Here's why: The CAFE rule is the fleet-wide average fuel economy rating manufacturers are required by Washington to achieve. The new rule -- issued in response to a 2010 Obama directive, not to specific legislation passed by Congress -- would require automakers to achieve a 40.9 mpg CAFE average by 2021 and 54.5 mpg by 2025. In case you're wondering whatever happened to the National Highway Traffic Safety Administration, it has been supplanted in the CAFE process by the EPA. The proposed regulation was designed, according to the EPA, "to preserve consumer choice -- that is, the proposed standards should not affect consumers' opportunity to purchase the size of vehicle with the performance, utility and safety features that meets their needs." But the reality is that consumer choice will be the first victim.
Getting from the current 35 mpg CAFE standard to 54.5 can be achieved by such expedients as making air conditioning systems work more efficiently. We have a bridge in Brooklyn to sell to anybody who thinks that's even remotely realistic. There is one primary method of increasing fuel economy -- weight reduction. That in turn means automakers will have to use much more exotic materials, including especially the petroleum-processing byproduct known as "plastic." But using more plastic will make it much more difficult to satisfy current federal safety standards. The bottom-line will be much more expensive vehicles and dramatically fewer kinds of vehicles.
The average price of a new vehicle will go up at least $3,200, according to NHTSA, but experts outside government such as the National Automobile Dealers Association say the cost will be substantially higher. The U.S. Energy Information Administration projects that there will be no vehicles costing $15,000 or less, the segment of the market that college students and low-income consumers depend upon. Altogether, an estimated seven million buyers will be forced out of the market for new cars.
Total costs, as calculated by the EPA, will exceed $157 billion, making this by far the most expensive CAFE rule ever. For comparison, the previous rule in 2010 cost $51 billion, according to the EPA. But the EPA doesn't include this fact in its calculation: Annual U.S. car sales are 14-16 million units, yet over time, this rule will remove the equivalent of half a year's worth of buyers. Will that be when the EPA takes a cue from Obamacare and issues an individual mandate that we all must buy Chevy Volts?