Why Fuel Economy Rollbacks Will Spur More Trucks, More V-8 Engines

Just drop a $100k on a new truck....... you'll be fine, don't worry about the $5+/gal fuel costs. You need that new truck to impress everybody who doesn't care what you own.

Spoiler alert: With $4-7 gas/diesel - it won't

I hope this can bring back compact trucks. In 2004 the EPA's new rules based fuel economy demands for a vehicle on its wheelbase and track width. The math meant a Chevy S10 would have to get a combined fuel economy rating of 43MPG to pass without fines. Affordable little trucks were so fun and useful and need to come back.

Going to have to take a loan out to put gas in them

The bit that rarely gets explained is who was actually paying for the old rules. Because the CAFE penalty is now zero, the credit market that Tesla built a business line on (close to 2.8 billion dollars of regulatory credit revenue in 2024) basically evaporates, while Stellantis, which paid a few hundred million in fines for the 2019 and 2020 model years alone, goes from buyer to free. That is why Ram could announce the Hemi coming back within weeks of the fines being axed: the engine was never the problem, the penalty math was. The strange part is the timing on the product side. A new engine family takes 4 to 5 years and a plant commitment, so the V-8s being revived are old tooling, not new programs. Does anyone think a single automaker will green-light a brand new V-8 for 2030, knowing the rules can swing back just as fast?

There is no transmission mechanism in a mature oligopoly with pricing power that converts a cost reduction into a consumer price reduction. The money goes to shareholders because that’s what the legal and incentive structure since ‘82 is built to do. Executive comp is largely stock-based, so buybacks mechanically pump the metric the C-suite is paid on.TLDR: this is coupon for AUTOMAKERS who won't lower prices because why would they their incentive is to raise their stock not making a cheaper "light truck"

Large displacement engines needed for towing but I don’t see people haulers going back.

Automakers are deluding themselves. The future does not lie in larger engines, more expensive vehicles, and longer auto loans. The majority of consumers do not have the money to go in that direction. With the big push to have AI replace more and more of the better paying jobs, affordability will become even more important. That is, unless they figure out a way to sell those expensive vehicles to AI agents.

This is the final gasps of a dying industry in the us.

My big van has only been driven about 1,000 miles so far this year. But. I have a small 4 banger suv that gets 30 mpg when I only need to get groceries or move people.

Fun Fact: I saw a guy with a Really Nice Ford Raptor. Front tires were TOTALLY BALD though! Pretty Wild if he actually went off-road 😜

CAFE laws also incentivized larger vehicles to be made by manufacturers since the fuel economy requirements were lower.