asset Management

Impax Asset Management manages approximately $7 billion in assets for institutional investors around the world.

Carol Lee Rawn (https://www.ceres.org/about-us/staff/carol-lee-rawn) , Transportation Program Director, Ceres

Ceres convenes influential investors (https://www.ceres.org/networks/ceres-investor-network) and businesses (https://www.ceres.org/networks/ceres-company-network) including Apple, PepsiCo and Gap.

Data shows that fuel efficiency standards save Americans thousands of dollars at the pump (http://consumersunion.org/2016/09/new-cafe-standards-help-consumers-save-big/) , are creating much-needed jobs across the country (https://www.bluegreenalliance.org/the-latest/report-288000-american-workers-in-48-states-are-building-technology-for-cleaner-cars-today/) and can be achieved more affordably than even the EPA estimates (http://www.theicct.org/news/press-release-cost-estimates-for-meeting-mpg-and-pollution-standards-are-overstated) .

To schedule an interview with one or more of these experts please contact Christina Heartquist, 415-453-0430, christina@catercommunications.com.

LATEST STATISTICS & ANALYSIS

ICCT

A recent ICCT analysis (http://www.theicct.org/news/press-release-cost-estimates-for-meeting-mpg-and-pollution-standards-are-overstated) shows that automakers and industry cost estimates have been overstated by as much as 40 percent.

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State-of-the-art engineering studies and emerging supplier technology developments indicate that costs will drop by thousands of dollars per vehicle by 2025.

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Conventional vehicles could dominate in the near term. Emerging combustion vehicle efficiency will result in cost-effective 8–10 percent mileage improvements for vehicles by 2025, compared to the EPA’s analysis.

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Progress can continue at the same rate out to 2030. Federal standards that get progressively more stringent, at 4–6 percent lower fuel use per mile annually from 2025 to 2030, can be achieved cost-effectively.

Another recent ICCT analysis (http://www.theicct.org/consumer-benefits-ldv-efficiency-us-2030) examines consumer cost/benefit ratios, lifetime fuel savings and payback periods for vehicles model years 2021-2025 under current standards. The analysis is a follow-on from their previous report (http://www.theicct.org/news/press-release-cost-estimates-for-meeting-mpg-and-pollution-standards-are-overstated) that found EPA costs for implementing standards could be overstated by as much as 40 percent.

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The adopted 2025 standards provide tremendous value for American consumers.

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Under current standards, buyers of model year 2025 vehicles will fully recoup their investment in the 3rd year of ownership for a cash purchase.

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Those who finance their vehicles will see a net positive cash flow starting immediately. Consumer benefits would be more than 3 times the costs of the standards.

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Fuel savings are 2.4 times the costs if fuel prices stay low for the next several decades.

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High consumer benefits are available across vehicle types, from cars to light trucks.

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The average new car fuel economy label would increase from 35 MPG in 2021 to 41 MPG in 2025 under the adopted standards, and to 52 MPG in 2030 assuming improvements of 5 percent per year—each of these steps would save consumers $2,300–$2,600 in fuel costs over the lifetime of the vehicle.

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For trucks, the average fuel economy would increase from 25 MPG in 2021, to 30 MPG in 2025, to 38 MPG in 2030—similarly, each step would save consumers $3,900–$4,000 in fuel costs per vehicle.

In its public comments (https://www.regulations.gov/document?D=EPA-HQ-OAR-2015-0827-6108) submitted for the proposed determination, the ICCT concluded that the standards are achievable largely through conventional, gas-powered technology and at lower cost than agencies estimated. For example, according to ICCT estimates:

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High-efficiency engines like Mazda’s SkyActiv, which are one of the main ways automakers are expected to meet the standards, can produce double the efficiency improvement assumed by the agency.

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By 2025, lighter-weight materials could reduce average vehicle weight by 15 percent, double what the agency has projected.

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Most companies won’t need to rely on full hybrids to meet the standards.

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Mild hybrids may prove more attractive than the agency estimates.

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Greater vehicle electrification is also unnecessary to meet the standards and agency electric vehicle cost estimates are higher than indicated by real-world data.

CERES

A Ceres analyst brief (https://www.ceres.org/sites/default/files/Fact%20Sheets%20or%20misc%20files/Ceres%20Analyst%20Brief%20June%202016.pdf) shows that automakers and suppliers would benefit under different gas price and emission stringency scenarios:

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The Detroit Three will be profitable given a wide range of fuel prices, even if gas prices fall as low as $1.80 a gallon.

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, which provide two-and-a-half times more American jobs than the top domestic automakers, stand to gain about $90 billion in increased orders.

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If standards are weakened and gas prices spike:

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Suppliers could lose up to $1.42 billion a year in sales of fuel-efficient technologies.

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The Detroit Three could lose over 300,000 vehicle sales and $1.08 billion in profits.

A study commissioned by Ceres, and conducted by independent analyst Management Information Systems Inc., found:

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The current fuel efficiency standards would create nearly 700,000 new jobs nationwide and over 63,000 jobs in the auto sector, according to the Ceres report More Jobs Per Gallon (http://www.ceres.org/files/report-fact-sheets/more-jobs-fact-sheets/national-fact-sheet) .

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Click here (http://3blmedia.com/theCSRfeed/New-Reports-Citi-Ceres-See-US-Auto-Industry-Boosting-Profits-Sales-Higher-Mileage#sthash.Wg5qY4K8.dpuf) for additional data from Ceres and Citi Investment Research on automaker profits under the standards affordability.

In letters and statements, major U.S. businesses and investors outlined their support for maintaining fuel economy standards.

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Members of Ceres’ BICEP (https://www.ceres.org/bicep) , including major U.S. businesses like Nike, IKEA and General Mills, signed a letter to the EPA. (https://www.ceres.org/news-center/press-releases/big-business-and-investors-urge-new-epa-chief-keep-mpg-and-ghg-standards)

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40 financial institutions and investors, with over $740 billion in assets under management, signed a letter to EPA (https://www.ceres.org/sites/default/files/Fact%20Sheets%20or%20misc%20files/Final%20Investor%20PD%20letter.pdf) .

CONSUMER FEDERATION OF AMERICA

According to a recent Consumer Federation of America report (http://consumerfed.org/wp-content/uploads/2017/07/on-the-road-to-2025-cafe-standards.pdf) , fuel economy standards are providing consumers access to higher MPG cars without increasing sticker price:

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27% (21) of the “all-new�?? vehicles introduced in 2017 actually cost less than their 2011 version and got 1-10 MPG better fuel economy.

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When calculating 5 years of fuel costs, nearly half of these 2017 vehicles cost less to buy and fuel than their 2011 counterparts.

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58 of the 79 vehicles increased in price, however;

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15% (12 of 79) had fuel savings that offset the entire price increase;

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52% (41 of 79) had fuel savings that offset the increased cost of fuel economy technology;

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6% (5 of 79) were more expensive in 2017 but their fuel economy stayed the same or decreased from 2011.

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Looking at the cost/benefit average for these 79 all-new models—the added cost of fuel economy averaged $320 per vehicle and will save the buyer an average of $946, putting $626 back into consumer pocketbooks.

According to a recent Consumer Federation of America report (http://consumerfed.org/wp-content/uploads/2017/07/on-the-road-to-2025-cafe-standards.pdf) , auto manufacturers are showing they can comply with national fuel economy targets:

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70 percent of the “all-new�?? 2017 vehicles had a CAFE-compliant trim, compared to 41 percent of the “all-new�?? 2015 vehicles.

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A record breaking 6 vehicles are compliant all the way to MY 2025.

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In looking at all of the 2017 models, “gas guzzlers�?? getting below 14 MPG are a miniscule 0.4% in 2017, down from 8.5% in 2011.

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A record 78% of the “all-new�?? light duty trucks had a CAFE compliant trim for 2017. Percentage-wise, trucks beat cars for CAFE compliance in 2017.

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15 of the 17 manufacturers improved their CAFE compliance rate from 2015 to 2017.

Consumers are buying the more fuel efficient light-truck and SUV models, according to recent calculations (http://consumerfed.org/press_release/new-poll-americans-care-fuel-economy-support-stronger-fuel-economy-standards/) from Consumer Federation of America:

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Comparing the sales figures for 2016 SUVs and light duty trucks with the 2011 models, those that increased the fuel efficiency by over 10% sold nearly 20% more vehicles than those with a less than 10% increase in fuel efficiency.

If U.S. fuel economy standards are rolled back, foreign automakers will dominate the world market as MPG standards ratchet up globally, according to recent calculations from the Consumer Federation of America (http://consumerfed.org/press_release/roll-back-mpg-standards-foreign-automakers-will-roll-detroit/) :

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CFA’s analysis of NHTSA fuel economy projections show that for 2016 MY, out of 41 vehicle categories, 18 beat the requirements and, out of 17 manufacturers, 10 had one or more models that beat the requirements – all who beat the standards were foreign automakers except Tesla.

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Each year under the standards, U.S. fleet wide fuel economy increased by an average of 7.1 percent through 2015. Even with 2016 as an outlier, the average is increasing at an annual pace of 6.4% since 2004.

A recent Consumer Federation of America poll (http://consumerfed.org/press_release/poll-finds-trump-voters-support-mpg-targets/) found bi-partisan support for the standards:

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Two-thirds of Donald Trump voters support strong fuel economy standards, which were also supported by four-fifths of Hillary Clinton voters.

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Two-thirds of Republicans expressed support for strong fuel-efficiency standards, as did two-thirds of independents who lean Republican.

A recent Consumer Federation of America analysis (http://consumerfed.org/press_release/suvs-crossovers-pickups-high-mpg-percent-increase-sell-better/) shows that SUVs, pickups and crossovers, whose MPGs increased by over 10% between 2011 to 2016, had a 59% increase in sales.

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On the other hand, those same vehicles with less than a 10% increase in MPGs from 2011 to 2016 only experienced a 41% increase in sales, almost 20% less.

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For example: The Toyota RAV4, which increased by 10 MPG from 2011 to 2016, saw a sales increase of almost 220,000 or a 166% increase in annual vehicle sales. Meanwhile, the GMC Terrain which had a 1 MPG decrease saw only a 6% increase in sales from 2011 to 2016.  

CONSUMERS UNION

Consumers support fuel economy targets but don’t agree that automakers care about lowering fuel costs, according to recent poll by Consumers Union (http://consumersunion.org/news/2017-fuel-economy-survey/) . The poll found that:

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87% agree automakers should continue to improve fuel economy.

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73% agree government should be setting higher standards for vehicle efficiency.

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79% agree it is important to make larger vehicles, including SUVs and trucks, more efficient.

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79% agree that increasing fuel economy from a real-world average of 25 MPG today to 40 MPG in 2025 is a worthwhile goal.

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Less than a third of consumers (30%) agree automakers care about lowering fuel costs for their customers.

The cost of new vehicles has remained flat compared to other consumer goods while fuel economy has improved, contrary to claims from industry groups that fuel economy standards are increasing new car prices, according to a new report (http://consumersunion.org/research/more-mileage-for-your-money-report/) from Consumers Union, the research and advocacy arm of Consumer Reports:

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Car buyers are enjoying higher fuel economy than before – and they are paying less for it. The report finds that the average price of new and used cars and light-duty trucks has remained relatively flat since 1997.

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Fuel efficiency improvements have been a boon for consumers. If fuel economy had not improved from 2005 through 2015 (i.e. if it had stayed at 20 MPG), households purchasing new vehicles would have spent 25% more on fuel in 2015 than they actually did. By 2015, the average household buying a new vehicle saved $523 in fuel annually, based on fleet-wide efficiency gains since 2005.

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The price of entry-level vehicles has remained approximately the same over the past 10 years.

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While the prices of new and used cars have remained flat (or have fallen in real terms), low-income households are under increasing financial pressure from higher prices of other household goods and stagnant wages.

Consumer support for and savings from rising fuel economy standards remains high, according to Consumers Union, the research and advocacy arm of Consumer Reports:

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Under the 2025 standard, consumers would benefit from net savings of $3,200 per car and $5,700 per truck at today’s low gas prices, according to a recent Consumers Union analysis (http://consumersunion.org/2016/09/new-cafe-standards-help-consumers-save-big/) .

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In the event gas prices rise again, net savings would be even higher: $5,600 per car and $7,300 per truck, according to a report from Consumers Union (http://consumersunion.org/2016/09/new-cafe-standards-help-consumers-save-big/) .

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An overwhelming majority of Americans (84 percent) believe that automakers should continue to improve fuel economy across all vehicle types, according to a recent Consumer Reports survey (http://consumersunion.org/2016/06/2016-fe-consumer-survey/) .

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Even consumers who plan to buy an SUV want their next vehicle to have better fuel economy, according to Consumers Union (http://consumersunion.org/2016/06/2016-fe-consumer-survey/) .

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In fact, owners of all vehicle types (small, midsize, large, and pick-up truck) identified fuel economy as the number one attribute that needed improvement

CALSTART

The first-ever fuel economy survey of auto suppliers (http://www.calstart.org/News_and_Publications/CALSTART-in-the-news/CALSTART-Press-Releases/Survey-Suppliers-Support-Existing-2025-Federal.aspx) , conducted by CALSTART in July 2016, found that:

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70% of suppliers said policymakers should not adjust the program’s goals.

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65 % agreed with the decision to set new MPG standards for 2025, with 30% saying they strongly agreed with the decision.

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Among those who agreed, all but one named regulatory certainty as critical for the industry and half said the standards spark innovation.

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59% said that fuel economy standards help spur job growth.

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Suppliers identified a wide range of conventional and electric technology that could be used to meet the standards.

BLUEGREEN ALLIANCE

In a recent policy brief (https://www.bluegreenalliance.org/wp-content/uploads/2016/12/Preview-of-Supplying-Ingenuity-II-vFINAL.pdf) , BlueGreen Alliance shows that fuel economy rules have been an integral part of the recovery of the automotive sector in the past decade, spurring investment in innovation in the U.S. auto parts supply chain:

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More than 1,200 facilities in 48 states make components and materials that improve fuel economy.

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Michigan and California lead the pack with more than 180 facilities each, and hundreds of other companies are clustered in the industrial Midwest and Southeast.

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Automakers and suppliers are making robust, dynamic investments in domestic manufacturing under the standards. Sustaining this innovation and investment is key to securing today’s jobs and creating new ones.

A recent report by BlueGreen Alliance (https://www.nrdc.org/sites/default/files/supplying-ingenuity-clean-vehicle-technologies-report.pdf) found that 288,000 Americans are employed to build technologies that reduce pollution from cars and trucks and help meet national fuel economy standards.

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There are nine states with 10,000 or more workers building clean, fuel efficient vehicle technology. The top five states—Michigan, Indiana, Ohio, Tennessee and Kentucky—building cleaner vehicle technologies support nearly 160,000 manufacturing jobs.

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Since the 2008–2009 recession, the auto industry has recovered, adding nearly 700,000 retail and manufacturing jobs, while simultaneously meeting steadily tightening emissions and fuel economy standards and capturing the market benefits of new leadership in innovation.

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