Automakers say CAFE compliance will cost jobs and make cars more expensive

Vehicle costs may be $1,800 higher by 2025.

An automaker-funded report released Thursday said the US adoption of Corporate Average Fuel Economy (CAFE) standards between now and 2025 will result in higher vehicle prices and job losses. The study, released by Indiana University's School of Public and Environmental Affairs and funded by the Alliance of Automobile Manufacturers, said the higher investments automakers need to make in order to comply with such standards will boost the average new-vehicle cost in 2025 by $1,836 (for this year, the average cost is up just $154). Additionally, such standards may reduce US automotive-industry employment by as many as 150,000 workers by 2021.

Such losses will eventually be offset by longer-term benefits via money saved as drivers spend less on fuel, according to the report. Still, lower-than-expected fuel prices have reduced demand for hybrids and plug-in vehicles, making it harder for automakers to recoup their investments in electrified-drivetrain technology. Part of the issue is that federal regulators predict that gas prices will be $2.74 a gallon in 2025, down from a previous forecast of $3.84 a gallon. Take a look at the report (get some coffee, because it's 202 pages) here.

In January, former Environmental Protection Agency ( EPA) administrator Gina McCarthy said the agency would not back down from its insistence that US regulators maintain its CAFE targets for 2025, in which automakers must achieve a CAFE-rated fleetwide 54.5 miles per gallon – which in real-world terms is closer to 40 mpg. Things have changed a bit since then, however, and President Donald Trump is considering tweaking or repealing the CAFE standards. This week, Scott Pruitt, President Trump's director of the Environmental Protection Agency (EPA), contradicted the EPA's long-held findings by saying he didn't believe carbon dioxide was the primary reason for global warming.

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