A study by the University of Michigan shows that auto manufacturers could meet tougher fuel economy standards simply by increasing the size of the vehicles they sell. A "footprint-based" formula for calculating mileage targets was adopted when Corporate Average Fuel Economy standards were revised in 2007. Researchers now think this could lead to bigger vehicles on the road rather than increases in fuel economy for our nation's fleet.

"It's cheaper to make large vehicles, and meeting fuel-economy standards costs [manufacturers] money in implementing and looking at what consumers will purchase," one of the researchers told Automotive News.

The study simulated changes that auto manufacturers could make to 473 different vehicles in order to meet the new regulations. The model allowed for changing the size of vehicles, as well as adding fuel-saving technology, wile balancing acceleration and performance with fuel economy. Pricing was also taken into account. The researchers think that the size of light trucks is likely to grow, even more than the increases they forecast for cars, with the changes coming about as soon as 2014.

"This study illustrates that there may be a substantial financial incentive to produce larger vehicles, and that it can undermine the goals of the policy," said the lead researcher, who wants the National Highway Traffic Safety Administration to revise its formula. Click past the jump to read the University of Michigan's press release on the study.
Show full PR text
CAFE standards create profit incentive for larger vehicles

Published on Dec 07, 2011
Written by Nicole Casal Moore

ANN ARBOR, Mich.-The current Corporate Average Fuel Economy standards create a financial incentive for auto companies to make bigger vehicles that are allowed to meet lower targets, according to a new University of Michigan study.

Over their lifetimes, these larger vehicles would generate between three and ten 1,000-megawatt coal-fired power plants' worth of excess carbon emissions. A 1,000-megawatt plant could provide power for more than half a million people.

"This study illustrates that there may be a substantial financial incentive to produce larger vehicles, and that it can undermine the goals of the policy," said Kate Whitefoot, who conducted the research as a U-M design science doctoral student and is now a senior program officer at the National Academy of Engineering.

"The results show that the policy can be adjusted to reduce these unintended incentives by making it harder to lower the fuel economy targets by producing larger vehicles."

The study is published online in Energy Policy.

The loophole is the formula for setting mile-per-gallon targets. The standards, which actually depend on the sizes of vehicles automakers produce, are expected to require that firms boost average fuel economy to 35.5 mpg by 2016 and 54.5 mpg by 2025. Those oft-cited numbers are averages. In reality, each car company must meet a different standard each year determined by the literal "footprints" of the vehicles it makes. A vehicle's footprint is its track width times its wheelbase.

According to the study, the sales-weighted average vehicle size in 2014 could increase by 1 to 16 square feet, undermining fuel economy improvements between 1 and 4 mpg. That means the industry as a whole would not achieve that year's fuel economy goal.

"We know it's a broad range, but we looked at a large range of possible consumer preferences for vehicle attributes and the answer is probably somewhere in the middle," said Steven Skerlos, an associate professor in the U-M Department of Mechanical Engineering.

"Will cars get bigger? Very possibly. Will that lead to more pollution? Yes. And there wasn't an emphasis in the rulemaking process that this could happen."

The impetus for the footprint-based formula back in 2006 was to prevent an influx of smaller vehicles, though not necessarily to do the opposite. Critics worried that the previous one-size-fits-all standard unfairly and perhaps dangerously rewarded production of slimmer, lighter vehicles that could put the domestic industry at a disadvantage and drivers at greater risk. The researchers believe the correction overshot its target.

They found that light trucks would grow even more than cars, which could yet lead to traffic safety concerns. They call on the National Highway Traffic Safety Administration to revise the formula.

This study was more than just an economic analysis. Whitefoot built a first-of-its-kind model that considered supply and demand but also incorporated engineering tradeoffs that carmakers consider as well as a wide range of possible consumer preferences.

They conducted simulations with 473 different vehicles. In the simulations, auto firms could adjust the size of their vehicles, add fuel-saving technologies, balance acceleration performance with fuel economy, and adjust vehicle prices. The result, Skerlos says, is an exciting new framework where economists, environmentalists, engineers and policymakers can work together.

"Sustainability is about tradeoffs," Skerlos said. "On the one hand, there's a concern about vehicle size largely driven by safety and the effect on domestic automakers. The adjustment to the CAFE standard tries to achieve high fuel economy while not compromising vehicle size, and the idea here is these things intersect and you have an equivalent of three to 10 coal-fired power plants hidden in that tradeoff."

The research is funded by the Michigan Memorial Phoenix Energy Institute and the National Science Foundation. The paper is titled "Design Incentives to Increase Vehicle Size Created from the U.S. Footprint-Based Fuel Economy Standards."
Show full PR text
CAFE standards create profit incentive for larger vehicles

Published on Dec 07, 2011
Written by Nicole Casal Moore

ANN ARBOR, Mich.-The current Corporate Average Fuel Economy standards create a financial incentive for auto companies to make bigger vehicles that are allowed to meet lower targets, according to a new University of Michigan study.

Over their lifetimes, these larger vehicles would generate between three and ten 1,000-megawatt coal-fired power plants' worth of excess carbon emissions. A 1,000-megawatt plant could provide power for more than half a million people.

"This study illustrates that there may be a substantial financial incentive to produce larger vehicles, and that it can undermine the goals of the policy," said Kate Whitefoot, who conducted the research as a U-M design science doctoral student and is now a senior program officer at the National Academy of Engineering.

"The results show that the policy can be adjusted to reduce these unintended incentives by making it harder to lower the fuel economy targets by producing larger vehicles."

The study is published online in Energy Policy.

The loophole is the formula for setting mile-per-gallon targets. The standards, which actually depend on the sizes of vehicles automakers produce, are expected to require that firms boost average fuel economy to 35.5 mpg by 2016 and 54.5 mpg by 2025. Those oft-cited numbers are averages. In reality, each car company must meet a different standard each year determined by the literal "footprints" of the vehicles it makes. A vehicle's footprint is its track width times its wheelbase.

According to the study, the sales-weighted average vehicle size in 2014 could increase by 1 to 16 square feet, undermining fuel economy improvements between 1 and 4 mpg. That means the industry as a whole would not achieve that year's fuel economy goal.

"We know it's a broad range, but we looked at a large range of possible consumer preferences for vehicle attributes and the answer is probably somewhere in the middle," said Steven Skerlos, an associate professor in the U-M Department of Mechanical Engineering.

"Will cars get bigger? Very possibly. Will that lead to more pollution? Yes. And there wasn't an emphasis in the rulemaking process that this could happen."

The impetus for the footprint-based formula back in 2006 was to prevent an influx of smaller vehicles, though not necessarily to do the opposite. Critics worried that the previous one-size-fits-all standard unfairly and perhaps dangerously rewarded production of slimmer, lighter vehicles that could put the domestic industry at a disadvantage and drivers at greater risk. The researchers believe the correction overshot its target.

They found that light trucks would grow even more than cars, which could yet lead to traffic safety concerns. They call on the National Highway Traffic Safety Administration to revise the formula.

This study was more than just an economic analysis. Whitefoot built a first-of-its-kind model that considered supply and demand but also incorporated engineering tradeoffs that carmakers consider as well as a wide range of possible consumer preferences.

They conducted simulations with 473 different vehicles. In the simulations, auto firms could adjust the size of their vehicles, add fuel-saving technologies, balance acceleration performance with fuel economy, and adjust vehicle prices. The result, Skerlos says, is an exciting new framework where economists, environmentalists, engineers and policymakers can work together.

"Sustainability is about tradeoffs," Skerlos said. "On the one hand, there's a concern about vehicle size largely driven by safety and the effect on domestic automakers. The adjustment to the CAFE standard tries to achieve high fuel economy while not compromising vehicle size, and the idea here is these things intersect and you have an equivalent of three to 10 coal-fired power plants hidden in that tradeoff."

The research is funded by the Michigan Memorial Phoenix Energy Institute and the National Science Foundation. The paper is titled "Design Incentives to Increase Vehicle Size Created from the U.S. Footprint-Based Fuel Economy Standards."


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  • 46 Comments
      LUSTSTANG S-197
      • 3 Years Ago
      That may be a contributing factor, however, I think a more important one is consumer demands. If consumers start demanding smaller cars, then companies will start designing smaller cars. I can see how this has taken shape, with how full-sized trucks have been getting bigger while compact trucks have been disappearing entirely.
        Pj Taintz
        • 3 Years Ago
        @LUSTSTANG S-197
        It isnt that hard to figure out that it will happen. It happened before. When cali started all this nonsense, SUVs were called "trucks" and therefore not hit with the changes that were required to cars, people bought up the SUVs, If the numbers say that the larger the car, the more "bad stuff" its allowed to make, than the car companies will make bigger cars!! Personally Im waiting for fins to make a comeback
      Artemiy Pavlov
      • 3 Years Ago
      Does this mean that what VW is bragging about makes sense? Or their claim is different?
      whofan
      • 3 Years Ago
      They should scrap CAFE. If government wants economy vehicles they should raise the gas tax. High gas prices sell small cars not regulations. I don`t like high gas prices but I see the need to get conservative on fuel consumption. Diesel should be embraced and cheaper than gas.
        EZEE
        • 3 Years Ago
        @whofan
        let me be liberal EZEE for a moment... Gas taxes affect the poor and minorities the hardest. Where you rich people dont even care about the price of gas, the poor and minorities must watch every penny! Why do you want to starve children, throw old people into the street, and force them to eat dog food? Why are you so racist? And so on. Personally, I have a gas card from my company, so I couldn't care less for my situation, but in addition to hurting the poor directly, you will also hurt them a second time when they pay the increased costs for consumer goods (gas taxes will increase shipping, so that will be passed on as well). Stop hating the poor. Stop hating minorities. Stop being racist. Resist efforts by greedy government people to raise gas taxes. Liberal EZEE out...
          clquake
          • 3 Years Ago
          @EZEE
          Can I upvote this more than once?
        clquake
        • 3 Years Ago
        @whofan
        This is a very short term solution If you raise the gas tax to the point where it adversely affects the driving population, it would mean rising costs for shipping. Raising the demand for diesel will result in much higher prices for diesel, all really bad for mainstream Joe Schmoes. A long term solution involving alternative fuels must be found.
        Frank
        • 3 Years Ago
        @whofan
        CAFE is like trying to make a fat person lose weight by mandating they have to wear smaller clothes. That's a paraphrase of what Bob Lutz said.
        LUSTSTANG S-197
        • 3 Years Ago
        @whofan
        I may catch flack for this, but I can think of many possible scenarios where raising the gas tax could backfire, other than it being political suicide. Then comes the question of where that money goes, and what happens as it starts to dry up when people start seeking more alternative fuels.
        JSP
        • 3 Years Ago
        @whofan
        Thumbs up for having the courage to raise this unpopular but effective solution. The market is demand-driven. Car companies make what consumers want to buy, so the most effective policy is one that encourages consumers to buy fuel-efficient cars.
          LUSTSTANG S-197
          • 3 Years Ago
          @JSP
          People are already demanding more efficient vehicles, hence the reason for all of the fuel saving technological advances making their way into newer vehicles at an alarming rate. Read up on what's taking place throughout the auto industry, and you will see exactly what I mean.
        Echelon Bob
        • 3 Years Ago
        @whofan
        I agree - raise the gas tax. Simple, effective, and needed to pay for road infrastructure, whose poor quality is destroying our cars, causing accidents, and lowering MPG. It would also be appropriate to use the gas tax to pay for our wars in the oil-producing countries. It's only political suicide because most voters make it so.
      Mdriftda
      • 3 Years Ago
      and obama fails again! lol liberals
        Jason
        • 3 Years Ago
        @Mdriftda
        If you actually read the article, the revision was made in 2007, under George W. Bush. The Presidency is actually a weak office, but many people will blame the President for things that are beyond his control. Reduce your partisanship and open your mind a little, if that's even possible.
      • 3 Years Ago
      [blocked]
        SheldonRoss
        • 3 Years Ago
        Oil companies do not get subsidized, that's an outright fabrication by the anti-oil lobby. Most of the "subsidies" these people go on about are tax provisions that ALL large US companies get. The only actual subsidies for oil are government R&D grants, and maintenance of the strategic oil reserve; which totals less than a billion dollars. http://www.washingtontimes.com/news/2011/dec/7/debunking-the-big-oil-subsidy-myth/ http://www.heritage.org/research/reports/2011/05/whats-an-oil-subsidy
        EZEE
        • 3 Years Ago
        The oil companies get advantages on depreciation of equipment and wells, but no direct subsidies. Ethanol, solar, and wind get huge subsidies. In many cases, wind farms shut down immediately as soon as the subsidies stop. How about a trade - no subsidies at all...?
          EZEE
          • 3 Years Ago
          @EZEE
          Nick, please cite sources and I will correct myself. Advantages on depreciation of wells and equipment are not direct payments.
          • 3 Years Ago
          @EZEE
          [blocked]
          Dump
          • 3 Years Ago
          @EZEE
          If the US did cut oil subsidies, the cost of fuel at the pump would double (near UK prices) and automakers would be forced to focus on small cars and making new cars smaller & more efficient. They're still making them bigger & bigger every year with the except of a few new models. A next-gen vehicle doesn't need to be wider, longer, taller, heavier, etc....it just needs to be better than the last iteration. See Cadillac SRX. And unfortunately, as a result of drastically higher fuel rates, the costs of everything would increase as well in a very noticeable way. Any service or product that depends on fuel would be affected --- any progress made in the housing market recovery would instantly vanish. Businesses that directly depend on fuel for daily transactions would have to cut staff to control skyrocketing fuel usage. The US just ain't ready, and something like this would have to be done gradually over a long period of time.
          clquake
          • 3 Years Ago
          @EZEE
          The subsidies for alternative fuels is needed to spur development. Unfortunately, ethanol isn't being done correctly in the US, simply raises the cost of food, while returning less gas mileage.
      Mchicha
      • 3 Years Ago
      This would be awesome!! I want my V8!!
        SAAj
        • 3 Years Ago
        @Mchicha
        I want my V12. That has nothing to do with my ability to keep the tank full.
      Vimicus
      • 3 Years Ago
      The right thing to do (and the future if you will) is to make smaller, more efficient cars as time goes on. Making larger, more efficient cars is completely self negating, I believe. Mind you, I have nothing personal against big trucks, especially if they are diesels. However, big trucks have a time and a place. Trucks do not belong in urban areas, unless they are for commercial/industrial purposes. I would even go as far as to say suburban areas. If you want to have one in metro areas you have to pay the government (society) for the luxury... The point of cities, metropolitan areas and "large human communities" is to, usually, do more with less. Less space, less consumption, less travel, etc. If we keep promoting the unregulated use of large vehicles we are promoting regression, amongst other things. Cars like the Smart, Fiat 500, Golf, Jetta, Civic, Chevrolet Sonic and Spark, Juke, Tiguan, A3... (the list goes on) are the future for urban/metropolitan areas. Every time I take the time to notice and see one person in a 5+ person car it makes me angry. Why the hell are we allowing people to have such a large footprint on the road, not to mention the environment? It just does not make sense and it shouldn't make sense to anyone. As for the CAFE standards, Volkwswagen is one of the largest car companies in the world. They also have a pretty good track record and make some really efficient compact cars. Why wouldn't people listen to them? /rant
      citidriver
      • 3 Years Ago
      Just get rid of the "light truck" category and have all vehicles sold for use on public roads meet the same safety (headlight and bumper height, too) and emission standards, you could then set a lower CAFE goal that would make more sense. But since "light trucks" get a break, there is more profit to be had. We don't even have the choice of a full size wagon over a CUV or minivan because of that.
        LUSTSTANG S-197
        • 3 Years Ago
        @citidriver
        Be careful what you wish for, in terms of have all vehicles meet the same headlight and bumper height standards, unless that is of course you like really tall cars. Seeing as that hurts fuel efficiency, my guess would be that you don't. And what's to stop one from lifting their truck for "off-road use"?
          LUSTSTANG S-197
          • 3 Years Ago
          @LUSTSTANG S-197
          I know. Economy cars are almost as tall as what many small pick-ups and SUVs were 15 years ago, and they would likely stay that way, or get even taller if they had to meet the standards you are proposing. I never understood these bumper height regulations because the minivans and smaller pick-up trucks have generally part of the problem proponents feel they would solve. It's the larger trucks, the segment in which manufacturers have shifted their focus over the last decade and a half. I think such mandates would only serve to continue this trend of manufacturers building larger vehicles. The positive I see here is that, despite family sedans and pick-up trucks growing ever larger, we do have more smaller vehicles to choose from now than we did just a few years ago.
      JamesJ
      • 3 Years Ago
      I would love to see the return of the Cadillac Fleetwood Brougham. That was my favorite car. It would be nice to have a full-size car that is capable of holding 6 people comfortably plus a large lockable trunk to put all their belongings in. Also big cars doesn't always mean big gas guzzlers.
      clquake
      • 3 Years Ago
      Perfect example of unintended consequences. Instead of promoting higher efficiency, they promoted sleazy corporate tactics. So instead of a 50 mpg small car, we get a 30 mpg large sedan, which clearly uses more resources, both in fuel and in production. I really don't want a boat in my driveway, please revise CAFE.
      Krazeecain
      • 3 Years Ago
      Great. Couple this with the ever-increasing safety regulations, and we're all gonna be driving around in inflated 2000+KG boats soon. Gotta love all that government regulation...
        lasertekk
        • 3 Years Ago
        @Krazeecain
        I remember when this was passed. Pay attention to the year of the law and the party in office, and take a guess who got the law catered to them. It was passed to skirt fuel mileage regulations, and give makers of trucks and suvs (high profit margins) a pass.
          Frank
          • 3 Years Ago
          @lasertekk
          "It was passed to skirt fuel mileage regulations, and give makers of trucks and suvs (high profit margins) a pass." And thereby keep our domestic auto industry profitable and Americans working. Wait, I thought Republicans hated working Americans! They should have vote for sky high CAFE and other regs so they would go out of business and only foreign makes would be sold here. Gee they are so dumb! Or is it the Democrats who pass these laws and then chastise companies when they have to lay off workers because they cant' afford to make things here anymore.
          montoym
          • 3 Years Ago
          @lasertekk
          I guess you totally forgot that the Democrats took over Congress after the 2006 elections. Congress passes these laws, the President only chooses to sign or veto them. On the contrary, it was Republicans who were opposed to the original law and they only voted for it after $21B in tax increases were deleted from the bill along with a mandate that electric utilities get 15% of their power from renewable sources by mid-decade. So, what's your point again? http://green.autoblog.com/2007/12/13/third-times-a-charm-second-vote-on-energy-bill-comes-up-1-vote/ http://green.autoblog.com/2007/12/13/breaking-35-mpg-it-is-senate-passes-energy-bill-back-to-the-h/
      Pointgrinder
      • 3 Years Ago
      And this is why they will go out of business again. Customers demand, remember?
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