Apparently I didn’t do such a good job in this post explaining why I found this New York Times article on higher-mileage, gas-electric hybrid SUVs so troubling.  So I’ll try again.

To recap—the Times article claims that, under the system governing vehicle fuel economy in the U.S., selling a hybrid Escape lets Ford sell an additional Lincoln Navigator without running afoul of federal standards.  In other words, while buying an Escape may mean that you’re driving a more efficient vehicle, it doesn’t mean that the average fuel economy of all the Fords on the road will change one whit. 

A couple commentors said this is bunk.  But I think the article is onto something.  Take a look at the fleetwide fuel economy for Ford’s light truck fleet over the last fewyears for which I could get data:

2000:  21.0 mpg

2001:  20.5 mpg

2002:  20.7 mpg

2003:  21.3 mpg

Now, remember, the CAFE standard for light trucks over this period was 20.7 mpg—that is, the average mpg for all the light trucks that Ford sold had to be 20.7 or more, or the federal government would levy a fee on each vehicle.  From the numbers, it’s pretty clear that Ford has been doing its level best to keep its light truck fleet at or near 20.7 each year—maybe a little above or below, but not enough to incur any penalties (under CAFE rules, exceeding the standards in one year lets you dip below them in subsequent years).

So how does the company fine-tune its vehicle sales to fall right at the CAFE standard?  By tweaking its pricing, offering deeper discounts to ramp up sales of higher-mileage pickups and SUVs, while still selling as many hulking SUVs—vehicles with terrible gas mileage but huge profit margins—as it can without running afoul of the standards.

My point here is that the introduction of the 35 mpg Escape, by itself, probably doesn’t change this dynamic.  Ford is legally required to maximize its profit—otherwise it faces the threat of a shareholder lawsuit.  So it’s got an incentive to use whatever means it can to keep the high-profit SUVs moving off the car lots.  And that means that selling more Escapes won’t necessarily boost the overall efficiency of the vehicles Ford sells.  Higher gas prices might boost fuel economy; stricter standards might as well.  But as nifty as the high-tech hybrid Escape may be, buying one won’t guarantee that Ford’s overall mileage is moving in the right direction.

  • Obviously, the existence of the Escape has spinoff benefits.  Among them, it undercuts the car-makers arguments that major improvements in vehicle efficiency are technically impossible.  Hybrid SUVs show that the feds could probably lift CAFE standards for light trucks above 30 mpg without forcing automakers to do much, if any, R&D.  True, the big auto manufacturers could always say that they can’t afford to make trucks more efficient.  But they can’t say that they don’t know how.

    But there’s yet another perverse market effect hidden in the Escape.  CAFE has two tiers, with a higher mileage standard for cars than light trucks.  To the extent that the Escape (a light truck) attracts buyers who’d otherwise go for a Taurus (classified as a car), it could tilt Ford’s overall mix away from cars and towards trucks—which, paradoxically, could lower the average fuel economy for Ford’s entire vehicle fleet.  (Sheesh, this stuff is weird.)

    So, all this goes to say that a system can have unpredictable results that undermine the best intentions of any one individual.  That’s not a reason to throw up one’s hands in despair—but it is a reason to think that changing the system is even more important than making the right kinds of purchases.