Corporate average fuel economy


Corporate average fuel economy[] standards are regulations in the United States, first enacted by the United States Congress in 1975, after the 1973–74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks produced for sale in the United States. More recently, efficiency standards were developed and implemented for heavy-duty pickup trucks and commercial medium-duty and heavy-duty vehicles. CAFE neither directly offers incentives for customers to choose fuel efficient vehicles nor directly affects fuel prices. Rather, it attempts to accomplish the goals indirectly, by making it more expensive for automakers to build inefficient vehicles by introducing penalties.
CAFE standards are administered by the secretary of transportation via the National Highway Traffic Safety Administration. The original CAFE standards sought to drive automotive innovation to curtail fuel consumption, and now the aim is also to create domestic jobs and cut global warming.
A study found that stringent CAFE standards together with government incentives for fuel efficient vehicles in the United States should accelerate the demand for electric vehicles.
In 2025, fines for violating CAFE standards were largely eliminated.

Overview

The Energy Policy and Conservation Act, as amended by the 2007 Energy Independence and Security Act, requires that the U.S. Department of Transportation establish standards separately for passenger automobiles and nonpassenger automobiles at the maximum feasible levels in each model year, and requires that DOT enforce compliance with the standards. DOT has delegated the responsibilities to the National Highway Traffic Safety Administration. Through EPCA and EISA, U.S. law also preempts state or local laws: "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards."
The CAFE achieved by a given fleet of vehicles in a given model year is the production-weighted harmonic mean fuel economy, expressed in miles per US gallon, of a manufacturer's fleet of current model year passenger cars or light trucks with a gross vehicle weight rating of 8,500 pounds or less, produced for sale in the United States. The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that model year, specific levels depending on the characteristics and mix of vehicles produced by each manufacturer. If the average fuel economy of a manufacturer's annual fleet of vehicle production falls below the applicable requirement, the manufacturer must either apply sufficient CAFE credits to cover the shortfall or pay a penalty, currently $14 per 0.1 mpg under the standard, multiplied by the manufacturer's total production for the U.S. domestic market. Congress established both of these provisions explicitly in EPCA, as amended in 2007 by EISA. In addition, a Gas Guzzler Tax is levied on individual passenger car models that get less than.
Starting in 2011, the CAFE standards are newly expressed as mathematical functions depending on vehicle footprint, a measure of vehicle size determined by multiplying the vehicle's wheelbase by its average track width. A complicated 2011 mathematical formula was replaced starting in 2012 with a simpler inverse-linear formula with cutoff values.
CAFE footprint requirements are set up such that a vehicle with a larger footprint has a lower fuel economy requirement than a vehicle with a smaller footprint. For example, the fuel economy target for the 2012 Honda Fit with a footprint of is, equivalent to a published fuel economy of , and a Ford F-150 with its footprint of has a fuel economy target of, i.e., published. Individual vehicles do not have to meet their fuel economy targets; CAFE compliance is enforced at the fleet level. CAFE 2016 target fuel economy of 34.0 MPG compares to 2012 advanced vehicle performance of Prius hybrid on the compliance test cycles: 70.7 MPG, Plug-in Prius hybrid: 69.8 MPGe and LEAF electric vehicle: 141.7 MPGe. The compliance fuel economy of plug-in electric vehicles such as the Plug-in Prius or LEAF is complicated by accounting for the energy used in generating electricity.
CAFE has separate standards for "passenger cars" and "light trucks" even if the majority of "light trucks" are being used as passenger vehicles. The market share of "light trucks" grew steadily from 9.7% in 1979 to 47% in 2001, remained in 50% numbers up to 2011. More than 500,000 vehicles in the 1999 model year exceeded the GVWR cutoff and were thus omitted from CAFE calculations. More recently, coverage of medium duty trucks has been added to the CAFE regulations starting in 2012, and heavy duty commercial trucks starting in 2014.
The National Highway Traffic Safety Administration regulates CAFE standards and the U.S. Environmental Protection Agency measures vehicle fuel efficiency. Congress specifies that CAFE standards must be set at the "maximum feasible level" given consideration for:
  1. technological feasibility;
  2. economic practicality;
  3. effect of other standards on fuel economy;
  4. need of the nation to conserve energy.
Historically, the EPA has encouraged consumers to buy more fuel efficient vehicles, while the NHTSA expressed concerns that smaller, more fuel efficient vehicles may lead to increased traffic fatalities.
Thus higher fuel efficiency was associated with lower traffic safety, intertwining the issues of fuel economy, road-traffic safety, air pollution, and carbon emissions. In the mid-2000s, increasing safety of smaller cars and the poor safety record of light trucks began to reverse this association. Nevertheless, in 2008, the on-road vehicle fleets in the United States and Canada had the lowest overall average fuel economy among first world nations: in North America, versus in the European Union and was even higher in Japan, according to data as of 2008. Furthermore, despite general opinion that larger and heavier vehicles are safer, the U.S. traffic fatality rate—and its trend over time—is higher than some other western nations, although it has recently started to gradually decline at a faster rate than in previous years.

Effect on automotive fuel economy

In 2002, a committee of the National Academy of Sciences wrote a report on the effects of the CAFE standard. The report's conclusions include a finding that in the absence of CAFE, and with no other fuel economy regulation substituted, motor vehicle fuel consumption would have been approximately 14 percent higher than it actually was in 2002. However, due to the effect of these standards on the types and weights of vehicles sold, it has increased the costs of vehicles and may have led to an estimated 1,300 to 2,600 increased fatalities in the year 1993 alone, though certain members of the committee dissented from the latter opinion.
A plot of average overall vehicle fuel economy for new model year passenger cars, the required by law CAFE standard target fuel economy value for new model year passenger cars, and fuel prices, adjusted for inflation, shows that there has been little variation over the past 20 years. Within this period, there are three distinct periods of fuel economy change:
  1. from 1979 to 1982 the fuel economy rose as the CAFE standard rose dramatically and the price of fuel increased;
  2. from 1984 to 1986 the fuel economy rose as the CAFE standard rose and the price of fuel decreased rapidly;
  3. from 1986 to 1988 the fuel economy rose at a significantly subdued rate and eventually leveled off as the price of fuel fell and the CAFE standard was relaxed
before returning to 1986 levels in 1990. These are following by an extended period during which the passenger car CAFE standard, the observed average passenger car fuel economy, and the price of gasoline remained stable, and finally a period starting about 2003 when prices rose dramatically and fuel economy has slowly responded.
The law of supply and demand would predict that an increase in gasoline prices would lead in the long run to an increase in the average fuel economy of the U.S. passenger car fleet, and that a drop in gasoline prices would be associated with a reduction in the average fuel economy of the entire U.S. fleet. There is some evidence that this happened with an increase in market share of lower fuel economy light trucks and SUVs and decline in passenger car sales, as a percentage of total fleet sales, as car buying trends changed during the 1990s, the impact of which is not reflected in this chart.
In the case of passenger cars, U.S. average fuel economy did not fall as economic theory would predict, suggesting that CAFE standards maintained the higher fuel economy of the passenger car fleet during the long period from the end of the 1979 energy crisis to the rise of gasoline prices in the early 2000s. Most recently, fuel economy has increased about one mpg from 2006 to 2007. This increase is due primarily to increased fuel efficiency of imported cars. Similarly, the law of supply and demand predicts that due to the United States' large percentage consumption of the world's oil supply, that increasing fuel economy would drive down the gasoline prices that U.S. consumers would otherwise have to pay. Reductions in petroleum demand in the United States helped create the collapse of OPEC market power in 1986.
The "CAFE" and "CAFE standard" shown here only regards new model passenger car fuel economy and target fuel economy rather than the overall U.S. fuel economy average which tends to be dominated by used vehicles manufactured in previous years, new model light truck CAFE standards, light truck CAFE averages, or aggregate data.

Calculation

Under CAFE regulations, a light vehicle's fuel economy,, is determined as the weighted harmonic average of the values measured on the “city” and “highway” drive cycles.

has long been known to overestimate real-world fuel economy which, as of the 2022 model year, is typically 76 percent of, and has gotten worse over its decades of use. is not the same as the Monroney window sticker value for consumer information.
Fleet fuel economy is calculated using a harmonic mean, not a simple arithmetic mean – namely, the reciprocal of the average of the reciprocal values. For a fleet composed of four different kinds of vehicle A, B, C and D, produced in numbers nA, nB, nC and nD, with fuel economies fA, fB, fC and fD, the CAFE would be:

For example, a fleet of 4 vehicles getting 15, 13, 17, and 100 mpg has a CAFE of slightly less than 19 mpg:

While the arithmetic mean fuel economy of the fleet is just over 36 mpg:

The harmonic mean captures the fuel economy of driving each car in the fleet for the same number of miles, while the arithmetic mean captures the fuel economy of driving each car using the same amount of gas.
For the purposes of CAFE, a manufacturer's car output is divided into a domestic fleet and a foreign fleet. Each of these fleets must separately meet the requirements. The two-fleet requirement was developed by the United Automobile Workers as a means to ensure job creation in the United States. The UAW successfully lobbied Congress to write this provision into the enabling legislation – and continues to advocate this position. The two fleet rule for light trucks was removed in 1996.
For the fuel economy calculation for alternative fuel vehicles, a gallon of alternative fuel is deemed to contain 15% fuel
as an incentive to develop alternative fuel vehicles. The mileage for dual-fuel vehicles, such as E85 capable models and plug-in hybrid electric vehicles, is computed as the average of its alternative fuel rating—divided by 0.15 —and its gasoline rating. Thus an E85-capable vehicle that gets 15 mpg on E-85 and 25 mpg on gasoline might logically be rated at 20 mpg. But in fact the average, for CAFE purposes, despite perhaps only one percent of the fuel used in E85-capable vehicles is actually E85, is computed as 100 mpg for E-85 and the standard 25 mpg for gasoline, or 62.5 mpg. However, the total increase in a manufacturer's average fuel economy rating due to dual-fueled vehicles cannot exceed 1.2mpg. Section 32906 reduces the increase due to dual-fueled vehicles to 0 through 2020. Electric vehicles are also incentivized by the 0.15 fuel divisor, but are not subject to the 1.2 mpg cap like dual-fuel vehicles.
Manufacturers are also allowed to earn CAFE "credits" in any year they exceed CAFE requirements, which they may use to offset deficiencies in other years. CAFE credits can be applied to the three years before or the five years after the year in which they are earned. The reason for this flexibility is so manufacturers are penalized only for persistent failure to meet the requirements, not for transient non-compliance due to market conditions.