Study: Auto jobs would suffer under gas-mileage standards – USA TODAY
The U.S. manufacturing sector will likely suffer job losses if current vehicle fuel-economy requirements for 2025 are left in place, according to a new auto industry study.
The non-partisan Center for Automotive Research concluded that U.S. auto factories and parts operations could slash up to 137,900 jobs through 2025 if the federal government’s Corporate Average Fuel Economy (CAFE) standards remain in effect.
The Michigan-based non-profit’s study comes amid a debate between the auto industry and Washington policymakers over CAFE standards, which require automaker fleets to average 54.5 miles per gallon by 2025.
The Obama administration implemented aggressive gas-mileage targets to jolt the economy and reduce carbon emissions, which contribute to climate change. Regulators signaled earlier this year that they’re unlikely to make significant changes.
“Automakers are developing far more technologies to improve fuel economy and reduce greenhouse gas emissions, at similar or lower costs, than we thought possible just a few years ago,” Janet McCabe, acting assistant administrator for the EPA’s Office of Air and Radiation, said in a statement in July. “They are adopting these fuel-saving technologies into their fleets even faster than anticipated.”
But the auto industry wants the 2025 standards to be rolled back, arguing that the targets are too aggressive, particularly considering low gas prices.
The Center for Automotive Research, which has historically received some funding from the auto industry but said this study was independently funded, said its analysis showed the U.S. economy losing auto manufacturing jobs in eight of nine scenarios.
Researchers analyzed three price levels for gasoline, based on U.S. Energy Information Administration projections — $2.44, $3 and $4.64. They matched that with three different estimates for the average cost per vehicle required to meet the CAFE mandates — $2,000, $4,000 and $6,000.
Only in the scenario in which gas hits $4.64 per gallon and the fuel-economy mandate cost is $2,000 would U.S. auto manufacturing facilities add jobs, gaining just 15,700, according to the projections.
In most scenarios, however, the center projected that auto sales, production and jobs would fall because consumers would shy away from buying expensive, fuel-efficient new vehicles as fuel savings would be insufficient for the trade-off.
The study estimated that, based on nine possible scenarios, annual U.S. auto sales could at best rise 410,000 units and at worst fall 3.71 million units. In three of the instances the CAR studied, sales would fall at least 3 million units. Dealership employment would at best rise by 18,000 workers and at worst fall by 99,000, the CAR estimated.
To ease the impact on the economy, the center suggested implementing higher gas taxes or a carbon tax, offering strong incentives for purchasing green vehicles, providing incentives to automakers or extending the CAFE timeline altogether.
“If the value of fuel savings to the new-vehicle buyer falls short of the cost of mandated fuel-economy technologies then U.S. automotive sales, production and manufacturing will fall with serious consequences for the U.S. economy,” concluded the CAR researchers, Sean McAlinden, Yen Chen, Michael Schultz and David Andrea.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.