New Mileage Rules Debated by Carmakers and White House

The NY Times reports New Mileage Rules Debated by Carmakers and White House:

“The administration is proposing regulations that will require new American cars and trucks to attain an average of as much as 56.2 miles per gallon by 2025, roughly double the current level. That would require increases in fuel efficiency of nearly 5 percent a year from 2017 to 2025.
The standard would put domestic vehicle fuel efficiency on a par with that in Europe, China and Japan, saving consumers billions of dollars at the pump and creating for the first time a truly global automobile market.
The automakers say the standard is technically achievable. But they warn that it will cost billions of dollars to develop the vehicles, and they express doubt that consumers will accept the smaller, lighter — and in some cases, more expensive — cars that result.”

Consumers will accept it if that is what is offered, i.e. if all automakers have to produce this at a price to move (i.e. hiking the price of poor fuel economy vehicles to shift the demand curve), the CAFE standards will have achieved their end. Why we can’t just raise the gas tax to achieve the same ends and be done with it remains something I cannot fathom (yes I know politicians don’t like to raise taxes, but this is implicitly a tax, and surely people complain about regulation with the same frequency they complain about taxes – you could return the money to taxpayers somehow and bill it as a credit). Anyway the article suggests this will result in a 50% Hybrid fleet, which seems perfectly plausible, especially since we are talking 14 years from now. Until the recent downtick in hybrid sales, we were well on our way to that mark.