The MPG Targets Are Back Up Again To 52 MPG

Fleet-wide average fuel economy objectives were high under Obama, then low under Trump. But does it even matter?

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What we really need to meet these objectives is a Volkswagen XL1 in every garage.
What we really need to meet these objectives is a Volkswagen XL1 in every garage.
Photo: Volkswagen

The Biden administration is angling to drive up carmakers’ fleet-wide fuel efficiency, Honda says you shouldn’t hold your breath for Level 3 autonomy in the States and Carvana just turned its first profit as a public company. All this and more in this happy Friday edition of The Morning Shift for August 6, 2021.

1st Gear: 52 MPG Average By 2026

That’s where the Biden administration is hoping to take the fleet-wide fuel economy average for carmakers in five years’ time, the EPA announced Thursday. 52 miles per gallon would be roughly 9 MPG more than the Trump administration had proposed by that same year. From Reuters:

The Democratic administrations of Biden and Obama have pushed for stricter fuel efficiency standards to reduce greenhouse gas omissions [sic] and fight climate change. In March 2020, Trump’s Republican administration rolled back Obama’s standards to require only 1.5% annual increases in efficiency through 2026. Obama had required 5% annual increases.

The EPA said through the 2026 model year “the new vehicle fleet likely will continue to consist primarily of gasoline-fueled vehicles.” It estimates electric vehicles and plug-in hybrid electric will account for 8% of new U.S. vehicle sales by 2026.


Now, it’s important to note that there is a massive gulf between Corporate Average Fuel Economy (CAFE) targets and the real-world fuel economy we end up seeing. The Wall Street Journal explained this a few days ago:

Under rules put in place under the Obama administration, auto makers were required to achieve average fuel efficiency of 54.5 mpg by 2025—or an estimated 36 mpg in so-called real-world driving that accounts for stop-and-go traffic. Mr. Trump eased that to 40 mpg, or about 29 mpg on a real-world basis.


Based on the Trump-era targets, we should be getting an idealized 37.3 MPG average across passenger cars and light-duty trucks as of right now. Data for 2021 and 2020 isn’t available yet, but in January the EPA revealed that fleet-wide efficiency actually slid to 24.9 MPG, two-tenths less than in 2018. The blame for this was laid on customers flocking to SUVs and larger vehicles in increasing numbers and shunning the most efficient models offered by each carmaker.

So, to recap: These moving targets have been imposed and walked back dramatically with alternating administrations; the numbers they purport to achieve don’t have any basis in reality and manufacturers aren’t meeting them anyway; and today’s buyers are choosing the heavier, thirstier, less-efficient options in every fleet. 52 MPG in five years is a nice dream. If history is any indication, that’s all it will ever be.


2nd Gear: Level 3 More Like “Wait And See”

The new Honda Legend on sale in Japan with the Honda Sensing Elite system is technically the world’s first car capable of Level 3 autonomous driving. In a nutshell, what differentiates the Level 2 tech available from a range of automakers today and Level 3 systems is the ability for the car to handle all major driving functions itself, including navigating traffic jams, however the driver must always be ready to take over at a moment’s notice.


Honda’s marketing VP Jay Joseph says you shouldn’t expect it on our roads anytime soon, blaming our patchwork of state-by-state rules. Via Automotive News:

The infrastructure here is not compatible with the Honda Sensing Elite system that enables hands-free driving in the 2021 Honda Legend sedan, Jay Joseph, Honda vice president of marketing and customer experience, said in a presentation at the Management Briefing Seminars. But also, the patchwork regulatory situation in individual states, insurance company policies and other issues are holding back deployment of the technology.

“This is the recipe we followed [in Japan], and it may be a good guide on how to pave the way in other markets as well,” he said. “We worked with regulators and law enforcement to update regulations to allow L3 operation. We engaged our dealers to ensure appropriate customer education when deciding if the technology was relevant for those customers. We, as Honda, spoke directly with customers and the public to set clear expectations on how our system works and how it interacts with nonautomated-driving vehicles on the roadways. This recipe may not be right for every market, but it does show one pathway to success.”


These are massive regulatory stumbling blocks standing in the way of getting a Level 3 system like Honda’s certified for public use on every state’s roadway, and that’s before you even consider the inevitability of folks flippantly misusing the technology. Critics have been saying this forever, of course, but now that we’re on the cusp of Level 3 cars, manufacturers and lawmakers are going to have to reckon with this problem sooner rather than later.

3rd Gear: Nikola CEO’s Legal Team Has Been Here Before

Trevor Milton, Nikola founder and CEO, is being sued by the Securities and Exchange Commission for fraud. Prosecutors allege he misled investors about “nearly all aspects of the business,” including touting non-functioning prototypes and passing off reservations as binding orders. CNN has the lengthy, amusing list of accusations if you’d like to peruse them all.


Anyway, the lawyers that Milton has chosen to defend him in court evidently have a thing for representing shady masterminds behind EV startups. From Automotive News:

Brad Bondi and Terence Healy represented Musk when the Securities and Exchange Commission investigated the Tesla Inc. CEO over his 2018 tweet claiming that he had secured funding to take the electric car maker private. They negotiated a settlement by which Musk agreed to step down as Tesla chairman and have someone monitor his tweets.

Bondi and Healy are now defending the Nikola Corp. founder against far more serious charges. Milton, who stepped down from the company in September, is facing criminal securities fraud charges from federal prosecutors who claim he misled investors about the electric truck company’s prototypes. He’s also being sued by the SEC.

“Trevor Milton is innocent,” the lawyers said in a statement issued last week. “This is a new low in the government’s efforts to criminalize lawful business conduct. Every executive in America should be horrified.”


Hear that, executives of the United States? You should be shaking in your boots. Think about that before the next time you engage in totally rational marketing practices like this:

“On or about June 25, 2020, TREVOR MILTON, the defendant, issued several tweets making claims about how the Badger would use the water created as a by-product of the hydrogen fuel cell. In particular, MILTON tweeted that the Badger uses ‘most all of it for our windshield washer fluid and . . . a little bit for clean, pure, drinking water.’ Approximately several minutes later, MILTON tweeted, “Yes you heard that right, we will have a drinking fountain in our truck using the hydrogen bi product water for the drivers to have nice cold, clean, pure drinking water.” In fact, at that point, MILTON had not discussed with Nikola’s engineers the idea of using fuel cell by-product as washer fluid or drinking water, and several days later attempted to determine if it was even possible by searching on the internet, ‘can you drink water from a fuel cell?’”



4th Gear: Carvana Made Money

Carvana went public in 2017. Four years later, it’s posted its first quarterly profit, Automotive News reports:

The company posted net income of $45 million in the second quarter, a turnaround from a loss of $106 million in the year-earlier period.

Carvana has boosted unit sales and revenue by triple digits in several quarters over the last several years while aggressively expanding. Critics have in the past noted that the company was not profitable, but investors have so far bet that it would achieve profitability once it reached scale.


Although Carvana wasn’t profitable until very recently, it has performed well enough to make its father-and-son founders billionaires, because money is imaginary and hype is everything.

In the second quarter, Carvana sold 107,815 retail units, nearly double what it sold in the same period last year. Revenue nearly tripled to $3.3 billion. It marked the first quarter that retail unit sales topped 100,000 and that revenue exceeded $3 billion.

In a letter to shareholders, the company said it would have sold more vehicles if it had had more cars and trucks to market, reflecting low inventories that have dogged most auto retailers in the U.S.


See, I don’t know about that last part. Demand is continually at record highs as inventory sits at record lows, and nobody was selling this many cars when stock was plentiful. If anything, this whole episode has exposed supply and demand for the sham that it is. Better yet, some experts don’t believe things will ever go back to anything resembling normalcy!

5th Gear: Things Might Get A Little Awkward At McLaren HQ

The British maker of supercars and team of racers will sell its Applied division — formerly Applied Technologies — to investment firm Greybull Capital, according to Sky News. McLaren Applied sells “technology services such as telemetry and data analytics to corporate customers.”


However, the Applied team will stay right where it is, in McLaren’s Woking, Surrey headquarters, despite the fact McLaren will no longer own it:

Greybull is backing McLaren Applied’s existing management team, which is led by chief executive Anthony Murray, according to people close to the deal.

They added that the division would continue to operate from the spectacular McLaren Technology Centre in Woking, Surrey, and continue to collaborate closely with its former owner.

Applied plans to use Greybull’s investment to accelerate growth in its key market segments such as automotive and public transport, the sources said.


McLaren Applied was founded in 2014 and is said to employ roughly 250 people. Greybull is involved in various industries, including steelmaking and aviation. It’s another move in McLaren’s attempts to stay financially viable after a tough couple of years. In April the company sold its iconic home base in Woking to a New York firm, but has remained there as a tenant.

Reverse: Future Champion Takes His First Win in Hungary

Jenson Button entered Formula 1 in 2000. He wouldn’t record his first victory until 2006, in the Hungarian Grand Prix driving for BAR Honda on this day 15 years ago. The race started in misty fashion and ended with a first-time winner, much like last weekend’s Hungarian Grand Prix. Button of course went on to win his one and only driver’s title with Brawn GP in 2009 following a major regulations change. Hey — we’re due for one of those next season! Are you listening to me, Esteban?


Neutral: What Little Projects Are You Working On?

I got one of those Tire Rack steelie-plus-winter tires combos when I bought my Fiesta ST years ago. The steelies look like shit due to a wealth of surface rust, but the tires are still in good shape, so my dad and I are going to try and sand, prime and paint them this weekend. Honestly it feels like a lot of work for crappy rims, but alas. What are you working on?