How Much Will New MPG Requirements Cost Car Buyers?

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Where'd everybody go?

By 2025, it looks like the average light vehicle sold in the U.S. will have to get somewhere between 47 mpg and 62 mpg. The technology needed to produce such fuel efficiency will increase the initial cost of each car somewhere between $2,000 and $10,000, while saving the driver somewhere up to $7,000 on gas while owning the car.

Did you note the repeated use of the word “somewhere” in all of these rough estimates? That’s because these estimates seem to be rougher than most—understandably so because of all the moving parts and guesswork that must be factored in.

New mpg regulations from the Environmental Protection Agency and the National Highway Traffic Safety Administration are expected to be announced by the end of September. The regulations will mandate increased fuel efficiency in car fleets produced from 2017 through 2025. How much of an increase are we talking about? Between 3% and 6% annually, meaning that if a 5% increase in fuel economy is approved—this is the figure the government seems to be pushing—the average new car would get 56.2 mpg in 2025. That’s better mileage than a Prius gets right now.

Per Edmunds AutoObserver, the Obama administration says that most drivers will wind up paying less in the long run, regardless of the initial upfront price increase:

The administration is estimating that hiking the Corporate Average Fuel Economy (CAFE) standard to 56.2 miles per gallon from the 35.5 mpg requirement already set for 2016 would add from $2,100 to $2,600 to the initial price of a new vehicle in 2025 – but would result in lifetime fuel savings of $5,500 to $7,000. The initial buyer would have to own the vehicle for at least three years to recoup the initial price premium through fuel savings.

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The Center for Automotive Research (CAR) (via Popular Mechanics), meanwhile, offers a scenario in which drivers would wind up paying more—a lot more. If the 62 mpg standard is adopted, a CAR study holds, by 2025, the price of a new car would go up by $9,790, and an estimated 1.7 million jobs would be lost.

In situations like this, different organizations will cherrypick the data to skew estimates in their own interests. Environmental groups will spread the word that vastly increasing fuel efficiency will only cost the car buyer a couple thousand bucks up front—and save money in the long run—while organizations close to car manufacturers will produce scarier estimates to get the public on its side in the battle against the mandating of dramatically improved mileage.

And in this specific situation, with so many factors up in the air, it’s easier to manipulate the data. The unknowns include:

How much will the cost of lithium batteries and other fuel-efficient technologies decrease in the coming years?

What new technologies will arise, and potentially revolutionize the auto industry in the coming years?

What’s gas going to cost in, say, 2016 or 2020 or 2025?

How much will drivers pay in taxes on gas sold in, say, 2016 or 2020 or 2025?

How will inflation impact the cost of cars, gas, and technology over the next couple of decades?

Nobody really knows the answers to these questions. So how can anyone really know how much a car getting 56 mpg or 62 mpg will cost (and how much it might save in fuel) in 2025?

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