June 15, 2017

Highlights from Fuel Economy Standards Strengthen Automakers, an op-ed in Detroit News by Drew Kodjak, Executive Director of the International Council on Clean Transportation

Link to full store here

  • If President Trump and Congress want to inspire automakers to build more cars here in the U.S., then pulling out of the Paris Climate agreement, and threatening to roll back motor vehicle fuel economy standards are precisely the wrong way to do it,
  • The logic behind linking auto fuel economy policies to improved international competitiveness is a three-step process
    1. Demonstrate the link between vehicle emission standards and technology innovation.
      • Example – Ford F-150: New fuel economy standards implemented in 2012 inspired Ford to invest in a downsized, turbocharged EcoBoost engine and an all-aluminum body. These innovations have contributed to a 21 percent increase in fuel economy from 16 to 19 mpg over four years.
    2. Diffusion of auto emissions standards
      • The pattern has been well documented since the world’s most progressive standards tend to start in California and then spread to the U.S. government, over to Europe, and then to the rest of the world. Historically, emerging markets such as China, India, Mexico and Brazil have adopted emission standards from the U.S. and Europe after a lag time of between 5 and 10 years. This lag time gives U.S. manufacturers and component suppliers the opportunity to benefit from learning by doing and economies of scale from the technologies they invested in to comply with auto standards developed in the U.S.
    3. Job Element:
      • “There is an important jobs element to this story. Manufacturing plants and suppliers tend to locate where the markets are. For example, BMW and Mercedes, both German companies, build SUVs in the U.S. and export to Europe because the largest market for SUVs is in the U.S. B-segment small cars, which are most popular in Europe, are all produced there and exported to the rest of the world. It’s no coincidence that Tesla is located in California, the home of the Zero Emission Vehicle requirement. There’s nothing wrong with any country seeking to encourage investment in manufacturing in its own country. The point here is that if we want the auto manufacturing of the future to be located in the U.S., we need policies that incentivize investments in cutting-edge efficiency technology. And if we want to help our domestic manufacturers to make long-term investments in the cars of the future, then sticking with existing standards, and even strengthening them, is the right way to go.”