Study Claims CAFE Loopholes Will Make Vehicles Larger, Not Smaller
December 14, 2011 12:46 PM
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Could the proposed standards lead to automakers vacating smaller platforms?
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
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.
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RE: Another government regulation backfiring?
12/20/2011 12:15:52 PM
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.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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