Last month, a group of American carmakers urged President Trump to remove cost-effective vehicle emission and fuel efficiency standards in an attempt to capitalize on changing political winds in Washington.
Trump didn’t waste any time: On March 15, in Detroit, Michigan, he announced plans to roll back the U.S. Environmental Protection Agency’s historic Clean Car Standards for new models hitting the market between 2022 and 2025 – vehicles that will account for 40 percent of the United States’ oil consumption and nearly 20 percent of our greenhouse gases.
As car makers ought to know, however, a reversal of fuel efficiency is ill-advised for reasons that go beyond pollution. To remain competitive in a global market increasingly dominated by China, they must invest in cleaner-running cars, period.
Markets, Trump move in opposite directions
Nearly three in four vehicles sold globally today are subject to existing fuel efficiency standards [PDF]. Add to that an explosive growth in sales of electric cars, and it’s clear where the market is headed.
China, the top market for electric vehicles with 630,000 such cars on the road, reported a 70-percent increase in sales of EVs in 2016. Nations such as Canada, France and Sweden saw similar increases.
The pace of adoption of advanced technology vehicles will continue to grow as Paris, Mexico City, Athens and other large cities restrict access to conventionally fueled vehicles to reduce exposure to harmful pollutants. The EPA fuel efficiency standards for car models produced between 2022 and 2025 keep us at the front end of this trend.
If we want to export American-made cars to China or France a few years from now, in other words, we’d better make sure these standards remain in place. It’s worth considering since China already makes up one-third of GM’s global sales.
Clean cars, strong industry go hand-in-hand
The historic EPA Clean Car Standards have been in effect since 2012 and require a predictable and flexible pace of improvement through 2025.
Last year, the EPA concluded an exhaustive technical review of the industry’s ability to meet the phase of the standards that cover the 2022-2025 model years. It found that the automotive industry can meet those standards at lower costs than predicted when they were initially finalized in 2012.
Indeed, the past few years have demonstrated that a robust automotive industry and leading fuel efficiency and greenhouse gas standards do go hand-in-hand.
In 2016, the industry sold more vehicles than ever before, increased employment by 700,000 direct jobs since the recession, and complied with the most stringent fuel efficiency standards in our history.
Lower fuel prices won’t change trajectory
Just in the past few months, Ford promised a new fully electric SUV vehicle with 300-mile range by 2020, General Motors started selling the 238-mile range Chevy Bolt, Nissan announced a new generation LEAF with 200 mile range, and Tesla declared that its gigafactory for battery production was open for business.
The explosive pace of technology development has coincided with another trend: falling oil prices.
Since mid-2012, the price of gas at the pump has fallen from $3.50 a gallon to $2.25 today. Industry associations have been trumpeting this as Exhibit A in its attack on the 2022-2025 standards. Except, this argument doesn’t hold up.
The critical nature of the fuel economy program is apparent through the flexible path of progress it enables in the event of lower-than-expected fuel prices. The fact is that even with lower fuel prices, consumers purchasing new vehicles in 2025 are expected to spend up to $8,200 less on fuel over the lifetime of those vehicles.
The EPA standards were also designed to reflect changing consumer taste in vehicles by creating distinct standards for various vehicle types. This means that performance will continue to improve even if consumers seek large vehicles.
Short-term profit motives won’t change this trajectory, nor can the Trump White House overcome global market trends. It means the president is doing American car companies a big disservice by rolling back these critical fuel economy rules.