The EPA Unveils New Fuel Economy Labels

The new federal fuel economy labels unveiled recently by the Department of Transportation (DOT) and Environmental Protection Agency (EPA) are the product of a lengthy and often contentious debate about the best way to provide consumers with valuable information related to air emissions and fuel efficiency.

Rather remarkably, they are being praised by virtually all of the parties who have a stake in the presentation.

The new labels will be affixed to conventional gas- and diesel-powered vehicles, as well as vehicles powered by alternative means such as plug-in hybrids, battery-electric vehicles and fuel-cell EVs. The labels present the most dramatic overhaul to fuel economy labels since the federal government began requiring them more than three decades ago. Beginning with the 2013 model year, these labels will provide:

• New ways to compare energy use and cost between conventional gas- and diesel-powered vehicles and those powered by alternative means such as electricity.
• Useful estimates of the amount consumers will save or spend on fuel over the five years after purchase, compared to the average conventionally powered new vehicle.
• Easy-to-read ratings on a 1-10 scale (10 being best) of the way a particular model compares to all others for fuel economy, air emissions related to the formation of smog, and air emissions related to climate change.
• An estimate of how much fuel or electricity it takes to drive 100 miles.
• Information about the driving range and charging time of an electric vehicle.
• A code that will enable users of smartphones to access online information about the way various models compare according to not only fuel economy but also other environmental and energy factors. This tool also will allow consumers to enter information about their typical commutes and driving behavior in order to get a more precise estimate of individual fuel costs and savings.

Better Comparisons
"There's a lot of really useful comparative information here," says Mark Cooper, director of research for the Consumer Federation of America. Cooper's organization had been advocating an A-D letter-grade label to give consumers an easy way to compare the fuel efficiency of different models, but he says of the numerical ratings: "They are quite transparent, which is actually better than a letter grade."

The new labels present four useful categories of data that enable consumers to compare any vehicle against all other vehicles in all classes. For example, a pickup truck with a fuel economy and greenhouse gas rating of 7 consumes roughly the same amount of gasoline and generates roughly the same amount of greenhouse gases per mile as an SUV or minivan with a fuel economy and greenhouse gas ratings of 7.

The new labels will also provide useful fuel economy information within individual vehicle segments. For example, the label on a gasoline-powered subcompact might indicate that it gets 30 miles per gallon in the city, 35 mpg on the highway and 32 mpg combined. Yet the same label will also include text like this: "Subcompacts range from 28-38 mpg."

This is helpful information for people who have decided they want a subcompact and want to know how the ones they are looking at compare to others in the segment. Consumer and environmental groups say the new labels will help people find the most efficient vehicles that fit their needs.

Incentives for Carmakers To Do Better
The EPA's new labels are also likely to spur automakers to work harder to achieve higher ratings, because they know that consumers will be looking closely at them now that the numbers are posted in plain sight. Under the present system, the fuel economy labels one sees in dealer showrooms do not contain fuel economy and greenhouse gas ratings, nor do they contain smog ratings.

"It won't take long for the car companies who offer vehicles with 9 and 10 ratings to reap the rewards that come with offering the cleanest and most fuel-efficient vehicles," says Jack Gillis, director of public affairs for the Consumer Federation of America. "On the other hand, it's going to be pretty difficult to sell a vehicle with a 1 or 2 rating, when consumers can readily see the alternatives."

While most environmental and some consumer groups came down hard in favor of the letter-grade label when the EPA initially issued its proposals, most have accepted the information-based, with its numerical rating label. The Alliance of Automobile Manufacturers, which had opposed the letter-grade label (as did Edmunds.com and Consumer Reports) on the grounds that it was too simplistic and didn't enable consumers to compare vehicles by category, was quick to endorse the so-called MPG label, which emphasizes fuel economy and fuel cost information.

The new label "fits consumer needs well," says Gloria Bergquist, public affairs vice president for the industry trade group. She says automakers are especially happy with the decision to have a single national label to replace the present system of using one label for cars sold in California (because of its tougher emissions standards), and another for the rest of the country.

"Basically, we like them," Eric Evarts, associate autos editor for Consumer Reports, says of the labels. "A more data-driven label allows people to compare cars more directly than the letter-grade label."

Empowerment for Buyers
Kathryn Phillips, the Environmental Defense Fund's transportation specialist, says the new label "will empower American car buyers like never before." She says the numerical rankings provide "an easy way to compare the performance of different vehicles." They enable car buyers to reduce their fuel bills and carbon footprints by selecting the most fuel-efficient vehicles that meet their needs, she says. Overall, says Phillips, the new label should help make car buying "an easier, more pleasant experience."

The most lukewarm endorsements of the new EPA label come from the Natural Resources Defense Council and the Union of Concerned Scientists. Michelle Robinson, director of the clean vehicles program for the Union of Concerned Scientists, says the new label "will provide us with better information so we can make better choices at the dealership. But she also adds that the new label "would have been even better if the auto industry hadn't pressured the agency to drop plans to give each car a letter grade."

Robinson also says that fuel economy and air-emissions labels can tell consumers what they are getting, but "not what they deserve." She complains that automakers now are fighting the EPA's consideration of a new Corporate Average Fuel Economy (CAFE) standard that could push the requirement for average fuel economy to as much as 62 mpg by 2025, and further says that strong fuel efficiency standards are more important than fuel efficiency labels.

Luke Tonachel, the vehicles analyst for the National Resources Defense Council, says that while his group would have preferred the letter grade, the new label does provide "useful information" that will help consumers identify the most efficient vehicles in the showroom. He says the group would have preferred that the label include so-called upstream-emissions information on labels for electric-drive vehicles. If consumers had that information, they could see the environmental impact from the production of the electricity used to charge the cars, which automakers advertise as zero-emissions vehicles.

Dealers React Coolly
Auto dealers reached by Edmunds' AutoObserver were mixed in their opinions. Vince Marquez, general sales manager for Norm Reeves Honda in Cerritos, California, says the new labels will "be more helpful." Marquez says consumers are increasingly asking questions about fuel economy and vehicle emissions.

Meanwhile, Tony Gmitrovic, new-car sales manager for Elmhurst Toyota of Elmhurst, Illinois, questions whether consumers will really be able to save money with the new information. "People are realizing that there's a huge potential in savings, so they're going to buy smaller cars. But smaller cars mean smaller profits." Gmitrovic thinks automakers will boost prices of the most fuel-efficient vehicles, so that whatever consumers might save on future fuel costs they'll simply spend in dealer showrooms to buy the new vehicle.

Geoff Pohanka, president of Pohanka Automotive Group, which owns 13 dealerships in the Washington, D.C. area, says he doesn't see any value in the stickers. He questions whether most car shoppers care much about vehicle emissions, regardless of what they say in opinion polls. "They don't look at that," he says of emissions information. "Today's cars barely pollute compared to 10 or 20 years ago. Cars run real clean."

Coming to Your Next New Car
With the announcement of the new label, the DOT and EPA noted that new fuel economy standards adopted last year for passenger cars and trucks built in model years 2012 through 2016 will save an estimated 1.8 billion barrels of oil over the life of the program and will save the average consumer $3,000 in fuel costs.

In July, the Obama administration plans to finalize the first-ever national fuel economy and greenhouse-gas emissions standards for commercial trucks, vans and buses, which will apply to such vehicles built between 2014 and 2018. These standards are expected to save hundreds of millions of barrels of oil over the life of the vehicles covered and promote the development and deployment of alternative fuels.

The Obama administration is also developing the next generation of fuel economy and greenhouse-gas emissions standards for model-year 2017-'25 passenger vehicles, and the result is expected to be announced in September 2011.

As you can tell from the number of people with vested interests in the content of the new EPA label, there's more to all of this than just a different piece of paper pasted into the window of the car that you'll be seeing in dealer showrooms in 2013. It might be that this label will trigger a dramatic shift in the way that people perceive and evaluate the vehicles they drive.

Senior Editor John O'Dell and contributor Danny King contributed to this report.