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Could the proposed standards lead to automakers vacating smaller platforms?

The proposed CAFE standards that have been looming all year will force some major changes on the automotive market. The government says that the much more stringent fuel economy standard will save consumers at the pump and reduce the national need for foreign oil. The auto industry has said that the cost of meeting the standard would increase the cost of new vehicles and could result in lost jobs.
According to a new study published by the University of Michigan, the CAFE standards will make cars larger, not smaller. The study indicates that there is a loophole in the economy standards that the automakers could exploit.
"For just about all the scenarios, the car got bigger,” said Steven Skerlos, an associate professor at U-M Department of Mechanical Engineering. “What you can model in a computer is different from reality, but based on this research we expect it to happen."
The loophole is that the formula used for determining miles per gallons required under the new standard uses the vehicles footprint (multiplying the wheelbase by track width). This was done to give larger vehicles less stringent economy standards to follow. In a nutshell, the formula favors larger vehicles and those vehicles may be less costly since they wouldn't have to use as much technology for fuel gains. 
Therefore, automakers may design new vehicles to be larger in an effort to target the lower economy standards. The study also claims that not only would the automakers considering redesigning a vehicle to go for the lower economy limits undermine the CAFE standard goals, but it would also create more pollution
"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.

Source: AutoNews

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Another government regulation backfiring?
By lightfoot on 12/14/2011 1:28:43 PM , Rating: 3
Kind of reminds me of the whole SUV craze that was driven in part by the previous CAFE standards. Truck platforms were simply more profitable because they were held to a lower standard.

Is anyone truly suprised by this? I'm not.

RE: Another government regulation backfiring?
By sigmatau on 12/14/2011 2:41:41 PM , Rating: 2
Or another way to look at it:

Companies faced with new regulations will find any way to get around them not only defeating the regulation but defeating the spirit of why the regulation was implemented.

It's like the government told Company A to stop dumping styrofoam into the landfills because it doesn't decompose quickly and should be recycled. So, instead of dumping the styrofoam into the landfill, Company A decides to burn it and release all the lovely chemicals into our atmosphere.

I really wish people would think more like this. The government can make the most carefully thought out law/regulation, but there will be always someone that will find a way to get around it.

RE: Another government regulation backfiring?
By lightfoot on 12/14/2011 4:35:47 PM , Rating: 5
Or another way to look at it is that government is stupid.

If you want to reduce automobile sales, TAX AUTOMOBILE SALES.

If you want to reduce gasoline use, TAX GASOLINE USE.

Don't make some half-assed crazy concoction of government regulations to try to shift the blame for increased costs to some other entity.

The increased cost is the government's fault, and they shouldn't try to hide the blame. People hate taxes and rightfully so. Don't make policies to try and pick winners and losers. Make policies because they are good policy. That's it. Period.

The CAFE standard is BAD POLICY.

RE: Another government regulation backfiring?
By idiot77 on 12/14/11, Rating: 0
RE: Another government regulation backfiring?
By Arsynic on 12/15/2011 9:50:39 AM , Rating: 4
I'm sorry, but the government shouldn't be in the social engineering business.

By Lerianis on 12/18/2011 9:42:57 PM , Rating: 2
Only in your personal opinion. Many people like myself say that when these companies will not do the socially responsible thing and increase fuel economy and other standards themselves, the government HAS to step in to encourage that.

It is simply good for the people of the world, good for our economy, and good for our national security.

RE: Another government regulation backfiring?
By sigmatau on 12/14/11, Rating: -1
RE: Another government regulation backfiring?
By Keeir on 12/15/2011 3:36:51 PM , Rating: 3
The question is not "How is CAFE bad?"

but rather "How is CAFE good?" or "Is CAFE better than the alternatives?"

Any regulation is fundamentally "bad". Now the regulation can accomplish overall good, but it starts negative, not positive.

If the end goal is to increase fuel economy, then increase the cost of gasoline. Consumers will put pressure on manufacturers to produce fuel efficient cars, at the rate they value it. Government revenue will increase (regardless of your political view, US revenue MUST increase and spending MUST decrease), and Government will have no burden of compliance costs.

CAFE ensures the Government is in the business of designing special tests, collecting data, assesing data, levying fines, holding hearings on the fines, etc, etc. Overall end cost to the government is much much higher with CAFE.

But why is CAFE bad?
Well, CAFE forces manufacturers to force consumers to buy fuel efficient cars. Manufacturers ALREADY have fuel efficient cars they could offer. The US marketplace DOES NOT WANT them. Recent studies have shown most US consumers (more than 50%) require fuel savings to pay off increases in initial cost in less than 36 months. Given that over 3 year the average US driver pays ~6,000 in fuel costs, and even a 50%! savings in fuel justifies only a 3-4,000 increase in initial purchase price.

So given the above, CAFE forces manufacturers to force you (average US consumer) to purchase cars than you do not see as a good value. And you get to blame the manufacturers for the higher prices of the cars you want to buy and the cheapness of the cars you can afford to buy. Stupid.

If we (the US consumers) really want more efficient cars... simply refuse to purchase less efficient cars! No need for CAFE OR Gas Taxes. But we are all too selfish for this... so we need something to force us to act in the way we apparently want to act... lets at least do it efficiently.

By Lerianis on 12/18/2011 9:46:42 PM , Rating: 2
With all due respect, I disagree about 'U.S. revenue must increase and spending must decrease.' Why?

Because the fact is that compared to what we spent years ago with less people in America (meaning less wear and tear on the road and other things) we are already spending TOO LITTLE and not taking in enough revenue.

Hell, in the 1970's, federal and state combined, we took in 25% of GDP. Today? 18.6% with nearly 2 times the people!

The real issue is that government isn't taxing enough and isn't taxing the right people, meaning the rich people and corporations that outsource overseas.

By Mint on 12/20/2011 12:15:52 PM , Rating: 2
It can pay off immediately if you lease. $3000 over 3 years works out to $80/mo, which is a lot. Put another way, if a car has a 60% residual after three years, then $3000 saved per year means break even occurs with a $7500 greater capital cost (assuming 0% interest, so reduce that however you see fit).

The thing holding back batteries and PHEV from being cost competitive today is not initial cost, but battery life and inventive financing. Imagine if, 10 years down the road (say 3000 charges), a battery can still function at 90% capacity. The value of the battery is still very high, and does not depreciate nearly as fast as the rest of the car. You can, for example, remove 90% of that battery and put them in a new car while running the old one as a regular hybrid until it's retired.

By lightfoot on 12/15/2011 3:52:24 PM , Rating: 2
I am still waiting for a thoughtful response to why CAFE is bad.

Shane wrote this really great article titled "Study Claims CAFE Loopholes Will Make Vehicles Larger, Not Smaller."

It goes into pretty good detail about one of the reasons that CAFE is bad.

The Cliff's Notes version is basically this: CAFE was designed to reduce fuel consumption and emissions. Instead it makes vehicles larger and consume more fuel and create more emissions. That is bad. Mmkay?

A fuel tax on the other hand would have EXACTLY the desired results and would not have loopholes because it is so simple. Heck, Europe even tested it for us and proved that it works.

How the Corporate Average Fuel Economy is supposed to work can't even be described in three pages much less three sentences.

A fuel tax makes fuel more expensive. People react by buying, and thus using, less fuel. The money collected by the tax can be invested in technologies that improve fuel efficiency, build better roads, and improve access to transportation to the poor.

CAFE is needlessly complex and irreparably flawed. It is bad legislation and bad government policy.

I am still waiting for a thoughtful response to why CAFE is good.

RE: Another government regulation backfiring?
By Strunf on 12/15/2011 7:35:38 AM , Rating: 2
The thing is that those taxes are blind taxes, as in they affect everyone that buys or has a car, sure if you want to make driving your own car a privilege only wealthy people can afford then yes TAX the hell out of automobile sales and gasoline, I'm pretty sure the "1%" would be more than happy to pay more of those taxes if that meant they would only share the roads with there own "kind".

By lightfoot on 12/15/2011 6:09:19 PM , Rating: 2
I don't disagree with your assessment, but I have to ask:
How do you reduce fuel use if you exempt the vast majority of the population from any rules designed to curb usage?

Due to sheer numbers, even the poor and middle class will need to cut back on fuel usage.

RE: Another government regulation backfiring?
By lagomorpha on 12/15/2011 10:30:34 PM , Rating: 2
i have to admit, as a motorcycle rider, i would happily pay $10/gallon in the summer months if it meant no SUVs on the road

By Lerianis on 12/18/2011 9:55:11 PM , Rating: 2
Why? The fact is that SUV's are safer to drive than many other cars and are less likely to get into an accident with a motorcycle because of their 'high and expansive field of view' than a small car is, according to the NHTSA.

RE: Another government regulation backfiring?
By Solandri on 12/14/2011 5:31:50 PM , Rating: 2
Companies faced with new regulations will find any way to get around them not only defeating the regulation but defeating the spirit of why the regulation was implemented.

Companies and consumers faced with new regulations found a way to get around them, defeating the purpose and spirit of the regulation. The sellers can't do anything without the buyers.

CAFE was based on the misguided belief that "if you build it, they will come." That consumers wanted smaller, more fuel-efficient cars, but the evil car companies simply weren't building them. Instead, it turns out that consumers predominantly want bigger, gas guzzling cars, and automakers were just giving them what they wanted. So automakers figured out a way to skirt around CAFE to continue to give consumers what they wanted, government regulations be damned.

RE: Another government regulation backfiring?
By sigmatau on 12/14/2011 8:35:13 PM , Rating: 1
Um no. The consumer is usualy out of the loop of any regulations not directly imposed onto them.

CAFE was made to decrease our increasing use of oil, not what you said at all.

By Flunk on 12/15/2011 9:21:42 AM , Rating: 2
I want a smaller more fuel efficient car, so someone must. If you want to drive a huge gas-guzzling wreck that's up to you but it's hard to argue that CAFE regulations haven't resulted in more fuel efficient cars and even huge SUVs. These new regulations seem too strict to actually achieve but CAFE regulations have achieved what they have set out to do in the past.

By OneOkie on 12/14/2011 1:45:47 PM , Rating: 1
I want a bigger vehicle. This would help lower the cost of the larger vehicles and I am all for that.

RE: sweet
By autoboy on 12/14/2011 1:59:38 PM , Rating: 5
I want the government to get out of regulating fuel economy on the back of the producer and instead focus on the consumer. Let fuel prices determine the demand for fuel efficient cars and quit subsidizing trains and buses nobody rides. We're broke.

RE: sweet
By soloburrito on 12/14/2011 2:24:46 PM , Rating: 3
Well stated. Government intervention typically does more harm than good. Look at how subsidizing ethanol has caused the price of corn to rise which then caused general food prices to rise.

Government-sponsored healthcare has created an environment where healthcare is a matter or how many treatments you can bill instead of focusing on a patients' needs.

Government-guaranteed student loans means anyone can afford college so the price of higher education has risen and colleges and universities have no incentive to control costs.

RE: sweet
By TSS on 12/15/2011 9:17:54 AM , Rating: 2
I wonder why that is. I mean it's not like government intervention is harmfull in all cases.

The financial crisis wouldn't have happened if the government intervened before everything fell down. Even if they where the ones that set the rules in the beginning. And i very much doubt the government has stayed out of people's business in the good times we all remember. I just wonder what has changed since then.

For example in my country the educational system is going to hell in a handbasket fast. It's been reformed a dozen times now the last 2 decades and currently it's just awefull. My point is 3-4 decades ago the system was quite good. Just about everybody agrees on that, old and new generations. That system was also instituted by the government at some point.

Same thing with the healthcare system. 2 decades ago, fine. Now the cost has tripled within 6 years. Because the government changed their old system and the new one sucks and is corrupt to the core.

Why is it that governments in the past could get it right, and our governments can't?

RE: sweet
By Spuke on 12/15/2011 1:21:48 PM , Rating: 2
The financial crisis wouldn't have happened if the government intervened before everything fell down. Even if they where the ones that set the rules in the beginning. And i very much doubt the government has stayed out of people's business in the good times we all remember. I just wonder what has changed since then.
Nothing has changed. Our governments ineptitude didn't just start yesterday. This is a DECADES old problem that's been brought up many times before. The only reason people are paying attention now is because of the economy.

RE: sweet
By idiot77 on 12/14/11, Rating: -1
RE: sweet
By Solandri on 12/14/2011 5:18:49 PM , Rating: 2
Supply-side market manipulation like CAFE tends to result in underproduction of vehicles consumers want, and overproduction of vehicles consumers don't want. With CAFE in particular, while it has driven the MPG of cars up, it's also driven up the sales of light trucks relative to cars (from about 15% in the 1950s-1960s to about 50% today). Light trucks (and SUVs) have to meet a lesser CAFE standard, and with cars being forced smaller by CAFE, people have gravitated towards SUVs as the vehicle of choice if you want a large car.

Overall, I'm not really sure it's saved us much gas since SUVs (which weigh more and experience more air resistance) tend to guzzle more gas than large sedans. And due to the inverted MPG metric, someone switching from a 25 MPG sedan to a 18 MPG SUV completely cancels out the fuel savings of someone switching from a 25 MPG sedan to a 40 MPG econobox.

Demand-side market manipulation as OP proposes avoids this problem. You increase the fuel tax. The higher fuel price drives consumers to buy smaller, more fuel-efficient vehicles, and the automakers shift production in response..

Cafe standards
By Isidore on 12/14/2011 6:52:18 PM , Rating: 1
It's really very simple: Just put fuel prices up to European levels and watch the cars get small and MUCH more fuel efficient. You can buy SUVs in Europe but they're all diesels, as are all the pick ups. From an American perspective it's also a way to roll back the far eastern dominance - I don't see any good Japanese or Korean diesels, much less Chinese ones. Higher fuel taxes would also solve the government deficit and create a more level playing field for mass transit. I bet I'm down to -5 before you can say 'fuel injection'.

RE: Cafe standards
By Seagrave on 12/15/2011 1:18:43 AM , Rating: 2
yes tax fuel more, so all other aspects of american life cost more, food and services, the cost of doing business. believe this guy that a fuel tax will fix our governments deficit and spending habits... yea right.

fuel prices affect everything and not equally. my company is hugely affected by fuel prices. a 25 cent increase equates to around 2 million dollars a day. then imagine the price of air travel, or the affect on our food pricing. diesel fuel is taxed more here in america because its has higher demand, sadly from commercial logistics.

european countries are much smaller geographically, tend to have good public transportation, and dont force large portions of workers to commute 30-45 minutes each day for work in their own vehicles. dont model the united states after another country with huge geological differences.

european pricing would cause huge economic burden on business as well as private citizens, increase unemployment, and drive more americans into poverty.

oh then discuss improving transportation in america, like small or large scale rail, it becomes liberal spending, or huge tax burdens for citizens. not foresight, future proofing, and reduced costs in the long run. we have places to go, room to improve, but our government keeps us from moving forward.

no good japanese diesels? what about the toyota hilux diesel truck. create a demand the foreign makers will respond faster then american companies can.

RE: Cafe standards
By Isidore on 12/15/2011 3:37:11 PM , Rating: 2
While the US does have a much lower population density which alters the numbers, in terms of size and transport distances, Europe is of equivalent size to the US. The single market has routes from Ireland to Hungary and from the north of Norway to southern Italy/ Greece. Of course a lot of bulk stuff goes by rail or ship including all the big rivers. Aviation fuel is not taxed on the same basis but that may change. Americans seem to have this phobia of higher fuel prices as if the world would end if they had to pay more. Canada, which is many ways a more extreme version of the US in having an even lower population density, has much higher prices and it hasn't ground to a halt. I am not saying that fuel prices should double overnight. But the idea that they should stay artificially low is storing up trouble for the future. Many people in Europe commute by car for the times you quote but about half the cars in Europe are diesel- cars, not trucks like the Toyota you mention. Why can't the US manufacturers respond quickly? Chrysler have an excellent source of good small diesels from Fiat, Ford from their European plants, and GM well who knows what they will do. I don't like high fuel costs but American vehicle design has become such a dinosaur, out on an evolutionary limb and bound to fail. This mind set needs to change. As for the transport of goods, the US is the only major market with such a low proportion of its trade going by sea in the form of feeder ships up the coasts. the cost of sea transport is much much lower than trucking.

RE: Cafe standards
By lightfoot on 12/15/2011 4:49:48 PM , Rating: 2
my company is hugely affected by fuel prices. a 25 cent increase equates to around 2 million dollars a day.

So you're saying that your company burns 8 million gallons of fuel per day? That is two thirds of what the Department of Defense spends. That is outragous by any measure.

Heaven forbid that you have to pass that extra expense onto your customers or *gasp* increase the efficiency of your fleet.

Your company seems to be a prime target for fuel useage reductions.

Give me one reason why your company specifically should not reduce fuel consumption, but everyone else should.

Don't get me wrong, I am not in favor of a fuel tax. But it's a MUCH better solution to fuel consumption than the existing CAFE regulations.

RE: Cafe standards
By lagomorpha on 12/15/2011 2:24:48 AM , Rating: 2
I think at least part of the idea is to create an incentive to produce more efficient new cars without creating an enormous financial burdon on lower working class people that are currently stuck with used gas sucking SUVs that got bought up in the 90s. Is it a good system? Not really but coming out as wanting higher gas taxes is political suicide right now.

RE: Cafe standards
By dubyadubya on 12/19/2011 3:20:42 PM , Rating: 2
Raising the price of fuel is a very bad idea. Doing so would raise the price of all products and services we buy. Reason being the United States is too vast. Everything we buy has transportation costs. Europe will nearly fit in the state of Texas so their transportation costs are much lower. Just look how much prices went up in the US as a result of the increased cost of fuel over the last few years. Raising the price of fuel will cost the American public way more than the added cost of the fuel. Add to this the state of the economy if anything we should be doing everything possible to lower the cost of fuel not raise it.


By Stuka on 12/14/2011 2:02:10 PM , Rating: 2
This makes me picture all cars as widebodies, which is a HUGE PLUS! Footprint says nothing of mass, so a lighter car will go farther to promote fuel economy than a larger one will gain in rule exploitation. So, lightweight, widebody Mustangs for everybody!! I love me some low offset wheels.

RE: Hmmm...
By lagomorpha on 12/15/2011 2:17:07 AM , Rating: 2
Enjoy your wide, light bodies twisting noticably every time you corner modestly hard. oh wait Mustangs cant do that anyway :P

RE: Hmmm...
By Spuke on 12/15/2011 1:27:35 PM , Rating: 2
oh wait Mustangs cant do that anyway :P
Guess you haven't read a car magazine lately.

RE: Hmmm...
By Dr of crap on 12/15/2011 9:03:40 AM , Rating: 2
I have to agree with the wider part.

I hate the small car that are ALL reduced in width and yet increased in height. Makes for worse handling than if they went for wider and lower.

The older Civics were lower and wider, not sure of the new ones.

This was obvious
By Colin1497 on 12/14/2011 2:43:41 PM , Rating: 2
When I first read about the new CAFE standards over a year ago, this was so obvious that I'd expect even a government bureaucrat to be able to figure out. They listed the cars furthest from their requirements and the Porsche 911 was at the top of the list, not because it was so inefficient (I get about 25mpg) but because it's so small. The target was really high for the 911, like 60 or 70 mpg. OOPS!

The government would rather that I go buy a large vehicle with worse mileage than continue to drive my small one that gets similar mileage to the average car. My prediction was that wheel bases and tracks would increase. The new 911? Larger wheel base and track...

RE: This was obvious
By Spuke on 12/14/2011 2:59:57 PM , Rating: 2
My prediction was that wheel bases and tracks would increase. The new 911? Larger wheel base and track...
I was wondering why they went that route.

RE: This was obvious
By lagomorpha on 12/15/2011 2:20:39 AM , Rating: 2
It is really bizarre that they use size rather than number of passengers. a 4 passenger BMW X6 should be the worst possible thing but comes out decently, and a 6 passenger mazda5 should do better if they didnt use the insane system they do. Making the seats wider should not improve the cafe rating. Obviously the system was designed by obese people.

By Arsynic on 12/15/2011 9:48:57 AM , Rating: 1
When you have the same idiots responsible for a $16 trillion debt making arbitrary rules for private industry, shit like this happens.

These people are idiots, most of them are criminals.

By No_City_Bum on 12/16/2011 12:09:32 AM , Rating: 2
There is a huge portion of people like myself who need a pickup to work with, and high gas taxes will also kill our paycheck. I and others like me, have no choice!!
Amazing, that we (or they)cannot get this right after a hundred years of car building. We bailed them out too.

By Lerianis on 12/18/2011 9:49:20 PM , Rating: 2
Hey, there is an easy fix for that: if you live in an area with heavy snows even once every 5 years that need an SUV/heavy-duty truck to get through?

You can put in a special tax form to get some of your fuel taxes back at the end of the year.

Think of it as a 'investment' and government-sponsored savings plan.

Not Surprised US Gov't Screwed Up Again
By n00bxqb on 12/14/2011 1:32:42 PM , Rating: 2
Assuming the information in this article is true (don't have time to cross reference right now), I'm seriously not at all surprised. Fuel economy standards, even as intended, are still screwed up. They introduce these supposedly tougher standards while still maintaining a 48 MPH (77 km/h) highway test speed (which they increased a few years ago, IIRC). Have they been on highways, per chance ? All the highways that are in my area are 80-110 km/h (50-68 MPH) and people generally go 10 over (90-120 km/h or 56-75 MPH).

So you have all these new vehicles that are being popped out that are larger than their predecessors to reduce fuel economy standards and, on top of it, you have all these new vehicles coming out optimized for 48 MPH where the average highway speed is about 65 MPH. It may not seem like a huge difference, but remember that the power required to ovecome air resistance is cubed, so a 35% increase in speed requires about 2.5x more power to overcome air resistance. If you have larger vehicles, air resistance is already increased (frontal area and drag coefficient being major factors as well at high speed), too.

What you theoretically end up with is substantially lower than optimal fuel economy at ACTUAL highway speeds.

By Mint on 12/14/2011 2:17:43 PM , Rating: 2
That may be the average highway test speed, but they're not tested at a constant speed. Most cars will actually get better MPG at the constant 65 MPH you're talking about for traffic-free driving.

Bigger != Heavier
By Shadowmaster625 on 12/14/2011 2:35:28 PM , Rating: 2
Who cares if it is bigger as long as it can be made lighter. More size gives you more control over drag.

RE: Bigger != Heavier
By lightfoot on 12/14/2011 4:22:47 PM , Rating: 2
But that's where you are wrong. All else being equal, bigger means heavier.

In fact it will be harder, not easier to make a lighter large vehicle than a smaller vehicle.

Admittedly there is a LOT more fat that can be trimmed from a modern full size SUV than there is from a modern compact car, but you still won't be able to get the full size SUV to weigh less than a compact using the same materials and technology.

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs

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