Thursday, May 19, 2011

CAFE Math.. Why the gas hogs have to go.

Over a year ago the EPA released the new Corporate Average Fuel Economy standards going forward. New Federal CAFE standards officially released, 34.1 mpg by 2016
The overall fleet fuel mileage requirement will be an average between both passenger cars and light trucks, and NHTSA is predicting that the 2012 numbers will be 33.3 for cars and 25.4 for trucks in 2012, rising to 37.8 for cars and 28.8 for trucks by 2016.

And that doesn't sound like all that much of an increase from 2011's standards of 30.2 mpg for cars and 24.1 mpg for light trucks.  But a bit of math shows that this is not going to take just some minor tweaking here and there.  It is going to be very difficult, or at least expensive, to keep on offering high performance vehicles with poor fuel economy.  The key detail is in how the CAFE number is calculated. The average fuel economy is a weighted average of the harmonic mean, not the arithmetic mean of the mileage ratings of the individual vehicles.  I'll let the NHTSA website explain it to make the math clear..
The regulatory language describes the calculation as: “the number of passenger automobiles manufactured by the manufacturer in a model year; divided by the sum of the fractions obtained by dividing the number of passenger automobiles of each model manufactured by the manufacturer in that model year by the fuel economy measured for that model.”
SO,  based on that explanation, feel free to dive in and calculate the fleet average for a manufacturer that sold equal numbers of vehicles with 50 mpg and 30 mpg.  That would make the fleet average 40 mpg right?  Uh, not so fast.   According to the definition you have to calculate the fleet average based on gallons-per-mile, not based on miles-per-gallon.  The answer to the problem is 37.5 mpg, which just so happens to be close to the 2016 standard for passenger cars.  To comply with the CAFE standards in 2016, manufacturers will have to sell as many vehicles that get 50 mpg as 30 mpg. 

Hopefully we will actually get to see what a 50 mpg vehicle looks like sometime soon, at least in concept, seeing as in a few years they will have to comprise about half the total fleet.  That is unless manufactures go ahead and penalize customers who want a vehicle that gets only 30 mpg to cover the gas-guzzler penalty.

The harmonic mean method for calculating the CAFE number puts a severe penalty on vehicles with relatively low mileage because they drag down the overall mileage average.  As an extreme example consider that the average between 1 mpg and 100 mpg is only 2 mpg.   To acheive the 2016 CAFE requirement of 28.8 mpg for light trucks, manufacturers will have to sell one truck that gets 39 mpg for every for truck that gets 23 mpg.  Seeing as there is no truck that can get close to 39 mpg now it will be a real challenge to rely on that vehicle for half the sales of light trucks.   Either that or the approach will have to be increasing the efficiency of the lower mileage vehicles and there is no easy way to squeeze much more economy from a full size V8-powered pickup truck with current towing and weight capabilities.

True there are some substantial mileage credits manufacturers can get by offering flexible fuel vehicles, but soon those will diminish unless automakers can demonstrate that drivers are actually buying the E85 fuel, which they aren't.  It may be cheaper per gallon but it provides less fuel economy so it ends up more expensive per mile and truck owners are savvy enough to figure that out.  So I don't look for the flexible fuel credit to be the savior that enables a full portfolio of light duty trucks to meet CAFE long-term.

To comply with 2016 CAFE standards manufacturers will have to keep pushing the limits of engineering and technology to get maximum fuel efficiency out of each vehicle. But the way I see it, all of the best efforts of the automakers will not do enough to elevate the fleet average to enable the continued offering of high performance and full sized vehicles in significant volume.   The low mileage vehicles will be purged from the lineups except for the high end vehicles that can command the gas guzzler premium from customers.

So get used to those little B-class subcompact vehicles.  Good chance you'll be driving one in a few years.  


  1. The only concern is that car prices may increase as a result of CAFE. The cost of the development of these efficient cars will most likely passed on to consumers.

  2. True that development costs for efficiency gains eventually get passed on to consumers, but the consumers will get their money back in lower fuel costs over time. If all the automakers have to comply then it comes down to who has the most ingenious approach. I like the domestic's chances.

  3. From my understanding, it seems like the CAFE standards apply to the entire fleet and not individual cars. Car companies can still sell SUV's and trucks if they offset them with EV's and hybrids.