New Mobility Could Change Future CAFE Rules

TRAVERSE CITY, MI – “Last year felt like the ‘Thrilla in Manila’ and this year we’re all smoking the peace pipe,” says Mitch Bainwol, chairman and CEO of the Alliance of Automobile Manufacturers, likening last year’s Center for Automotive Research Management Briefing Seminars session here on CAFE regulations to the famous Ali-Frazier prizefight.

Indeed, compared with 2016’s throwdown, this year is a veritable Summer of Love. The players on each side of the policy debate even compliment each other on their thoughtful ideas and creativity.

“I’m glad we’re all willing to sit in the same room and figure out a way to go forward,” says Annette Hebert, chief of Emissions Compliance, Automotive Regulations and Science Div. for the California Air Resources Board. She mentions China, Germany, France, the U.K. and other countries are announcing future bans on gasoline and diesel vehicles, while CARB has not suggested anything so drastic.

The regulatory landscape has changed dramatically in the past 12 months. Donald Trump was elected president and he named a new EPA chief who favors fewer regulations, not more. A midterm review of the 2022-2025 CAFE standards was rushed through during the final days of the Obama Admin. but a second round has been scheduled by Trump.

Now the same issues are on the table: fuel economy vs. safety; mandates for hybrids and electric cars that customers shun; emissions rules that make vehicles unaffordable; and more, but the tone is more conciliatory.

That is because both sides seem to realize new trends in personal mobility, not politics, may make the 45-year-old CAFE standards obsolete.  

Both sides agree vehicle emissions need to be reduced and consumers want fuel-economy improvements to continue. It’s all a matter of degree – how much the changes cost and whether consumers will pay for them.

“We did not ask for a rollback of the standards. We asked for a robust analysis of the data,” says John Bozella, president and CEO-Global Automakers. “I think some assumptions have significantly changed.”

Chris Grundler, Director-Office of Transportation and Air Quality for the EPA, doesn’t disagree.

He says there still are big problems to be solved; 40% of Americans live in places with unhealthy air, and he mentions a recent guilty plea related to diesel-engine defeat devices.

Bozella and Bainwol counter by saying separate state regulations such as California’s zero-emissions mandate are unfair to manufacturers who were promised by the Obama Admin. there would be one single set of national regulations, not a patchwork quilt of state rules.

And since new CAFE rules were implemented in 2011 there has been a massive shift in product mix toward CUVs and SUVs, gas prices have remained low and autonomy and connectivity are changing personal mobility.

It is the new area of mobility where both sides seem to find common ground.

“This new mobility seems to be happening,” Grundler says. “I think we need to think differently. We need to be thinking beyond simply tailpipe standards measured in the laboratory. We need to stop assuming all vehicles are going to be owned by individuals. We need to think beyond policies focused strictly on OEMs.

“We have to think how we can incentivize game-changing technologies and be willing to identify opportunities for risk-taking and experimentation.”

Grundler suggests focusing incentives more on meeting emissions goals in the real world rather than in laboratory tests and having public policy take a more system-wide view of vehicles that are in ride-sharing fleets, transporting more people with fewer overall emissions.

“What if dealers could get credits?” he wonders aloud almost in a stream of consciousness. Grundler throws out yet more ideas, making it clear he hasn’t even bounced them off his bosses yet.

“I think we need to collectively open up our minds to think differently. That’s what regulatory reform means to me. And we can find solutions grounded in market dynamics that would be good for business as well as the environment.”

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