Fuel Economy Standards Are Supersizing Our Vehicles And Ford Scrapping Small Cars Is An Alarm Bell

May 22, 2018

In 2011, federal standards became “footprint based,” meaning vehicles are regulated based on the product of their length and width. Vehicles with larger footprints are subject to more moderate efficiency targets. It suggests that this feature may have incentivized automakers to super-size their cars to comply with the fuel economy regulation without actually improving fuel economy. A new study authored by (2011) ARE Alumnus Koichiro Ito and co-authored with ARE Assistant Professor James Sallee seeks to explore whether such size-based regulations were actually effective. The analysis shows that automakers indeed respond to the incentive created by size-based fuel economy regulation—they make bigger cars to achieve compliance at the lowest cost, often at the expense of actual gains in efficiency. The evidence makes it difficult to argue that size increases were purely in response to consumer demand for larger vehicles.