CAFE Rules Will Increase Vehicle Prices $1,800 by 2025: Study

New fuel economy and emissions standards will lead to job losses and increased prices for vehicles in the next several years, according to a study conducted by Indiana University.

Vehicles are expected to become more expensive every year over the next eight years, reaching the point where consumers will spend an extra $1,800 per vehicle by 2025 due to the new rules. As drivers stop buying more expensive vehicles, job losses are expected to reach their peak at about 150,000 in 2021.

The study was funded by the Alliance of Automobile Manufacturers, a group that has been critical of the fuel economy rules for a long time. The alliance is made up of 12 automakers including BMW, FCA, Ford, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Porsche, Toyota, Volkswagen, and Volvo.

In the long term, the picture looks a little better. Consumers will end up saving more money on gas, and by 2031, a net gain of 150,000 jobs could be reached.

Just before President Donald Trump took office, regulators locked in fuel economy standards through 2025. But automakers have called on Trump to roll back the rules, citing costs as a major concern. In January, Ford CEO Mark Fields met with Trump and warned that 1 million jobs could be in jeopardy if new fuel economy rules don’t take into account consumer demand.

Source: Bloomberg

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