A few years ago, the federal government worked with automakers to set a very ambitious goal: Corporate Average Fuel Economy (CAFE) standards dictating automakers achieve an average fuel mileage of 54.5 miles per gallon (mpg).
But earlier this month, the EPA proposed changing those standards, essentially doing away with the 54.5 mpg goal.
Meanwhile the state of California – which has long set its own emission standards – has filed a lawsuit to keep the CAFE standards in place.
Where will this saga end up? Nobody really knows.
We wanted some clarity around the issue, so we asked Tom Stricker, TMNA vice president of regulatory affairs, to help make some sense of it.
You can watch this video and, if you want to read a more in-depth conversation, keep scrolling.
Driver’s Seat: We called you here today to talk about CAFE standards. I’m hearing a lot of stuff that really makes me confused so I’m hoping you can help me untangle this.
The industry agreed a number of years ago to a standard of approximately 55 miles per gallon fuel economy for our fleets by 2025. Right now, the administration is looking at potentially changing that target and we are working with them to try and right-size the requirement based on the current market conditions
So, what’s standing in the way right now with changing it?
Well there’s a process that the government has to go through any time it changes a regulation. It has to make a proposal, it has to justify why they feel changes are necessary, they have to gather input from the public, and then they have to make a final decision.
What kind of changes would Toyota like to see?
Things are much different than they were when these standards were put in place in 2012. So, we’re looking for changes that would, for example, incentivize new technologies like electric vehicles and fuel cells and other things that we’re working on for the future.
So what do team members need to know?
Two things. First, know that Toyota supports ongoing improvements in fuel economy. It’s who we are as a company, it’s in our DNA, and it’s what our customers and society expect from us. Second, take what you read and hear about this issue with a grain of salt. Conflict sells, and you’re likely to see some negative stories and attacks against the industry and Toyota. Despite what you might hear, Toyota is trying to forge a compromise that works for our customers and the environment.
As far as our plans to get to the 2025 goal, are those dependent on this debate?
Yes, they are. The one thing we’re trying to avoid in this current process is uncertainty in our business. We have a long planning horizon for our products and our powertrains. If this process goes sideways and ends up in litigation, we’re going to face a lot of uncertainty in how we run our business. So, we are seeking to find a middle ground between the state of California and those that are looking for the current standards to stay in place, and the administration that’s looking to make some pretty significant changes. We’re trying to play the middle ground and actually forge a solution that avoids litigation and gives us some certainty in how we run our business.
Path to Innovation -- The release of the Mirai, Toyota's first hydrogen fuel cell vehicle which gets the equivalent of 67 miles per gallon and emits zero emissions, served as an example of progress on the path to the CAFE standards.
Are we committed to green cars because of the regulation, or is it because it’s good for the environment?
We’re guided by the Toyota Environmental Challenge 2050, which is really our North Star on where we want to be on environmental technology across the board. At a corporate level we have a commitment to advanced technologies. We have goals to reduce our new vehicle carbon emissions by 90 percent by 2050. We have targets set for 2025 and 2030 to expand the number of zero-emission vehicle offerings that we sell. This is a direction the company is going to be moving in regardless of these regulations. The regulation is more about what’s the right cadence and what’s the right speed where we can meet the demands of consumers in the U.S. and still make progress.
The tricky part here is that we have this desire to become better stewards of the environment. But we’re in a market that loves trucks and SUVs and we have to cater to our customers on that. How do we balance that?
In every class and segment in which we operate, we need to offer products to consumers that have good fuel economy and the performance they expect. People will buy what they want to buy. And they should
buy what they want to buy. Our job is to make sure that we can provide them with the best technology and the best fuel economy at a reasonable price in any segment.
How do we compare to other automakers as far as where we’re at with our MPG?
Toyota has always been a leader in advanced technology and fuel economy. And we still have a very favorable position when it comes to our performance in this area. Our advantages have stemmed historically from our strong hybrid strategy. And getting out in front of the market with hybrid technology has allowed us to put ourselves in a position where we can at least have a fighting chance at meeting these more aggressive standards.
How are we working with other automakers on this?
We belong to a number or trade associations – The Auto Alliance and Global Automakers are the two largest. We’re working extensively within these groups to try and forge compromise on this issue between the administration and California.
It’s a team effort. And it’s really important that the industry stay united on this issue. We have managed to stay united up to this point, and I think with a unified voice we have a better chance of achieving success.
When can we expect this to be resolved?
We expect to see a final regulation put in place sometime in the first quarter of next year. Assuming we can reach a deal, that could be the end of it. But if things don’t work out, there could be litigation that could last for a number of years.
By Dan Nied