Corporate Average Fuel Economy.
https://en.wikipedia.org/wiki/Corporate_Average_Fuel_EconomyIf the consumers what cars and trucks that on average have too low an average mpg rating, the corporation must "fix" this by forcing their consumers to buy things that they do not want or pay a penalty to the government.
The CAFE achieved by a given fleet of vehicles in a given model year is the production-weighted harmonic mean fuel economy, expressed in miles per USgallon (mpg), of a manufacturer's fleet of current model year passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 pounds (3,856 kg) or less (but also including medium-duty passenger vehicles, such as large sport-utility vehicles and passenger vans, with GVWR up to 10,000 pounds), produced for sale in the United States. The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that model year, specific levels depending on the characteristics and mix of vehicles produced by each manufacturer. If the average fuel economy of a manufacturer's annual fleet of vehicle production falls below the applicable requirement, the manufacturer must either apply sufficient CAFE credits (see below) to cover the shortfall or pay a penalty, currently $5.50 per 0.1 mpg under the standard, multiplied by the manufacturer's total production for the U.S. domestic market. Congress established both of these provisions explicitly in EPCA, as amended in 2007 by EISA. In addition, a Gas Guzzler Tax is levied on individual passenger car models (but not trucks, vans, minivans, or SUVs) that get less than 22.5 miles per US gallon (10.5 l/100 km).
On July 29, 2011, President Obama announced an agreement with thirteen large automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025.
The cost is going to go even higher for anyone that wants a car or truck that is not the smallest of all vehicles.
Steel is cheap, but heavy. Heavy means lower gas mileage. It also generally means safer.
To get the average up, they must use more expensive material, more complex designs (more expensive engineering, testing, manufacturing, etc.), and simply charge you a premium sufficient to convince enough people to buy the little vehicles in the category.
Vehicles are a highly manipulated market. If not for the CAFE standards, vehicles would cost a lot less. However, providing the consumers the best value doesn't matter if you cannot satisfy the law. It skews everything making it far less efficient and therefore far more costly too the consumer.
Just think if they figured out how to make big vehicles a lot cheaper. Demand would go up. Average mpg's would go up. They'd be breaking the law and get fined, so they have to raise the price to make sure they don't sell too many or reduce the cost of the small vehicles so they sell more. It makes the system irrational and inefficient.
Posted: Sun May 15, 2016 10:04 am