Does your Toyota Prius subsidize my Chevy Tahoe?

This isn’t exactly news, since I’ve seen the idea published before, but it surely bares repeating…here’s the logic:

1. In the United States, all car companies have to achieve a “fleet” miles-per-gallon average for vehicles weighing less than 8,500 pounds, called the Corporate Average Fuel Economy (CAFE) standards. For reference, the Chevy Tahoe is less than 8,500 lbs, while the Ford Excursion is not.

2. Cars and trucks are treated separately and have different standards - 27.5 mpg for cars and 20.7 for “trucks.” Trucks are defined as anything where the seats can be folded or removed to create a flat cargo space, so a minivan and some station wagons are actually trucks. The truck standard is going up over the next few years to 23.5 mpg by 2010 (Source).

3. If you buy a more efficient car or truck that exceeds the standard, it saves you some money (bravo) and personal carbon dioxide emissions (hurrah), but it also helps the manufacturer sell a less-efficient car without penalty, i.e. not global carbon dioxide emissions. CAFE is a “teeter-totter” policy - they have to meet an average and anything above the average helps anything below the average. So at a societal level, your choice doesn’t save any gas to the world, just you personally, since the less efficient car will make-up for what you save. Ultimately this was a political compromise so that it was a company-wide average and not a prescription for each car.

4. So to answer the question, your Toyota Prius does not subsidize my Chevy Tahoe (I don’t actually own one) because cars and trucks are treated separately and only within the same company. Almost all (if not all) of Toyota’s cars exceed the standard already so your Prius doesn’t really subsidize their other cars to much extent. But your Chevy Aveo does subsidize a Chevy Corvette, and so on.

But wait, there’s more!

5. Auto manufacturers get a CAFE credit of 1.25 if the vehicle is “alternative-fuel capable.” As far as I can tell, a 20 mpg gas-only car is rated at 25 mpg as an E85-gas car (a 1.25 credit). (There are some natural gas vehicles, but this largely means E85 vehicles, of which there are millions.) Honestly, this is a big loophole because although they make the E85 cars, they have done relatively little to make sure there is E85 fuel available for them to use. Some say the loophole should just be cut off, but that would largely strand the only alternative to gasoline available to retail consumers. Minnesota has over 300 E85 stations (www.cleanairchoice.org) and it’s an interesting market experiment to try to sell something other than gas to the average person. A better alternative would be for the auto manufacturers to get the credit, only after they can verify that fuel has been offset. This would obviously be complicated. Related to alternative fuel vehicles, hybrid vehicles don’t qualify under the definition, so the manufacturers don’t get extra mileage credit for their use (just the actual mileage rating).

And one more time!

6. The Toyota Prius is the poster-child for fuel activism right? But here’s an interesting conundrum…Society saves more gas by someone making the choice of a slightly more efficient SUV or minivan than they do a really more efficient Prius. Here’s how…The average consumer driving a Prius at 50 mpg isn’t likely to switch from a Tahoe at 15 mpg. More than likely, the new Prius owner drove a Camry, Corolla, Civic, etc at 30 mpg average. Similarly, the Tahoe driver isn’t jumping the SUV ship. But getting that Tahoe driver into a more efficient SUV, or making SUVs into hybrid vehicles, is just as good as making small cars into hybrid vehicles. Watching the math…

10,000 miles of driving per year

Civic @ 30 mpg to a new Prius @ 45 mpg (+15 mpg) saves 111 gallons of gas per year

Minivan @ 20 mpg to a more efficient minivan@ 25 mpg (+5 mpg) saves 100 gallons of gas per year

The lesson? We need to focus on bringing up the inefficient rear as much or more than we work on pushing the high mileage edge.