New Fuel Economy Standards: Cars Will Cost More to Buy, Less to Drive

June 18, 2013 — -- Cars are about to get more expensive. And it's going to save you money. Yes, it sounds loony, but I believe it, because Consumer Reports says so.

This is not a group of people prone to hyperbole, and frankly, that gives them credibility. Take their product ratings. I can't remember the last time I saw a product score more than about 78-percent after undergoing Consumer Reports' battery of tests. These folks don't exaggerate.

New Fuel Efficiency Standards

And yet this is what Consumer Reports has to say about the government's new "CAFE" (Corporate Average Fuel Economy) standards for cars and trucks:

"Imagine a federal regulation that will save you thousands of dollars, while also cutting back on pollution, strengthening American industry, creating jobs and reducing our oil consumption. Actually, you don't have to imagine it. ... The updated CAFE standards ... will do just that."

Whoa. These new standards can do all that and most of us have never heard of them? Let's review. "CAFE Standards" sounds like something to do with how much coffee you're allowed to consume. But actually, they're about how much fuel your car can consume. The goal of the new standards is for the cars of 2025 to emit half the carbon of the cars of 2010.

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To do that, each manufacturers' fleet must average 54.5 miles per gallon. The individual vehicle you buy may not sip gas that slowly, but the average for vehicles overall will be dramatically improved. The new standards will start to phase in for model year 2017, but you'll likely see the difference sooner as manufacturers strive for this goal.

At a forum on the new CAFE Standards, David Strickland of the National Highway Transportation Administration called them "one of the greatest accomplishments in transportation in three decades."

If that doesn't do anything for you, consider this statement from Judith Enck of the Environmental Protection Agency: "Environmental policies benefit consumers and nowhere is that more obvious than in the area of transportation."

Savings for Car Owners

How so? Consumer Reports estimated that in the future you will save $4,600 over the life of your vehicle. The car itself will cost more up front -- about $2,000 they think -- but you'll save about $700 a year on fuel. So after three years, the higher purchase price will have paid for itself and the real savings will begin.

Oh, and by the way, this math is calculated based on the government's future fuel cost projection of $3.87 a gallon in the year 2025! Ha! I paid more than that 25 minutes ago when I filled up. Translation: the savings could be even greater.

"Some people now spend more on gasoline, than they do on car payments," said Consumer Reports president and CEO Jim Guest.

Ponder that for a second and you begin to see the potential.

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Types of Fuel Efficient Cars

So how are auto makers going to achieve these dramatic improvements in fuel efficiency? Who knows what they'll introduce in a dozen years. (One panelist rhapsodized about the potential of diesel engines that burn modified gasoline.) For now, they're banking on hybrids you can get for less, electrics that can take you farther and diesels that people actually want to drive.

How's a consumer to choose? For stop-and-start urban drives, hybrids are the most fuel efficient and their prices have come down, so most now pay for themselves in about a year and a half. But -- news flash -- if you drive a lot of freeway miles, modern diesels consistently outperform hybrids. Who knew? As for electrics, right now most still have a limited range of 70-some miles, so they're best for people who commute less than 35 miles each way. Figure out which kind of commuter you are and you'll know what kind of car to buy.