What marvel of technological improvements and comfort will command such a high price tag in 2025 for the common pickup truck?
Actually nothing new, just the same truck that’s being sold today for around $35,000.
Why the higher price in 2025?
Think about Corporate Average Fuel Economy (CAFE) mandates, or the miles per gallon that each auto manufacturer must achieve.
Manufacturers have two options under the law:
- Pay a fine for the amount they miss achieving the CAFE standards
- Reduce the number of high mileage vehicles sold
They will, of course, also try to build smaller vehicles, reduce the weight of vehicles, use smaller engines with less horsepower, or build electric or fuel cell vehicles.
Electric and fuel cell vehicles are zero emission vehicles (ZEV) that supposedly reduce CO2 emissions.
These actions either increase cost or lower the value proposition, i.e., less car for more money, all because of CAFE standards.
Consumers vote by buying the cars they want, and many consumers prefer larger, high horsepower vehicles, or pickup trucks and SUVs that get fewer miles per gallon.
This preference has been demonstrated whenever the price of gasoline has varied. With high priced gasoline consumers tend to buy smaller cars, but seem to always buy larger, so-called gas guzzlers, when the price of gasoline is low.
So what could happen in 2025?
Not wanting to pay the fine, and having no control over what consumers want to buy, manufacturers can be certain to avoid paying the fine by reducing the number of pickup trucks they build.
According to economics 101, the lower supply of pickup tricks will result in a higher price for pickup trucks. The increased margin from this very high price will partially satisfy the manufacturers’ need for profits, though the price of smaller cars will also have to increase for manufacturers to remain profitable.
It will also increase the resale value of pickup trucks sold in prior years.
But why are we pursuing such an absurd increase in CAFE standards?
When CAFE standards were first established, shortly after the Arab oil embargo, their intent was to reduce oil imports.
Today, the United States has enough oil to begin exporting it, and there is no need for any law requiring Americans to cut their usage of oil.
Market forces alone will achieve the proper balance between small and large vehicles.
The only possible reason for reducing oil usage is to cut CO2 emissions.
CAFE standards once again demonstrate how extreme environmentalists are imposing their view on all Americans, when it’s very doubtful that CO2 emissions are the primary cause of global warming.
Why not eliminate CAFE standards, allow those who want to buy small cars to do so, while allowing other Americans to buy whatever type of car that best suits their needs?
Let’s avoid the $100,000 pickup truck.
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