Fuel economy is a big issue for automakers. Not only do people want cars with good fuel economy, but the government demands certain standards be met. According to Ford CEO Mark Fields, current government standards could put as many as one million jobs at risk.
The Environmental Protection Agency set the corporate average fuel economy (CAFE) target for automakers at 54.5 mpg by 2025. The number was under review with a deadline for a final decisions set for April 2018, but the EPA didn’t wait. They made their decision ahead of Trump’s inauguration in hopes that it would be more difficult to bring the number down.
This comes despite studies showing that fuel economy is in a holding pattern with average fuel economy stuck at 25.1 mpg. It hit this number back in 2014 and hasn’t budged since. Until then, the number had gone up every year.
The problem largely comes down to what people are buying. When fuel prices were high, people wanted the most fuel efficient car possible so it made fiscal sense for automakers to build those cars. Now the price of gas is lower and people aren’t putting the same focus on fuel economy.
The family sedan is also disappearing. People are moving toward SUVs and trucks, which don’t boast the same high numbers. This deepens the problem automakers are facing. They need to build what people want to buy and people are buying less fuel efficient cars.
Ford CEO Mark Fields met with Donald Trump and let him know the 54.5 mpg goal is going to be a problem. He estimated that one million jobs are at risk if the regulations don’t change to match up with consumer demand. He’s not looking to get rid of fuel economy standards but instead wants some flexibility.
Fields gave the news to Trump during a meeting with the President at the White House. He was joined by Mary Barra of General Motors and Sergio Marchionne of Fiat Chrysler with the intent of discussing how multiple government regulations can be modeled into something that works for the consumer and corporations.
The chances of a reduction in fuel economy numbers was slim under the Obama administration, but Trump could take a different view. Although Barra and Marchionne didn’t ask for lower fuel economy standards outright like Fields, they will benefit, too, if a compromise is reached.
Otherwise, automakers have only eight years to make up a lot of fuel economy ground.