If Cars Are Too Expensive, Just Pump More Gas. What? Relaxing mileage standards, along with the earlier removal of penalties for missing them, will spur Detroit to sell more of the higher margin, lower fuel-economy, trucks and SUVs rather than shifting production toward smaller, cheaper models

Using CAFE fleet fuel standards to try to alter consumer behavior through “punishing” automakers doesn’t make much sense. It is essentially a cowards way for public policy.

We could just give consumers the right signals.. like a revenue neutral carbon tax. For vehicles, that essentially means taxing for the harmful emissions at time of new vehicle purchase. It needs to be stressed as a personal responsibility thing, which it is.

A new ICE midsized SUV represents over 8,000 gallons of gas, or over 50,000 lbs of gas in an expected lifetime of 200,000 miles. That ends up being over 150,000 of GHG emissions (WtW). This isn’t accounted for in the purchase price.

The National Academy of Sciences recommends a price of $190 per ton of GHG emissions. That’s almost $15,000 worth of impact that is not properly internalized at time of purchase.

If each ICE RAV4 had an extra $15,000 in price to help pay for the impacts, then choosing more efficient and alternative energy vehicles would be an easy choice for most. We wouldn’t need CAFE fleet fuel economy standards.

A Cadillac Escalade would have $25,000 extra cost. Even a Ford Mach-E BEV would be taxed – at $4,000, while something extremely efficient like an Ioniq 6 or Model 3 would be closer to $3,300.