On Wednesday, President Trump came to Michigan to announce his administration's long-anticipated plan to review the Obama administration's ambitious - automakers have argued stringent and expensive - CAFE fuel-economy standards. Today, Fortune magazine lays out an argument for why easing those standards is not in the automakers' best interest.
Margo Oge wrote the piece for Fortune. She worked at the EPA for 32 years, was the director of the agency's Office of Transportation and Air Quality and was a key architect of the CAFE standards that Trump will review and presumably roll back. She is also the author of the book Driving the Future: Combating Climate Change with Cleaner, Smarter Cars. Coincidentally, Trump's proposed federal budget out today calls for a 31-percent cut at the EPA. Other science-based agencies and programs take a hit as well.
Oge sets aside arguments about climate change and the environment and focuses on the business case for maintaining the CAFE standards leading to a 54.5-mile-per-gallon fleet average by 2025. She points out that the last time the federal government eased these standards was the mid-1980s. Detroit experienced a boost in pickup and minivan sales, but easing the CAFE standard handed the competitive advantage to fuel-efficient foreign automakers. So when gas prices went up, the foreign automakers' market share rose from 25 percent to 55 percent over two decades, weakening the Big Three financially until the 2008 recession sent Chrysler and GM hat-in-hand to the federal government for a bailout.
Oge also wonders why the administration would entertain a rollback that would harm the impetus for electric vehicles just as EVs are approaching a tipping point in terms of range, price and acceptance. Gas prices will rise again, as they inevitably do. "So why," she asks, "is the industry shooting itself in the foot, again?"
Beyond Oge's reasoning, there is the argument that the Obama-era standards are driving innovation, a fact recognized by the industry itself and quantified by these researchers at Cornell and UC-Irvine. It's a premise easily demonstrated by the number of EVs, hybrids, turbocharged engines and new transmissions and myriad other developments to hit the road in recent years. Other advocates, such as the Union of Concerned Scientists, argue that the Obama CAFE standards will, by the year 2030:
- Create 570,000 jobs rather than cost us jobs.
- Promote energy independence, saving three million barrels of oil a day, the amount we import from the Persian gulf and Venezuela.
- Reduce greenhouse-gas pollution by up to 570 million metric tons a year, the equivalent of shutting down 140 coal-fired power plants.
- And save consumers $140 billion, or about $8,000 per car.
But the bottom line for automakers is this: It's important for any business to listen to its customers. And American consumers say, in survey after survey after survey, that they support and desire greater fuel efficiency, up to 60 mpg, and in survey after survey after survey feel the government and companies should address global warming. This certainly isn't always borne out in current vehicle-buying habits, but let gas prices go back up and see what happens.
Perhaps the administration won't lower the standards all that much. Or perhaps automakers will continue their innovation all on their own, without such a challenging CAFE mandate. Then again, what do any of us get done without goals?