Policy update

Mexico light-duty vehicle CO2 and fuel economy standards

On July 12, 2012, the Government of Mexico officially published proposed regulations of CO2 emissions and the fuel economy equivalent for new passenger vehicles—cars, pickup trucks, and SUVs—mandating an average new car fleet average fuel economy of 14.9 km/L (35 mpg) in 2016. The proposal is patterned on U.S. National Highway Transportation Safety Administration (NHTSA) 2012–2016 standards and represents the final step in harmonizing passenger vehicle fuel economy / greenhouse gas standards throughout North America during that time frame.

Publication in the Diario Oficial de la Federación opened a 60-day public comment period. The agencies involved will then respond to comments, make any necessary adjustments to the proposal, and publish the final standard.

Our full update is here. Highlights:

Key elements of the proposal

The proposal is for a regulation on new-vehicle emissions of CO2 in grams per kilometer, and provides the equivalent regulatory metrics for fuel economy in km/L. The overall goal is to achieve an average new-vehicle fuel economy of 14.9 km/L for the model year 2016. This overall goal is not a standard for each individual vehicle, but refers to the fleet average of all passenger cars and light trucks that are sold in Mexico by 2016. The regulation would be implemented for new vehicles from model year 2014 through 2016, and credits generated in 2013 can be used toward compliance in the following years. Automakers must submit data for each year and, if the target is exceeded in any year, credits can be counted forward and backward throughout the full period of the regulation, allowing greater flexibility to automakers. Also, manufacturers can pool compliance for additional flexibility.

Manufacturers must comply with standards that will vary based on the sales-weighted average size and composition of the vehicles they sell. Separate compliance curves based on the vehicle size or “footprint” (the area between the four wheels of the vehicle, in square meters) are provided for two categories, passenger cars and light trucks (SUVs, minivans, pickups). The regulation pertains to light vehicles with gross vehicle weights up to 3,857 kg.

The proposal is based upon the U.S. NHTSA Corporate Average Fuel Economy (CAFE) curves for passenger cars and light trucks. It does not include technology credits of any sort, but does include 1% and 2% reductions from the original U.S. fuel economy targets for passenger vehicles and trucks, respectively, in order to add flexibility for Mexico-specific technology deployment strategies. The technologies considered in the modeling of the expected compliance with the regulation are existing technologies that are present in other markets, and the regulation does not require fleet composition shifts or advanced technologies like hybrids and diesels that are currently more costly.

Expected effects

The Instituto Nacional de Ecología estimates the following benefits from the application of the standard over the period from 2013 to 2030.

  • Reduction in fuel consumed: 70 billion liters
  • CO2 emissions avoided: 170 million tons of CO2
  • Health benefits due to diseases and deaths averted (through reduced upstream pollutant emissions): 4,170 million pesos (approximately $314 million)
  • Fuel savings equivalent to 513 billion pesos (US$39 billion), with federal government savings of 103 billion pesos (US$8 billion) associated with fuel subsidies.