President Trump's Review Won't Really Destroy Fuel Efficiency

Government

Don't worry, things won't suddenly get out of control.

When President Trump entered office, 18 automakers signed a petition to ease up on strict targets for fuel efficiency that were set by the Obama administration. The automakers claimed that reaching 54.5 average fleet MPG by 2025 would be too difficult and could end up costing jobs. Consumer groups quickly pleaded against loosening up MPG standards because it would end up hurting American drivers. These groups are fearful of the new regulations, but a recent report from Reuters suggests that they may not have to worry quite so much.

Analysts now say that Trump's review of emission and fuel-efficiency standards will only delay, not stop the original targets that were set by the Obama administration. This basically means that automakers will simply have a few more years to reach the standards that were negotiated back in 2012. Morgan Stanley analyst Adam Jonas says that "Of all the things that are likely to drive fuel economy, I would rank the EPA a distant third on the list, behind consumer preferences and the direction of technology." Even though automakers may not be forced to improve fuel economy as quickly, consumers still demand cars that have good fuel economy.

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Interestingly, California and nine other states in the Zero Emission Vehicle program may end up moving forward with the original targets. These states account for 30 percent of US auto sales and they could create a two-tiered environment with two sets of regulations,” said Mark Wakefield, managing director of AlixPartners’ automotive practice. Trump's review could take at least a year to take effect, but we will be interested to see how the administration deals with these emissions and MPG targets and how the automakers respond.

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