CAFE on a Curve = Market Failure

I came across an interesting video on YouTube that investigated the consequences of the formula used to enforce EPA fuel economy regulations on automakers. If you ever wondered

a) why there are ZERO small trucks as we knew them in the 1980s
b) why today’s “small trucks” are the size of yesteryear’s full size trucks

then wonder no more. It’s no accident.

The gist of the analysis is original CAFE regulations and all revisions to them have embedded a sliding scale within the guidelines based upon car footprint (wheelbase x track) that basically assumes larger vehicles can never be as efficient as smaller vehicles and thus tilts expectations for higher MGP to smaller footprint cars.

The result? Even though a small 4 cylinder S10 of the 80s could be a much better choice TODAY for many pickup owners, a vehicle with the footprint of an 80s S10 would need to get nearly 50 MPG to meet current CAFE standards. But a GIGANTIC modern full size truck is still benefiting from the bias that it can’t improve efficiency much so the adjusted formula still makes it viable for the maker to build them only getting 14 MPG.

As a result, a country with demand for (say) 1 million vehicles that COULD have been served with an offering achieving 27 mpg but would “fail” to meet CAFE standards is instead served with an offering that gets 15 mgp that DOES meet CAFE standards. From an economic and climate perspective, that makes ZERO sense.

Is this what they meant by the soft bigotry of low expectations?

Here’s the video link, bookmarked to the point where the details and implications of the formula start getting discussed.

The video is entitled “Why Can’t We Have This! (psst - it’s the EPA)” but understanding the historical context when this regulation was first introduced is crucial to understanding its structure. At the time of introduction, energy prices and quality problems were crushing American makers who had small truck offerings but had quality problems and were primarily dependent upon large truck sales. At the same time, foreign makers had no large truck offerings but were make highly reliable small trucks and running circles around domestic makers in that segment. It is highly likely the original rules and subsequent adjustments to them were driven in part by lobbying from domestic makers to limit the trauma on their core segment and tighten the noose on the segment that was eating their lunch.

Think of the MILLIONS of people who don’t need a 7 passenger vehicle and just need the occasional ability to haul something bulky from Lowes or Home Depot back to their lair without bothering a neighbor and could use a small (SMALL!) truck that doesn’t need to track like a Porsche 911 or serve Grey Poupon from the carbon fiber center console with the Mark Levinson 18 speaker sound system.

It’s this kind of regulation with such twisted logic that is baking the planet.



I have been commenting on this for several years. The original CAFE reg set a number for a sales weighted fleet average. Automakers could build anything they wanted, but they had to sell enough small cars to offest the poor mileage of the larger (higher ATP, higher GP) models. The “reform” that changed the system to the footprint model, and removed the incentive to produce smaller vehicles at all, was introduced in 2006. I read that reg when it was first released. The reg openly said the formula was skewed to discourage the production of smaller vehicles, claiming they were “less safe”.

Of course, the automakers want to push ATP and GP ever higher. Ford CEO Farley recently announced they don’t really want to make two row CUVs at all, because vigorous competition in those segments limits their ability to increase ATP and GP whenever they feel like it.

VW, which did not have a strong slate of big SUVs at the time, made the following observation:

“Volkswagen does not endorse the proposal under discussion. It places an unfairly high burden on passenger cars, while allowing special compliance flexibility for heavier light trucks. Passenger cars would be required to achieve 5% annual improvements, and light trucks 3.5% annual improvements. The largest trucks carry almost no burden for the 2017–2020 timeframe, and are granted numerous ways to mathematically meet targets in the outlying years without significant real-world gains. The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles, defeating the goal of reduced greenhouse gas emissions.”

Somehow, the industry has convinced a large portion of the customer base that they really want the biggest, tallest, thing they can possibly make the payments on, and have “innovated” financing plans up to 8 years in length, to enable the purchase of ever more expensive (profitable) vehicles. I heard the excuses at work all the time “I like to sit up high”, “I feel safe in my SUV” (in spite of SUVs having demonstrated a much higher tendency to roll over than a passenger car)



It’a called “gaming the system.” There are an incredible number of idiotic meet/beat the rule gimmicks on the road.

A few thousand rule makers in government are up against millions of smart rule breakers. The rest of us pay the price.

The Captain


Why the surprise? It’s all in the marketing. How are the big trucks, the bit SUV’s advertised? Rock music, adrenalin, patriotism, manliness. It’s all emotion. Contrast to how the small cars are advertised. This is not a mistake! And it works.

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Truly not a surprise, who was it said, “A fool and his money are soon parted?”

The version of the expression we use today is first found in Dr. John Bridges’ Defence of the Government of the Church of England, 1587:

If they pay a penie or two pence more for the reddinesse of them…let them looke to that, a foole and his money is soone parted.

Why do we say A fool and his money are soon parted?.

Have you not noticed the huge number of products the Investing Industrial Complex has to sell? 2007-8 was a great example of manufactured products to game the real estate market yet hardly anyone went to jail.

The Captain

My neighbour in Caracas had bought a prime swampland lot in Florida but being a patient man he kept making the payments on the worthless property. During the 2007 real estate bubble he started getting emails from people who wanted to buy the lot. Being patient he refused to sell until a desperate fool, I mean ‘buyer,’ made an offer my neighbour could not resist.


That was great video. I like trucks and I need a truck fairly often, but I almost never need a big truck. So I want a small truck with a bed that accommodates a 4x8’ piece of sheetrock, but they aren’t available anymore. They all have short beds with a crew cab. I don’t want the crew cab, I want the long bed.


I’m not sure how many pickup owners today would agree with that.


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Did I miss it, or is there nothing in the formula that accounts for the vehicle weight or its towing capacity? That doesn’t seem right.

my 2016 midsize truck has a short bed. I use a “canoe hauler”, it slides into my trailer hitch receiver, extends the bed about 4 feet, I leave the tailgate down,so there is a lot of support there. I do carpentry projects around the house, so have used it to haul a lot of lumber. I have a utility trailer to haul 4x8 sheets. My last fullsized truck was bought in 2002, it was total overkill for just about everything that I did, sold it in 2004 and have never owned another one. My midsize has a towing capacity of 7500 lbs, and I’ve never come close to that heavy of a load. Plus with a smaller midsized truck I’m not getting asked to tow my friends heavy boats when their big trucks are in the shop, lol.


Yea but how do you roll coal?



sure hope the coal rollers can be tracked down and prosecuted, that’s some dangerous bs they’re pulling. They do the same thing to cyclists.

I figure they’re all males who are compensating for their short changed manhood.


Nope, it is all footprint. By pushing the wheels nearer to the corners of the vehicle, they increase the footprint, thus reduce the target mileage the vehicle needs to achieve, without actually improving the fuel efficiency of the vehicle.



Ya’ll just need to buy one of these…

→ got $187K?


Sure, but not for a pickup.