March 4, 2014 | 7
CAFE standards are working, at least according to a research note from the University of Michigan. The graph below shows the average sales-weighted MPGs by month and model year. That is, the graph shows average MPGs from window stickers (between city and highway) weighted by vehicle sales. The average MPG of all cars sold has increased with every model year and is up nearly 5 MPG since 2007.
CAFE, which stands for Corporate Average Fuel Economy, is federal regulation that requires automakers to increase the fuel economy of their fleet, meaning an auto maker can have cars (and trucks, which have separate standards) that are both really efficient and not so efficient. But as long as they sell enough of the more efficient cars, their fleetwide average will be high enough. The formula for setting MPG targets for different sized cars has gotten more robust in recent years and now depends on the vehicles footprint.
The standard dates back to 1975 when the United States government intended to raise MPGs after the Arab Oil Embargo. The rule has been updated since then, most recently in 2009 and 2012 by President Obama. The target for 2011-2016 model years plateaus at 35.5 MPG while the standard increases to 54.5 MPG by 2025.