A difficult road ahead: Fleet fuel economy, footprint-based CAFE compliance, and manufacturer incentives

- This paper studies vehicle manufacturer's compliance with footprint CAFE standards.
- Compliance will be difficult changing only identifiable vehicle characteristics.
- New standards may incentivize an increase in vehicle size.

Using detailed vehicle specifications, this paper analyzes the impact identifiable vehicle characteristics and technological progress has on fleet fuel economy by vehicle type and class. The results suggest manufacturers will face a difficult task complying with the new footprint-based CAFE standards if compliance is met by only changing identifiable vehicle characteristics. I find evidence that the stringent footprint-based standards create a manufacturer incentive to increase vehicle size to lower the burden of compliance. This undermines the standards' potential to create expected fuel savings and lower emissions levels.