Analysts: Trump’s CAFE Review to Slow, Not Stop, Efficiency Gains

When President Donald Trump called for a reevaluation of 2025 CAFE goals, it was seen as a sign the U.S. was moving toward an era of relaxed fuel economy standards. But according to some analysts, the Trump review will delay, but not stop, the original targets set forth by the Obama administration.

The auto industry may end up gaining a few more years to meet the CAFE goals, which required automakers to achieve an average of more than 50 mpg in their fleets. According to Morgan Stanley analyst Adam Jonas, recent actions by the government may have a relatively small effect on vehicle efficiency.

“Of all the things that are likely to drive fuel economy, I would rank the EPA a distant third on the list, behind consumer preferences and the direction of technology,” he told Reuters.

Rescinding the original CAFE targets could prove risky for exporting cars from the U.S. to Europe or China, which have tougher regulatory environments, says one analyst. “I don’t think we’re going to see a rollback,” said Kristin Dziczek, director of the Center for Automotive Research’s labor and industry group. “At most, I think we may see a slowing of the timetable.”

Meanwhile, 10 states including California are moving forward with their own fuel economy goals. Differing standards on the state and federal level “could drive costs higher if automakers have to build two versions of the same vehicle to meet the two different standards,” said Mark Wakefield, managing director of AlixPartners’ automotive practice.

As we previously reported, Trump’s review of the CAFE standards could take a year. The move was seen as a major win for automakers that argue the stricter regulations will increase costs and threaten jobs. A recent study funded by a group of automakers said the rules would increase vehicle prices $1,800 by 2025 and result in 150,000 job losses in 2021. However, consumers would save at the gas pump, and by 2031, a net gain of 150,000 jobs could be achieved.

Source: Reuters

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