The popularity of large vehicles can be explained by both consumer choice and supplier profit maximization ( NASEM 2021). Source is from the Transportation Energy Data Book ( Davis and Boundy 2021). The two MPG curves represent sales-weighted performance. The two CAFE standard curves show required sales-weighted targets. Vehicle sales shares by classes and average fuel economy over time for the US Furthermore, this conflict is worsened by the fact that larger vehicles are driven more, as shown in this study. It is of policy relevance to understand what causes the conflict between the goal of fuel economy regulations and the popularity of large vehicles.
In China, the sales share of cars dropped to 48% in 2019 after decreasing for several years ( MarkLines 2020b). The 2008 CAFE rulemaking (with the adoption of separate, footprint-based standards for cars and trucks) was followed by fuel economy performance improvements of 25% for cars and a lower 21% for light trucks by 2017, which widened the gap between car and light truck average fuel economies. In addition, as shown in Figure 1, SUVs, especially truck-based SUVs, have gained the most market share in recent decades. In the US, large vehicles accounted for 67% of the 2019 light-duty vehicle market ( MarkLines 2020a). However, throughout the world, especially in the US ( Figure 1) and China, larger vehicles have become increasingly popular and are known to be more profitable than smaller vehicles such as cars ( Vanderheiden 2006 Snyder 2017). For the goal of increasing average fuel efficiency and reducing fleet-wide fuel consumption, a growing market share of small vehicles is more desirable, as they are generally more efficient. Large vehicles (SUVs, minivans, and pickups) present a problem for fuel economy regulators. What is also common is that larger or heavier vehicles are required to meet less-stringent efficiency targets. This allows automakers some flexibility in meeting fuel economy regulations while maximizing profits with their competitive products. In sum, the fuel economy of an automaker is often assessed through sales-weighted or production-weighted metrics. Both the EU and China regulations stipulate higher (i.e., less stringent) CO 2 emissions or fuel consumption targets for heavier vehicles. China uses the fuel consumption rate (L/100 km) to evaluate the sales-weighted fuel consumption in its Corporate Average Fuel Consumption (CAFC) standard, and the fuel consumption target varies with the vehicle weight ( Ou et al., 2018).
Similarly, the EU regulates CO 2 emissions per kilometer (g/km) of vehicles as the measurement for evaluating the sales-weighted fuel economy, and the EU also stipulates the linear relationship between the CO 2 emission limits and vehicle weights ( Tietge et al., 2020). Furthermore, the 2008 CAFE rulemaking created different MPG target curves for passenger cars and light trucks, further relaxing the MPG requirement for truck-based sports utility vehicles (SUVs), minivans, and pickup trucks ( NHTSA 2020). Starting in model year 2008, the CAFE program shifted to a footprint-based approach, setting relatively less stringent fuel economy targets-in terms of miles per gallon (MPG)-for larger vehicles (NRC, 2011). The US established Corporate Average Fuel Economy (CAFE) standards in 1975 after the oil crisis ( Komiyama 2008). To promote fuel efficiency and mitigate vehicle CO 2 emissions, sales-weighted fuel economy regulations have been adopted by almost all countries with major vehicle markets, such as the US, the European Union (EU), Japan, and China ( Ou et al., 2018 NASEM 2021). Tension is growing between the increasing global demand for passenger vehicles and the pressing need to reduce fossil fuel consumption and transportation CO 2 emissions to achieve climate change goals. We propose and estimate Sales Adjustment Factors that weigh fuel economy standards based on vehicle lifetime usage and demonstrate the resultant significant improvements in the effectiveness and equity of fuel economy regulations. This means large vehicles and their high-income owners use more fuel and emit more pollutants than represented by current policy and thus raises both policy effectiveness and energy equity concerns.
This study shows that, for both the US and China, large vehicles travel more, last longer, and are owned by higher income consumers. Their increasing popularity runs contrary to the goal of fuel economy regulations to reduce fossil fuel consumption and greenhouse gas emissions and can be explained by consumer preference and lower regulation stringency, which is due to footprint, truck classification, and the omission of heterogenous lifetime vehicle distance traveled among vehicle classes.
Larger vehicles, such as sports utility vehicles, consume more energy than cars.
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