Corporate Average Fuel Economy - Calculation

Calculation

Fleet fuel economy is calculated using a harmonic mean, not a simple arithmetic mean (average) – namely, the reciprocal of the average of the reciprocal values. For a fleet composed of four different kinds of vehicle A, B, C and D, produced in numbers n_A, n_B, n_C and n_D, with fuel economies f_A, f_B, f_C and f_D, the CAFE would be:

For example, a fleet of 4 vehicles getting 15, 13, 17, and 100 mpg has a CAFE of slightly less than 19 mpg:

While the arithmetic mean fuel economy of the fleet is just over 36 mpg:

The harmonic mean captures the fuel economy of driving each car in the fleet for the same number of miles, while the arithmetic mean captures the fuel economy of driving each car using the same amount of gas (i.e. the 13 mpg vehicle would travel 13 miles (21 km) with one gallon while the 100 mpg vehicle would travel 100 miles).

For the purposes of CAFE, a manufacturer's car output is divided into a domestic fleet (vehicles with more than 75 percent U.S., Canadian or post-NAFTA Mexican content) and a foreign fleet (everything else). Each of these fleets must separately meet the requirements. The two-fleet requirement was developed by the United Automobile Workers (UAW) as a means to ensure job creation in the US. The UAW successfully lobbied Congress to write this provision into the enabling legislation – and continues to advocate this position. The two fleet rule for light trucks was removed in 1996.

For the fuel economy calculation for alternative fuel vehicles, a gallon of alternative fuel is deemed to contain 15% fuel (which is approximately the amount of gasoline in a gallon of E85) as an incentive to develop alternative fuel vehicles. The mileage for dual-fuel vehicles, such as E85 capable models and plug-in hybrid electric vehicles, is computed as the average of its alternative fuel rating—divided by 0.15 (equal to multiplying by 6.666) -- and its gasoline rating. Thus an E85-capable vehicle that gets 15 mpg on E-85 and 25 mpg on gasoline might logically be rated at 20 mpg. But in fact the average, for CAFE purposes, despite perhaps only one percent of the fuel used in E85-capable vehicles is actually E85, is computed as 100 mpg for E-85 and the standard 25 mpg for gasoline, or 62.5 mpg. However, the total increase in a manufacturer's average fuel economy rating due to dual-fueled vehicles cannot exceed 1.2mpg. Section 32906 reduces the increase due to dual-fueled vehicles to 0 through 2020. Electric vehicles are also incentivized by the 0.15 fuel divisor, but are not subject to the 1.2 mpg cap like dual-fuel vehicles.

Manufacturers are also allowed to earn CAFE "credits" in any year they exceed CAFE requirements, which they may use to offset deficiencies in other years. CAFE credits can be applied to the three years before or after the year in which they are earned. The reason for this flexibility is so manufacturers are penalized only for persistent failure to meet the requirements, not for transient non-compliance due to market conditions.