Why is the Auto Industry Repeating Discredited 60MPG Cost Claims?

It’s a different world. Gasoline is fast approaching $4 gallon natiowide and consumer demand for fuel-efficient cars is skyrocketing. So why are the automakers continuing to use their old tactics to fight stronger pollution and fuel economy standards? In a recent Detroit News article, the auto industry repeated--yet again--the same cost claim exaggeration that they made last January. The cost claim, based on a draft analysis by a Michigan-based consulting firm, has been since thoroughly discredited. According to the International Council on Clean Transportation, the consultant analysis is full of “so many fundamental technical and scientific errors” and it “cannot…serve as a basis for serious policy discussion.” The auto industry’s Orwellian-strategy appears to be if they repeat their claims enough times, it will make them true.

Auto Industry Claims Costs to Achieve 60 MPG Twice as High as Agencies

The auto industry claims the cost to achieve 60 MPG is $6,435 which is about twice as high as the September 30th, 2010 estimate by the U.S. Environmental Protection Agency, U.S. Department of Transportation and the California Air Resources Board. The source of the claim is a draft analysis by the Michigan-based Center for Automobile Research (CAR) that is available only as a presentation. (Note: It appears you cannot find the presentation on the seminars home page but must directly access it here.)

The exaggerated cost claim first showed up in January 11th letters from the Alliance of Automobile Manufacturers, the main lobbying organization for the auto industry, to the new House Committee leaders, Darrell Issa (Chairman, Committee on Oversight and Government Reform) and Fred Upton (Chairman, Committee on Energy and Commerce). The letters made the identical claims that the joint analysis by the US EPA, US DOT and CARB, “systematically underestimated the costs of the proposed standards and overstate the benefits to consumers”.

And despite analysts, including myself, pointing out how deeply flawed the analysis is, the auto industry continues to use its results mostly recently in a April 12 Detroit News article: “Automakers argue those estimates are "unrealistic" and point to a Center for Automotive Research analysis that says hiking fuel efficiency to 60.1 mpg could boost vehicle prices 22 percent, cut sales 25 percent and trim up to 220,000 auto sector jobs.”

Auto Cost Claimed Based on Deeply Flawed Analysis

On February 2nd, I blogged about how the auto industry was repeating its historic pattern of exaggerating costs by two to ten times. I pointed out one obvious fundamental flaw in the study: the CARs study relies heavily upon a recent National Academy of Sciences study that only looked at the potential for near-term fuel economy improvements and not 2025.  NAS study states: “Tables S-1 and S-2 show the committee’s estimates of fuel consumption benefits and costs for technologies that are commercially available and can be implemented within 5 years. The cost estimates represent estimates for the current (2009/2010) time period to about 5 years in future.”

I had no idea how deeply flawed the study is until I read the devastating ICCT critique released on March 10th. Besides the inappropriate use of the NAS study, the ICCT critique listed fifteen other different flaws for a total of 18 significant errors (three flaws in how they used the NAS study). As a result, according to ICCT, the analysis “cannot…serve as a basis for serious policy discussion.” One of most troubling errors is that the analyst apparently mixed up such fundamental concepts as the difference between fuel consumption with fuel economy (basically the difference between gallons per mile and miles per gallon). The critique speaks for itself and would urge readers to download and read it for themselves.

I’m honestly puzzled by the auto industry’s Orwellian strategy of repeating the same exaggerated cost claim over and over. By the auto industry’s own admission, higher fuel economy standards has helped the industry, especially Detroit, be more competitive as gasoline prices spike towards $4 gallon. Isn’t it time automakers send their lobbyist home and put their engineers to work?

About the Authors

Roland Hwang

Director, Energy & Transportation program

Join Us