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CAFE: The Story behind the Corporate Fuel Economy standards debate. What is the background on CAFE? First enacted by Congress in 1975, the Corporate Average Fuel Economy (CAFE) program mandates all auto manufacturers selling in the United States to meet certain fuel economy levels. Today, each manufacturer's fleet must average 27.5 miles per gallon (mpg) for cars and 20.7 mpg for light trucks (pickups, vans, minivans, and sports utility vehicles). The Alliance of Automobile Manufacturers (Alliance) and its member companies are taking a proactive, leadership role in researching and developing advanced fuel economy technologies for passenger cars and light trucks. These efforts will do more for real improvements in fuel consumption than short-term CAFE increases that effectively limit consumer choice. The Alliance urges Members of Congress not to raise CAFE standards, but rather to support development of breakthrough technology and consumer incentives for purchase of advanced technologies such as electric vehicles, hybrids and fuel cells. Why is the auto industry seeking to hold CAFE standards at current levels? Why is the auto industry seeking to hold CAFE standards at current levels? Because there's a better way. Last year, Congressman Kildee introduced H. R. 4270, the "Advanced Technology Motor Vehicle Fuel Economy Act of 2000." A group of Senators then introduced a companion bill, S. 2685. Members of the Alliance of Automobile Manufacturers strongly support these bills. This legislation would foster technology advancements and fleet fuel economy increases through consumer tax incentives and the flexible fuel vehicle credit, and it would provide greater clarity to our public policy priorities through a comprehensive study of fuel economy measures. Why does the auto industry support consumer tax incentives? Federal tax credits applied to the purchase of advanced vehicles such as qualifying electric and hybrid-electric vehicles put us on the right track for fuel economy advancements. Today, there is fierce competition among automakers to be first to market with even cleaner, more fuel-efficient cars and light trucks. Vehicles with advanced fuel-efficient technologies are on sale now from automakers, and more advanced technologies are on the horizon. To get these advanced automobiles on the road, it is critical that this technology be attractive and affordable to consumers. Federal tax credits are a great incentive for consumers to buy advanced technology vehicles. Why does the auto industry support a study of fuel economy measures? Since CAFE was enacted in 1975, many policies designed to increase energy conservation have come and gone, with some more successful than others. Meanwhile, our energy and economic situation has changed, along with American lifestyles. It's time to take a fresh look at current and future energy conservation without limiting our study to CAFE alone. What is the role of consumers in meeting CAFE standards? Meeting CAFE standards is not something that manufacturers can do by themselves. Because the standard measures sales-weighted fleet fuel economy, the result depends on what the consumer purchases. A manufacturer may offer a number of higher fuel economy models, but if customer preferences shift away from those models, then the fleet average for that manufacturer drops. Small shifts in consumer buying patterns can offset the fuel economy gains of manufacturers - which is what is happening today. Manufacturers already offer vehicles that can achieve higher than 40 miles per gallon, but fewer than 1% of consumers buy them. Advanced technology that preserves consumer desires for utility, safety and affordability is the answer, and that's why the Alliance supports federal tax credits for consumer purchases of vehicles with advanced technologies. What would be the impact of raising CAFE standards? Increasing CAFE standards would limit consumer choices and put manufacturers at odds with consumer priorities for utility and safety. If higher standards make vehicles less attractive to customers in terms of meeting their needs for work and family, vehicle sales will be affected, with impacts on suppliers and dealers, jobs and the economy. Isn't fuel economy important to consumers? Consumers actually care about fuel economy, but it is a lower priority for most of the public than other needs including utility, affordability and safety. If CAFE increases compromise these other needs, vehicle owners may well hold on to their older, less fuel efficient cars longer. Thus, increasing CAFE standards can be counterproductive in the U.S. The American market is very different from markets such as Europe and Japan in terms of driving distances, demands for utility, and passenger and cargo capability. A lot of this is due to fuel prices and driving conditions causing European and Japanese consumers to place a higher priority on fuel economy. Diesel technology is popular in Europe because of its fuel economy benefits, but this technology has not yet found broad acceptance in the U.S.
Aren't CAFE increases needed because so many people are buying light trucks? Cars and trucks are required to meet separate fuel economy averages. It's tougher to increase the fuel economy of trucks without compromising the functions for which they are designed - such as towing and load-carrying capacity. Technologies that resulted in significant car fuel economy improvements - such as front wheel drive and aerodynamic improvements - aren't always practical on trucks. But many of the advanced engine technologies that manufacturers are working on - lean burn, compression ignition, direct injection, hybrids and fuel cells - will have similar benefits for trucks. What are automakers doing to address fuel economy? Alliance members and other international automakers are working individually and with governments in research and development of advanced technologies. Cooperative research programs between the U.S. industry and government, most notably the Partnership for a New Generation of Vehicles (PNGV), have been mirrored by industry and governments in Europe and Japan. The goal of these programs is to achieve technology breakthroughs that will then be integrated into new vehicle fleets. These efforts are bearing fruit, as evidenced by the many exciting announcements in the past year of prototype vehicles, demonstration fleets and limited volume production vehicles powered by electric, hybrid-electric, and fuel cell engines and other promising fuel efficiency technologies. The challenge with all these technologies is high volume application at prices that customers can afford. Another way that automakers are addressing fuel economy is through development of alternative fuel vehicles. Automakers already offer more than 25 vehicles powered by alternative fuels, including natural gas, ethanol and liquefied petroleum gas. More than one million of these alternative fuel vehicles are on the road today. The availability of the fuels has been limited, and that is an issue that needs to be addressed further. Congress needs to extend the flexible fuel vehicle credit, because it has been successful in advancing fuel diversity in vehicles. At the same time, the U.S. needs to work on developing the infrastructure to make these fuels more widely available. PNGV Vehicle Goals
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