Is COVID-19 impact and SAFE rule an enabler on investment reduction to meet regulation?@weight>
Download the full whitepaper
Discover if COVID-19 impact and the SAFE rule is an enabler on investment reduction to meet regulation?
A big shift on vehicle fuel-efficient technology cost?
The US Environmental Protection Agency (EPA) and the Department of Transportation's National Highway Traffic Safety Administration (NHTSA) have finalized The Safer Affordable Fuel-Efficient (SAFE) vehicles rule revising federal carbon dioxide (CO2) emissions and corporate average fuel economy (CAFE) standards for cars and light trucks. Under the new rule, automakers will now have to increase the average fuel economy of their new vehicle fleets by 1.5 % every year through their 2026 model year lineup, ultimately arriving at an average of about 40 miles per gallon. Under the previous rule, automakers had to increase the average fuel economy of their fleets by 4-5% annually, with the goal of hitting 48.7-49.7 miles per gallon in the 2025 model year cars.
Perhaps the question asked is "Will it impact the powertrain investment, implying reduction in technology cost to meet relaxed target?"
This paper focuses on the impact of COVID-19 and implementation of SAFE rule, with a nearly exclusive focus on change in market size for various technologies and change in investments by automotive manufacturers, for passenger cars (PCs) and light-duty trucks (LDTs) combined. To understand the full impact of the new SAFE rule requires the comparison of investments in fuel-efficient technologies during Obama-era CAFE standards to the comparable investments required under new SAFE rules. This paper evaluates the economic impact, including the vehicle sales, the powertrain investments required by automotive manufacturers to meet the fuel-economy standards and comply with the regulations (covering Obama-era CAFE standards and SAFE rule), underlying powertrain technology cost-benefit for selective car manufacturers and thereby arriving at potential avoidance of powertrain investment with the introduction of SAFE vehicle rules.