Flex Fuel’s Big Payoff - Very interesting article
07-20-06, 01:25 PM
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Flex Fuel’s Big Payoff - Very interesting article
With fewer than 600 stations selling E85 fuel in 37 states, why have GM, Ford, and DaimlerChrysler been cranking out these flex-fuel vehicles by the millions?
The answer is the mandatory Corporate Average Fuel Economy (CAFE) standards. Federal law requires that the cars an automaker offers for sale average 27.5 mpg; light trucks must achieve 22.2 mpg. Failure to do so can result in substantial fines. However, relief is available to manufacturers that build E85 vehicles to encourage their production.
The irony here is that although E85 in fact gets poorer fuel economy than gasoline, for CAFE purposes, the government counts only the 15-percent gasoline content of E85. Not counting the ethanol, which is the other 85 percent, produces a seven-fold increase in E85 mpg. The official CAFE number for an E85 vehicle results from averaging the gas and the inflated E85 fuel-economy stats.
Calculating backward from our test Tahoe’s window-sticker figures (which are lower than but derived from the unpublished CAFE numbers), we figure the E85 Tahoe’s CAFE rating jumped from 20.1 mpg to 33.3 mpg, blowing through the 22.2-mpg mandate and raising GM’s average. What’s that worth? Well, spread over the roughly 4.5-million vehicles GM sold in 2005, the maximum 0.9-mpg benefit allowed by the E85 loophole could have saved GM more than $200 million in fines. That’s not chump change, even for the auto giant.
The answer is the mandatory Corporate Average Fuel Economy (CAFE) standards. Federal law requires that the cars an automaker offers for sale average 27.5 mpg; light trucks must achieve 22.2 mpg. Failure to do so can result in substantial fines. However, relief is available to manufacturers that build E85 vehicles to encourage their production.
The irony here is that although E85 in fact gets poorer fuel economy than gasoline, for CAFE purposes, the government counts only the 15-percent gasoline content of E85. Not counting the ethanol, which is the other 85 percent, produces a seven-fold increase in E85 mpg. The official CAFE number for an E85 vehicle results from averaging the gas and the inflated E85 fuel-economy stats.
Calculating backward from our test Tahoe’s window-sticker figures (which are lower than but derived from the unpublished CAFE numbers), we figure the E85 Tahoe’s CAFE rating jumped from 20.1 mpg to 33.3 mpg, blowing through the 22.2-mpg mandate and raising GM’s average. What’s that worth? Well, spread over the roughly 4.5-million vehicles GM sold in 2005, the maximum 0.9-mpg benefit allowed by the E85 loophole could have saved GM more than $200 million in fines. That’s not chump change, even for the auto giant.
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